“As a result, we expect 2023 infrastructure revenue below its model and pre-tax margin in the low-teens.”

In context

“e growth generates operating leverage, and we'd expect software pre-tax margin to expand by about 2 points year-to-year. Consulting's model is to deliver high single-digit revenue. We're coming off a strong year with revenue growth of 15% as we help clients with their digital transformations. This momentum and strong book-to-bill ratio support consulting revenue growth at the high-end of its model despite the tough compare. We expect to expand consulting pre-tax margin by at least 1 point as we continue to realize more of the price increases and improved utilization. Infrastructure revenue is roughly flat over the midterm model horizon, with performance in any year reflecting product cycle dynamics. We're entering the year three quarters into the z16 cycle, and will also ramp on Power 10. As a result, we expect 2023 infrastructure revenue below its model and pre-tax margin in the low-teens. For perspective, infrastructure should impact IBM's overall revenue growth by over 1 point. With these segment dynamics, we would expect IBM's operating pretax margin to expand by about 0.5 point. That's in line with our model and our tax rate should be in the mid- to high-teens range. Let me comment on a few items within our expectations. First, as I said, currency was a significant headwind in 2022, impacting revenue by $3.5 billion. With the movement of spot rates over the last 90 days, currency translation would be fairly neutral to revenue in 2023 with a headwind in the first half, flipping to a tailwind in the second. But I'll remind you that we had over $650 million of hedging gains in 2022, which will not repeat in 2023, resulting in an impact to our profit and cash on a year-to-y”