“And given the z cycle dynamics, we expect Infrastructure pretax margin to be lower year-over-year.”

In context

“llion. Our revenue expectations are underpinned by solid growth in both software and consulting. In software, given our pipeline of business, investment in innovation and the contribution of acquisitions, we expect revenue growth slightly above the high end of our mid-single-digit model. In consulting, our solid signings and book-to-bill ratio support revenue growth in the range of 6% to 8% with acceleration throughout the year. Given this growth profile, coupled with our productivity actions, we expect to see well over a point of pretax margin expansion in each of these segments. And then in Infrastructure, as we are entering the year seven quarters into the z16 cycle, we expect 2024 infrastructure revenue to decline. This should drive over a point impact to IBM's overall revenue growth. And given the z cycle dynamics, we expect Infrastructure pretax margin to be lower year-over-year. Bringing it all together with these segment dynamics, we expect IBM's operating pretax margin to expand by about 0.5 point, consistent with what we delivered in 2023. Our tax rate for the year should also be fairly consistent with 2023, and as always, the timing of discrete items can cause the rate to vary within the year. For free cash flow, we expect to generate about $12 billion in 2024 driven primarily by growth in adjusted EBITDA. We will have lower cash requirements driven by changes in our retirement plans, which will be offset by higher CapEx and other balance sheet dynamics. Let me comment on a couple of items that are included in our guidance. First, we are seeing increased productivity in our business, which will lead to workforce rebalancing fairly consistent with 2023 levels.”