Good afternoon, and welcome to the 2025 IBM annual stockholders meeting. I ask that the meeting please come to order. Thank you for joining us today. My name is Arvind Krishna, Chairman of the Board, and I will act as Chairman of the meeting. Joining me on this webcast today from IBM are James Kavanaugh, Senior Vice President and Chief Financial Officer; Anne Robinson, Senior Vice President and Chief Legal Officer; Nikhil Leeder, Senior Vice President and Chief Human Resources Officer; and Jane Edwards, Vice President and Secretary. We are also joined by the members of IBM's Board of Directors. IBM has an exceptional board whose members bring a diversity of backgrounds, talents, and perspectives from the public and private sectors, and from across a variety of industries and businesses with operations around the world. I'd like to introduce each member of the board on the line today.
In addition to myself, we are joined by Marianne Brown, former Chief Operating Officer, Global Financial Solutions at Fidelity National Information Services; Thomas Buberl, Chief Executive Officer of AXA; David Farr, retired Chairman and Chief Executive Officer of Emerson Electric Company; Alex Gorsky, former Chairman and Chief Executive Officer of Johnson & Johnson; Michelle Howard, retired Admiral, United States Navy; Andrew Liveris, retired Chairman and Chief Executive Officer of the Dow Chemical Company; Bill McNabb, retired Chairman and Chief Executive Officer of the Vanguard Group; Michael Miebach, Chief Executive Officer of Mastercard; Martha Pollack, President Emerita of Cornell University; Peter Voser, retired Chief Executive Officer of Royal Dutch Shell and Chairman of ABB; Rick Waddell, retired Chairman and Chief Executive Officer of the Northern Trust Corporation; and Al Zoller, former Executive Advisor at Suresh Capital Group.
All stockholders of record on February 28, 2025, were given notice of this meeting by mail. Copies were also sent to the financial press. Michael, Barbara, and Jason Graham of First Coast Results have been appointed by the Board of Directors to serve as the Inspectors of Election for this meeting in accordance with our company's bylaws. The Inspector of Election sent me a report that shows that over 75% of the outstanding stock entitled to vote at this meeting is represented by proxy. Under our bylaws, a quorum is a majority of the outstanding stock. Therefore, a quorum is in attendance. We will now dispense with the reading of the minutes of last year's stockholders' meeting and move on to the items of business set forth in the proxy statement. Item 1, election of directors.
Item 2, ratification of the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm. Item 3, advisory vote on executive compensation. Our position is set forth in the proxy statement. There are two stockholder proposals reflected as Items 4 and 5. However, as noted in our proxy supplement filed on April 25, the proponent agreed to withdraw Item 5. Accordingly, Item 5 will not be presented or voted upon at this meeting, nor will any board's costs in regard to Item 5 be tabulated or reported. Other proposals will not be considered today. Our board recommends a vote against the stockholder proposal, Item 4, which is to support transparency in lobbying. There is no need to read the proposal or the supporting statement, as all other information is set forth in the proxy statement.
Out of respect for other stockholders, the rules of conduct published in advance of the meeting require that the speaker presenting the proposal limit his comments to a period of three minutes and limit his comments to the subject of the proposal. In addition, please note that this is not the time to ask questions, air personal grievances, or discuss matters that are otherwise not suitable for the conduct of this meeting. This proposal, Item 4, is on page 70 in the proxy statement and from John Shevardin requesting support on transparency in lobbying. Our statement in opposition is on page 71. I'll now ask the operator to open the line for Mr. Shevardin to present the proposal.
Hello, this is John Shevardin. Proposal 4, transparency in lobbying. I move Proposal 4, asking IBM to provide a report on its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations and social welfare groups. IBM does not issue a comprehensive report of its own direct state lobbying. That data is scattered and difficult to obtain. IBM shareholders only know that IBM spent over $78 million in federal lobbying since 2010, and there is incomplete disclosure about IBM's spending at the state level, where finding this information is nearly impossible. IBM is required to report its state lobbying expenditures and already has this information, so it could easily be provided to shareholders. This proposal seeks full disclosure of dark money payments to trade associations or social welfare groups, where there are no limits or disclosure requirements. IBM shareholders face a blind spot here.
IBM lists memberships in 13 principal trade associations but fails to disclose its payments and amounts used for lobbying. IBM lags at least 12 of its peers, which do disclose their trade association payments used to lobby. For example, IBM belongs to the Business Roundtable and Chamber of Commerce, which together spent over $99 million in lobbying for 2024. How large are IBM's payments, and what amounts were used for lobbying? IBM shareholders do not know, and that's a problem. Additionally, this disclosure is incomplete and leaves out many IBM trade association memberships like the Coalition of Service Industries, Compete America, HR Policy Association, National Retail Federation, and Partnership for New York City. How many other significant memberships are left out? Many of IBM's trade association lobbying positions contradict IBM public positions, resulting in value misalignment and reputation risk.
For example, IBM believes in addressing climate change, yet its Business Roundtable filed an amicus brief opposing climate risk disclosure rules, and its Chamber of Commerce undermined the Paris Climate Accord. IBM has attracted scrutiny for avoiding federal income taxes, and the Business Roundtable has lobbied against a new minimum corporate tax. IBM also fails to disclose its payments to 501(c)(4) social welfare organizations, which also lobby. IBM supports social welfare groups that lobby, like Bay Area Council and Future of Privacy Forum. What is the extent of IBM's contributions to dark money social welfare groups? Shareholders do not know. Disclosure transparency is a safety valve for IBM, its reputation, and stockholders, since what gets disclosed gets managed. Full disclosure of IBM's lobbying, including its third-party payments, will ensure proper oversight of IBM's lobbying, and I urge shareholders to vote for this Proposal 4.
Thank you, Mr. Shevardin. Operator, please mute the line. At this time, the polls are now closed. I will now proceed with a report on your company and our progress in 2024. 2024 was a year of strong progress for IBM as we continued our journey to become a higher-growth, higher-margin business. We combined deep technology innovation with consulting expertise to help our clients drive productivity and transform their operations, and we applied these same capabilities within our own company. As a result, I'm pleased to share that IBM is delivering strong returns for clients, employees, and shareholders alike. Today, I want to speak with you about three things: our financial performance in 2024, how we are executing our strategy around hybrid cloud and AI, and the innovations we are driving to shape the future of computing. Let's start with our performance.
In 2024, IBM generated $62.8 billion in revenue, growing 3% at constant currency, and we delivered $12.7 billion in free cash flow, up $1.5 billion from the previous year. This financial strength allowed us to reinvest in our business, with over $7 billion allocated to research and development, 11 strategic acquisitions to enhance our AI and hybrid cloud capabilities. It has also enabled us to return more than $6 billion to you, our shareholders, through dividends. I'm proud to share that we have now increased our dividend for 29 consecutive years. Our operating gross profit margin expanded by 130 basis points, driven by demand for high-value offerings and the continued focus on productivity. Software led the way with 9% revenue growth at constant currency, powered by strong momentum across data and AI, automation, transaction processing, and security. Red Hat continued to perform well as more clients adopted open hybrid cloud.
Consulting grew 1% at constant currency, reflecting sustained demand for our expertise in AI deployment and digital transformation. While infrastructure declined 3%, as expected due to the product cycle, IBM Z16 became the most successful mainframe program in our history in terms of client adoption and workload scale. Let me now turn to our strategy. We are building IBM around the two most transformative technologies of our era: artificial intelligence and hybrid cloud. Clients today aren't experimenting with AI. They're scaling it. To scale AI effectively, they need enterprise-grade solutions that are efficient, governable, and cost-effective. That's exactly what IBM delivers. In fact, since inception, our generative AI book of business has grown to more than $5 billion. Our enterprise AI portfolio, watsonx, continues to expand.
It includes tools to build, train, and govern AI models, assistants that perform core business functions, and our family of Granite models, which are open, trusted, and optimized for enterprise use. These models can be trained on proprietary data in weeks, not months, and can help deliver up to 90% improved cost efficiency compared to alternatives. AI can't scale without access to data, and that's where hybrid cloud comes in. Our platforms, including Red Hat Enterprise Linux AI and OpenShift AI, provide a consistent, secure foundation for AI workloads across any environment. More than 90% of the Fortune 500 companies use IBM's hybrid cloud offerings, and increasingly, clients are buying across all three segments: software, consulting, and infrastructure because they see the value in IBM's integrated approach. At IBM, innovation is the engine that powers everything we do. IBM Research continues to shape the future of computing.
In 2024, we introduced the IBM Quantum Heron processor, which delivers dramatically better performance and speed than our previous quantum systems. We expanded our quantum data centers in New York and Germany and announced a new national quantum algorithmic center in partnership with the state of Illinois. We also unveiled next-generation infrastructure, including the Telum 2 processor and the upcoming Spire AI accelerator, purpose-built to run enterprise AI at scale. Our work in quantum, AI, hybrid cloud, and automation is all designed to solve real business problems and unlock new value for our clients. What does all of this mean in practice? It means helping NatWest Bank improve satisfaction in key areas of customer service by up to 150% with an AI-powered virtual agent. It means helping Cathay Pacific migrate 90 critical applications to the cloud with zero downtime, achieving 70% faster time to market and improved scalability.
It means helping Australia's water corporation reduce cloud-related costs by 40% and save 1,500 hours of manual labor a year through hybrid cloud. Our consulting business plays a critical role here. IBM Consulting now drives about 80% of our AI-related bookings, and we are scaling that impact with IBM Consulting Advantage, a platform that gives our consultants domain-specific AI assistance to deliver faster outcomes. None of this happens with IBM alone. Our strategic partnerships with Microsoft, Amazon Web Services, Salesforce, SAP, Oracle, Palo Alto Networks, and others extend our reach and help us serve clients better. These relationships create a multiplier effect for IBM. Finally, we have embraced a client-zero philosophy, using the same technology internally that we deliver externally. That's allowed us to automate work at scale. 94% of basic HR queries are now handled by AI since 2023.
These changes and others have helped to drive over $3.5 billion in productivity savings. This efficiency enables us to keep investing in our products, in our people, and in your returns. IBMers around the world are the reason we have made this progress, and we are proud that the vast majority of our employees say they would recommend IBM as a great place to work. Let me close by saying, the world needs IBM. In a time of rapid change, clients want a partner they can trust, a partner who can help them harness AI and hybrid cloud to drive growth, a partner who brings not just technology but expertise at scale. That's who IBM is. We are a software-led, platform-based company built for the future and built to deliver strong returns. Thank you for your support, your partnership, and your confidence in our journey.
The inspector of election sent me a report this morning on the preliminary count of the votes cast based upon the proxies and ballots which have been processed. On the basis of that report, I declare that each of the 13 nominees listed in the proxy statement standing for election as directors received a majority of the votes cast. A majority of votes cast voted for the ratification of PricewaterhouseCoopers as the company's independent registered public accounting firm. A majority of the votes cast voted for the advisory vote on executive compensation, say, on pay. The stockholder proposal to support transparency in lobbying did not receive a majority of the votes cast. We will now move to the question period of the meeting.
As we have done for many years, we posted an invitation on the investor relations website in March, which gave stockholders the opportunity to submit questions in advance of today's meeting. For stockholders who signed in today with a control number, you can also submit questions through the portal during the meeting. I will now go through some of these questions that we received. There were a lot of questions from shareholders on artificial intelligence. Let me give you an update on IBM's AI strategy. I want to start by acknowledging that the AI landscape is evolving, and the conversation is changing. From just a few short years ago, the AI conversation has shifted. The industry is moving away from massive general-purpose models towards smaller, open, and fine-tuned models that deliver real business value. That is exactly where IBM has focused from the beginning.
We have always built AI for business, not just benchmarks. We want to meet clients where they are, ensuring AI runs anywhere that their data lives: on-premise, in the cloud, across hybrid environments. The latest evolution of our Granite model family, Granite 3.2 models, shows a continued effort to deliver small, efficient, practical AI for real business use cases and impact. It comes back to this. Overbuilt AI tries to do everything, but purpose-built AI gets the job done for business. I'm sure you've heard this before, but AI is all about data. IDC projects that AI spending will hit over $800 billion by 2029, yet only 26% of companies have successfully scaled GenAI into production. One of the biggest barriers is that 95% of enterprise data is unstructured, and many businesses struggle to access and use it effectively.
That's why we invest in technologies that help unlock that value. More data and technology mean more complexity, and that is one of the biggest barriers to AI adoption. As enterprise environments grow more complex, businesses need AI that simplifies and not complicates their infrastructure. That is why we recently announced the close of our HashiCorp acquisition to help solve clients' long-standing challenge of infrastructure complexity. To deliver a unified approach, we can break down silos and accelerate modernization. HashiCorp's solutions complement IBM's AI-powered automation portfolio, helping enterprises gain control over their environments. Moving on from artificial intelligence, we received quite a few questions on quantum computing. I'll break down our strategy and leadership by what we are doing across quantum hardware, software, and looking to the future.
I'd like to start by stating that IBM is the industry leader with unmatched utility-scale quantum computing performance that is being put to use as a scientific tool across healthcare, life sciences, material sciences, and other domains. On hardware, when IBM first released its quantum roadmap in 2020, we signaled how we plan to move from small-scale quantum devices to large-scale, useful quantum computers that are able to provide valuable results for hard scientific and business challenges. We have delivered on this roadmap, meeting every goal on time. We just released IBM Quantum Heron, our most powerful utility-scale quantum processor, the latest of which is more than 25 times faster, with 50% lower error rates than its predecessor, and it is available to all our users.
We are building advanced quantum systems at scale, including the deployment of IBM Quantum System 2, our most advanced modular quantum computer, and a cornerstone of our quantum-centric supercomputing architecture. Our team has built a core software platform called Qiskit, which is now the world's most performant and popular quantum software, powering our clients' utility-scale experiments. Qiskit's Transpiler service uses AI to power efficient optimization of quantum circuits for quantum hardware, and Qiskit's Code Assistant helps developers generate quantum code with IBM Granite-based AI models. IBM's expanded quantum roadmap aims to realize quantum computers at scale. This will progress us from quantum advantage in the near term to large-scale fault-tolerant quantum computers before the end of this decade. Three examples of this recent expansion: last year, we announced a collaboration with the state of Illinois to establish the National Quantum Algorithmic Center, part of the Illinois Quantum and Microelectronics Park.
That center will be anchored by an IBM Quantum System 2 system, our next-generation modular quantum computer, and the foundation of quantum-enhanced supercomputing. In March of this year, we announced plans with the Basque government to install Europe's first IBM Quantum System 2 at the IBM USCADI Quantum Computational Center in Spain. We are doing the same in Japan, where an IBM Quantum System 2 will soon be installed at the RIKEN Center for Computational Science. This will be the only quantum system in the world co-located with the RIKEN supercomputer Fugaku. A lot of shareholders have asked about the macro environment. Let me give you some information on how IBM is operating in the current climate. From an IBM level, let me share how we view the macro environment and also how we are well-positioned for today and the future.
No one is immune to uncertainty, but over the last few years, IBM has been strengthening its portfolio and focusing on execution. In order to operate from a position of relative strength, our diversity across businesses, geographies, industries, and client sets makes us resilient. Our performance reflects the continued success of our focused strategy around hybrid cloud and AI, especially where clients are looking for cost savings, productivity gains, and trusted partners. Those needs remain front and center in today's market. A few statements that I also mentioned on our first quarter earnings call last week: technology will remain a key competitive advantage that allows businesses to drive cost efficiencies, productivity, and preserve the balance sheets. In the near term, uncertainty may cause clients to pause and take a wait-and-see approach. However, the value of hybrid cloud, automation, data sovereignty, and on-premise solutions becomes even more critical in volatile windows.
Our containerization and virtualization pipeline continue to grow, with clients focused not only on near-term costs but also longer-term savings driven by modernization. There are areas of our business where volatility acts as a catalyst for demand, driving increased capacity requirements, particularly across our mainframe environments. This has played out over the last several weeks. For clients with a more direct impact from current policy, the slowdown may get more pronounced. Consulting is more susceptible to discretionary pullbacks and DOGE-related initiatives. Given all of these statements, both our confidence on the future, our strategy, but acknowledging some of the uncertainty, we have decided we maintain our four-year guidance for accelerating revenue growth to 5% plus and about $13.5 billion of free cash flow.
Over the longer term, we are confident in our ability to deliver on our model presented at Investor Day for sustainable higher revenue growth and strong free cash flow. Having gone through these questions, I would like to thank you for joining us today for our 2025 stockholders meeting and for your support of IBM. I now adjourn the meeting.