KYNDRYL REPORTS FIRST QUARTER FISCAL 2025 RESULTS
Kyndryl Holdings (NYSE: KD) reported its Q1 fiscal 2025 results, with revenues of $3.74 billion, a year-over-year decline of 11% (8% in constant currency). The company posted a pretax income of $64 million and net income of $11 million ($0.05 per diluted share). Adjusted EBITDA was $556 million, while adjusted pretax income increased 96% to $92 million. Kyndryl Consult saw double-digit revenue growth of 10% (14% in constant currency). The company raised its fiscal 2025 outlook, projecting an adjusted EBITDA margin of at least 16.3% and adjusted pretax income of at least $460 million. Kyndryl reaffirmed its constant-currency revenue growth outlook of -2% to -4% and expects to deliver year-over-year growth in Q4 FY2025.
Kyndryl Holdings (NYSE: KD) ha riportato i risultati del primo trimestre dell'anno fiscale 2025, con ricavi di 3,74 miliardi di dollari, un calo dell'11% rispetto all'anno precedente (8% a cambi costanti). La società ha registrato un reddito ante imposte di 64 milioni di dollari e un reddito netto di 11 milioni di dollari (0,05 dollari per azione diluita). L'EBITDA rettificato è stato di 556 milioni di dollari, mentre il reddito ante imposte rettificato è aumentato del 96%, arrivando a 92 milioni di dollari. Kyndryl Consult ha visto una crescita dei ricavi a doppia cifra del 10% (14% a cambi costanti). L'azienda ha alzato le previsioni per l'anno fiscale 2025, prevedendo un margine EBITDA rettificato di almeno il 16,3% e un reddito ante imposte rettificato di almeno 460 milioni di dollari. Kyndryl ha confermato le aspettative di crescita dei ricavi a cambi costanti tra -2% e -4% e prevede di registrare una crescita anno su anno nel quarto trimestre dell'anno fiscale 2025.
Kyndryl Holdings (NYSE: KD) informó sus resultados del primer trimestre del año fiscal 2025, con ingresos de 3.74 mil millones de dólares, una disminución interanual del 11% (8% en moneda constante). La compañía reportó un ingreso antes de impuestos de 64 millones de dólares y un ingreso neto de 11 millones de dólares (0.05 dólares por acción diluida). El EBITDA ajustado fue de 556 millones de dólares, mientras que el ingreso antes de impuestos ajustado aumentó un 96% a 92 millones de dólares. Kyndryl Consult experimentó un crecimiento de ingresos de dos dígitos del 10% (14% en moneda constante). La empresa elevó su pronóstico para el año fiscal 2025, proyectando un margen de EBITDA ajustado de al menos el 16.3% y un ingreso antes de impuestos ajustado de al menos 460 millones de dólares. Kyndryl reafirmó su pronóstico de crecimiento de ingresos en moneda constante de -2% a -4% y espera entregar un crecimiento interanual en el cuarto trimestre del año fiscal 2025.
Kyndryl Holdings (NYSE: KD)는 2025 회계 연도 1분기 실적을 발표했으며, 수익은 37.4억 달러로 전년 대비 11% 감소했습니다(상수 통화 기준 8% 감소). 회사는 세전 수익 6400만 달러와 순이익 1100만 달러 (희석 주당 0.05 달러)를 기록했습니다. 조정된 EBITDA는 5억 5600만 달러였으며, 조정된 세전 수익은 96% 증가하여 9200만 달러에 달했습니다. Kyndryl Consult는 두 자릿수 수익 성장을 기록하며 10% (상수 통화 기준 14%) 성장했습니다. 이 회사는 2025 회계 연도 전망을 상향 조정하여 최소 16.3%의 조정 EBITDA 마진과 최소 4억 6000만 달러의 조정 세전 수익을 예상했습니다. Kyndryl은 상수 통화 기준으로 -2%에서 -4% 사이의 수익 성장 전망을 재확인하며, 2025 회계 연도 4분기에는 전년 대비 성장을 달성할 것으로 기대하고 있습니다.
Kyndryl Holdings (NYSE: KD) a annoncé ses résultats pour le premier trimestre de l'exercice fiscal 2025, avec des revenus de 3,74 milliards de dollars, soit une baisse de 11 % par rapport à l'année précédente (8 % en monnaie constante). L'entreprise a affiché un revenu avant impôt de 64 millions de dollars et un revenu net de 11 millions de dollars (0,05 dollar par action diluée). L'EBITDA ajusté s'élevait à 556 millions de dollars, tandis que le revenu avant impôt ajusté a augmenté de 96 % pour atteindre 92 millions de dollars. Kyndryl Consult a connu une croissance des revenus à deux chiffres de 10 % (14 % en monnaie constante). L'entreprise a relevé ses prévisions pour l'exercice fiscal 2025, projetant une marge EBITDA ajustée d'au moins 16,3 % et un revenu avant impôt ajusté d'au moins 460 millions de dollars. Kyndryl a réaffirmé ses prévisions de croissance des revenus en monnaie constante de -2 % à -4 % et prévoit de réaliser une croissance d'une année sur l'autre au quatrième trimestre de l'exercice fiscal 2025.
Kyndryl Holdings (NYSE: KD) hat die Ergebnisse des ersten Quartals des Geschäftsjahres 2025 veröffentlicht, mit Einnahmen von 3,74 Milliarden US-Dollar, was einem Rückgang von 11% im Jahresvergleich entspricht (8% bei konstanten Wechselkursen). Das Unternehmen erzielte ein Ergebnis vor Steuern von 64 Millionen US-Dollar und ein Nettoeinkommen von 11 Millionen US-Dollar (0,05 US-Dollar pro verwässerter Aktie). Das bereinigte EBITDA belief sich auf 556 Millionen US-Dollar, während das bereinigte Ergebnis vor Steuern um 96% auf 92 Millionen US-Dollar stieg. Kyndryl Consult verzeichnete ein Zwei-Stellen-Umsatzwachstum von 10% (14% bei konstanten Wechselkursen). Das Unternehmen hob seine Prognose für das Geschäftsjahr 2025 an und erwartet eine bereinigte EBITDA-Marge von mindestens 16,3% sowie ein bereinigtes Ergebnis vor Steuern von mindestens 460 Millionen US-Dollar. Kyndryl bestätigte seine Prognose für das Umsatzwachstum bei konstanten Wechselkursen von -2% bis -4% und erwartet, im vierten Quartal des Geschäftsjahres 2025 ein Jahr-zu-Jahr-Wachstum zu erreichen.
- Adjusted pretax income increased 96% year-over-year to $92 million
- Kyndryl Consult revenues grew 10% year-over-year (14% in constant currency)
- Raised adjusted EBITDA margin outlook to at least 16.3% for fiscal year 2025
- Increased adjusted pretax income outlook to at least $460 million for fiscal year 2025
- Expects to deliver year-over-year constant-currency revenue growth in Q4 FY2025
- Hyperscaler alliance revenues reached $210 million, progressing towards $1 billion target
- Advanced Delivery initiative generated annualized savings of approximately $650 million
- Overall revenues declined 11% year-over-year (8% in constant currency) to $3.74 billion
- Cash flow used in operations was $48 million in Q1
- Adjusted free cash flow was negative $116 million in Q1
- Constant-currency revenue growth outlook remains negative at -2% to -4% for FY2025
Insights
Kyndryl's Q1 FY2025 results demonstrate a mixed but generally positive picture. The company reported revenues of
Notably, Kyndryl has shown significant improvement in profitability metrics:
- Pretax income:
$64 million - Net income:
$11 million ($0.05 per diluted share) - Adjusted pretax income:
$92 million (up96% year-over-year) - Adjusted EBITDA:
$556 million
The company's three-A initiatives (Alliances, Advanced Delivery and Accounts) are driving margin expansion. Hyperscaler alliance revenues reached
Kyndryl Consult, a key growth driver, saw a
The company has raised its FY2025 outlook, projecting an adjusted EBITDA margin of at least
These results suggest that Kyndryl's strategic initiatives are gaining traction, positioning the company for improved profitability and potential revenue growth in the near future. However, investors should monitor the pace of revenue decline and the company's ability to execute on its growth strategies in high-margin areas.
Kyndryl's Q1 FY2025 results highlight the company's strategic pivot towards higher-value services and technological transformation. The
The AI-enabled Kyndryl Bridge operating platform emerges as a key differentiator, driving operational efficiencies and creating new revenue opportunities. By freeing up over 10,500 delivery professionals, this platform has not only generated substantial cost savings but also positioned Kyndryl to better address the evolving needs of its clients in areas such as AI, cloud and cybersecurity.
The company's progress in cloud-related services is evident from the
Kyndryl's focus on reducing low-margin third-party content in favor of higher-margin proprietary solutions demonstrates a strategic shift towards becoming a more value-added service provider. This transition, while causing short-term revenue declines, is likely to result in a more robust and profitable business model in the long run.
The company's ability to achieve high-single-digit projected pretax income margins on recent signings is a positive indicator of its improving competitive position in the IT services market. As Kyndryl continues to expand its capabilities in emerging technologies and high-growth areas, it is well-positioned to capitalize on the ongoing digital transformation trends across industries.
However, the challenge for Kyndryl will be to accelerate its revenue growth while maintaining this margin expansion. The company's projection of year-over-year constant-currency revenue growth in Q4 FY2025 will be a critical milestone to watch, as it will indicate whether Kyndryl has successfully navigated its strategic transformation.
- Revenues for the quarter ended June 30, 2024 total
$3.74 billion $64 million $11 million - Adjusted EBITDA is
$556 million $92 million $31 million - Kyndryl Consult continues to gain momentum with double-digit revenue growth in the quarter and over the last twelve months
- Raises adjusted earnings outlook for fiscal year 2025 and reaffirms constant-currency revenue outlook with revenue growth in the fourth quarter
"Kyndryl continued its momentum and delivered another strong set of results in the first quarter, led by significant increases in Kyndryl Consult and hyperscaler-related revenues. Our expertise in running and transforming mission-critical technology differentiates us in the markets we serve. This uniquely positions Kyndryl at the center of secular trends shaping the evolution of IT," said Kyndryl Chairman and Chief Executive Officer Martin Schroeter.
"Going forward, we'll continue to execute our strategy and drive meaningful financial progress, and we remain on track to deliver top-line growth in the fourth quarter of this fiscal year."
Results for the Fiscal First Quarter Ended June 30, 2024
For the first quarter, Kyndryl reported revenues of
Adjusted pretax income was
In the quarter, adjusted EBITDA was
"In the quarter, we continued to expand our adjusted pretax income margins year-over-year, driven by strong execution on our three-A initiatives and another quarter of double-digit growth in Kyndryl Consult. And importantly, we've delivered growth in total signings over the last twelve months with new contracts having solid projected margins. This is positioning us for future revenue, margin and profit growth," said Kyndryl Chief Financial Officer David Wyshner.
Recent Developments
- Alliances initiative – In the first quarter, Kyndryl recognized
$210 million $1 billion - Advanced Delivery initiative – The AI-enabled Kyndryl Bridge operating platform is further enhancing the world-class technology services the Company provides and creating additional revenue opportunities. It has also helped Kyndryl free up more than 10,500 delivery professionals. This has generated annualized savings of approximately
$650 million $750 million - Accounts initiative – Kyndryl continued to address elements of contracts with substandard margins, bringing the total impact from this initiative to
$725 million $850 million - Strong projected margin on recent signings – In the quarter, projected pretax income margins associated with total signings were in the high-single-digit range, which aligns with levels achieved throughout fiscal 2023 and fiscal 2024 and reflects the Company's focus on margin expansion.
- Double-digit growth in Kyndryl Consult – In the first quarter, Kyndryl Consult revenues grew
10% year-over-year and14% in constant currency. Kyndryl Consult signings grew49% year-over-year in constant currency in the first quarter, and have grown31% year-over-year in constant currency over the last twelve months. - Other – In April, an appeals court overturned a judgment against IBM in litigation brought by BMC Software for which IBM might have sought indemnification from Kyndryl. All costs and benefits, including any reserve reversals, related to this litigation are included in the Company's reported results and excluded from its adjusted results.
Raising Fiscal Year 2025 Outlook
Kyndryl is raising its adjusted earnings outlook for its fiscal year 2025, which runs from April 2024 to March 2025:
- Adjusted EBITDA margin of at least
16.3% compared to its prior outlook of at least16.2% . This represents a year-over-year increase of at least 160 basis points. - Adjusted pretax income of at least
$460 million $435 million $295 million
Kyndryl is reaffirming its outlook for constant-currency revenue growth of (
Forecasted amounts are based on currency exchange rates as of July 2024.
Earnings Webcast
Kyndryl's earnings call for the first fiscal quarter is scheduled to begin at 8:30 a.m. ET on August 1, 2024. The live webcast can be accessed by visiting investors.kyndryl.com on Kyndryl's investor relations website. A slide presentation will be made available on Kyndryl's investor relations website before the call on August 1, 2024. Following the event, a replay will be available via webcast for twelve months at investors.kyndryl.com.
About Kyndryl
Kyndryl (NYSE: KD) is the world's largest IT infrastructure services provider, serving thousands of enterprise customers in more than 60 countries. The Company designs, builds, manages and modernizes the complex, mission-critical information systems that the world depends on every day. For more information, visit www.kyndryl.com.
Forward-Looking and Cautionary Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including statements concerning the Company's plans, objectives, goals, beliefs, business strategies, future events, business condition, results of operations, financial position, business outlook and business trends and other non-historical statements, including without limitation the information presented in the "Outlook" section of this press release (which does not assume any acquisitions or divestitures), are forward-looking statements. Such forward-looking statements often contain words such as "aim," "anticipate," "believe," "contemplate," "could," "estimate," "expect," "forecast," "intend," "may," "opportunity," "plan," "position," "predict," "project," "should," "seek," "target," "will," "would" and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are based on the Company's current assumptions and beliefs regarding future business and financial performance.
The Company's actual business, financial condition or results of operations may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others: failure to attract new customers, retain existing customers or sell additional services to customers; failure to meet growth and productivity objectives; competition; impacts of relationships with critical suppliers and partners; failure to address and adapt to technological developments and trends; inability to attract and retain key personnel and other skilled employees; impact of economic, political, public health and other conditions; damage to the Company's reputation; inability to accurately estimate the cost of services and the timeline for completion of contracts; service delivery issues; the Company's ability to successfully manage acquisitions and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; the impact of our business with government customers; failure of the Company's intellectual property rights to prevent competitive offerings and the failure of the Company to obtain, retain and extend necessary licenses; the impairment of our goodwill or long-lived assets; risks relating to cybersecurity, data governance and privacy; risks relating to non-compliance with legal and regulatory requirements; adverse effects from tax matters and environmental matters; legal proceedings and investigatory risks; the impact of changes in market liquidity conditions and customer credit risk on receivables; the Company's pension plans; the impact of currency fluctuations; risks related to the Company's spin-off from IBM; and risks related to the Company's common stock and the securities market.
Additional risks and uncertainties include, among others, those risks and uncertainties described in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024, and may be further updated from time to time in the Company's subsequent filings with the Securities and Exchange Commission. Any forward-looking statement in this press release speaks only as of the date on which it is made. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
In this release, certain amounts may not add due to the use of rounded numbers; percentages presented are calculated based on the underlying amounts.
Non-GAAP Financial Measures
In an effort to provide investors with additional information regarding its results, the Company has provided certain metrics that are not calculated based on generally accepted accounting principles (GAAP), such as constant-currency results, adjusted EBITDA, adjusted pretax income, adjusted net income, adjusted EPS, adjusted EBITDA margin, adjusted pretax margin, adjusted net margin and adjusted free cash flow. Such non-GAAP metrics are intended to supplement GAAP metrics, but not to replace them. The Company's non-GAAP metrics may not be comparable to similarly titled metrics used by other companies. Definitions of non-GAAP metrics and reconciliations of non-GAAP metrics for historical periods to GAAP metrics are included in the tables in this release.
A reconciliation of forward-looking non-GAAP financial information is not included in this release because the Company is unable to predict with reasonable certainty some individual components of such reconciliation without unreasonable effort. These items are uncertain, depend on various factors and could have a material impact on future results computed in accordance with GAAP.
Investor Contact:
Lori Chaitman
lori.chaitman@kyndryl.com
Media Contact:
Ed Barbini
edward.barbini@kyndryl.com
Table 1
KYNDRYL HOLDINGS, INC. CONSOLIDATED INCOME STATEMENT (in millions, except per share amounts) | ||||||
Three Months Ended June 30, | ||||||
2024 | 2023 | |||||
Revenues | $ | 3,739 | $ | 4,193 | ||
Cost of services | $ | 2,934 | $ | 3,449 | ||
Selling, general and administrative expenses | 657 | 720 | ||||
Workforce rebalancing charges | 36 | 58 | ||||
Transaction-related costs | 20 | 42 | ||||
Interest expense | 28 | 29 | ||||
Other expense | — | 5 | ||||
Total costs and expenses | $ | 3,675 | $ | 4,302 | ||
Income (loss) before income taxes | $ | 64 | $ | (109) | ||
Provision for income taxes | 53 | 32 | ||||
Net income (loss) | $ | 11 | $ | (141) | ||
Earnings per share data | ||||||
Basic earnings (loss) per share | $ | 0.05 | $ | (0.62) | ||
Diluted earnings (loss) per share | 0.05 | (0.62) | ||||
Weighted-average basic shares outstanding | 230.5 | 227.9 | ||||
Weighted-average diluted shares outstanding | 235.8 | 227.9 | ||||
Table 2
SEGMENT RESULTS AND SELECTED BALANCE SHEET INFORMATION (dollars in millions) | ||||||||||
Three Months Ended June 30, | Year-over-Year Growth | |||||||||
As | Constant | |||||||||
Segment Results | 2024 | 2023 | Reported | Currency | ||||||
Revenue | ||||||||||
$ | 986 | $ | 1,164 | (15 %) | (15 %) | |||||
569 | 610 | (7 %) | 6 % | |||||||
Principal Markets1 | 1,315 | 1,391 | (5 %) | (5 %) | ||||||
Strategic Markets1 | 869 | 1,027 | (15 %) | (14 %) | ||||||
Total revenue | $ | 3,739 | $ | 4,193 | (11 %) | (8 %) | ||||
Adjusted EBITDA2 | ||||||||||
$ | 133 | $ | 236 | |||||||
83 | 100 | |||||||||
Principal Markets | 241 | 151 | ||||||||
Strategic Markets | 120 | 149 | ||||||||
Corporate and other3 | (21) | (24) | ||||||||
Total adjusted EBITDA | $ | 556 | $ | 612 | ||||||
June 30, | March 31, | |||||||||
Balance Sheet Data | 2024 | 2024 | ||||||||
Cash and equivalents | $ | 1,269 | $ | 1,553 | ||||||
Debt (short-term and long-term) | 3,239 | 3,238 | ||||||||
1 | Principal Markets is comprised of Kyndryl's operations in | ||||||
2 | 2024 amounts include workforce rebalancing charges of | ||||||
3 | Represents net amounts not allocated to segments. | ||||||
Table 3
KYNDRYL HOLDINGS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (dollars in millions) | ||||||
Three Months Ended June 30, | ||||||
2024 | 2023 | |||||
Cash flows from operating activities: | ||||||
Net income (loss) | $ | 11 | $ | (141) | ||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||||||
Depreciation and amortization | ||||||
Depreciation of property, equipment and capitalized software | 127 | 210 | ||||
Depreciation of right-of-use assets | 70 | 91 | ||||
Amortization of transition costs and prepaid software | 310 | 325 | ||||
Amortization of capitalized contract costs | 107 | 138 | ||||
Amortization of acquisition-related intangible assets | 7 | 8 | ||||
Stock-based compensation | 24 | 22 | ||||
Deferred taxes | 17 | 26 | ||||
Net (gain) loss on asset sales and other | 27 | 29 | ||||
Change in operating assets and liabilities: | ||||||
Deferred costs (excluding amortization) | (363) | (418) | ||||
Right-of-use assets and liabilities (excluding depreciation) | (65) | (103) | ||||
Workforce rebalancing liabilities | 7 | (23) | ||||
Receivables | 163 | 53 | ||||
Accounts payable | (122) | (143) | ||||
Taxes | (9) | (25) | ||||
Other assets and other liabilities | (358) | (222) | ||||
Net cash provided by (used in) operating activities | $ | (48) | $ | (173) | ||
Cash flows from investing activities: | ||||||
Capital expenditures | $ | (122) | $ | (100) | ||
Proceeds from disposition of property and equipment | 24 | 6 | ||||
Acquisitions and divestitures, net of cash acquired | (46) | — | ||||
Other investing activities, net | (22) | (19) | ||||
Net cash used in investing activities | $ | (166) | $ | (113) | ||
Cash flows from financing activities: | ||||||
Debt repayments | $ | (38) | $ | (30) | ||
Common stock repurchases for tax withholdings | (7) | (7) | ||||
Other financing activities, net | (6) | (1) | ||||
Net cash provided by (used in) financing activities | $ | (51) | $ | (38) | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | (17) | $ | (15) | ||
Net change in cash, cash equivalents and restricted cash | $ | (281) | $ | (339) | ||
Cash, cash equivalents and restricted cash at beginning of period | $ | 1,554 | $ | 1,860 | ||
Cash, cash equivalents and restricted cash at end of period | $ | 1,273 | $ | 1,521 | ||
Supplemental data | ||||||
Income taxes paid, net of refunds received | $ | 54 | $ | 65 | ||
Interest paid on debt | $ | 40 | $ | 46 | ||
Table 4
NON-GAAP METRIC DEFINITIONS AND RECONCILIATIONS
(dollars in millions, except signings)
We report our financial results in accordance with GAAP. We also present certain non-GAAP financial measures to provide useful supplemental information to investors. We provide these non-GAAP financial measures as we believe it enhances investors' visibility to management decisions and their impacts on operational performance; enables better comparison to peer companies; and allows us to provide a long-term strategic view of the business going forward.
Constant-currency information compares results between periods as if exchange rates had remained constant period over period. We define constant-currency revenues as total revenues excluding the impact of foreign exchange rate movements and use it to determine the constant-currency revenue growth on a year-over-year basis. Constant-currency revenues are calculated by translating current period revenues using corresponding prior-period exchange rates.
Adjusted pretax income (loss) is defined as pretax income (loss) excluding transaction-related costs and benefits, charges related to ceasing to use leased / fixed assets, charges related to lease terminations, pension costs other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, amortization of acquisition-related intangible assets, workforce rebalancing charges incurred prior to March 31, 2024, impairment expense, significant litigation costs and benefits, and currency impacts of highly inflationary countries. The Company's fiscal year 2025 outlook for adjusted pretax income includes approximately
Adjusted EBITDA is defined as net income (loss) excluding net interest expense, income taxes, depreciation and amortization (excluding depreciation of right-of-use assets and amortization of capitalized contract costs), charges related to ceasing to use leased / fixed assets, charges related to lease terminations, transaction-related costs and benefits, pension costs other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, workforce rebalancing charges incurred prior to March 31, 2024, impairment expense, significant litigation costs and benefits, and currency impacts of highly inflationary countries. The Company's fiscal year 2025 outlook for adjusted EBITDA includes approximately
Adjusted net income is defined as adjusted pretax income less the reported provision for income taxes, minus or plus the tax effect of the non-GAAP adjustments made to calculate adjusted pretax income, and excluding exceptional items impacting the reported provision for income taxes. Adjusted net margin is calculated by dividing adjusted net income by revenue.
Adjusted earnings per share (EPS) is defined as adjusted net income divided by diluted weighted average shares outstanding to reflect shares that are dilutive or anti-dilutive based on the amount of adjusted net income. The weighted average common shares outstanding used to calculate adjusted earnings (loss) per share will differ from such shares used to calculate diluted earnings (loss) per share (GAAP) when the inclusion of dilutive shares has an anti-dilutive effect for one calculation but not for the other.
Adjusted free cash flow is defined as cash flows from operating activities (GAAP) after adding back transaction-related payments, charges related to lease terminations, payments related to workforce rebalancing charges incurred prior to March 31, 2024, and significant litigation payments, less net capital expenditures. Management uses adjusted free cash flow as a measure to evaluate its operating results, plan strategic investments and assess our ability and need to incur and service debt. We believe adjusted free cash flow is a useful supplemental financial measure to aid investors in assessing our ability to pursue business opportunities and investments and to service our debt. Adjusted free cash flow is a financial measure that is not recognized under
Signings are defined by Kyndryl as an initial estimate of the value of a customer's commitment under a contract. The calculation involves estimates and judgments to gauge the extent of a customer's commitment. We calculate this based on various considerations including the type and duration of the agreement as well as the presence of termination charges or wind-down costs. Contract extensions and increases in scope are treated as signings only to the extent of the incremental new value. Signings can vary over time due to a variety of factors including, but not limited to, the timing of signing a small number of larger outsourcing contracts, as well as the length of those contracts. The conversion of signings into revenue may vary based on the types of services and solutions, customer decisions and other factors, which may include, but are not limited to, macroeconomic environment or external events. Management uses signings as a tool to monitor the performance of the business including the business' ability to attract new customers and sell additional scope into our existing customer base.
Reconciliation of net income (loss) to | ||||||
adjusted pretax income (loss), adjusted EBITDA, | ||||||
adjusted net income (loss) and adjusted EPS | Three Months Ended June 30, | |||||
(in millions, except per share amounts) | 2024 | 2023 | ||||
Net income (loss) (GAAP) | $ | 11 | $ | (141) | ||
Provision for income taxes | 53 | 32 | ||||
Pretax income (loss) (GAAP)1 | $ | 64 | $ | (109) | ||
Workforce rebalancing charges incurred prior to March 31, 2024 | — | 58 | ||||
Charges related to ceasing to use leased/fixed assets and lease terminations | 9 | 10 | ||||
Transaction-related costs | 20 | 42 | ||||
Stock-based compensation expense | 24 | 22 | ||||
Amortization of acquisition-related intangible assets | 7 | 8 | ||||
Other adjustments2 | (32) | 16 | ||||
Adjusted pretax income (non-GAAP) | $ | 92 | $ | 47 | ||
Interest expense | 28 | 29 | ||||
Depreciation of property, equipment and capitalized software | 127 | 210 | ||||
Amortization of transition costs and prepaid software | 310 | 325 | ||||
Adjusted EBITDA (non-GAAP) | $ | 556 | $ | 612 | ||
Net income (loss) margin | 0.3 % | (3.4 %) | ||||
Adjusted EBITDA margin | 14.9 % | 14.6 % | ||||
Adjusted pretax income (non-GAAP) | $ | 92 | $ | 47 | ||
Provision for income taxes (GAAP) | (53) | (32) | ||||
Tax effect of non-GAAP adjustments | (8) | (15) | ||||
Adjusted net income (non-GAAP) | $ | 31 | $ | 0 | ||
Diluted weighted average shares outstanding | 235.8 | 227.9 | ||||
Diluted earnings (loss) per share (GAAP) | $ | 0.05 | $ | (0.62) | ||
Adjusted earnings per share (non-GAAP) | $ | 0.13 | $ | 0.00 | ||
1 | Includes lower depreciation expenses resulting from the change of useful life of information technology equipment effective April 1, 2024 (a net year-over-year benefit of | ||||||
2 | Other adjustments represent pension costs other than pension servicing costs and multi-employer plan costs, significant litigation costs and benefits, and currency impacts of highly inflationary countries. | ||||||
Reconciliation of cash flow from operations | Three Months Ended June 30, | |||||
to adjusted free cash flow (in millions) | 2024 | 2023 | ||||
Cash flows from operating activities (GAAP) | $ | (48) | $ | (173) | ||
Plus: Transaction-related payments (benefits) | 5 | 42 | ||||
Plus: Workforce rebalancing payments related to charges incurred prior to March 31, 2024 | 21 | 79 | ||||
Plus: Significant litigation payments | 4 | 33 | ||||
Plus: Payments related to lease terminations | — | 7 | ||||
Less: Net capital expenditures | (98) | (94) | ||||
Adjusted free cash flow (non-GAAP) | $ | (116) | $ | (106) | ||
Three Months Ended June 30, | ||||||
Signings (in billions) | 2024 | 2023 | ||||
Signings1 | $ | 3.1 | $ | 2.8 | ||
1 | Signings for the quarter ended June 30, 2024 increased by | ||||||
View original content to download multimedia:https://www.prnewswire.com/news-releases/kyndryl-reports-first-quarter-fiscal-2025-results-302211351.html
SOURCE Kyndryl
FAQ
What were Kyndryl's (KD) Q1 fiscal 2025 revenue and earnings?
How did Kyndryl's (KD) Consult division perform in Q1 fiscal 2025?
What is Kyndryl's (KD) revenue outlook for fiscal year 2025?
Has Kyndryl (KD) updated its earnings guidance for fiscal year 2025?
