KYNDRYL REPORTS SECOND QUARTER FISCAL 2025 RESULTS
Kyndryl (NYSE: KD) reported Q2 FY2025 results with revenues of $3.8 billion, showing a 7% year-over-year decline. The company posted a net loss of $43 million ($0.19 per share), improving from a $142 million loss in the prior year. Total signings reached a record $5.6 billion, up 132% year-over-year. Kyndryl Consult showed strong performance with 23% revenue growth. The company reaffirmed its FY2025 outlook, expecting constant-currency revenue growth in Q4, adjusted EBITDA margin of at least 16.3%, and adjusted pretax income of at least $460 million.
Kyndryl (NYSE: KD) ha riportato i risultati del secondo trimestre dell'anno fiscale 2025 con ricavi di 3,8 miliardi di dollari, mostrando un calo del 7% rispetto all'anno precedente. L'azienda ha registrato una perdita netta di 43 milioni di dollari (0,19 dollari per azione), in miglioramento rispetto a una perdita di 142 milioni di dollari nell'anno precedente. Le firme totali hanno raggiunto un record di 5,6 miliardi di dollari, con un aumento del 132% su base annua. Kyndryl Consult ha mostrato una forte performance con una crescita del fatturato del 23%. L'azienda ha confermato le sue previsioni per l'anno fiscale 2025, prevedendo una crescita dei ricavi a valuta costante nel quarto trimestre, un margine EBITDA rettificato di almeno il 16,3% e un reddito ante imposte rettificato di almeno 460 milioni di dollari.
Kyndryl (NYSE: KD) informó los resultados del segundo trimestre del año fiscal 2025 con ingresos de 3.8 mil millones de dólares, mostrando una disminución del 7% en comparación con el año anterior. La compañía registró una pérdida neta de 43 millones de dólares (0.19 dólares por acción), mejorando respecto a una pérdida de 142 millones de dólares el año pasado. Las firmas totales alcanzaron un récord de 5.6 mil millones de dólares, un aumento del 132% interanual. Kyndryl Consult mostró un fuerte desempeño con un crecimiento del 23% en los ingresos. La empresa reafirmó su perspectiva para el año fiscal 2025, esperando un crecimiento de ingresos en moneda constante en el cuarto trimestre, un margen EBITDA ajustado de al menos 16.3% y un ingreso antes de impuestos ajustado de al menos 460 millones de dólares.
Kyndryl (NYSE: KD)는 2025 회계연도 2분기 실적을 보고하였으며, 38억 달러의 수익을 기록하여 전년 대비 7% 감소하였습니다. 회사는 4,300만 달러(주당 0.19 달러)의 순손실을 기록하였으며, 이는 지난해 1억 4,200만 달러의 손실보다 개선된 수치입니다. 총 서명은 기록적인 56억 달러에 도달하여 전년 대비 132% 증가했습니다. Kyndryl Consult는 23%의 수익 성장으로 강력한 성과를 보였습니다. 회사는 2025 회계연도 전망을 재확인하며, 4분기에는 고정 통화 기준 수익 증가, 최소 16.3%의 조정 EBITDA 마진 및 최소 4억 6천만 달러의 조정 세전 수익을 예상하고 있습니다.
Kyndryl (NYSE: KD) a publié ses résultats pour le deuxième trimestre de l'exercice 2025, avec des revenus de 3,8 milliards de dollars, enregistrant une baisse de 7% par rapport à l'année précédente. L'entreprise a affiché une perte nette de 43 millions de dollars (0,19 dollar par action), s'améliorant par rapport à une perte de 142 millions de dollars l'année dernière. Les signatures totales ont atteint un niveau record de 5,6 milliards de dollars, en hausse de 132% d'une année sur l'autre. Kyndryl Consult a montré une performance solide avec une croissance des revenus de 23%. L'entreprise a réaffirmé ses prévisions pour l'exercice 2025, s'attendant à une croissance des revenus à devises constantes au quatrième trimestre, une marge EBITDA ajustée d'au moins 16,3% et un revenu avant impôts ajusté d'au moins 460 millions de dollars.
Kyndryl (NYSE: KD) hat die Ergebnisse des zweiten Quartals des Geschäftsjahres 2025 veröffentlicht, mit Einnahmen von 3,8 Milliarden US-Dollar, was einem Rückgang von 7% im Vergleich zum Vorjahr entspricht. Das Unternehmen verzeichnete einen Nettoverlust von 43 Millionen US-Dollar (0,19 US-Dollar pro Aktie), was eine Verbesserung gegenüber einem Verlust von 142 Millionen US-Dollar im Vorjahr darstellt. Die Gesamterträge erreichten einen Rekord von 5,6 Milliarden US-Dollar, ein Anstieg von 132% im Vergleich zum Vorjahr. Kyndryl Consult zeigte eine starke Leistung mit einem Umsatzwachstum von 23%. Das Unternehmen bekräftigte seinen Ausblick für das Geschäftsjahr 2025 und rechnet mit einem Umsatzwachstum in konstanten Währungen im vierten Quartal, einer angepassten EBITDA-Marge von mindestens 16,3% und einem angepassten Vorsteuergewinn von mindestens 460 Millionen US-Dollar.
- Record signings of $5.6B, up 132% year-over-year
- Kyndryl Consult revenue grew 23% year-over-year
- Operating cash flow improved by $103M to $149M
- Adjusted pretax income increased 80% to $45M
- Generated $700M in annualized savings from AI-enabled Bridge platform
- Revenue declined 7% year-over-year to $3.8B
- Net loss of $43M ($0.19 per share)
- Pretax loss of $5M
- Incurred workforce rebalancing charges of $39M
Insights
The Q2 FY2025 results show mixed performance with notable improvements in profitability despite revenue challenges.
- Record signings of
$5.6 billion , up132% YoY - Narrowed net loss to
$43 million from$142 million YoY - Strong Kyndryl Consult growth of
23% YoY
The company's "three-A" initiatives are delivering results, with
The strategic transformation is gaining traction with Kyndryl's pivot toward higher-value services. Key technological developments include:
- AI-enabled Kyndryl Bridge platform driving operational efficiencies
- Strong hyperscaler alliance revenue of
$260 million - Optimization of 11,500 delivery professionals through AI implementation
- Revenues for the quarter ended September 30, 2024 total
$3.8 billion $5 million $43 million - Adjusted EBITDA is
$557 million $45 million $3 million - Kyndryl Consult again delivers double-digit revenue growth in the quarter and over the last twelve months
- Reaffirms outlook for fiscal year 2025, including constant-currency revenue growth in the fourth quarter, supported by a record level of post-spin signings in the most recent quarter and for the trailing twelve months
"We continue to build momentum, delivering another quarter of signings growth and remaining well-positioned to deliver top-line growth in the fourth quarter of this fiscal year. Our strong performance was led by Kyndryl Consult, our alliances with hyperscalers and our expanding mission-critical capabilities in modernization, cloud, cyber-resiliency and AI readiness," said Kyndryl Chairman and Chief Executive Officer Martin Schroeter.
Total signings in the quarter were a record
"With Kyndryl Bridge powering our services, we're attracting new customers through our differentiated innovation and delivering incremental value to our existing customers. We're uniquely positioned at the nexus of secular trends shaping the evolution of IT, and we'll continue to capitalize on these market opportunities and drive profitable growth," Mr. Schroeter said.
Results for the Fiscal Second Quarter Ended September 30, 2024
For the second quarter, Kyndryl reported revenues of
Adjusted pretax income was
In the quarter, adjusted EBITDA was
"In the quarter, we continued to execute on our three-A initiatives to increase our earnings. Over the last twelve months, we've consistently grown our signings to incorporate a broader scope of services, while we continually enhance relationships to generate higher margins," said David Wyshner, Kyndryl's Chief Financial Officer. "The higher margins associated with our post-spin signings underpin our plans to reach high-single-digit adjusted pretax margins in our fiscal year 2027, which begins less than a year and half from now."
Recent Developments
- Alliances initiative – In the second quarter, Kyndryl recognized
$260 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 11,500 delivery professionals. This has generated annualized savings of approximately
$700 million $750 million - Accounts initiative – Kyndryl continued to address elements of contracts with substandard margins, bringing the total impact from this initiative to
$775 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, in line with recent quarters, reflecting the Company's focus on margin expansion.
- Double-digit growth in Kyndryl Consult – In the second quarter, Kyndryl Consult revenues grew
23% year-over-year. Kyndryl Consult signings grew81% year-over-year in the second quarter, and have grown41% year-over-year over the last twelve months. - Securities Industry Services (SIS) divestiture – The Company completed its previously announced sale of its Securities Industry Services platform in
Canada earlier this month.
Reaffirming Fiscal Year 2025 Outlook
Kyndryl is reaffirming its outlook for its fiscal year 2025, which runs from April 2024 to March 2025:
- Adjusted EBITDA margin of at least
16.3% , representing a year-over-year increase of at least 160 basis points. - Adjusted pretax income of at least
$460 million $295 million - Constant-currency revenue growth of (
2% ) to (4% ), which now implies fiscal 2025 revenue of$15.2 $15.5 billion - Adjusted free cash flow of approximately
$300 million
Forecasted amounts are based on currency exchange rates as of October 2024.
Earnings Webcast
Kyndryl's earnings call for the second fiscal quarter is scheduled to begin at 8:30 a.m. ET on November 7, 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 November 7, 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 future 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; 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 CONSOLIDATED INCOME STATEMENT (in millions, except per share amounts) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Revenues | $ | 3,774 | $ | 4,073 | $ | 7,513 | $ | 8,266 | ||||
Cost of services | $ | 3,024 | $ | 3,422 | $ | 5,958 | $ | 6,871 | ||||
Selling, general and administrative expenses | 647 | 634 | 1,304 | 1,353 | ||||||||
Workforce rebalancing charges | 39 | 39 | 74 | 97 | ||||||||
Transaction-related costs | — | 48 | 21 | 89 | ||||||||
Interest expense | 25 | 31 | 52 | 61 | ||||||||
Other expense | 44 | 8 | 44 | 13 | ||||||||
Total costs and expenses | $ | 3,779 | $ | 4,182 | $ | 7,454 | $ | 8,484 | ||||
Income (loss) before income taxes | $ | (5) | $ | (109) | $ | 59 | $ | (218) | ||||
Provision for income taxes | 38 | 33 | 91 | 65 | ||||||||
Net income (loss) | $ | (43) | $ | (142) | $ | (32) | $ | (283) | ||||
Earnings per share data | ||||||||||||
Basic earnings (loss) per share | $ | (0.19) | $ | (0.62) | $ | (0.14) | $ | (1.24) | ||||
Diluted earnings (loss) per share | (0.19) | (0.62) | (0.14) | (1.24) | ||||||||
Weighted-average basic shares outstanding | 231.6 | 229.1 | 231.1 | 228.5 | ||||||||
Weighted-average diluted shares outstanding | 231.6 | 229.1 | 231.1 | 228.5 | ||||||||
Table 2 SEGMENT RESULTS AND SELECTED BALANCE SHEET INFORMATION (dollars in millions) | ||||||||||
Three Months Ended September 30, | Year-over-Year Growth | |||||||||
As | Constant | |||||||||
Segment Results | 2024 | 2023 | Reported | Currency | ||||||
Revenue | ||||||||||
$ | 960 | $ | 1,108 | (13 %) | (13 %) | |||||
604 | 569 | 6 % | 9 % | |||||||
Principal Markets1 | 1,318 | 1,376 | (4 %) | (5 %) | ||||||
Strategic Markets1 | 892 | 1,019 | (12 %) | (11 %) | ||||||
Total revenue | $ | 3,774 | $ | 4,073 | (7 %) | (7 %) | ||||
Adjusted EBITDA2 | ||||||||||
$ | 159 | $ | 176 | |||||||
94 | 84 | |||||||||
Principal Markets | 187 | 169 | ||||||||
Strategic Markets | 138 | 166 | ||||||||
Corporate and other3 | (22) | (21) | ||||||||
Total adjusted EBITDA | $ | 557 | $ | 574 | ||||||
Six Months Ended September 30, | Year-over-Year Growth | |||||||||
As | Constant | |||||||||
Segment Results | 2024 | 2023 | Reported | Currency | ||||||
Revenue | ||||||||||
$ | 1,946 | $ | 2,272 | (14 %) | (14 %) | |||||
1,174 | 1,180 | (0 %) | 7 % | |||||||
Principal Markets1 | 2,633 | 2,768 | (5 %) | (5 %) | ||||||
Strategic Markets1 | 1,761 | 2,046 | (14 %) | (13 %) | ||||||
Total revenue | $ | 7,513 | $ | 8,266 | (9 %) | (8 %) | ||||
Adjusted EBITDA2 | ||||||||||
$ | 292 | $ | 412 | |||||||
177 | 184 | |||||||||
Principal Markets | 428 | 320 | ||||||||
Strategic Markets | 258 | 315 | ||||||||
Corporate and other3 | (42) | (45) | ||||||||
Total adjusted EBITDA | $ | 1,113 | $ | 1,186 | ||||||
September 30, | March 31, | |||||||||
Balance Sheet Data | 2024 | 2024 | ||||||||
Cash and equivalents | $ | 1,325 | $ | 1,553 | ||||||
Debt (short-term and long-term) | 3,241 | 3,238 | ||||||||
___________________________ | |
1 | Principal Markets is comprised of Kyndryl's operations in |
2 | In the three months ended September 30, 2024, amounts include workforce rebalancing charges of |
3 | Represents net amounts not allocated to segments. |
Table 3 CONSOLIDATED STATEMENT OF CASH FLOWS (dollars in millions) | ||||||
Six Months Ended September 30, | ||||||
2024 | 2023 | |||||
Cash flows from operating activities: | ||||||
Net income (loss) | $ | (32) | $ | (283) | ||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||||||
Depreciation and amortization | ||||||
Depreciation of property, equipment and capitalized software | 276 | 431 | ||||
Depreciation of right-of-use assets | 154 | 173 | ||||
Amortization of transition costs and prepaid software | 647 | 631 | ||||
Amortization of capitalized contract costs | 205 | 281 | ||||
Amortization of acquisition-related intangible assets | 17 | 15 | ||||
Stock-based compensation | 49 | 48 | ||||
Deferred taxes | 17 | 51 | ||||
Net (gain) loss on asset sales and other | (14) | 22 | ||||
Change in operating assets and liabilities: | ||||||
Deferred costs (excluding amortization) | (852) | (699) | ||||
Right-of-use assets and liabilities (excluding depreciation) | (145) | (195) | ||||
Workforce rebalancing liabilities | (13) | (18) | ||||
Receivables | 193 | (110) | ||||
Accounts payable | (237) | (494) | ||||
Taxes | (31) | (55) | ||||
Other assets and other liabilities | (133) | 75 | ||||
Net cash provided by (used in) operating activities | $ | 101 | $ | (127) | ||
Cash flows from investing activities: | ||||||
Capital expenditures | $ | (256) | $ | (275) | ||
Proceeds from disposition of property and equipment | 54 | 119 | ||||
Acquisitions and divestitures, net of cash acquired | (46) | — | ||||
Other investing activities, net | 7 | (53) | ||||
Net cash used in investing activities | $ | (241) | $ | (208) | ||
Cash flows from financing activities: | ||||||
Debt repayments | $ | (73) | $ | (67) | ||
Common stock repurchases for tax withholdings | (24) | (12) | ||||
Other financing activities, net | (5) | (1) | ||||
Net cash provided by (used in) financing activities | $ | (101) | $ | (80) | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | $ | 17 | $ | (33) | ||
Net change in cash, cash equivalents and restricted cash | $ | (224) | $ | (448) | ||
Cash, cash equivalents and restricted cash at beginning of period | $ | 1,554 | $ | 1,860 | ||
Cash, cash equivalents and restricted cash at end of period | $ | 1,330 | $ | 1,412 | ||
Supplemental data | ||||||
Income taxes paid, net of refunds received | $ | 89 | $ | 88 | ||
Interest paid on debt | $ | 60 | $ | 59 | ||
___________________________ |
Net cash provided by (used in) operating activities was |
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, | ||||||||||||
adjusted EBITDA, adjusted net | Three Months Ended | Six Months Ended | ||||||||||
income (loss) and adjusted EPS | September 30, | September 30, | ||||||||||
(in millions, except per share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||
Net income (loss) (GAAP) | $ | (43) | $ | (142) | $ | (32) | $ | (283) | ||||
Provision for income taxes | 38 | 33 | 91 | 65 | ||||||||
Pretax income (loss) (GAAP) | $ | (5) | $ | (109) | $ | 59 | $ | (218) | ||||
Workforce rebalancing charges incurred prior to March 31, 2024 | — | 39 | — | 97 | ||||||||
Charges related to ceasing to use leased/fixed assets and lease terminations | 10 | — | 20 | 10 | ||||||||
Transaction-related costs | — | 48 | 21 | 89 | ||||||||
Stock-based compensation expense | 25 | 25 | 49 | 48 | ||||||||
Amortization of acquisition-related intangible assets | 10 | 7 | 17 | 15 | ||||||||
Other adjustments1 | 5 | 15 | (27) | 31 | ||||||||
Adjusted pretax income (non-GAAP) | $ | 45 | $ | 25 | $ | 138 | $ | 72 | ||||
Interest expense | 25 | 31 | 52 | 61 | ||||||||
Depreciation of property, equipment and capitalized software2 | 150 | 212 | 276 | 422 | ||||||||
Amortization of transition costs and prepaid software | 337 | 306 | 647 | 631 | ||||||||
Adjusted EBITDA (non-GAAP) | $ | 557 | $ | 574 | $ | 1,113 | $ | 1,186 | ||||
Net income (loss) margin | (1.1) % | (3.5) % | (0.4) % | (3.4) % | ||||||||
Adjusted EBITDA margin | 14.8 % | 14.1 % | 14.8 % | 14.4 % | ||||||||
Adjusted pretax income (non-GAAP) | $ | 45 | $ | 25 | $ | 138 | $ | 72 | ||||
Provision for income taxes (GAAP) | (38) | (33) | (91) | (65) | ||||||||
Tax effect of non-GAAP adjustments | (4) | (4) | (12) | (19) | ||||||||
Adjusted net income (loss) (non-GAAP) | $ | 3 | $ | (12) | $ | 35 | $ | (12) | ||||
Diluted weighted average shares outstanding for calculating Adjusted EPS3 | 238.2 | 229.1 | 237.0 | 228.5 | ||||||||
Diluted earnings (loss) per share (GAAP) | $ | (0.19) | $ | (0.62) | $ | (0.14) | $ | (1.24) | ||||
Adjusted earnings (loss) per share (non-GAAP) | $ | 0.01 | $ | (0.05) | $ | 0.15 | $ | (0.05) | ||||
___________________________ | |
1 | 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. |
2 | Amounts for the three and six months ended September 30, 2023 exclude |
3 | For the three and six months ended September 30, 2024, the computation of adjusted earnings (loss) per share (EPS) included certain securities that were dilutive to the calculation. |
Three Months Ended | Six Months Ended | |||||||||||
Reconciliation of cash flow from operations | September 30, | September 30, | ||||||||||
to adjusted free cash flow (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||
Cash flows from operating activities (GAAP) | $ | 149 | $ | 46 | $ | 101 | $ | (127) | ||||
Plus: Transaction-related payments (benefits) | — | 42 | 5 | 84 | ||||||||
Plus: Workforce rebalancing payments related to charges incurred prior to March 31, 2024 | 4 | 34 | 25 | 113 | ||||||||
Plus: Significant litigation payments | 6 | 10 | 10 | 44 | ||||||||
Plus: Payments related to lease terminations | — | (2) | — | 5 | ||||||||
Less: Net capital expenditures | (104) | (61) | (202) | (155) | ||||||||
Adjusted free cash flow (non-GAAP) | $ | 56 | $ | 69 | $ | (60) | $ | (37) | ||||
Three Months Ended | Six Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
Signings (in billions) | 2024 | 2023 | 2024 | 2023 | ||||||||
Signings1 | $ | 5.6 | $ | 2.4 | $ | 8.7 | $ | 5.2 | ||||
___________________________ | |
1 | Signings for the three months ended September 30, 2024 increased by |
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SOURCE Kyndryl
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