Kyndryl Holdings, Inc. · NYSE:KD
Kyndryl — Q2 2023 Earnings Presentation
30 slides from Kyndryl's earnings presentation, Nov 2, 2022
Slide 1: Fiscal Second Quarter 2023 Earnings
Fiscal Second Quarter 2023 Earnings November 3, 2022
Slide 2: Disclaimers
Disclaimers Forward-looking statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements often contain words such as “will,” “anticipate,” “predict,” “project,” “plan,” “forecast,” “esti
Slide 3: Martin Schroeter, Chairman and Chief Executive Officer
Martin Schroeter Chairman and Chief Executive Officer
Slide 4: Key highlights
Key highlights Performance Looking ahead Future objectives Quarterly results Updating outlook On track toward our demonstrate progress for fiscal year 2023* medium-term goals Alliances Advanced Delivery Accounts Partnerships creating Quality, cost benefiting Enhancing existing new business from incr
Slide 5: Building on our position as the world's leading IT infrastructure services provider
Building on our position as the world’s leading IT infrastructure services provider Unrivaled expertise Large and growing Transforming our business mix addressable market through our six practices World’s largest IT Practice Revenue Signings infrastructure services provider $510B 2024 Cloud 33% 36%
Slide 6: Progress on our three major initiatives
Progress on our three major initiatives Alliances Advanced Delivery Accounts Driving signings, certifications and revenues with Transforming service delivery through Addressing elements of the business our new ecosystem partners and capabilities upskilling and automation with substandard margins $42
Slide 7: Three-A's creating value for customers and driving our business performance
Three-A’s creating value for customers and driving our business performance Alliances Advanced Delivery Accounts Driving signings, certifications and revenues with Transforming service delivery through Addressing elements of the business our new ecosystem partners and capabilities upskilling and aut
Slide 8: Global strategic alliances with leading technology providers
Global strategic alliances with leading technology providers Prior announcements Recently announced partnerships (since ourannouncements Prior spin-off) Leveraging new initiative that increases Delivering managed services for Google’s Accelerating clients’ complex digital customer access to mainfram
Slide 9: Launched Kyndryl Bridge, transforming how we deliver advanced services
Launched Kyndryl Bridge, transforming how we deliver advanced services An open integration platform giving our customers real-time insights into their complex IT estates and unprecedented control over customizing their mission-critical operations Value Efficiency Innovate for through clarity through
Slide 10: Executing on our strategic objectives
Executing on our strategic objectives Pre-November 2021 spin Recent progress Medium-term Limited partnerships with hyperscalers, Major hyperscaler alliances, new Extensive, integrated IT ecosystem ISVs and systems integrators partnerships Reached 26,000+ hyperscaler 20% employees with cloud-related
Slide 11: David Wyshner, Chief Financial Officer
David Wyshner Chief Financial Officer
Slide 12: Financial overview
Financial overview Quarterly results Balance sheet, liquidity Outlook and free cash flow 12
Slide 13: Fiscal second quarter 2023 financial highlights
Fiscal second quarter 2023 financial highlights ($ in millions) Pro Forma Quarterly revenue by segment Quarter Ended Quarter Ended Quarter Ended ($ in millions) Sept. 30, 2022 June 30, 2022 Sept. 30, 2021 Revenue $4,179 $4,288 $4,529 Strategic Markets United States Growth, in constant currency1 2% (
Slide 14: 2023 cash flow and balance sheet metrics
2023 cash flow and balance sheet metrics Adjusted free cash flow Balance sheet and cash flow metrics ($ in millions) $5.0B $1.9B Available liquidity1 Cash $3.2B $1.3B Debt Net debt Adjusted pretax income Adjusted free cash flow 2 $491M Cash flow from operations We’re on a solid financial footing to
Slide 15: Over the medium term, our initiatives will contribute to profit growth
Over the medium term, our initiatives will contribute to profit growth Alliances Advanced Accounts plus Delivery Driving signings, certifications Transforming service Addressing elements of the Advisory services growth, and revenues through our new delivery through upskilling and business with subst
Slide 16: Fiscal 2023 outlook
Fiscal 2023 outlook Based on In constant year-to-date currency exchange rates Revenue growth (vs. LTM)1 (1%) – 0% (11%) – (10%) • Three-point increase in our constant-currency revenue growth compared to our prior outlook • $1.7 billion or 9+ points of unfavorable currency effects year-over-year2 Rev
Slide 17: Transforming focus accounts into high-value "blueprint" accounts
Transforming focus accounts into high-value “blueprint” accounts Accounts initiative: ~0% average ~$800M medium-term annual Focus gross margin pretax profit opportunity accounts ~$8B / ~40% “Blueprint” accounts ~$10B / ~60% Mid-20s average gross margin Substantial existing value Revenue1 We have sub
Slide 18: Our strategies will drive revenue and profit growth in the medium term
Our strategies will drive revenue and profit growth in the medium term Growth practices Advisory High-teens services EBITDA margin drives pretax Accounts margin expansion Advanced Delivery 2021 0% Higher software Alliances Medium-term costs, etc. Adjusted pretax margin Box sizes not drawn to scale =
Slide 19: Investment highlights
Investment highlights Separation more than doubles our addressable market from $240 billion pre-spin to $510 billion by 2024, with market growth driven by numerous interrelated tailwinds World leader in designing, building, managing and modernizing mission-critical information systems spanning t
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Slide 21: Appendix
Appendix Accolades and ESG commitment Our services and recognition revenue mix Financial metrics Definitions and Reconciliation of rationale for non-GAAP metrics non-GAAP metrics 21
Slide 22: Customer signings, expanding relationships
Customer signings, expanding relationships Delta Air Lines extended its long-term collaboration Singapore Airlines and Kyndryl expanded their CIB, a major Hungarian bank, partnered with with Kyndryl as the airline drives operational nearly 20-year partnership to transform its Kyndryl to modernize an
Slide 23: Recent accolades and industry recognition
Recent accolades and industry recognition A Leader: May 2022 Magic Quadrant™ for Market Leader: 2022 Cybersecurity 2022 Cisco Global Gold Integrator status, Managed Mobility Services report Services 2022 RadarView report the highest level available Major Contender: 2022 Digital Workplace Major Playe
Slide 24: Strong commitment to ESG principles
Strong commitment to ESG principles Environment Social Governance • Established carbon inventory and goals, and • Launched Kyndryl Inclusion Networks (KINs) to • Launched ethics training globally for all completed pre-assurance data review from support Black, Hispanic, LGBTQ+, People with employees
Slide 25: Our services
Our services Practice Overview Medium-term revenue growth opportunity Delivering seamless, integrated, multicloud management in Cloud a hybrid model Single-digit growth driven by hyperscaler partnerships Delivering full line of cybersecurity, business continuity and Security & disaster recovery serv
Slide 26: Fiscal second quarter 2023 adjusted pretax income and adjusted EBITDA
Fiscal second quarter 2023 adjusted pretax income and adjusted EBITDA ($ in millions) Pretax Adjusted Adjusted income (loss) 1 pretax 2 3 EBITDA as reported income 1 Effects of amortization of intangible assets, stock-based compensation, pension costs other than pension servicing costs and multi-emp
Slide 27: Fiscal first half 2023 adjusted pretax income and adjusted EBITDA
Fiscal first half 2023 adjusted pretax income and adjusted EBITDA ($ in millions) Pretax Adjusted Adjusted income (loss) 1 pretax 2 3 EBITDA as reported income 1 Effects of amortization of intangible assets, stock-based compensation, pension costs other than pension servicing costs and multi-employe
Slide 28: Definitions and rationale for non-GAAP metrics
Definitions and rationale for non-GAAP metrics Metric Definition Adjusted 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), transa
Slide 29: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics ($ in millions) Reconciliation of net income (loss) Six Months Ended Three Months Ended Three Months Ended Reconciliation of net income (loss) to pro forma Three Months Ended to adjusted pretax income (loss) September 30, 2022 September 30, 2022 June 30, 2022 preta
Slide 30: Reconciliation of non-GAAP metrics (continued)
Reconciliation of non-GAAP metrics (continued) Reconciliation of historical revenue Three Months Ended to pro forma revenue September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Historical revenue (GAAP) $4,179 $4,288 $4,431 $4,556 $4,579 $4,751 Pro forma