Kyndryl Holdings, Inc. · NYSE:KD
Kyndryl — Q4 2024 Earnings Presentation
32 slides from Kyndryl's earnings presentation, May 8, 2024
Slide 1: Fourth Quarter 2024 Earnings
Fourth Quarter 2024 Earnings May 8, 2024
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,” “contemplate,” “plan,” “f
Slide 3: Speakers
Speakers Lori Chaitman, Global Head of Investor Relations Martin Schroeter, Chairman and Chief Executive Officer David Wyshner, Chief Financial Officer 3
Slide 4: Building a strong track record of successful execution
Building a strong track record of successful execution Signings Earnings Cash flow Progress on Up 3% in fiscal 2024, with 9% Adjusted pretax income up Adjusted free cash flow of our financials projected pretax margins $382M year-over-year $291M in fiscal 2024 Kyndryl Consult Kyndryl Bridge Progress
Slide 5: Kyndryl enables customers to address secular IT trends
Kyndryl enables customers to address secular IT trends Secular trends driving demand for our capabilities Cybersecurity risks Artificial Mission-critical expertise in hybrid environments intelligence Mainframe modernization services Cloud Cloud migration, management and optimization migration Data a
Slide 6: Applying our capabilities to unlock AI growth opportunities for customers
Applying our capabilities to unlock AI growth opportunities for customers Data modernization Enterprise AI Alliances Innovation Customer satisfaction Solving complex data Creating the end-to- Leveraging alliances, Applying our expertise Delivering the management issues end data supply chain collabor
Slide 7: Our evolving business mix is driving increased profitability and free cash flow
Our evolving business mix is driving increased profitability and free cash flow Mix of post-spin signings in our revenue 1 Adjusted pretax income / margin 2 High-single- digit margins 1% 5% 20% 33% Post-spin At least 50% signings 67% (higher- $435M 85% margin) 99% 95% 80% $165M 67% 50% Pre-spin 33%
Slide 8: Kyndryl's growth trajectory
Kyndryl’sgrowth Kyndryl’s growthtrajectory trajectory Gaining market share Increasing demand for Year-over-year revenue growth cloud, security, data and AI services (secular trends) (in constant currency) Growing ‘share of wallet’ Adding new Revenue inflection, customers that currently with third-pa
Slide 9: Kyndryl's evolution delivers value and drives growth
Kyndryl’s evolution delivers value and drives growth Kyndryl Consult and alliances IT strategy and transformation Data architecture enabling AI Value and growth Practices Enable workload portability Cloud Security & Resiliency Drive transformation and agility Kyndryl Apps, Data & AI Bridge Increase
Slide 10: Financial highlights
Financial highlights Results reflect accelerated progress and strong execution Alliances, Advanced Delivery and Accounts driving significant margin expansion Robust balance sheet, strong liquidity and free cash flow Projecting substantial earnings growth for fiscal year 2025 We design, build, manage
Slide 11: Fiscal fourth quarter 2024 financial highlights
Fiscal fourth quarter 2024 financial highlights Quarterly revenue by segment ($ in millions) ($ in millions) Quarter ended Quarter ended March 31, 2024 March 31, 2023 Strategic Markets United States Revenue $3,850 $4,255 $848 $990 Growth, in constant currency (9%) 1% Adjusted EBITDA $566 $476 Adjust
Slide 12: Fiscal year 2024 financial highlights
Fiscal year 2024 financial highlights Fiscal year revenue by segment ($ in millions) ($ in millions) Year ended Year ended March 31, 2024 March 31, 2023 Strategic Markets United States Revenue $16,052 $17,026 $3,590 Growth, in constant currency (6%) 0% $4,295 Adjusted EBITDA $2,367 $1,975 Adjusted E
Slide 13: Strong projected margins on signings support our medium-term goals
Strong projected margins on signings support our medium-term goals Gross margin Gross profit book-to-bill 1 Pretax margin expected on post-spin signings expected on post-spin signings 26% 26% 1.2x 1.1x 9% 9% Supports our high-single-digit margin target Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 2023
Slide 14: Positive cash flow from operations and strong balance sheet metrics
Positive cash flow from operations and strong balance sheet metrics Adjusted free cash flow Balance sheet and cash flow metrics ($ in millions, twelve months ended March 31) $4.7B $1.6B Available liquidity1 Cash $824 $3.2B $1.7B Debt Net debt $454M Cash flow from operations Adjusted Adjusted pretax
Slide 15: Executed at an accelerated pace on our three-A's in fiscal 2024
Executed at an accelerated pace on our three-A’s in fiscal 2024 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
Slide 16: Fiscal 2025 outlook
Fiscal 2025 outlook Fiscal 2025 outlook Comments • Year-over-year revenue comparisons will become less (2%) to (4%) growth in constant currency; negative as the year progresses and turn positive in Q4 Revenue implies revenue of $15.2 to $15.5 • Hyperscaler revenue to double, and Consult revenue to b
Slide 17: Investment highlights
Investment highlights The world leader in designing, building, managing and modernizing mission-critical information systems Independence doubled our addressable market, which will continue to grow due to numerous interrelated tailwinds Competitive advantage stems from our people, data and intel
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Slide 19: Appendix
Appendix Accolades and Corporate Our services and recognition citizenship revenue mix Financial metrics Definitions and Reconciliation of rationale for non-GAAP metrics non-GAAP metrics 19
Slide 20: Recent accolades and industry recognition
Recent accolades and industry recognition Kyndryl named a 2024 Partner of the Year by 2024 A Leader for Managed Cloud Services Kyndryl named a Challenger in the March 2024 Magic Google Cloud in Infrastructure Specialization for SAP ERP in the U.S. Quadrant for Outsourced Digital Workplace Services (
Slide 21: Strong commitment to corporate citizenship
Strong commitment to corporate citizenship Environmental stewardship Social inclusivity Governance • Committed to Net Zero emissions by 2040 and • Increased Kyndryl Inclusion Networks (KINs) to • Published inaugural Corporate Citizenship Report reducing all-scope emissions at least 50% by support Bl
Slide 22: Our services
Our services Diversified sources Practice Overview Revenue of revenue Delivering seamless, integrated, multicloud management in a 34% Cloud hybrid model Technology, media Financial and telecom services Delivering full line of cybersecurity, business continuity and disaster Security & 14% 16% recover
Slide 23: 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 Consult growth, growth in and revenues through our new delivery through upskilling and business with subst
Slide 24: Transforming focus accounts into higher-value 'blueprint' accounts
Transforming focus accounts into higher-value ‘blueprint’ accounts Revenue Starting Post-spin (at spin) 1 point signings Focus accounts ~0% average Low to mid-20s Focus driving substantial gross margin gross margin accounts margin accretion ~$8B / ~40% ‘Blueprint’ accounts ~$10B / ~60% Margins incre
Slide 25: Gross profit book-to-bill
Gross profit book-to-bill ($ in billions) Fiscal 2024 Projected gross margin on signings ~ 26% Total signings $12.5 Projected gross profit on signings (“book”) $3.24 Reported gross profit (“bill”) $2.87 Gross profit book-to-bill ratio 1.13x (projected gross profit on signings / reported gross profit
Slide 26: Fiscal fourth quarter 2024 adjusted pretax income and adjusted EBITDA
Fiscal fourth quarter 2024 adjusted pretax income and adjusted EBITDA ($ in millions) $23 Pretax Adjusted Adjusted Pretax income 1 pretax 2 3 EBITDA income (loss) as reported income as reported 1 Effects of amortization of acquisition-related intangible assets, stock-based compensation, pension cost
Slide 27: Fiscal year 2024 adjusted pretax income and adjusted EBITDA
Fiscal year 2024 adjusted pretax income and adjusted EBITDA ($ in millions) ($46) Pretax Pretax Adjusted Adjusted income income (loss) 1 pretax 2 3 EBITDA as as reported reported income 1 Effects of amortization of acquisition-related intangible assets, stock-based compensation, pension costs other
Slide 28: Fiscal 2024 adjusted EBITDA and adjusted free cash flow
Fiscal 2024 adjusted EBITDA and adjusted free cash flow ($ in millions) Fourth quarter Fiscal year 2024 ($10) Adjusted Net capital Deferred Interest Cash taxes Working Working capital Adjusted Adjusted Net capital Deferred Interest Cash taxes Working capital Working Adjusted EBITDA expenditures 1 co
Slide 29: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics (in millions, except per-share amounts) Reconciliation of adjusted pretax income (loss) Three months Three months ended ended to adjusted net income (loss) and adjusted EPS Mar. 31, 2024 Mar. 31, 2023 Adjusted pretax income (loss) (non-GAAP) $30 ($61) Reconciliatio
Slide 30: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics (in millions, except per-share amounts) Reconciliation of net income (loss) Twelve months Twelve months Twelve months Twelve months Reconciliation of adjusted pretax income (loss) to adjusted pretax income (loss) ended ended ended ended to adjusted net income (loss
Slide 31: 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 EBITDA and capitalized contract cos
Slide 32: Definitions and rationale for non-GAAP metrics (continued)
Definitions and rationale for non-GAAP metrics (continued) Metric Definition Constant- 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 currency the impact of