Kyndryl Holdings, Inc. · NYSE:KD
Kyndryl — Q3 2025 Earnings Presentation
24 slides from Kyndryl's earnings presentation, Feb 4, 2025
Slide 1: Third Quarter 2025 Earnings
Third Quarter 2025 Earnings February 4, 2025
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 “aim,” “anticipate,” “believe,” “contemplate,” “could,” “estimate,” “
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: Continuing to build a strong track record of successful execution
Continuing to build a strong track record of successful execution Signings Earnings Cash flow Progress on Up 31% in LTM, Expect FY25 adjusted pretax income Expect ~$350M of adjusted our financials with 9% projected pretax margins of at least $475M, up at least $310M free cash flow in FY25 year-over-
Slide 5: Customers seek our industry-leading capabilities
Customers seek our industry-leading capabilities Mission-critical expertise Global scale Operational data that drives continuous learning World-class intellectual property AI-enabled operating platform – Kyndryl Bridge Actionable insights and automation Broad technology alliances The advantages we o
Slide 6: Kyndryl is positioned at the nexus of key secular trends
Kyndryl is positioned at the nexus of key secular trends Kyndryl Consult signings Kyndryl Consult revenue Cybersecurity risks Artificial intelligence +18% $2.7B +45% Cloud migration $2.3B Industry-wide year-over-year skills shortages growth Modernizing complex environments LTM LTM December 2023 Dece
Slide 7: Kyndryl is capturing demand for modernization across vertical markets
Kyndryl is capturing demand for modernization across vertical markets Financial services Retail & travel Enhance consumers’ digital Reduce operational risk, ensure experiences through the use of AI compliance with regulatory changes and and increase security and data enable use of AI and digital ser
Slide 8: Example: Expanding services and growing revenue with an industrial customer
Example: Expanding services and growing revenue with an industrial customer Innovative IT partner Providing automation and analytics with Kyndryl Bridge Won additional work Displaced incumbent to provide new cloud, data, security, network and other services Kyndryl Consult Enabling ‘right workload o
Slide 9: Demonstrating thought leadership related to secular IT trends
Demonstrating thought leadership related to secular IT trends Kyndryl Bridge Using AI-generated actionable insights to help insights customers prioritize their IT investments Kyndryl Exploring businesses’ digital readiness and Providing perspectives and Readiness Report ability to adopt AI insights
Slide 10: Our 'triple, double, single' medium-term targets
Our ‘triple, double, single’ medium-term targets Adjusted Adjusted pretax Sources of free cash flow income and margin our revenue 3x ~$1B >2x $1.2B+ Pre-spin <10% signings ~$1B (lower-margin) 50% High- single- ~$350M digit >90% $475M+ Post-spin margin signings 50% (higher-margin) 3% margin FY25E FY2
Slide 11: Entering a new era of profitable growth
Entering a new era of profitable growth Mission-critical Kyndryl Margins and Capital services Consult free cash flow allocation Providing foundation Continue to drive Generate high-single-digit Now returning capital for growth double-digit growth adjusted pretax margins to shareholders with strong c
Slide 12: Financial highlights
Financial highlights Results reflect continued progress and consistent execution Alliances, Advanced Delivery and Accounts driving significant margin expansion Capital returns to shareholders driven by strong liquidity and free cash flow Projecting substantial earnings growth for fiscal year 2025 We
Slide 13: Fiscal third quarter 2025 financial highlights
Fiscal third quarter 2025 financial highlights Quarterly revenue by segment ($ in millions) ($ in millions) Quarter ended Quarter ended Dec. 31, 2024 Dec. 31, 2023 Strategic Markets United States Revenue $3,744 $3,936 Growth, in constant currency (3%) (10%) $904 $961 Adjusted EBITDA $704 $615 Adjust
Slide 14: Strong projected margins on signings support our medium-term goals
Strong projected margins on signings support our medium-term goals Gross margin Gross profit book-to-bill 1 Pretax margin expected on post-spin signings expected on post-spin signings 1.4x 26% 26% 25% 1.2x 1.1x 9% 9% 9% Supports our high-single-digit margin target FY23 FY24 LTM FY23 FY24 LTM FY23 FY
Slide 15: Balance sheet and cash flow aligned to our strategy
Balance sheet and cash flow aligned to our strategy Adjusted free cash flow Balance sheet and cash flow metrics ($ in millions, three months ended December 31) $1.5B $3.2B ($93) Cash Debt $194 ($34) ($55) $1.7B $4.7B Net debt Available liquidity1 $160 $171 $260M $30M Cash flow from operations Shares
Slide 16: Raising our fiscal 2025 earnings and cash flow outlook
Raising our fiscal 2025 earnings and cash flow outlook Outlook Adjusted pretax income • At least $475 million in fiscal 2025 Adjusted EBITDA margin • At least 16.7% in fiscal 2025 Adjusted free cash flow • Approximately $350 million in fiscal 2025 Revenue • Constant-currency growth of approximately
Slide 17: Investment highlights
Investment highlights The world leader in designing, building, managing and modernizing mission-critical information systems Independence doubled our addressable market, which will continue to grow due to numerous interrelated tailwinds Competitive advantage stems from our people, data and intel
Slide 18: Slide 18
Slide 19: Our services
Our services Diversified sources Practice Overview Revenue of revenue Delivering seamless, integrated, multicloud management in a 34% Cloud hybrid model Technology, media Financial and telecom services Delivering full line of cybersecurity, business continuity and disaster 13% Security & 14% recover
Slide 20: Fiscal third quarter 2025 adjusted pretax income and adjusted EBITDA
Fiscal third quarter 2025 adjusted pretax income and adjusted EBITDA ($ in millions) $24 $327 $704 $194 ($148) $258 $50 $160 Pretax Transaction- Other Intangibles Adjusted Depreciation Amortization Interest Adjusted Pretax income related costs adjustments amortization, 1 stock- pretax expense 2 expe
Slide 21: Fiscal third quarter 2025 adjusted EBITDA and adjusted free cash flow
Fiscal third quarter 2025 adjusted EBITDA and adjusted free cash flow ($ in millions) ($93) ($290) $704 ($40) ($34) ($76) $171 Adjusted Net capital Deferred Interest Cash taxes Working capital Adjusted EBITDA expenditures1 costs 2 paid paid (excl. deferred free cash flow costs) & other 3 1 Net capit
Slide 22: Definitions and rationale for non-GAAP metrics
Definitions and rationale for non-GAAP metrics We present certain non-GAAP financial measures to provide useful supplemental information to investors. We provide these non-GAAP financial measures as we believe it enhances investors' visibility to management decisions and their impacts on operational
Slide 23: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics ($ in millions, except per-share amounts) Three months Three months Reconciliation of adjusted pretax income ended ended to adjusted net income (loss) and adjusted EPS Dec. 31, 2024 Dec. 31, 2023 Adjusted pretax income (non-GAAP) $160 $63 Reconciliation of net inco
Slide 24: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics ($ in millions, except per-share amounts) Reconciliation of net income (loss) Nine months Nine months Nine months Nine months Reconciliation of adjusted pretax income to adjusted pretax income ended ended ended ended to adjusted net income (loss) and adjusted EPS a