Kyndryl Holdings, Inc. · NYSE:KD
Kyndryl — Q2 2025 Earnings Presentation
25 slides from Kyndryl's earnings presentation, Nov 7, 2024
Slide 1: Second Quarter 2025 Earnings
Second Quarter 2025 Earnings November 7, 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 “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 33% in LTM, Expect FY25 adjusted pretax income up Expect ~$300M of adjusted our financials with 9% projected pretax margins at least $295M year-over-year free cash flow in FY25 Kyndryl Consul
Slide 5: Kyndryl Consult is positioned at the nexus of key secular trends
Kyndryl Consult is positioned at the nexus of key secular trends Kyndryl Consult revenue Cybersecurity risks Artificial intelligence 16% CAGR $2.5B Cloud migration $2.0B Industry-wide skills shortages Modernizing Fiscal LTM complex environments 2023 Sept. 2024 40%+ LTM signings growth Customer deman
Slide 6: Migrating and managing IT environments across multiple cloud platforms
Migrating and managing IT environments across multiple cloud platforms Hyperscaler-related revenue 300%+ CAGR $0.8B $0.1B Fiscal LTM 2023 Sept. 2024 100%+ LTM signings growth Customer demand for end-to-end services is generating triple-digit growth in our hyperscaler-related revenue Signings growth
Slide 7: IT modernization is driving demand for Kyndryl services
IT modernization is driving demand for Kyndryl services Six tech readiness learnings 1 Leaders don’t feel risk ready and are struggling with diverse disruptions, the pace of change and talent gaps 2 The tech readiness paradox: leaders are confident in their tech, yet concerned about its readiness 3
Slide 8: 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- $460M 85% margin) 99% 95% 80% $165M 67% 50% Pre-spin 33%
Slide 9: Key sources of top-line growth
Key sources of top-line growth Increasing Organizations’ Alliances with IT spend by Mainframe need to top-tier most large modernization address tech technology organizations debt providers Cloud Leveraging migration, Demand for Ongoing ecosystem Secular management complex growth of scale and trends
Slide 10: Financial highlights
Financial highlights Results reflect continued progress and strong execution Alliances, Advanced Delivery and Accounts driving significant margin expansion Robust balance sheet, strong liquidity and full-year free cash flow Projecting substantial earnings growth for fiscal year 2025 We design, build
Slide 11: Fiscal second quarter 2025 financial highlights
Fiscal second quarter 2025 financial highlights Quarterly revenue by segment ($ in millions) ($ in millions) Quarter ended Quarter ended Sept. 30, 2024 Sept. 30, 2023 Strategic Markets United States Revenue $3,774 $4,073 $892 $960 Growth, in constant currency (7%) (5%) Adjusted EBITDA $557 $574 Adju
Slide 12: Strong projected margins on signings support our medium-term goals
Strong projected margins on signings support our medium-term goals Gross margin Gross profit book-to-bill 1 Pretax margin expected on post-spin signings expected on post-spin signings 1.4x 26% 26% 26% 1.2x 1.1x 9% 9% 9% Supports our high-single-digit margin target Fiscal Fiscal LTM Fiscal Fiscal LTM
Slide 13: Strong balance sheet metrics and cash flow
Strong balance sheet metrics and cash flow Adjusted free cash flow Balance sheet and cash flow metrics ($ in millions, three months ended September 30) $4.5B $1.3B ($104) Available liquidity1 Cash $150 $3.2B $1.9B ($35) Debt Net debt ($1) $45 $56 $149M Cash flow from operations Adjusted Depreciation
Slide 14: Reaffirming our fiscal 2025 outlook
Reaffirming our fiscal 2025 outlook Fiscal 2025 outlook Comments (2%) to (4%) growth in constant currency; Revenue implies revenue of $15.2 to $15.5 billion based • Constant-currency revenue growth in Q4 on recent exchange rates Adjusted EBITDA margin At least 16.3% • Year-over-year increase of at l
Slide 15: Investment highlights
Investment highlights The world leader in designing, building, managing and modernizing mission-critical information systems Independence doubled our addressable market, which will continue to grow due to numerous interrelated tailwinds Competitive advantage stems from our people, data and intel
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Slide 17: Our services
Our services Diversified sources Practice Overview Revenue of revenue Delivering seamless, integrated, multicloud management in a 34% Cloud hybrid model Technology, media Financial and telecom services Delivering full line of cybersecurity, business continuity and disaster 13% Security & 14% recover
Slide 18: Fiscal first half 2025 financial highlights
Fiscal first half 2025 financial highlights Fiscal half revenue by segment ($ in millions) ($ in millions) Six months ended Six months ended Sept. 30, 2024 Sept. 30, 2023 Strategic Markets United States Revenue $7,513 $8,266 $1,761 $1,946 Growth, in constant currency (8%) (3%) Adjusted EBITDA $1,113
Slide 19: Fiscal second quarter 2025 adjusted pretax income and adjusted EBITDA
Fiscal second quarter 2025 adjusted pretax income and adjusted EBITDA ($ in millions) $25 $337 $557 $150 $51 $50 $45 ($5) $0 Pretax Transaction- Intangibles Other Adjusted Depreciation Amortization Interest Adjusted Pretax income related costs amortization, adjustments 1 stock- pretax expense 2 expe
Slide 20: Fiscal first half 2025 adjusted pretax income and adjusted EBITDA
Fiscal first half 2025 adjusted pretax income and adjusted EBITDA ($ in millions) $52 $647 $1,113 $276 $21 $58 $138 $59 Pretax Transaction- Intangibles Other Adjusted Depreciation Amortization Interest Adjusted Pretax income related costs amortization, adjustments 1 stock- pretax expense 2 expense 3
Slide 21: Fiscal second quarter 2025 adjusted EBITDA and adjusted free cash flow
Fiscal second quarter 2025 adjusted EBITDA and adjusted free cash flow ($ in millions) ($104) $557 ($376) ($20) ($35) $33 $56 Adjusted Net capital Deferred Interest Cash taxes Working capital Adjusted EBITDA expenditures 1 costs 2 paid paid (excl. deferred free cash flow costs) & other 3 1 Net capit
Slide 22: Fiscal first half 2025 adjusted EBITDA and adjusted free cash flow
Fiscal first half 2025 adjusted EBITDA and adjusted free cash flow ($ in millions) ($202) ($632) $1,113 ($60) ($105) ($175) ($60) Adjusted Net capital Deferred Interest Cash taxes Working capital Adjusted EBITDA expenditures 1 costs 2 paid paid (excl. deferred free cash flow costs) & other 3 1 Net c
Slide 23: 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 24: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics Reconciliation of adjusted pretax income (loss) to adjusted net income and adjusted EPS Three months ended Sept. 30, 2024 Three months ended Sept. 30, 2023 (in millions, except per-share amounts) Adjusted pretax income (non-GAAP) $45 $25 Provision for income taxes
Slide 25: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics (in millions, except per-share amounts) Reconciliation of net income (loss) Six months Six months Six months Six months Reconciliation of adjusted pretax income (loss) to adjusted pretax income (loss) ended ended ended ended to adjusted net income and adjusted EPS