Kyndryl Holdings, Inc. · NYSE:KD
Kyndryl — Q1 2025 Earnings Presentation
22 slides from Kyndryl's earnings presentation, Aug 1, 2024
Slide 1: First Quarter 2025 Earnings
First Quarter 2025 Earnings August 1, 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 7% 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 Consult
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: Kyndryl Consult is positioned at the nexus of numerous secular trends
Kyndryl Consult is positioned at the nexus of numerous secular trends Providing world-class, hybrid solutions, bolstered by our hyperscaler and global technology alliances Cybersecurity risks Artificial intelligence Meeting customer demand for infrastructure and application expertise, specialized sk
Slide 7: Kyndryl Bridge accelerates value with AI
Kyndryl Bridge accelerates value with AI Strengthen security posture Manage spend 3.5 million Monthly AI-generated actionable insights Power Optimize 113 million insights Monthly automated operations with AI actions $2.8 billion Accelerate app Operate Annual incremental value modernization sustainab
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% $165M 67% 50% Pre-spin 33%
Slide 9: Kyndryl's growth trajectory
Kyndryl’sgrowth Kyndryl’s growthtrajectory trajectory Gaining market share in growing Increasing demand for markets Year-over-year revenue growth cloud, security, data and AI services (secular trends) (in constant currency) Growing share of wallet Revenue inflection, with third-party content 0% redu
Slide 10: Financial highlights
Financial highlights Results reflect continued progress and strong execution Alliances, Advanced Delivery and Accounts driving significant margin expansion Robust balance sheet, strong liquidity and full-year free cash flow Projecting substantial earnings growth for fiscal year 2025 We design, build
Slide 11: Fiscal first quarter 2025 financial highlights
Fiscal first quarter 2025 financial highlights Quarterly revenue by segment ($ in millions) ($ in millions) Quarter ended Quarter ended June 30, 2024 June 30, 2023 Strategic Markets United States Revenue $3,739 $4,193 $869 Growth, in constant currency (8%) (1%) $986 Adjusted EBITDA $556 $612 Adjuste
Slide 12: Strong projected margins on signings support our medium-term goals
Strong projected margins on signings support our medium-term goals Gross margin Gross profit book-to-bill 1 Pretax margin expected on post-spin signings expected on post-spin signings 26% 26% 26% 1.2x 1.1x 1.1x 9% 9% 9% Supports our high-single-digit margin target Fiscal Fiscal LTM Fiscal Fiscal LTM
Slide 13: Strong balance sheet metrics and cash flow seasonality
Strong balance sheet metrics and cash flow seasonality Adjusted free cash flow Balance sheet and cash flow metrics ($ in millions, three months ended June 30) $4.4B $1.3B Available liquidity1 Cash $3.2B $2.0B Debt Net debt ($48M) Adjusted Adjusted Cash flow from operations pretax income free cash fl
Slide 14: Fiscal 2025 outlook
Fiscal 2025 outlook Fiscal 2025 outlook Comments (2%) to (4%) growth in constant currency; Revenue implies revenue of $15.2 to $15.5 billion based • Constant-currency revenue growth in Q4 on recent exchange rates At least 16.3%; increase from May outlook of Adjusted EBITDA margin • Year-over-year in
Slide 15: Investment highlights
Investment highlights The world leader in designing, building, managing and modernizing mission-critical information systems Independence doubled our addressable market, which will continue to grow due to numerous interrelated tailwinds Competitive advantage stems from our people, data and intel
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Slide 17: Our services
Our services Diversified sources Practice Overview Revenue of revenue Delivering seamless, integrated, multicloud management in a 34% Cloud hybrid model Technology, media Financial and telecom services Delivering full line of cybersecurity, business continuity and disaster Security & 14% 16% recover
Slide 18: Fiscal first quarter 2025 adjusted pretax income and adjusted EBITDA
Fiscal first quarter 2025 adjusted pretax income and adjusted EBITDA ($ in millions) 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 costs oth
Slide 19: Fiscal first quarter 2025 adjusted EBITDA and adjusted free cash flow
Fiscal first quarter 2025 adjusted EBITDA and adjusted free cash flow ($ in millions) Adjusted Deferred Adjusted EBITDA 1 cost outlays22 free cash flow 3 1 Net capital expenditures compare to depreciation of $127M 2 Deferred costs offset amortization of prepaid software and transition costs of $310M
Slide 20: 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 21: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics Three months Three months Reconciliation of adjusted pretax income (loss) (in millions, except per-share amounts) to adjusted net income and adjusted EPS ended ended June 30, 2024 June 30, 2023 Adjusted pretax income (non-GAAP) $92 $47 Provision for income taxes (G
Slide 22: Segment information
Segment information (in millions) Fiscal 2023 Fiscal 2024 Fiscal year Fiscal year Three months ended Three months ended ended ended June 30, Sept. 30, Dec. 31, March 31, March 31, June 30, Sept. 30, Dec. 31, March 31, March 31, 2022 2022 2022 2023 2023 2023 2023 2023 2024 2024 Revenue United States