Kyndryl Holdings, Inc. · NYSE:KD
Kyndryl — Q1 2023 Earnings Presentation
31 slides from Kyndryl's earnings presentation, Aug 4, 2022
Slide 1: Fiscal First Quarter 2023 Earnings
Fiscal First Quarter 2023 Earnings August 4, 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 Reaffirming outlook On track toward our demonstrate progress for fiscal year 2023* medium-term goals Alliances Advanced Delivery Accounts Announced additional Quality, cost benefiting Enhancing existing partnerships with ke
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 addressable market through our six practices World’s largest IT Practice Revenue Signings infrastructure services provider $510B 2024 Cloud 33% 39% Oper
Slide 6: Global strategic alliances with leading technology providers
Global strategic alliances with leading technology providers Prior announcements Recently announced partnerships (since our spin-off) Prior announcements • Partnership providing managed • Expanded reseller and managed • Global alliance to help customers cloud services that simplify services partners
Slide 7: Expanding scope of customer relationship with new technology and services
Expanding scope of customer relationship with new technology and services Evolving 19-year relationship with a global bank driving additional revenue for Kyndryl First Then (as IBM captive) Now (with new freedom) 2003 + 2015 + 2022 = Strategic partner Initial outsourcing Consolidation and globalizat
Slide 8: Fiscal first quarter progress on our three major initiatives
Fiscal first quarter progress on our three major initiatives Alliances Advanced Delivery Accounts Driving signings, certifications and revenues with Transforming service delivery through Addressing elements of the business our new ecosystem partners and capabilities upskilling and automation with su
Slide 9: Executing on our strategic objectives
Executing on our strategic objectives Pre-November 2021 spin Recent progress Medium-term Limited partnerships with hyperscalers, Major hyperscaler alliances, new Extensive, integrated IT ecosystem ISVs and systems integrators partnerships 20% employees with cloud-related Reached 21,800+ hyperscaler
Slide 10: David Wyshner, Chief Financial Officer
David Wyshner Chief Financial Officer
Slide 11: Financial overview
Financial overview Quarterly results Balance sheet, liquidity Outlook and free cash flow 11
Slide 12: Fiscal first quarter 2023 financial highlights
Fiscal first quarter 2023 financial highlights ($ in millions) Pro Forma Quarterly revenue by segment Quarter Ended Quarter Ended Quarter Ended ($ in millions) June 30, 2022 March 31, 2022 June 30, 2021 Revenue $4,288 $4,431 $4,706 Strategic Markets United States Growth, in constant currency1 (2%) (
Slide 13: 2023 cash flow and balance sheet metrics
2023 cash flow and balance sheet metrics Adjusted free cash flow Balance sheet and cash flow metrics ($ in millions) $5.0B $1.9B Available liquidity1 Cash $3.2B $1.3B Debt Net debt Adjusted Adjusted pretax income free cash flow $104M Cash flow from operations We’re on a solid financial footing to ex
Slide 14: 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 15: Reaffirming our outlook, updating revenue forecast solely for currency effects
Reaffirming our outlook, updating revenue forecast solely for currency effects Outlook for fiscal year 2023 • In constant currency Signings Double-digit growth • Compared to calendar 2021 pro forma signings • (4)% to (3)% constant-currency decline versus pro forma revenue for the twelve Revenues $16
Slide 16: 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 17: Our strategies will help us deliver revenue and profit growth in the medium term
Our strategies will help us deliver revenue and profit growth in the medium term Revenue growth Growth Return to practices revenue Advisory & growth 2021 implementation 0% services Accounts Medium-term (5%) Alliances Margin expansion Growth practices Advisory & implementation High-teens services EBI
Slide 18: Martin Schroeter, Chairman and Chief Executive Officer
Martin Schroeter Chairman and Chief Executive Officer
Slide 19: Investment highlights
Investment highlights Separation more than doubles our addressable market from $240 billion pre-spin to $510 billion by 2024, with market growth driven by numerous interrelated tailwinds World leader in designing, building, managing and modernizing mission-critical information systems spanning t
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Slide 21: Appendix
Appendix Accolades and ESG commitment Our services and recognition revenue mix Financial metrics Definitions and Reconciliation of rationale for non-GAAP metrics non-GAAP metrics 21
Slide 22: Recent accolades and industry recognition
Recent accolades and industry recognition A Leader: May 2022 Magic Quadrant™ Major Player: IDC MarketScape: 2022 Kyndryl Security & Resiliency named for Managed Mobility Services report Worldwide Cloud Professional Services a Market Leader in Cybersecurity Vendor Assessment Services 2022 RadarView r
Slide 23: Customer signings, expanding relationships
Customer signings, expanding relationships Multi-year expanded collaboration for 34 European American Honda Motor Company and Honda Kantar and Kyndryl are partnering to modernize countries, with Kyndryl providing application Motorcycle & Scooter India expanded their Kantar’s colleague digital experi
Slide 24: Strong commitment to ESG principles
Strong commitment to ESG principles Environment Social Governance • Established global carbon baseline to build • Launched Kyndryl Inclusion Networks (KINs) to • Established Board oversight of ESG issues and goals aligned with industry standards support Black, Hispanic, LGBTQ+, People with commitmen
Slide 25: Our services
Our services Practice Overview Medium-term revenue growth opportunity Delivering seamless, integrated, multicloud management in Cloud a hybrid model Single-digit growth driven by hyperscaler partnerships Applications, Providing full application platform hosting and expert Double-digit growth Data &
Slide 26: Fiscal first quarter 2023 adjusted pretax income and adjusted EBITDA
Fiscal first quarter 2023 adjusted pretax income and adjusted EBITDA ($ in millions) Pretax Adjusted Adjusted income (loss) 1 pretax 2 3 EBITDA as reported income 1Effects of amortization of intangible assets, stock-based compensation, pension costs other than pension servicing costs and multi-emplo
Slide 27: 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 28: Reconciliation of non-GAAP metrics
Reconciliation of non-GAAP metrics ($ in millions) Reconciliation of net income (loss) to adjusted pretax income (loss) and adjusted EBITDA Three Months Ended Three Months Ended June 30, 2022 March 31, 2022 Net income (loss) (GAAP) ($250) ($229) Plus: Provision for income taxes 45 40 Pretax income (
Slide 29: Reconciliation of non-GAAP metrics (continued)
Reconciliation of non-GAAP metrics (continued) ($ in millions) Reconciliation of net income (loss) to pro forma pretax income (loss) and pro forma adjusted EBITDA Three Months Ended Twelve Months Ended June 30, 2021 December 31, 2021 Net income (loss) (GAAP) ($389) ($2,304) Plus: Provision for incom
Slide 30: Reconciliation of non-GAAP metrics (continued)
Reconciliation of non-GAAP metrics (continued) Reconciliation of cash flow from operations to adjusted free cash flow ($ in millions) Three Months Ended June 30, 2022 Cash flow from operations (GAAP) $104 Plus: Workforce rebalancing payments 5 Plus: Transaction-related payments1 65 Less: Net capital
Slide 31: Reconciliation of non-GAAP metrics (continued)
Reconciliation of non-GAAP metrics (continued) ($ in millions) Reconciliation of historical revenue to pro forma revenue Three Months Ended June 30, Year-over-year 2022 2021 Change Historical revenue (GAAP) $4,288 $4,751 (10%) Pro forma adjustments1 - (45) Pro forma revenue $4,288 $4,706 (9%) Revenu