KYNDRYL REPORTS FOURTH QUARTER AND FULL-YEAR 2025 RESULTS

PR Newswire

NEW YORK, May 7, 2025

   -- Revenues for the quarter ended March 31, 2025 total $3.8 billion, pretax 
      income is $118 million, net income is $68 million, adjusted EBITDA is 
      $698 million, and adjusted pretax income is $185 million 
 
   -- Fiscal year 2025 revenues total $15.1 billion, pretax income is $435 
      million, net income is $252 million, adjusted EBITDA is $2.5 billion, and 
      adjusted pretax income is $482 million 
 
   -- Signings for fiscal year 2025 were a record $18.2 billion, representing a 
      year-over-year increase of 46% 
 
   -- Company provides fiscal year 2026 outlook for positive constant-currency 
      revenue growth, at least $725 million of adjusted pretax income and 
      approximately $550 million of adjusted free cash flow 

NEW YORK, May 7, 2025 /PRNewswire/ -- Kyndryl $(KD)$, a leading provider of mission-critical enterprise technology services, today released financial results for the quarter ended March 31, 2025, the fourth quarter of its 2025 fiscal year.

"Fiscal 2025 was another year of strong execution on our strategy. In addition to returning to constant-currency revenue growth in the fourth quarter, we strengthened our leadership in innovative mission-critical technology services. We expanded our capabilities in cloud, modernization, applications, AI and security, and we further differentiated our services with Kyndryl Bridge," said Kyndryl Chairman and Chief Executive Officer Martin Schroeter.

"Our fiscal year 2026 outlook for free cash flow growth, earnings growth and constant-currency revenue growth reinforces our confidence to deliver our fiscal year 2028 objectives. Additionally, our ongoing share repurchase program reflects our commitment to returning capital to shareholders, and underscores our strong performance and confidence in the future," Mr. Schroeter said.

Results for the Fiscal Fourth Quarter Ended March 31, 2025

For the fourth quarter, Kyndryl reported revenues of $3.8 billion, a year-over-year decline of 1% on a reported basis and a year-over-year increase of 1.3% in constant currency. The Company reported pretax income of $118 million, compared to a pretax loss of $4 million in the fourth quarter of 2024. Net income was $68 million, or $0.28 per diluted share, in the quarter, compared to a net loss of $45 million, or ($0.20) per diluted share, in the prior-year period. Cash flow from operations was $581 million.

Adjusted pretax income was $185 million, a 510% increase compared to adjusted pretax income of $30 million in the prior-year period, reflecting contributions from Kyndryl's three-A initiatives, offset by the contractually required increase in IBM software costs. Adjusted net income was $126 million, or $0.52 per diluted share, compared to an adjusted net loss in the prior-year period. Adjusted EBITDA was $698 million, a 23% year-over-year increase. Adjusted free cash flow was $335 million in the quarter.

Results for the Fiscal Year Ended March 31, 2025

For the fiscal year ended March 31, 2025, Kyndryl reported revenues of $15.1 billion, a year-over-year decline of 6% and 4% in constant currency. The year-over-year constant-currency revenue decline reflects the Company's progress in reducing inherited no-margin and low-margin third-party content in customer contracts. The Company reported pretax income of $435 million, compared to a pretax loss of $168 million in fiscal year 2024. Net income was $252 million, or $1.05 per diluted share, in the year, compared to a net loss of $340 million, or ($1.48) per diluted share, in the prior year. Cash flow from operations was $942 million.

Adjusted pretax income was $482 million, a 192% increase compared to adjusted pretax income of $165 million in the prior-year period, reflecting contributions from Kyndryl's three-A initiatives, offset by the contractually required increase in IBM software costs and workforce rebalancing charges. Adjusted net income was $285 million, or $1.19 per diluted share, compared to an adjusted net loss in the prior-year period. Adjusted EBITDA was $2.5 billion, a 6% year-over-year increase. Adjusted free cash flow was $446 million in fiscal year 2025.

Signings for fiscal year 2025 were a record $18.2 billion, representing a year-over-year increase of 46%. The Company's global signings growth spanned a broad range of industries and included a record 55 contracts in excess of $50 million.

"We delivered strong signings growth in fiscal year 2025, with attractive margins built into these signings. This demonstrates the potential our business has to continue to grow our revenue, increase our earnings and generate cash flow. Our Kyndryl Consult and managed services capabilities align with enterprise customers' technology needs and are driving incremental, profitable growth opportunities," said David Wyshner, Kyndryl's Chief Financial Officer.

Recent Developments

   -- Alliances initiative -- In the fourth quarter and the full year, Kyndryl 
      recognized $375 million and $1.2 billion, respectively, in revenue tied 
      to cloud hyperscaler alliances. These amounts are more than double 
      prior-year levels and allowed the Company to exceed its hyperscaler 
      revenue target of nearly $1 billion in fiscal year 2025. 
 
   -- Advanced Delivery initiative -- The AI-enabled Kyndryl Bridge operating 
      platform is further enhancing the world-class technology services the 
      Company provides and creating additional revenue opportunities. It has 
      also helped Kyndryl free up more than 13,000 delivery professionals. This 
      has generated annualized savings of approximately $775 million as of 
      year-end, ahead of the Company's $750 million fiscal 2025 year-end goal. 
 
   -- Accounts initiative -- Kyndryl continued to address elements of contracts 
      with substandard margins, bringing the total impact from this initiative 
      to $900 million of annualized benefits, surpassing the Company's $850 
      million fiscal 2025 year-end objective. 
 
   -- Strong projected margin on recent signings -- In the quarter, projected 
      pretax income margins associated with total signings were in the 
      high-single-digit range, in line with recent quarters, reflecting the 
      Company's focus on margin expansion. 
 
   -- Double-digit growth in Kyndryl Consult -- Kyndryl Consult revenues grew 
      45% year-over-year in the fourth quarter and grew 26% in fiscal 2025. 
      Kyndryl Consult signings grew 37% year-over-year in the fourth quarter 
      and grew 47% in fiscal 2025. 
 
   -- Higher cash balance -- The Company ended fiscal year 2025 with cash of 
      $1.8 billion and debt of $3.2 billion, resulting in a net debt balance of 
      $1.4 billion. 
 
   -- Share repurchases -- The Company repurchased 1.8 million shares of its 
      common stock at a cost of $64 million in the fourth quarter, under the 
      $300 million share repurchase program authorized in November 2024. 

Fiscal Year 2026 Outlook

Kyndryl is providing the following outlook for its fiscal year 2026, which runs from April 2025 to March 2026:

   -- Adjusted pretax income of at least $725 million, representing a 
      year-over-year increase of at least $243 million. 
 
   -- Adjusted EBITDA margin of approximately 18%, representing a 
      year-over-year increase of approximately 130 basis points. 
 
   -- Adjusted free cash flow of approximately $550 million, reflecting the 
      Company's projected adjusted pretax income less cash taxes. 

The Company's earnings and cash flow outlook only assumes constant-currency revenue growth of 1%.

Earnings Webcast

Kyndryl's earnings call for the fourth fiscal quarter is scheduled to begin at 8:30 a.m. ET on May 8, 2025. The live webcast can be accessed by visiting investors.kyndryl.com on Kyndryl's investor relations website. A slide presentation will be made available on Kyndryl's investor relations website before the call on May 8, 2025. Following the event, a replay will be available via webcast for twelve months at investors.kyndryl.com.

About Kyndryl

Kyndryl (NYSE: KD) is a leading provider of mission-critical enterprise technology services offering advisory, implementation and managed service capabilities to thousands of customers in more than 60 countries. As the world's largest IT infrastructure services provider, the Company designs, builds, manages and modernizes the complex information systems that the world depends on every day. For more information, visit www.kyndryl.com.

Forward-Looking and Cautionary Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including statements concerning the Company's plans, objectives, goals, beliefs, business strategies, future events, business condition, results of operations, financial position, business outlook and business trends and other non-historical statements, including without limitation the outlook and financial objectives in this press release (which does not assume any future acquisitions or divestitures), are forward-looking statements. Such forward-looking statements often contain words such as "aim," "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "may," "objectives," "opportunity," "plan," "position," "predict," "project," "should," "seek, " "target," "will," "would" and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are based on the Company's current assumptions and beliefs regarding future business and financial performance.

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