Kyndryl, a leading global company providing a range of technology and business services, has released its second-quarter financial results for 2023, showcasing its performance and raising its outlook for the fiscal year 2024.
In Q2 2023, Kyndryl reported revenues of $4.1 billion, representing a year-over-year decline of 3 percent. This reduction in revenue is primarily attributed to the company’s strategic decision to reduce inherited zero-margin and low-margin third-party content in customer contracts.
Despite the decrease in revenue, Kyndryl reported a pretax loss of $109 million and a net loss of $142 million, or ($0.62) per diluted share. This compares favorably to the net loss of $281 million, or ($1.24) per diluted share, in the prior-year period. It’s worth noting that the net loss for the quarter includes $87 million in transaction-related costs and workforce rebalancing charges.
Kyndryl’s leadership expressed confidence in the company’s performance and strategic initiatives. “In our fiscal second quarter, we delivered outstanding growth in adjusted EBITDA and adjusted pretax income, driven by continued progress on our three-A initiatives and transforming how we operate,” stated Kyndryl Chief Financial Officer David Wyshner. He also highlighted the company’s efforts to secure new contracts and renewals with higher margins, positioning Kyndryl for future success.
Some of the notable developments and initiatives that Kyndryl highlighted in the report include:
Alliances Initiative: Kyndryl recognized $180 million in revenue tied to cloud hyperscaler alliances in the first half of the fiscal year. This progress aligns with the company’s hyperscaler revenue target of more than $300 million for fiscal year 2024.
Advanced Delivery Initiative: Kyndryl redeployed over 7,500 delivery professionals to serve new revenue streams and backfill attrition, resulting in approximately $425 million in annualized savings. Automation and the Kyndryl Bridge platform, powered by AI, are driving this progress, leading the company to raise its fiscal 2024 year-end objective for annualized savings from $450 million to $550 million.
As a result of these initiatives and their positive impact on the company’s performance, Kyndryl has revised its fiscal 2024 outlook:
Adjusted Pretax Income: The company now expects adjusted pretax income for fiscal 2024 to be at least $140 million, up from its prior outlook of at least $100 million.
Adjusted EBITDA Margin: Kyndryl is raising its outlook for fiscal 2024 adjusted EBITDA margin, now expecting it to be approximately 14.5 percent, compared to the prior estimate of approximately 14 percent.
Constant-Currency Revenue Growth: Kyndryl has narrowed its outlook for constant-currency revenue growth to a range of (6 percent) to (7 percent), which represents the stronger end of its prior estimate of (6 percent) to (8 percent).
Kyndryl’s Chairman and Chief Executive Officer, Martin Schroeter, expressed optimism about the company’s progress and future outlook. He noted, “We’re strengthening and transforming our business at an accelerated pace, which is driving faster-than-anticipated margin expansion and creating future growth opportunities for Kyndryl. We’re again increasing our adjusted earnings outlook for the year, and we remain on track to return to revenue growth in calendar 2025.”
Kyndryl’s ongoing commitment to adapting to evolving market dynamics and delivering value to its customers positions the company for continued success in the dynamic world of technology and business services.