Kyndryl (KD) investor relations material

Executive summary

• Q2 revenue was $3.651B, down 1.9% reported and 0.8% in constant currency; adjusted EBITDA rose to $699M from $641M.

• Adjusted EBITDA margin expanded to 19.1% from 17.2%; adjusted pretax income was $150M, up from $123M.

• H1 signings grew 33% to $8.0B; LTM signings were $15.5B, including $4.1B in Q2.

• Priorities included profitable growth, Consult, hyperscaler relationships, AI-led modernization and mission-critical services.

Financial highlights

• Q2 GAAP net income was $59M versus $68M; adjusted net income was $92M versus $89M, and adjusted EPS was $0.42 versus $0.38.

• H1 revenue was $7.269B versus $7.464B; adjusted EBITDA was $1.211B versus $1.288B, and adjusted pretax income was $113M versus $251M.

• H1 GAAP net income was $4M versus $124M; adjusted net income was $66M versus $179M, and adjusted EPS was $0.30 versus $0.75.

• H1 free cash flow was a $434M use versus a $200M use; operating cash flow was negative $137M and net capital expenditures were $297M.

• H1 results included $190M of workforce-rebalancing charges, a $38M facility impairment and a $40M divestiture gain.

Outlook and guidance

• FY27 outlook was reaffirmed: revenue flat to down 2% in constant currency, adjusted pretax income of $600M–$700M and free cash flow of $400M–$500M.

• FY27 outlook assumes ~19% adjusted EBITDA margin; October exchange rates imply a $50M unfavorable YoY revenue impact.

• FY27 workforce actions are expected to incur ~$200M in charges and cash outlays; savings are expected to largely offset charges in H2.

• Workforce actions are expected to generate $400M–$500M in annualized FY28 operating expense savings; the $1B adjusted free cash flow objective remains on track.

• FY27 assumptions include $730M depreciation, $1.3B amortization, $160M interest expense and $200M cash taxes; diluted shares are estimated at ~220M.