Kyndryl (KD) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

Key industry themes and customer priorities

• Cybersecurity and resiliency remain top priorities, with increasing focus due to AI and regulatory demands.

• Modernization is essential as enterprises seek to leverage AI, requiring transformation of legacy systems without downtime.

• Sovereignty, especially data and AI sovereignty, is a growing concern, driving complexity and interest in private cloud solutions.

• Decision cycles are lengthening due to regulatory, sovereignty, and AI-related complexities, becoming the new normal.

• Business cases for AI are currently productivity-driven, but growth-oriented use cases are expected to emerge as adoption matures.

Financial performance and outlook

• April saw strong deal closures, contributing to a robust start for the signings year and a healthy pipeline.

• Pipeline quality is improving, with a mix of new and existing customers and increased use of automation and agentic technologies.

• Profitability has improved through focus on outcome-based services and automation, allowing retention of productivity gains.

• U.S. operations have returned to growth, driven by both expanded relationships and new customer acquisitions.

• Second half of the year is expected to be stronger in both revenue and profit, with first quarter as the trough due to cost reductions.

IBM relationship and business mix

• Transitioning IBM hardware/software sales to direct customer relationships remains a revenue and signings headwind, but does not impact profits.

• The IBM-related headwind is expected to diminish over time as more customers buy direct, simplifying future growth rates.

• Excluding IBM, core business segments are performing as expected, with guidance for flat to slightly declining revenue, offset by profitability improvements.