Kyndryl (KD) Q4 2025 earnings summary

Executive summary

• Fiscal 2025 saw signings exceed $18 billion, up 48% year-over-year in constant currency, with adjusted pre-tax income rising by $317 million to $482 million and adjusted free cash flow reaching $446 million.

• Returned to positive constant currency revenue growth in Q4, driven by robust performance in Kyndryl Consult and hyperscaler-related services.

• Kyndryl Consult signings and revenue grew over 25% year-over-year, with hyperscaler revenue more than doubling.

• Surpassed full-year targets for all 3A/Advanced Delivery and Accounts initiatives, transforming them into pillars of profitable growth.

• Positioned as a leader in mission-critical technology services, leveraging innovation, partnerships, and expanded capabilities.

Financial highlights

• Fiscal 2025 revenue totaled $15.1 billion; Q4 revenue was $3.8 billion, up 1.3% year-over-year in constant currency.

• Adjusted EBITDA for the year was $2.5 billion (16.7% margin, up 200 basis points); Q4 adjusted EBITDA was $698 million (18.4% margin).

• Adjusted pre-tax income reached $482 million for the year, up 192% from the prior year; Q4 adjusted pre-tax income was $185 million.

• Adjusted free cash flow was $446 million, a 53% increase from the prior year.

• Ended year with $1.8 billion in cash and net debt of $1.4 billion.

Outlook and guidance

• Fiscal 2026 outlook projects 1% constant currency revenue growth, adjusted EBITDA margin of ~18%, and adjusted pre-tax income of at least $725 million.

• Adjusted free cash flow projected at approximately $550 million; depreciation expense forecast at $675 million.

• Hyperscaler-related revenue expected to reach $1.8 billion, a 50% year-over-year increase.

• Kyndryl Consult revenue anticipated to grow double digits; targets for fiscal 2028 include over $1 billion in both adjusted free cash flow and adjusted pre-tax income.

• November divestiture of Canadian SIS platform to reduce revenue by ~$40 million in H1 FY26.