Core Insights - Kyndryl has renewed its partnership with Vodafone Idea (Vi) for three years, focusing on transforming Vi's IT operations and enhancing cybersecurity measures [1][3] - The collaboration aims to implement a next-generation IT operations delivery model that emphasizes automation and data-driven insights, leading to improved service delivery and operational efficiency [2][4] Company Collaboration - Kyndryl will develop a cyber resilience framework for Vi, which includes security governance, zero-touch services, data protection, and incident recovery services [1][3] - The partnership will leverage Kyndryl Bridge, an AI-powered integration platform, which has already deployed over 1,000 automations at Vi, reducing delivery event noise by 15% [2][3] Strategic Objectives - The collaboration is designed to align Vi's IT strategy with its business objectives, maximizing returns on IT investments and accelerating the time-to-market for new digital services [4] - Kyndryl's expertise in managing mission-critical systems has been recognized by Vi, highlighting the importance of this partnership in driving business agility and operational efficiencies [3]

Summary of Kyndryl Holdings, Inc. Coverage Core Viewpoint - Kyndryl Holdings, Inc. (KD) has experienced a significant stock decline of 39% since June 30, 2025, primarily following the company's performance and market conditions [1]. Group 1: Stock Performance - The stock has plunged 39% since the last coverage on June 30, 2025 [1]. - The majority of losses occurred after the last analysis, indicating potential ongoing challenges for the company [1]. Group 2: Investment Strategy - The focus is on growth and momentum stocks that are reasonably priced and expected to outperform the market in the long term [1]. - The investment strategy emphasizes long-term quality stocks and the use of options for strategic positioning [1].

Industry Overview - The Chinese insurance market is projected to grow significantly, with its share of global premiums expected to rise from 11% in 2018 to 20% by 2029, surpassing the United States [1][6] - Key drivers of this growth include a strong economy, high levels of government spending, increased consumer awareness, and technological innovations [1][6] Major Companies - **Ping An Insurance (Group) of China Ltd.**: Founded in 1988, it is the largest insurance company in China with a market capitalization of approximately $118 billion as of July 2022 and net premiums written of $118.8 billion for 2020. The company employs 355,982 people and serves 227 million customers [3] - **China Life Insurance (Group) Company**: The second largest insurance company in China, with a market capitalization of about $103.9 billion and net premiums written of $111.2 billion for 2020. It operates a substantial service network and serves over 500 million customers [4][7] - **People's Insurance Company of China Group**: Established in 1949, it has net premiums written of $79.6 billion and a market cap of $226.6 billion as of July 2022. The company is involved in various insurance sectors including property and health insurance [8] - **China Pacific Insurance (Group) Company Ltd.**: An integrated insurance provider with net premiums written of $51.7 billion and a market capitalization of $233.37 billion as of July 2022. The company employs 107,000 people [9] - **New China Life Insurance**: Founded in 1996, it has a market cap of $80.8 billion and focuses primarily on life insurance while also expanding into investment and healthcare [10]

Core Insights - Kyndryl Holdings, Inc. reported mixed fiscal Q2 2026 results, with an EPS of $0.38 exceeding estimates by $0.02, but revenue of $3.72 billion falling short by $119 million [1][2] Financial Performance - The company experienced a 1.40% decrease in total revenue, attributed to longer sales cycles, despite key growth drivers such as Kyndryl Consult, which grew by 25% year-over-year, and Hyperscaler-related revenue, which doubled [2] - The book-to-bill ratio remains above 1, and management reaffirmed its fiscal 2026 outlook, anticipating revenue growth in the latter half of the year due to a stronger backlog [3] Analyst Ratings - Following the earnings release, Morgan Stanley reduced its price target from $30 to $28 while maintaining a Hold rating [4] - J.P. Morgan also lowered its price target from $45 to $40 but kept a Buy rating on the stock [4] Company Overview - Kyndryl Holdings, Inc. is based in New York City and specializes in designing, building, and managing critical technology systems for enterprises globally, with a focus on integrating AI-native automation into its IT modernization services [5]

Core Insights - Commvault announced the winners of the inaugural Commvault Fearless Awards 2025, recognizing partners who have demonstrated resilience against cyber threats and business disruptions [1][2][8] - The awards highlight a customer-first mindset and a unified, cloud-native approach to resilience among 24 standout partners globally [2][3] Award Winners - The Global Champion Award was awarded to HPE, with CDW, Softcat, and Logicalis Australia receiving regional champion awards for AMER, EMEA, and APAC respectively [6][12] - Other notable awards included Global AI Innovation Award to AWS, Global Cloud Partner of the Year to Microsoft, and Global Cyber Readiness Award to Bytes [7] Partner Statements - HPE emphasized the importance of comprehensive cyber resilience and data protection, reflecting a shared vision with Commvault [4] - Softcat highlighted the strength of their long-standing partnership with Commvault, focusing on innovation and customer-centric solutions [4] - Logicalis Australia expressed commitment to helping customers strengthen resilience and navigate complexity in the APAC region [4] Event Context - The awards were unveiled at SHIFT NYC, which also featured significant announcements including the Commvault Cloud Unity platform release [9][11] - The Commvault Fearless Awards aim to honor partners who show unwavering commitment to resilience amid evolving threats [8]

Core Insights - The 2025 Cloud Readiness Report by Kyndryl highlights a significant shift in cloud strategy among enterprises, emphasizing the need for deliberate cloud architectures to enhance AI adoption and enterprise agility [1][2][3] Cloud Strategy and Investment - Cloud computing has evolved into a $700 billion industry, yet 70% of CEOs report their current cloud environments were developed "by accident" rather than through a strategic plan [2] - Despite the lack of a deliberate strategy, organizations have increased cloud spending by over 30% on average in the past year, amidst challenges in AI adoption and rising security demands [2][8] Transition from Reactive to Strategic - The report stresses that a strategic approach to cloud architecture is essential for enterprises to integrate AI securely, manage costs, and comply with regulatory demands [4][5] - Organizations are increasingly adopting hybrid cloud models, which combine public and private cloud environments to balance performance, security, and cost [5][8] Security and Sovereignty - Security and data sovereignty are now viewed as design principles rather than constraints, with 75% of leaders concerned about geopolitical risks associated with global cloud environments [6][8] - 65% of leaders have modified their strategies in response to new data sovereignty regulations, indicating a shift towards hybrid and multi-cloud environments [8] AI Integration Challenges - While 89% of leaders believe cloud investments facilitate AI usage, 35% identify integration challenges as a major barrier to achieving ROI [8] - Organizations are increasingly utilizing specialized infrastructure, such as private AI or neoclouds, optimized for GPU-powered AI workloads to balance computational power with cost control [8] Evolving Cloud Security - With 82% of organizations experiencing cyber-related outages this year, there is a push for more adaptable architectures and enhanced security capabilities [8] - 91% of enterprises report their cloud infrastructure can adapt to new regulations, and 75% are investing in AI for cybersecurity, more than any other AI capability [8]

Core Insights - Kyndryl has been recognized as a Leader in the 2025 Gartner Magic Quadrant for Data Center Outsourcing Services, highlighting its strong execution capabilities and innovative solutions [1][2][5] - The report evaluates 17 global providers based on their Ability to Execute and Completeness of Vision, with Kyndryl demonstrating significant strengths in both areas [1][4] Company Capabilities - Kyndryl's AI-powered solutions, particularly through Kyndryl Bridge, are designed to deliver real-time insights and drive customer outcomes in complex IT environments [2][3] - The company emphasizes a shift from traditional infrastructure management to AI-led capability orchestration, which is seen as a critical evolution in data center services [3] - Kyndryl offers a comprehensive suite of services that includes deployment, consolidation, optimization, and managed services for various IT infrastructures, including data centers and private clouds [3][4] Market Position - Gartner describes Leaders as those who not only perform skillfully but also shape the market with a clear vision of its direction, which includes digital transformation and intelligent automation [4] - Kyndryl's strategic approach combines advisory-led delivery with managed services, aligning IT solutions with customer business priorities [8] Industry Context - The data center outsourcing services market is evolving rapidly, driven by increasing demands for AI capabilities and digital transformation [3] - Kyndryl's expertise in IBM Z and Power systems positions it well to support customers in modernizing and optimizing their core systems [8]

Financial Performance - For the three months ended September 30, 2025, the company reported revenue of $3.721 billion, a decrease of 1% compared to the prior-year period[118]. - Net income for the same period was $68 million, an increase of $111 million from the prior-year period, reflecting improved operating efficiencies[118]. - For the six months ended September 30, 2025, revenue was $7.464 billion, also a decrease of 1% year-over-year[119]. - Adjusted EBITDA for the three months ended September 30, 2025, was $641 million, representing a 15% increase compared to the prior-year period[122]. Revenue Breakdown - United States revenue for the three months ended September 30, 2025, was $899 million, a decline of 6% year-over-year[130]. - Japan revenue for the three months ended September 30, 2025, was $581 million, a decrease of 4% compared to the prior-year quarter[131]. - Principal Markets revenue increased by 1% to $1.334 billion for the three months ended September 30, 2025[122]. - Strategic Markets revenue increased by 2% to $906 million for the same period[122]. Currency Impact - The company experienced a favorable currency exchange rate impact of three points on revenue performance for the three months ended September 30, 2025[118]. - Principal Markets revenue for Q3 2025 was $1.334 billion, a 1% increase year-over-year, with a favorable currency exchange impact of 4 points[133]. - Strategic Markets revenue for Q3 2025 was $906 million, a 2% increase year-over-year, also benefiting from a favorable currency exchange impact of 4 points[135]. Operational Efficiency - The company aims to drive operating efficiencies and higher margins on recent signings as part of its key initiatives[120]. - Adjusted EBITDA for Principal Markets in Q3 2025 increased by $23 million to $210 million, driven by operational efficiencies and higher margins[133]. - Adjusted EBITDA for Strategic Markets in Q3 2025 increased by $4 million to $142 million, attributed to key initiatives for operational efficiency[137]. Assets and Liabilities - Total assets increased by $792 million to $11.2 billion from March 31, 2025, primarily due to an increase in deferred costs[154]. - Total liabilities rose by $784 million to $9.9 billion, mainly due to an increase in other noncurrent liabilities related to a software agreement[155]. Cash Flow and Financing - Net cash provided by operating activities was $22 million in the six months ended September 30, 2025, down from $101 million in the prior-year period[158]. - Net cash used in financing activities totaled $310 million in the six months ended September 30, 2025, primarily due to share repurchases of $154 million[160]. - The company has sufficient liquidity with existing cash and cash equivalents and a revolving credit agreement to meet anticipated operating cash needs for at least the next twelve months[163]. Share Repurchase Program - The company repurchased 2.9 million shares at a cost of $89 million during the three months ended September 30, 2025, and 4.6 million shares for $154 million during the six months ended September 30, 2025[175]. - The Board of Directors approved an increase to the Share Repurchase Program, adding $400 million of repurchase capacity as of November 2025[175]. Signings and Contracts - Total signings for the three months ended September 30, 2025, were $2.8 billion, a decrease of 49% compared to the prior-year quarter, and for the six months ended September 30, 2025, signings were $6.0 billion, down 31% from $8.7 billion in the same period of 2024[162]. - The largest signing in Kyndryl's history, valued at $1.8 billion, occurred in the quarter ended September 30, 2024, impacting the current year's performance[162]. Debt and Credit Agreements - In October 2021, Kyndryl completed an offering of $2.4 billion in senior unsecured fixed-rate notes, with various maturities ranging from 2026 to 2041[164]. - A registered offering of $500 million in senior unsecured notes due 2034 was completed in February 2024, with net proceeds of $494 million[165]. - The company entered into a $3.15 billion multi-currency revolving credit agreement in October 2021, which was amended in March 2025 to extend the maturity to March 2030[167]. - As of September 30, 2025, there has been no drawdown on the revolving credit agreement, and the company is in compliance with its debt covenants[168]. Workforce and Charges - Workforce rebalancing charges for Q3 2025 were $19 million, with total expected cash outlays for the program around $80 million[147]. - The provision for income taxes for Q3 2025 was $30 million, compared to $38 million in Q3 2024, primarily related to foreign operations[151].

Financial Data and Key Metrics Changes - Revenue for the second quarter totaled $3.7 billion, down 1% from the prior year quarter on a reported basis and 3.7% in constant currency [22] - Adjusted EBITDA increased 15% year over year to $641 million, with an Adjusted EBITDA margin of 17.2%, up 250 basis points year over year [23] - Adjusted Pre-Tax Income grew 171% to $123 million, with an Adjusted Pre-Tax margin increasing by 210 basis points year over year [23] - Free cash flow generated in the second quarter was $22 million, with a cash balance of $1.3 billion at the end of the quarter [26][31] Business Line Data and Key Metrics Changes - Kyndryl Consult revenues grew 32% in constant currency over the last 12 months, now running at an annual pace of $3.4 billion [10] - Hyperscaler-related revenues doubled since last year, tracking above the initial $1.8 billion fiscal 2026 target [10] - The last 12 months signings total was $15.6 billion, giving a book to bill ratio above 1 [22] Market Data and Key Metrics Changes - Strongest geographies for growth included Canada, Spain, India, and Latin America [10] - Fastest growing practices were in applications, data and AI, and digital workplace [22] Company Strategy and Development Direction - The company is focused on margin expansion and has removed low-margin hardware and software content from customer relationships, which is expected to lead to positive constant currency revenue growth [5][9] - The strategy includes expanding Kyndryl Consult capabilities and alliances, driving scope expansion with existing customers, and adding new logos [8][13] - The company aims to achieve fiscal year 2028 objectives, including over $1 billion in adjusted free cash flow and more than $1.2 billion in adjusted pre-tax income [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth in the second half of the year, supported by a record pipeline and committed backlog [6][34] - The demand for IT modernization, AI, and cybersecurity is driving customer demand for Kyndryl's services [13][33] - Management noted that customer decision cycles remain normal, with a cautious approach due to the mission-critical nature of services [58] Other Important Information - The company announced a $400 million increase in its share repurchase program, reflecting confidence in its earnings trajectory and cash flow growth [26] - The company is pursuing tuck-in acquisitions, with a recent agreement to acquire a midsize cloud services provider in Europe [20][54] Q&A Session Summary Question: Capital allocation opportunities for the company - Management highlighted the balance between investing in the business, accelerating capabilities, and returning capital to shareholders through share repurchases [40][41] Question: AI's impact on competitive position - About 25% of signings have AI-related content, with a focus on data architecture and migration services to support customer AI models [42][46] Question: Insights on customer decision cycles - Management noted that decision-making remains cautious but normal, especially when adding new scope or customers [58] Question: Revenue expectations and risks - Management indicated that the second half has a stronger contracted backlog and investments in consult resources will drive acceleration [66] Question: Strong verticals and examples of expanded scope - Strongest verticals include retail, travel, and technology, with examples of expanding services into new geographies and additional cybersecurity content [70][72]

Financial Performance & Outlook - Kyndryl's Q2 2026 adjusted EBITDA reached $641 million, a year-over-year increase from $557 million in Q2 2025[43] - The adjusted EBITDA margin increased by 250 basis points, reaching 17.2% in Q2 2026 compared to 14.8% in Q2 2025[43] - Adjusted pretax income for Q2 2026 was $123 million, significantly up from $45 million in Q2 2025[43] - The company reaffirms its fiscal year 2026 outlook, projecting adjusted pretax income of at least $725 million, a year-over-year increase of at least 50%[51] - Kyndryl anticipates approximately 1% constant-currency revenue growth for fiscal year 2026[51] Growth Drivers - Kyndryl Consult revenue reached $3.4 billion (LTM Sept 2025), a 32% increase compared to $2.5 billion (LTM Sept 2024)[19] - Hyperscaler-related revenue increased by 94%, reaching $1.5 billion (LTM Sept 2025) compared to $0.8 billion (LTM Sept 2024)[19] - The company's signings reached $15.6 billion[19] Capital Allocation - The company increased its repurchase authorization by $400 million[17]