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]

Core Insights - Kyndryl has announced the acquisition of Solvinity Group B.V., enhancing its portfolio to provide customers with modernized, innovative, and secure solutions for sensitive workloads [1][2]. Company Overview - Kyndryl is a leading provider of mission-critical enterprise technology services, operating in over 60 countries and offering advisory, implementation, and managed services [4]. Acquisition Details - The acquisition aims to combine Kyndryl's capabilities with Solvinity's secure managed cloud platforms, focusing on enhancing security and compliance for sensitive workloads [2]. - The transaction's terms were not disclosed, and it is subject to customary closing conditions, including regulatory approval [3]. Strategic Implications - This acquisition reflects Kyndryl's commitment to investing in mission-critical capabilities, enabling customers to meet increasing regulatory requirements and adapt to a rapidly evolving market [2]. - The integration of Solvinity's private and hybrid cloud offerings will allow Kyndryl to support customers in managing workloads with stringent security needs [2].

Core Insights - Kyndryl Holdings, Inc. reported revenue of $3.72 billion for the quarter ended September 2025, a decrease of 1.4% year-over-year, and an EPS of $0.38, up from $0.01 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $3.82 billion, resulting in a surprise of -2.49%, while the EPS exceeded the consensus estimate of $0.35 by 8.57% [1] Financial Performance - Kyndryl's stock has returned -6.1% over the past month, underperforming the Zacks S&P 500 composite, which increased by 2.1% [3] - The company currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3] Geographic Revenue Breakdown - Revenue from Japan was reported at $581 million, slightly below the average estimate of $588.81 million from three analysts [4] - Revenue from the United States was $899 million, also below the average estimate of $964.38 million [4] - Strategic Markets generated $906 million, exceeding the average estimate of $894.6 million [4] - Principal Markets revenue was $1.33 billion, slightly below the average estimate of $1.37 billion [4] Adjusted EBITDA Analysis - Adjusted EBITDA for Principal Markets was $210 million, surpassing the average estimate of $199.05 million from two analysts [4] - Adjusted EBITDA for Corporate and other segments was reported at -$28 million, worse than the average estimate of -$24 million [4] - Adjusted EBITDA for Strategic Markets was $142 million, below the average estimate of $157.43 million [4]

Core Insights - Kyndryl Holdings, Inc. reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.35 per share, and showing a significant increase from $0.01 per share a year ago, resulting in an earnings surprise of +8.57% [1][2] - The company generated revenues of $3.72 billion for the quarter ended September 2025, which was 2.49% below the Zacks Consensus Estimate and a decrease from $3.77 billion in the same quarter last year [2] - Kyndryl's stock has underperformed the market, losing approximately 16.9% year-to-date compared to the S&P 500's gain of 16.5% [3][4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.69, with expected revenues of $4.01 billion, and for the current fiscal year, the consensus EPS is $2.18 on revenues of $15.65 billion [7] - The trend of estimate revisions for Kyndryl was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Technology Services industry, to which Kyndryl belongs, is currently ranked in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - The performance of Kyndryl's stock may be influenced by the overall industry outlook, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than a factor of 2 to 1 [8]

Financial Performance - Kyndryl reported revenues of $3.7 billion for the second quarter of fiscal 2026, a decrease of 1% year-over-year and a 3.7% decline in constant currency[4]. - The company achieved a pretax income of $98 million, a year-over-year increase of $103 million from a pretax loss of $5 million in the prior-year period[4]. - Adjusted EBITDA was $641 million, reflecting a 15% year-over-year increase[6]. - Total revenue for the three months ended September 30, 2025, was $3,721 million, a decrease of 1% year-over-year[25]. - Adjusted EBITDA for the same period was $641 million, up from $557 million in 2024, reflecting a significant improvement[25]. - Net income for the six months ended September 30, 2025, was $124 million, compared to a loss of $32 million in 2024[27]. - The company reported a total adjusted EBITDA of $1,288 million for the six months ended September 30, 2025, an increase from $1,113 million in 2024[27]. - Adjusted earnings per share (EPS) for the three months ended September 30, 2025, was $0.38, compared to $0.01 in 2024[39]. Revenue Sources - Kyndryl generated $440 million in revenue from hyperscaler alliances, marking a 65% year-over-year increase, and is on track to exceed its fiscal 2026 target of $1.8 billion[9]. - Kyndryl Consult revenues grew by 28% year-over-year, with signings increasing by 11% over the last twelve months[9]. - Revenue from the United States decreased by 6% year-over-year to $899 million, while Japan's revenue decreased by 4% to $581 million[25]. Cash Flow and Capital Expenditures - Free cash flow for the quarter was $22 million, a decrease of $2 million compared to the prior-year period[4]. - Cash and equivalents at the end of September 2025 were $1,331 million, down from $1,786 million in March 2025[25]. - The company incurred capital expenditures of $272 million in the six months ended September 30, 2025, compared to $256 million in 2024[27]. - Net capital expenditures for Q3 2025 were $125 million, compared to $104 million in Q3 2024[41]. - Cash flows from operating activities for Q3 2025 were $147 million, compared to $149 million in Q3 2024[41]. - The company reported a net cash provided by operating activities of $22 million for the six months ended September 30, 2025, down from $101 million in 2024[27]. Shareholder Returns - The company announced an additional $400 million share repurchase authorization, complementing the previous $300 million program[8]. Future Outlook - Kyndryl reaffirms its fiscal 2026 outlook, expecting stronger second-half revenue driven by backlog and growth in Kyndryl Consult and hyperscaler-related revenue[11]. - The projected pretax margin associated with recent signings was in the high-single-digit range, indicating strong profit potential in service contracts[9]. Signings and Contracts - Signings for Q3 2025 were $2.8 billion, representing a 49% decrease compared to Q3 2024[41]. - Signings for the six months ended September 30, 2025 decreased by 31% to $5.6 billion compared to the same period in 2024[41]. - Signings for the twelve months ended September 30, 2025 decreased by 3% to $15.6 billion compared to the previous twelve months[41]. - The largest signing in the company's history occurred in Q3 2024, amounting to $1.8 billion[41]. Litigation and Workforce Adjustments - Significant litigation payments in Q3 2024 amounted to $6 million[41]. - Workforce rebalancing payments related to prior charges were $4 million in Q3 2024[41]. AI and Technology Development - Kyndryl is expanding its AI capabilities with new technology hubs and an AI Innovation Lab, with a quarter of its signings already containing AI-related content[9].