Kyndryl (US:KD)2025-02-06 21:23Financial Performance - For the three months ended December 31, 2024, the company reported revenue of $3.744 billion, a decline of 5% compared to the prior-year period [126]. - For the nine months ended December 31, 2024, revenue was $11.257 billion, down 8% year-over-year [128]. - Net income for the three months ended December 31, 2024, was $215 million, an improvement of $227 million from the prior-year period [126]. - Adjusted EBITDA for the three months ended December 31, 2024, was $704 million, a 15% increase compared to $615 million in the prior-year period [130]. - For the three months ended December 31, 2024, total revenue was $3.7 billion, a decrease of 5% compared to the prior-year quarter, with adjusted EBITDA of $226 million, reflecting a 19% year-over-year increase [150]. Revenue by Region - United States revenue for the three months ended December 31, 2024, was $961 million, a decrease of 7% year-over-year [139]. - Japan revenue remained unchanged at $579 million for the three months ended December 31, 2024, but increased by 3% in constant currency [141]. - For the nine months ended December 31, 2024, Japan revenue was $1.8 billion, unchanged from the prior-year period, but increased by 6% in constant currency [142]. Revenue by Market - Principal Markets revenue declined by 4% to $1.3 billion for the three months ended December 31, 2024 [130]. - Strategic Markets revenue decreased by 6% to $904 million for the three months ended December 31, 2024 [130]. - Principal Markets revenue for the nine months ended December 31, 2024, was $3.9 billion, a decrease of 5% compared to the prior-year period, while adjusted EBITDA increased by $144 million, primarily due to increased operating efficiencies [145]. - Strategic Markets revenue for the nine months ended December 31, 2024, was $2.7 billion, down 11% year-over-year, with adjusted EBITDA decreasing by $31 million due to workforce rebalancing charges [147]. Cost and Efficiency - Cost of services as a percentage of revenue decreased to 79.6% for the three months ended December 31, 2024, from 80.9% in the prior-year quarter, driven by increased operating efficiencies [150]. - The company attributed revenue declines to actions taken to reduce low-margin components and currency effects [126]. Cash Flow and Investments - Net cash provided by operating activities was $361 million for the nine months ended December 31, 2024, an increase of 16.9% compared to $309 million in the prior-year period [167]. - Net cash used in investing activities decreased to $199 million in the nine months ended December 31, 2024, from $350 million in the prior-year period, primarily due to the sale of the SIS business [168]. - Net cash used in financing activities totaled $172 million for the nine months ended December 31, 2024, compared to $123 million in the prior-year period, mainly due to share repurchases of $30 million [169]. Workforce and Cost Reduction - The company recorded $92 million in workforce rebalancing charges during the nine months ended December 31, 2024, as part of its cost-reduction initiatives [154]. - Management expects total cash outlays for workforce rebalancing and site-rationalization activities to be $140 million, with anticipated savings exceeding $200 million in fiscal year 2026 [155]. Assets and Liabilities - Total assets decreased by $665 million to $9.9 billion from March 31, 2024, primarily due to a $225 million decrease in accounts receivable [164]. - Total liabilities decreased by $747 million to $8.7 billion from March 31, 2024, mainly due to a $262 million decrease in accounts payable [165]. Financing and Capital Structure - The company completed a registered offering of $500 million in aggregate principal amount of 6.35% senior unsecured notes due 2034 in February 2024 [174]. - The company has a $3.15 billion multi-currency revolving credit agreement, which has not been drawn down as of December 31, 2024 [176]. - The company repurchased 0.9 million shares of its common stock at an aggregate cost of $30 million during the three months ended December 31, 2024, under its Share Repurchase Program [182]. Future Outlook - The company expects continued demand for IT services despite macroeconomic concerns, with positive growth anticipated in calendar year 2025 [125]. - The company believes its existing cash and cash equivalents will be sufficient to meet anticipated cash needs for at least the next twelve months [172]. Other Financial Activities - Total signings increased by $362 million, or 10%, in the three months ended December 31, 2024, and by $3.8 billion, or 43%, in the nine months ended December 31, 2024, compared to the prior-year periods [171]. - Gross proceeds from receivables sold to third parties were $760 million and $2.6 billion for the three and nine months ended December 31, 2024, respectively [179]. - The company initiated a supplier financing program with a third-party financial institution, with obligations outstanding being immaterial as of December 31, 2024 [180].