Kyndryl (US:KD)2025-11-05 21:20Financial 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].