Kyndryl (US:KD)2023-08-07 16:00Financial Performance - For the three months ended June 30, 2023, the company reported revenue of $4.2 billion, a decline of 2% compared to $4.3 billion in the prior-year period[112]. - The net loss for the quarter was $141 million, an improvement of $109 million from a net loss of $250 million in the same quarter last year[112]. - Adjusted EBITDA for the quarter increased by 25% to $612 million, up from $491 million in the prior-year period[114]. - Revenue from the United States remained unchanged at $1.2 billion, while Japan's revenue decreased by 4% to $610 million[119][120]. - Principal Markets revenue decreased by 2% to $1.5 billion, but adjusted EBITDA increased by 67% to $167 million[122]. - Strategic Markets revenue fell by 4% to $935 million, with adjusted EBITDA rising by 39% to $133 million[123]. Cost Management - Cost of services as a percentage of revenue improved to 82.3% from 85.8% year-over-year, reflecting increased operating efficiencies[126]. - Workforce rebalancing charges increased to $58 million, representing 1.4% of revenue, compared to only $4 million in the prior-year quarter[126]. - Transaction-related costs decreased significantly by 60% to $42 million, down from $103 million in the same quarter last year[126]. - The company recognized $58 million in workforce rebalancing charges and $10 million in charges related to ceasing to use leased and owned fixed assets during the three months ended June 30, 2023[128]. - Total future charges for the workforce rebalancing program are expected to be approximately $70 million, with $50 million in workforce rebalancing charges and $20 million in charges related to fixed assets[129]. - The company anticipates that the workforce rebalancing and site-rationalization activities will reduce future payroll costs, rent expenses, and depreciation by approximately $200 million in fiscal year 2024[130]. Asset and Liability Management - The company's total assets as of June 30, 2023, were $10.986 billion, down from $11.464 billion at the end of the previous quarter[112]. - Total assets decreased by $477 million to $11.0 billion from March 31, 2023, primarily due to a $341 million decrease in cash and cash equivalents[133]. - Total liabilities decreased by $354 million to $9.6 billion, driven by a $148 million decrease in accounts payable and a $63 million decrease in deferred income[134]. - Working capital decreased by $33 million to $62 million, with current assets down by $310 million primarily due to a decrease in cash and cash equivalents[135]. Cash Flow - Net cash used in operating activities was $173 million for the three months ended June 30, 2023, compared to net cash provided of $104 million in the prior-year period[139]. - Total signings decreased by $145 million, or 5%, to $2.8 billion for the three months ended June 30, 2023, due to efforts to reduce low-margin revenues[142]. - The company believes its existing cash and cash equivalents, along with a revolving credit agreement, will be sufficient to meet anticipated cash needs for at least the next twelve months[144]. - Gross proceeds from receivables sold to third parties were $1.2 billion for the three months ended June 30, 2023, compared to $613 million for the same period in 2022[152]. Risk Management - The Company faces risks including inability to estimate service costs and timelines, and challenges in managing acquisitions and integrations[159]. - There have been no material changes to the Company's market risk disclosures in the Form 10-K[160]. Communication - The Company utilizes its website and social media for distributing material information, accessible at https://investors.kyndryl.com[158].