Financial Data and Key Metrics Changes - In Q1 2026, revenue totaled $3.7 billion, reflecting a slight increase from the prior year quarter on a reported basis, but a 2.6% decline in constant currency due to focus accounts initiative [21][22] - Adjusted pre-tax income grew 39% to $128 million, with an adjusted pre-tax margin increasing by 100 basis points year over year [22][31] - Adjusted EBITDA was $647 million, with an adjusted EBITDA margin of 17.3%, up 240 basis points year over year [22][31] Business Line Data and Key Metrics Changes - Kindrel Consult revenues grew 30% year over year, indicating strong growth in higher-margin advisory services [21][22] - Hyperscaler-related revenue nearly doubled from a year ago to $400 million in Q1, progressing towards a fiscal 2026 target of $1.8 billion [8][23] - Aggregate signings increased by 2% year over year, totaling $18.3 billion, a 43% increase from the previous year [22][29] Market Data and Key Metrics Changes - The company reported a book-to-bill ratio above 1%, indicating strong demand for services and a healthy pipeline [8][22] - The focus accounts initiative has increased cumulative annualized profit from these accounts by $25 million to $925 million [24][46] Company Strategy and Development Direction - The company is focused on driving margin expansion and sustainable profitable growth through strategic initiatives, including partnerships and innovation in AI, cloud, and cybersecurity [5][8] - Investments in technology alliances and advanced delivery initiatives are central to the company's strategy, enhancing service delivery and operational efficiency [9][23] - The company aims to achieve over $1 billion in adjusted free cash flow and $1.2 billion in adjusted pre-tax income by fiscal 2028, requiring mid-single-digit revenue growth [19][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve financial and operational goals, citing strong customer demand and a solid pipeline [20][75] - The outlook for fiscal 2026 includes expectations for approximately $550 million in free cash flow and positive 1% constant currency revenue growth [19][32] - Management highlighted the importance of AI adoption and modernization initiatives as key drivers of future growth [16][68] Other Important Information - The company repurchased 1.8 million shares at a cost of $65 million during the quarter, with $141 million remaining under the share repurchase authorization [26][50] - The cash balance at June 30 was $1.5 billion, with a net leverage ratio of 0.6 times adjusted EBITDA, indicating a strong financial position [26][27] Q&A Session Summary Question: How did first quarter revenue come in versus planned? - Management indicated good momentum in growth vectors, with Kindrel Consult showing strong growth and a healthy pipeline supporting future revenue [35][37] Question: What trends have been noticed among focus accounts? - Management noted that while some deals were pushed out, they are confident in the ongoing progress and innovation being delivered to these accounts [43][46] Question: What catalysts could drive margin expansion beyond account renegotiation? - Management highlighted the increasing contribution of new contracts to the P&L, reduced software cost increases, and improved efficiency in SG&A as key factors for margin expansion [53][56] Question: What is the visibility on the triple, double, single strategy? - Management expressed strong visibility into achieving the triple, double, single goals, citing a solid cash flow forecast and a favorable margin outlook [64][72]

Financial Data and Key Metrics Changes - In Q1 2026, revenue totaled $3.7 billion, reflecting a slight increase from the prior year but a 2.6% decline in constant currency, primarily due to the focus accounts initiative [21][22] - Adjusted pre-tax income grew 39% to $128 million, with an adjusted pre-tax margin increasing by 100 basis points year over year [22][31] - Adjusted EBITDA was $647 million, with an adjusted EBITDA margin of 17.3%, up 240 basis points year over year [22][31] Business Line Data and Key Metrics Changes - Kindrel Consult revenues grew 30% year over year, indicating strong growth in higher-margin advisory services [21][31] - Hyperscaler-related revenue nearly doubled to $400 million in Q1, progressing towards a fiscal 2026 target of $1.8 billion [9][23] - Aggregate signings increased by 43% year over year to $18.3 billion, with a book-to-bill ratio above 1 [22][30] Market Data and Key Metrics Changes - The company reported a 44% increase in signings in constant currency over the last twelve months, with strong performance in the US market [9][22] - The focus accounts initiative has increased cumulative annualized profit from these accounts by $25 million to $925 million [24][46] Company Strategy and Development Direction - The company is focused on expanding its capabilities in AI, cloud migration, and cybersecurity, positioning itself as a key partner in IT modernization [10][12] - Strategic initiatives include leveraging technology alliances, advanced delivery, and enhancing the Kindrel Consult and Kindrel Bridge offerings [10][19] - The company aims to achieve over $1 billion in adjusted free cash flow and $1.2 billion in adjusted pre-tax income by fiscal 2028, requiring mid-single-digit revenue growth [19][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2026 targets, expecting revenue growth to accelerate from Q1 to Q2 and further in the second half of the year [20][32] - The company anticipates generating approximately $550 million in free cash flow for the fiscal year, with a strong conversion of earnings to cash flow [32][33] - Management highlighted the importance of innovation and customer relationships in driving future growth [10][80] Other Important Information - The company repurchased 1.8 million shares at a cost of $65 million during the quarter, with $141 million remaining under the share repurchase authorization [26][51] - The cash balance at June 30 was $1.5 billion, with a net leverage ratio of 0.6 times adjusted EBITDA [26][27] Q&A Session Summary Question: How did Q1 revenue come in versus planned, and what is the growth cadence for the rest of the year? - Management indicated good momentum in growth vectors, with Kindrel Consult showing strong growth and a solid pipeline for the year [35][39] Question: What trends have been noticed among focus accounts, and what is the confidence level for signings this quarter? - Management noted that while some deals were pushed out, progress continues, and they expect to close some transactions in Q2 [44][50] Question: What are the catalysts for margin expansion beyond account renegotiation? - Management highlighted the increasing contribution of their own margins to the P&L and improved efficiency in SG&A as key factors for margin expansion [55][59] Question: How does the company articulate the opportunity of AI-related technology transitions? - Management emphasized that AI presents both cost-saving and revenue opportunities, with Kindrel Bridge leveraging AI to enhance service delivery [66][70] Question: What is the visibility on the triple, double, single strategy? - Management expressed strong visibility on achieving the triple, double, single goals, supported by a solid cash flow forecast and growth in key business areas [72][76]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported signings growth of 48% in constant currency, totaling over $18 billion [6] - Adjusted pretax income increased by $317 million to $482 million, with adjusted free cash flow rising by 53% to $446 million [6][27] - The fourth quarter revenue reached $3.8 billion, reflecting a 1.3% year-over-year increase in constant currency [22] Business Line Data and Key Metrics Changes - Kindrel Consult's revenue grew by 45% in the fourth quarter and 50% in signings for fiscal year 2025, accounting for 22% of total signings [23][15] - Hyperscaler-related revenue more than doubled to $1.2 billion for the year, significantly exceeding the target of $1 billion [25][7] - The company achieved $900 million in annualized savings from its accounts initiative, surpassing its target for the year [26] Market Data and Key Metrics Changes - The company secured 55 contracts valued over $50 million in fiscal year 2025, with nearly half exceeding $100 million [10] - The signings growth was broad-based across various geographies and vertical markets, indicating strong demand for services [9] - The revenue book-to-bill ratio remained above one, suggesting future revenue growth from committed contracts [10] Company Strategy and Development Direction - The company is focused on leveraging its capabilities, partnerships, and innovation to drive sustainable growth [5] - The 3A initiatives have transitioned from turnaround drivers to pillars of profitable growth [7] - The company aims to address secular IT trends such as cloud migration, hybrid IT environments, and cybersecurity risks [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, citing the essential nature of its services [20][19] - The outlook for fiscal year 2026 includes expectations for substantial earnings and cash flow growth, with a target of at least $725 million in adjusted pretax income [18][33] - Management highlighted the importance of continued investment in innovation and capabilities to maintain growth momentum [45] Other Important Information - The company plans to balance capital allocation between organic growth investments and share repurchase programs [73] - The fiscal year 2026 outlook anticipates a 1% revenue growth in constant currency, with hyperscaler-related revenue expected to reach $1.8 billion [32][33] - The company maintains a strong liquidity position with nearly $5 billion available at quarter-end [30] Q&A Session Summary Question: Accomplishments in 2025 and positioning for 2026 - Management reflected on the successful execution of their strategy and expressed confidence in their ability to control their own destiny moving forward [42][45] Question: Progress with focus accounts - Management indicated they are approximately 75% through their focus accounts, having achieved 90% of targeted savings [50][48] Question: Book-to-bill ratio maintenance - Management confirmed expectations to maintain a book-to-bill ratio above one, driven by strong performance in consult and hyperscaler-related services [55] Question: Revenue growth guidance - Management explained that while signings growth was strong, they are not relying solely on revenue growth to achieve profit improvement, emphasizing the importance of backlog [66][69] Question: Impact of macro uncertainties on strategic accounts - Management noted that their services are essential for productivity, which tends to be a tailwind during uncertain macro conditions [81][84] Question: Role of Kindle Bridge in macro conditions - Management affirmed that Kindle Bridge can help uncover unused resources and provide leverage in uncertain macro conditions [86]

Financial Data and Key Metrics Changes - Kyndryl reported a 48% increase in signings in constant currency, totaling over $18 billion for fiscal year 2025 [6] - Adjusted pretax income rose by $317 million to $482 million, with adjusted free cash flow increasing by 53% to $446 million [6][27] - The fourth quarter revenue reached $3.8 billion, reflecting a 1.3% year-over-year increase in constant currency [22] Business Line Data and Key Metrics Changes - Kyndryl Consult's revenue grew by more than 25% for the year, with consult signings increasing by 50% in constant currency [7][14] - Hyperscaler-related revenue more than doubled to $1.2 billion for the year, significantly exceeding the target of nearly $1 billion [26] - The adjusted EBITDA margin for the fourth quarter was 18.4%, up 370 basis points year-over-year [24] Market Data and Key Metrics Changes - The company secured 55 contracts valued at over $50 million in fiscal year 2025, an increase from 40 contracts in the prior year [10] - Nearly half of these contracts were valued over $100 million, indicating strong demand across various geographies and verticals [10] - The revenue book-to-bill ratio remained above one, indicating future revenue growth from committed contracts [10] Company Strategy and Development Direction - Kyndryl's strategy focuses on building capabilities, partnerships, and innovation to drive sustainable growth, particularly in mission-critical technology services [5] - The company aims to leverage its expanded capabilities and strong customer relationships to win higher value opportunities [12] - The 3A initiatives have shifted from turnaround drivers to pillars of profitable growth, with expectations for substantial earnings and cash flow growth in fiscal year 2026 [8][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, emphasizing the essential nature of its technology services [20][21] - The outlook for fiscal year 2026 includes expectations for approximately $550 million in adjusted free cash flow and at least $725 million in adjusted pretax income [19][34] - Management highlighted the importance of continued investment in innovation and capabilities to maintain growth momentum [46] Other Important Information - Kyndryl's cash balance was $1.8 billion, with nearly $5 billion in liquidity at quarter end [31] - The company has a target to keep net leverage below one times adjusted EBITDA, ending the quarter at 0.6 times [32] - The fiscal year 2026 outlook assumes a 1% revenue growth in constant currency, with hyperscaler-related revenue expected to reach $1.8 billion [33][34] Q&A Session Summary Question: Accomplishments in 2025 and positioning for 2026 - Management reflected on the successful execution of their strategy and expressed confidence in their ability to control their own destiny through continued investment in innovation [44][46] Question: Progress with focus accounts - Management indicated they are approximately 75% through their focus accounts, having achieved 90% of targeted savings, with a revised target of $1 billion in annualized benefits [50][52] Question: Book to bill ratio and backlog duration - Management confirmed expectations to maintain a book to bill ratio above one, driven by strong performance in consult and hyperscaler-related services [58] Question: Revenue growth guidance - Management explained that while signings growth was strong, they are not relying solely on revenue growth to achieve profit improvement, as a significant portion of revenue is already contracted [70][72] Question: Impact of macro uncertainties on strategic accounts - Management noted that uncertainty tends to be a tailwind for their business, as clients seek to optimize their infrastructure in response to macro conditions [82][84] Question: Role of Kyndryl Bridge in uncertain conditions - Management affirmed that Kyndryl Bridge can help uncover unused resources and provide actionable insights, aiding clients in optimizing their operations [88][90]