Kyndryl (US:KD)2022-03-01 19:28Financial Data and Key Metrics Changes - In Q4 2021, Kyndryl reported pro forma revenue of $4.6 billion, reflecting a 4% year-over-year decline in constant currency, attributed to its previous operation as a captive subsidiary of IBM [49] - For the full year 2021, pro forma revenue was $18.5 billion, with pro forma adjusted EBITDA of $2.7 billion and pro forma adjusted pretax income of $114 million [51][62] - Pro forma adjusted pretax income for Q4 was $53 million, down from the prior year quarter primarily due to higher IBM software costs [49] Business Line Data and Key Metrics Changes - Kyndryl's revenue is divided into six global practices: cloud, core enterprise, security and resiliency, applications, data and AI, digital workplace, and network and edge, with cloud and core enterprise each representing about a third of revenues [58][60] - The company aims to grow its advisory and implementation services revenues, which tend to generate faster revenue compared to managed services [88] Market Data and Key Metrics Changes - The total addressable market for Kyndryl increased from approximately $240 billion pre-spin to $415 billion post-spin, expected to expand to about $510 billion by 2024 [17] - The company is positioned to benefit from trends in digital transformation, rapid data growth, and increased focus on cybersecurity and resiliency [12][15] Company Strategy and Development Direction - Kyndryl is focusing on three major global initiatives: alliances, advanced delivery, and accounts to drive profitable growth [31] - The company has established partnerships with major cloud providers like Microsoft, Google Cloud, and AWS to enhance its service offerings and market presence [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to revenue growth by 2025, emphasizing the importance of expanding partnerships and enhancing service delivery capabilities [80][67] - The company anticipates a decline in revenues for fiscal year 2023 but expects to achieve double-digit growth in signings over the same period [66][67] Other Important Information - Kyndryl is committed to environmental, social, and governance (ESG) principles, focusing on carbon management, diversity, and ethical governance [43][44][45] - The company reported a $469 million goodwill impairment, which is a non-cash charge and does not impact adjusted results [56] Q&A Session Summary Question: Insights on signings and revenue retention - Management is optimistic about achieving double-digit signings growth this year, with a focus on increasing share of wallet from existing customers while also adding new logos [87] Question: Capital allocation strategy and potential dividends - Management indicated that a dividend within the next 12 months is highly unlikely due to transition costs and the need to stabilize the company's financial footing [93] Question: Mechanics of recent partnerships - Partnerships involve co-investment in skills, joint go-to-market strategies, and co-innovation efforts, enhancing Kyndryl's capabilities and market presence [102]