Kyndryl Holdings, the IBM spinoff, has posted better-than-expected quarterly results and remains focused on a return to top-line growth. Despite a 9% decline in revenue compared to the previous year, the reported revenue of $3.9 billion for the quarter ending on Dec. 31 was in line with Wall Street's estimates.
The company's adjusted EBITDA reached $615 million, surpassing the consensus view by $20 million. Additionally, adjusted pre-tax income exceeded estimates by $2 million, reaching $63 million. On both a GAAP and non-GAAP basis, Kyndryl reported a loss of 5 cents per share. Notably, this performance was ahead of the consensus for GAAP and slightly below the non-GAAP forecast.
CEO Martin Schroeter expressed his satisfaction with the company's strong results and its ability to execute on the previously outlined strategy. He highlighted that Kyndryl signed $3.7 billion in new business during the quarter, marking a 16% increase from the previous year. Over the fiscal year through Jan. 31, new signings totaled $9.5 billion, surpassing the comparable period's figure of $9.1 billion.
Schroeter also emphasized Kyndryl's success in divesting zero-profit or negative-margin businesses inherited from IBM. Despite shedding $1 billion in revenue over the past year, the company added $360 million in profit without significant workforce changes. Currently, Kyndryl's workforce remains above 80,000 employees, demonstrating stability in its operations.
These positive results indicate Kyndryl's progress as an independent IT services provider. The company's focus on executing its strategic vision and its ability to attract new business suggest a promising future in the industry.
Kyndryl Reports Impressive Revenue Growth and Sets New Targets
Kyndryl, a leading provider of world-class IT services, has announced a remarkable achievement in its revenue for the fiscal year. The company has generated over $300 million in revenue through its strategic alliances with major cloud providers such as Microsoft, Google, and Amazon, surpassing its previous full-year goal. Now, Kyndryl aims to reach an even higher target of $400 million for the fiscal year ending in March 2024.
Although there is an expected contraction in revenue between 6% and 7% on a constant currency basis for the March 2024 fiscal year, Kyndryl remains optimistic. The company anticipates maintaining an adjusted Ebitda margin of 14.5%. Furthermore, the adjusted pre-tax income forecast for the year has been revised from $140 million to at least $150 million.
Kyndryl has emphasized its commitment to returning to revenue growth by the year 2025. The company attributes its earnings growth to the increasing demand for its top-notch IT services and effective strategic execution. Kyndryl prides itself on meeting customer needs for operational excellence and cybersecurity in complex hybrid environments by leveraging its mission-critical expertise.
Regarding the potential return of capital to shareholders through dividends or share buybacks, Kyndryl CEO, Schroeter, expressed confidence in the company's ability to achieve this. He acknowledged that there is still work to be done in improving margins, but expects significant progress next year and beyond. Schroeter stated that capital returns to Kyndryl shareholders are not too far off.
Despite a slight decline of approximately 2.6% in Kyndryl's shares this year, there has been an impressive increase of 53% over the past 12 months.
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