1. Kyndryl reported Q3 revenues of $3.74 billion, down 5% YoY. 2. Total signings increased 10% YoY, totaling $4.1 billion last quarter. 3. Adjusted net income reached $124 million, compared to a net loss last year. 4. The company raised its FY 2025 earnings and cash flow outlook. 5. Kyndryl initiated a $300 million share repurchase program to boost confidence.
Kyndryl's strong signings growth and raised outlook indicate positive financial momentum. Past examples show similar outlook revisions often correlated with stock price increases.
The quarterly earnings and strategic announcements signal potential growth and investor confidence, crucial for KD's market performance.
Immediate positive performance based on increased signings and repurchase program could boost share price. Similar announcements have previously led to rapid market reactions.
the world's largest IT infrastructure services provider, today released financial results for the quarter ended December 31, 2024, the third quarter of its 2025 fiscal year.
"In the third quarter, we delivered another quarter of strong signings growth and significant margin expansion, led by Kyndryl Consult, Kyndryl Bridge and our alliances with hyperscalers. With sustained momentum in our signings coupled with higher operating margins, we remain on track to deliver constant-currency revenue growth in the fourth quarter of this fiscal year and are raising our full-year outlook for adjusted earnings and adjusted free cash flow," said Kyndryl Chairman and Chief Executive Officer Martin Schroeter.
"In November, at our first Investor Day as an independent company, we outlined our multi-year growth strategy, emphasizing that over the next three years we expect to triple adjusted free cash flow and more than double adjusted pretax earnings. In addition, we initiated a $300 million share repurchase program, reflecting our confidence in our future growth trajectory," Mr. Schroeter said.
For the third quarter, Kyndryl reported revenues of $3.74 billion, a year-over-year decline of 5% and 3% in constant currency. The year-over-year constant-currency revenue decline reflects the Company's continued progress in reducing inherited no-margin and low-margin third-party content in customer contracts, as well as the divestiture of its SIS platform. In addition, exchange rates moved significantly over the course of the quarter and had an unfavorable year-over-year impact on reported revenue. The Company reported pretax income of $258 million and net income of $215 million, or $0.89 per diluted share, in the quarter, compared to a net loss of $12 million, or ($0.05) per diluted share, in the prior-year period.
Adjusted pretax income was $160 million, a 154% increase compared to adjusted pretax income of $63 million in the prior-year period, reflecting contributions from the Company's three-A initiatives, offset by the contractually required increase in IBM software costs and workforce rebalancing charges of $17 million. Adjusted net income was $124 million, or $0.51 per diluted share, compared to a net loss in the prior-year period. Adjusted EBITDA was $704 million, a 14% year-over-year increase. Cash flow from operations was $260 million, and adjusted free cash flow was $171 million in the quarter.
Total signings in the quarter were $4.1 billion, representing a year-over-year increase of 10% on a reported basis and 12% in constant currency. Total signings for the twelve months ended December 31, 2024 were $16.3 billion, a year-over-year increase of 31%.
"Once again, we delivered strong progress on our three-A's initiatives and robust signings growth that demonstrate customer demand for the essential services and insights we offer. The margins associated with our signings continue to support our outlook for future earnings and free cash flow growth," said David Wyshner, Kyndryl's Chief Financial Officer.
Kyndryl is raising its earnings and cash flow outlook for its fiscal year 2025, which runs from April 2024 to March 2025:
The Company expects to deliver constant-currency revenue growth of approximately 2% in the fourth quarter.
Kyndryl's earnings call for the third fiscal quarter is scheduled to begin at 8:30 a.m. ET on February 4, 2025. The live webcast can be accessed by visiting investors.kyndryl.com on Kyndryl's investor relations website. A slide presentation will be made available on Kyndryl's investor relations website before the call on February 4, 2025. Following the event, a replay will be available via webcast for twelve months at investors.kyndryl.com.
Kyndryl (NYSE: KD) is the world's largest IT infrastructure services provider, serving thousands of enterprise customers in more than 60 countries. The Company designs, builds, manages and modernizes the complex, mission-critical information systems that the world depends on every day. For more information, visit www.kyndryl.com.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including statements concerning the Company's plans, objectives, goals, beliefs, business strategies, future events, business condition, results of operations, financial position, business outlook and business trends and other non-historical statements, including without limitation the outlook and financial objectives in this press release (which does not assume any future acquisitions or divestitures), are forward-looking statements.
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| Three Months Ended | Nine Months Ended | December 31, 2024 | December 31, 2023 |
|---|---|---|---|
| Revenues | $3,744 | $3,936 |