Kyndryl (KD, Financial) is broadening its Distributed Cloud offerings by incorporating an AI-driven cloud approach developed in collaboration with Microsoft. This strategic enhancement aims to support clients in innovating, updating, and streamlining their business operations. The new services, which include advisory, implementation, and managed services, offer seamless integration across various platforms such as hybrid, multicloud, edge, and IoT environments.
The team at Kyndryl will assist organizations in integrating these enhanced cloud services into their current IT structures. The upgraded services are designed to work in conjunction with Microsoft Azure Arc, Azure Local, and Azure Cloud, facilitating adaptability and ensuring smooth transitions. This initiative is expected to enhance operational efficiency and optimize returns on investment for businesses.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Kyndryl Holdings Inc (KD, Financial) is $43.58 with a high estimate of $47.00 and a low estimate of $38.89. The average target implies an upside of 11.68% from the current price of $39.02. More detailed estimate data can be found on the Kyndryl Holdings Inc (KD) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Kyndryl Holdings Inc's (KD, Financial) average brokerage recommendation is currently 1.7, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Kyndryl Holdings Inc (KD, Financial) in one year is $13.33, suggesting a downside of 65.84% from the current price of $39.02. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Kyndryl Holdings Inc (KD) Summary page.
KD Key Business Developments
Release Date: May 08, 2025
- Signings: Up 48% in constant currency to more than $18 billion.
- Adjusted Pre-Tax Income: Increased $317 million to $482 million.
- Adjusted Free Cash Flow: $446 million, a 53% increase from last year.
- Kyndryl Consult Revenue: Increased more than 25% for the year.
- Hyperscale Related Revenue: More than doubled to $1.2 billion.
- Annual Savings: $775 million from advanced delivery and $900 million from accounts initiative.
- Fourth Quarter Revenue: $3.8 billion, a 1.3% year-over-year increase in constant currency.
- Fourth Quarter Adjusted EBITDA: $698 million with an 18.4% margin, up 370 basis points year over year.
- Fourth Quarter Adjusted Pre-Tax Income: $185 million, with a 410 basis point margin increase year over year.
- Fourth Quarter Hyperscale Related Revenue: $378 million.
- Full Year Revenue: $15.1 billion.
- Full Year Adjusted EBITDA: $2.5 billion.
- Full Year Adjusted Pre-Tax Margin: Increased by 220 basis points year over year.
- Adjusted Free Cash Flow for Fiscal 2026: Expected to be approximately $550 million.
- Fiscal 2026 Revenue Growth: Expected to grow 1% in constant currency.
- Fiscal 2026 Hyperscale Related Revenue: Expected to reach $1.8 billion or more, a 50% increase.
- Fiscal 2026 Adjusted EBITDA Margin: Expected to be approximately 18%, an increase of roughly 130 basis points.
- Fiscal 2026 Adjusted Pre-Tax Income: At least $725 million, growing by at least $243 million.
- Cash Balance: $1.8 billion with nearly $5 billion of liquidity at quarter end.
- Net Debt: $1.4 billion with net leverage at 0.6 times adjusted EBITDA.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kyndryl Holdings Inc (KD, Financial) achieved a 48% increase in signings, reaching over $18 billion in constant currency.
- The company reported a significant milestone by returning to positive constant currency revenue growth in the fourth quarter.
- Kyndryl Consult delivered above-market growth with a revenue increase of more than 25% for the year.
- The company generated $446 million in adjusted free cash flow, marking a 53% increase from the previous year.
- Kyndryl's hyperscale-related revenue more than doubled to $1.2 billion, showcasing strong growth in strategic alliances.
Negative Points
- The company faces ongoing challenges with macroeconomic uncertainties that could impact customer investment decisions.
- Despite strong growth, Kyndryl's revenue guidance for fiscal 2026 appears conservative given the 46% signing growth.
- The company is still working through legacy contracts, which may slow the acceleration of revenue growth.
- Kyndryl's exposure to IBM software cost increases remains a concern, although it is expected to stabilize in the future.
- The company acknowledges that while it is insulated, it is not immune to macroeconomic factors, which could affect future performance.
