Q1 2026 Kyndryl Holdings Inc Earnings Call Transcript
Key Points
- Kyndryl Holdings Inc (KD) reported a 39% year-over-year increase in adjusted pre-tax income for Q1, showcasing strong earnings growth.
- Kyndryl Consult revenue grew 32% in constant currency over the last 12 months, reaching an annual pace of more than $3 billion.
- The company achieved a 44% increase in signings over the last 12 months, with a book-to-bill ratio above 1, indicating strong demand for its services.
- Kyndryl's strategic initiatives, including alliances, advanced delivery, and accounts, are driving profitable growth and margin expansion.
- The company is on track to deliver $1.8 billion in hyperscalar-related revenue for fiscal 2026, a 50% increase from the previous year.
- Q1 revenue declined in constant currency due to actions taken to address eight focus accounts, resulting in a 50% reduction in revenue from these accounts.
- Some deals targeted for Q1 were delayed, impacting the quarter's revenue performance.
- The company continues to face challenges in predicting the timing of closing deals with focus accounts, which can affect revenue projections.
- Kyndryl is still battling some inherited contracts with substandard margins, which impacts overall profitability.
- The company experienced a $222 million outflow in free cash flow for Q1, primarily due to seasonal factors such as annual software and incentive compensation payments.
Good day and thank you for standing by. Welcome to the Kyndryl fiscal first quarter 2026 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Laurie Chapman, Global Head of Investor Relations. Please go ahead.
Good morning, everyone, and welcome to Kyndryl's earnings call for the first fiscal quarter ended June 30, 2025.
Before we begin, I'd like to remind you that our remarks today include forward-looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. These forward-looking statements speak only to our expectations as of today. For more details on some of these risks, please see the risk factors. Section of our annual report on Form 10-K for the year ended March 31, 2025.
Also, in today's remarks, we refer to certain non-gap financial
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