Kyndryl Holdings Inc
NYSE:KD
Kyndryl Holdings Inc
Kyndryl Holdings Inc., a name that might sound unfamiliar to some, was born from one of the most significant corporate separations in recent history. Spun off from IBM in November 2021, Kyndryl took on the task of managing the vast IT infrastructure services that Big Blue had cultivated over decades. This separation allowed Kyndryl to direct its focus squarely on advancing IT services across cloud-based solutions, networking, hosting, and customer data centers. The company's operations primarily revolve around designing, building, and managing critical information systems. Its business model leverages ongoing engagements with large organizations, providing essential services such as disaster recovery, security, and systems management, ensuring that clients' digital transformations are seamless and secure.
Kyndryl's revenue stream is firmly anchored in its partnerships and contractual agreements with a diverse array of industries, including financial services, telecoms, retail, and healthcare. By committing to long-term contracts, the company ensures a steady flow of income and builds deep relationships with its clients, who rely on its expertise to keep their IT infrastructure running smoothly. This model allows Kyndryl to customize solutions that specifically address the strategic needs of each client, thereby creating value not only through operational efficiency but also through innovative technology deployment tailored to meet the evolving business landscape. The firm’s ability to adapt and grow alongside its partners underscores its core strength, positioning Kyndryl as a pivotal player in the IT services domain, with a clear vision for both its operational execution and future growth trajectory.
Kyndryl Holdings Inc., a name that might sound unfamiliar to some, was born from one of the most significant corporate separations in recent history. Spun off from IBM in November 2021, Kyndryl took on the task of managing the vast IT infrastructure services that Big Blue had cultivated over decades. This separation allowed Kyndryl to direct its focus squarely on advancing IT services across cloud-based solutions, networking, hosting, and customer data centers. The company's operations primarily revolve around designing, building, and managing critical information systems. Its business model leverages ongoing engagements with large organizations, providing essential services such as disaster recovery, security, and systems management, ensuring that clients' digital transformations are seamless and secure.
Kyndryl's revenue stream is firmly anchored in its partnerships and contractual agreements with a diverse array of industries, including financial services, telecoms, retail, and healthcare. By committing to long-term contracts, the company ensures a steady flow of income and builds deep relationships with its clients, who rely on its expertise to keep their IT infrastructure running smoothly. This model allows Kyndryl to customize solutions that specifically address the strategic needs of each client, thereby creating value not only through operational efficiency but also through innovative technology deployment tailored to meet the evolving business landscape. The firm’s ability to adapt and grow alongside its partners underscores its core strength, positioning Kyndryl as a pivotal player in the IT services domain, with a clear vision for both its operational execution and future growth trajectory.
Revenue Growth: Kyndryl reported 3% revenue growth year-over-year in the third quarter, but growth was flat in constant currency and fell short of internal expectations.
Margin Expansion: The company delivered improved margins, higher earnings, and positive free cash flow, with margin gains supported by higher-value, post-spin contracts.
Sales Cycle Delays: Management cited longer sales cycles and regulatory complexity, especially around AI and data sovereignty, as key reasons for the downward revision of the second-half outlook.
Guidance Lowered: Fiscal 2026 adjusted pretax income and free cash flow guidance were lowered due to these headwinds, with free cash flow now expected between $325 million and $375 million.
Hyperscaler Business Growth: Hyperscaler-related revenue surged 58% year-over-year in Q3, on track to reach nearly $2 billion for fiscal 2026, up from an initial $1.8 billion target.
IBM Partnership Shift: Ongoing changes in the IBM alliance continue to weigh on reported revenue, with IBM-related revenue now halved to $2 billion since the spin-off.
Strong Backlog: The book-to-bill ratio remains above 1, and the company continues to add higher-margin business to its backlog, supporting confidence in long-term targets.
SEC Review Disclosure: Kyndryl is cooperating with an SEC review of cash management practices and internal controls but does not expect a restatement or impact to financial statements.
