Kyndryl Share Price Surged 12.8% After Raising FY ‘24 Guidance

The Kyndryl Holdings Inc (NYSE: KD) share price surged 12.76% after announcing its earnings results for its fiscal second quarter ended September 30, 2023. Kyndryl reported revenues of $4.1 billion for the second quarter, representing a year-over-year decline of 3% and 5% in constant currency terms. 

The decline was attributed to the company's strategic decision to reduce zero-margin and low-margin third-party content in customer contracts. The company reported a pretax loss of $109 million and a net loss of $142 million, equivalent to ($0.62) per diluted share, which compares favourably to last year when it saw a net loss of $281 million, or ($1.24) per diluted share. 

Adjusted pretax income for the quarter was $25 million, a notable improvement from the adjusted pretax loss of $102 million in the previous year. Adjusted net loss for the quarter amounted to $12 million, equivalent to ($0.05) per diluted share.

Adjusted EBITDA for the quarter stood at $574 million, marking a substantial 34% increase compared to $428 million in the same period of the previous year.  

Kyndryl recognised $180 million in revenue linked to cloud hyperscaler alliances in the first half of the fiscal year, making significant progress toward its hyperscaler revenue target of over $300 million for fiscal year 2024.

The company has redeployed over 7,500 delivery professionals to serve new revenue streams and address attrition, resulting in annualised savings of approximately $425 million as of the end of the quarter. 

Kyndryl continued to address contracts with substandard margins, yielding $400 million in annualised benefits.

Kyndryl is raising its fiscal year 2024 adjusted pretax income outlook, now expecting it to be at least $140 million, compared to the previous outlook of at least $100 million. The company is also increasing its fiscal year 2024 adjusted EBITDA margin outlook, aiming for approximately 14.5%, up from the previous outlook of approximately 14%.

Martin Schroeter, Kyndryl Chairman and CEO, said: “We’re strengthening and transforming our business at an accelerated pace, which is driving faster-than-anticipated margin expansion and creating future growth opportunities for Kyndryl.  We’re again increasing our adjusted earnings outlook for the year, and we remain on track to return to revenue growth in calendar 2025. Our customers are increasingly relying on us to provide the mission-critical expertise and technology necessary to harness today’s secular IT trends.”

Kyndryl share price. 

The Kyndryl share price surged 12.76% to trade at $17.50 from Tuesday’s closing price of $15.52.