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Kyndryl Holdings Incorporation (KD)
NYSE:KD
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Kyndryl Holdings Incorporation
(NYSE:KD)
52Neutral
Positive Factors
Contract Wins
KD signed 26 deals with over $100M TCV vs. 15 in F24.
Financial Performance
Free cash flow of $335M exceeded BofAe/implied guide of $245M/$240M.
Revenue Visibility
The company has strong visibility into near-term revenue dynamics, and achievement of revenue growth in near-term should earn further multiple separation vs rival DXC.
Negative Factors
Accounting Concerns
The report alleges aggressive accounting, coinciding with potential incremental IBM-related costs, suspect signings metrics, audit concerns, and internal stock sales.
Audit Concerns
Audit concerns are related to information technology controls rather than misstated revenue recognition.
Market Perception
The optics of the audit matters aren’t ideal, but KD says auditor PwC OK’d the financial statements despite the systems issue.
Kyndryl Holdings Incorporation (KD) vs. S&P 500 (SPY)
Market Cap
$7.74B
Dividend YieldN/A
Average Volume (3M)2.48M
Price to Earnings (P/E)59.5
Beta (1Y)1.47
Revenue Growth-8.20%
EPS GrowthN/A
CountryUS
Employees80,000
SectorTechnology
Sector Strength66
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.52
Shares Outstanding232,694,500
10 Day Avg. Volume1,530,543
30 Day Avg. Volume2,475,463
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.41
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit3.80
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$44.00Price Target Upside32.77% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Kyndryl Holdings Incorporation Business Overview & Revenue Model
Company DescriptionKyndryl Holdings Incorporation, established in 2021 as a spin-off from IBM, operates within the information technology services sector. The company is a global leader in providing infrastructure services, hosting services, network services, and digital workplace services. Kyndryl focuses on helping businesses and organizations worldwide manage and modernize their IT systems, optimize their digital transformation processes, and ensure operational resilience through a comprehensive suite of managed services and technology solutions.
How the Company Makes MoneyKyndryl makes money primarily through its range of IT infrastructure services, which it provides to a diverse clientele across various industries. The company's revenue model is based on long-term service contracts with enterprises that require ongoing IT management, cloud services, and digital transformation support. Key revenue streams include fees for managed services, cloud infrastructure management, and digital workplace solutions. Kyndryl's earnings are significantly enhanced by strategic partnerships with major technology providers like Microsoft, Google, and Amazon, which enable it to offer integrated cloud and IT solutions. Additionally, the company benefits from its legacy customer base inherited from IBM, which includes numerous Fortune 500 companies, ensuring a stable and recurring revenue flow.
Kyndryl Holdings Incorporation Financial Statement Overview
Summary
Kyndryl Holdings is experiencing declining revenue and profitability issues across financial statements. The income statement shows decreasing revenue with some margin recovery. The balance sheet reflects high leverage and limited equity, posing financial risks. Cash flow statements indicate struggles in generating positive cash flow. Strategic improvements are needed for stability and growth.Income Statement
Kyndryl Holdings has been experiencing declining revenue over recent years. The TTM (Trailing-Twelve-Months) shows a slight recovery in margins, with a gross profit margin of approximately 39.8% and a net profit margin of 0.9%. However, the company has struggled with consistent profitability, evidenced by previous years' losses. The EBIT and EBITDA margins have shown some improvement, but overall revenue growth has been negative.45
Neutral
Balance Sheet
The balance sheet indicates a high debt-to-equity ratio in the TTM (Trailing-Twelve-Months) of approximately 3.61, reflecting significant leverage. The return on equity is modest at 12.6%, suggesting limited profitability on shareholders' equity. The equity ratio is low, highlighting potential financial instability. Overall, the balance sheet reflects a high-risk financial structure with limited equity support.38
Negative
Cash Flow
Cash flow analysis reveals challenges with free cash flow, which has been negative and inconsistent. The operating cash flow to net income ratio is approximately 3.67 in the TTM (Trailing-Twelve-Months), indicating reliance on operational cash rather than profitability. The free cash flow to net income ratio is negative, underscoring ongoing struggles to generate cash from operations.42
Neutral
| Breakdown | ||||
| Mar 2024 | Mar 2023 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 16.05B | 17.03B | 18.66B | 19.35B | 20.28B | Gross Profit |
| 2.86B | 2.53B | 2.11B | 2.21B | 2.60B | EBIT |
| 116.00M | -422.00M | -704.00M | -1.70B | -503.00M | EBITDA |
| 1.14B | 952.00M | 960.00M | 195.00M | 1.42B | Net Income Common Stockholders |
| -340.00M | -1.37B | -2.31B | -2.01B | -943.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.55B | 1.85B | 2.22B | 24.00M | 36.00M | Total Assets |
| 10.59B | 11.46B | 13.21B | 11.21B | 11.74B | Total Debt |
| 4.14B | 4.24B | 4.60B | 1.39B | 1.36B | Net Debt |
| 2.59B | 2.40B | 2.38B | 1.37B | 1.32B | Total Liabilities |
| 9.47B | 10.00B | 10.45B | 6.28B | 5.80B | Stockholders Equity |
| 1.01B | 1.36B | 2.77B | 4.87B | 5.89B |
| Cash Flow | Free Cash Flow | |||
| -197.00M | -84.00M | -871.00M | -408.00M | -56.00M | Operating Cash Flow |
| 454.00M | 781.00M | -119.00M | 628.00M | 1.13B | Investing Cash Flow |
| -553.00M | -835.00M | -572.00M | -953.00M | -1.13B | Financing Cash Flow |
| -170.00M | -141.00M | 2.92B | 312.00M | -1.00M |
Kyndryl Holdings Incorporation Technical Analysis
Positive
33.14
Price Trends
32.92
Positive
35.45
Positive
30.58
Positive
Market Momentum
0.56
Negative
69.52
Neutral
82.36
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KD, the sentiment is Positive. The current price of 33.14 is above the 20-day moving average (MA) of 31.52, above the 50-day MA of 32.92, and above the 200-day MA of 30.58, indicating a bullish trend. The MACD of 0.56 indicates Negative momentum. The RSI at 69.52 is Neutral, neither overbought nor oversold. The STOCH value of 82.36 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KD.
Kyndryl Holdings Incorporation Risk Analysis
Kyndryl Holdings Incorporation disclosed 30 risk factors in its most recent earnings report. Kyndryl Holdings Incorporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kyndryl Holdings Incorporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $5.72B | 16.40 | 21.53% | 1.22% | 0.47% | -18.98% | |
77 Outperform | $8.69B | 17.41 | 22.21% | 1.27% | 7.33% | -15.86% | |
76 Outperform | $10.37B | 22.25 | 13.48% | ― | 14.16% | 22.25% | |
72 Outperform | $2.74B | 15.23 | 21.21% | ― | -0.64% | 30.96% | |
60 Neutral | $10.83B | 10.47 | -6.71% | 2.99% | 7.73% | -12.97% | |
52 Neutral | $7.74B | 59.55 | 12.09% | ― | -8.20% | ― | |
46 Neutral | $2.81B | 267.98 | -2.46% | ― | -5.65% | 78.20% |
* Technology Sector Average
Performance Comparison
KD
Kyndryl Holdings Incorporation
36.63
9.36
34.32%
CACI
Caci International
476.27
47.94
11.19%
G
Genpact
42.04
9.34
28.56%
SAIC
Science Applications
121.79
-11.65
-8.73%
WNS
WNS
55.82
6.15
12.38%
DXC
DXC Technology
15.86
-3.55
-18.29%
Kyndryl Holdings Incorporation Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q4-2025)
| % Change Since: 0.00%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
Kyndryl showcased strong financial performance with significant increases in signings, revenue, and adjusted pretax income. The company returned to positive revenue growth and demonstrated substantial progress in its strategic initiatives. However, challenges such as increased IBM software costs and geopolitical risks remain. Overall, the highlights significantly outweigh the lowlights.Q4-2025 Updates
Positive Updates
Significant Increase in Signings
Signings were up 48% in constant currency to more than $18 billion, indicating strong demand for Kyndryl's services.
Record Adjusted Pretax Income
Adjusted pretax income increased by $317 million to $482 million, marking a 192% increase from the prior year.
Strong Cash Flow Generation
Generated $446 million in adjusted free cash flow, a 53% increase from last year.
Kyndryl Consult Revenue Growth
Kyndryl Consult delivered above-market growth with revenue increasing more than 25% year over year.
Hyperscaler Related Revenue Surge
Hyperscaler related revenue more than doubled to $1.2 billion.
Positive Revenue Growth
Returned to positive constant currency revenue growth in the fourth quarter.
Large Contract Wins
Secured 55 contracts valued at over $50 million each, with nearly half over $100 million.
Negative Updates
IBM Software Cost Increase
Fiscal 2026 outlook includes a $150 million increase in IBM software costs, impacting financial results.
Exposure to Geopolitical Risks
Although limited, there is some exposure to geopolitical risks and tariffs, which the company is monitoring.
Company Guidance
In the Kyndryl Fourth Quarter 2025 Earnings Conference Call, the company provided guidance for fiscal 2026, projecting another year of significant earnings and cash flow growth, along with positive constant currency revenue growth. Key metrics highlighted included a 48% increase in signings to over $18 billion, $482 million in adjusted pretax income, a 53% increase in adjusted free cash flow to $446 million, and a 1.2 revenue book to bill ratio. The company reported that Kyndryl Consult revenue grew over 25%, with consult signings increasing by 50% in constant currency, and hyperscaler-related revenue more than doubled to $1.2 billion. For fiscal 2026, the company expects adjusted pretax income to grow by more than $240 million to at least $725 million and adjusted free cash flow to reach approximately $550 million. Over the medium term, Kyndryl aims to achieve more than $1 billion in adjusted free cash flow and $1.2 billion in adjusted pretax income by fiscal 2028, with a target of mid-single digit revenue growth.Kyndryl Holdings Incorporation Corporate Events
Stock BuybackBusiness Operations and Strategy
Kyndryl Holdings Announces $300 Million Share Buyback
Positive
Nov 21, 2024
Kyndryl Holdings, Inc. has announced a $300 million share repurchase program, signaling confidence in their business growth and financial stability. The company plans to buy back shares through various market transactions, with the flexibility to modify or discontinue the program as needed. This move aligns with Kyndryl’s strategy to return capital to shareholders while maintaining financial agility.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.