Kyndryl (KD) investor relations material

Executive summary

• Q2 FY2026 revenue was $3.7 billion, down 1% year-over-year, with net income rising to $68 million due to operating efficiencies and higher margins on recent signings.

• Achieved margin expansion, substantial earnings growth, and strong performance in Kyndryl Consult and hyperscaler-related revenue streams.

• Reaffirmed fiscal 2026 outlook and increased share repurchase program by $400 million.

• Entered Q3 with a record pipeline and expect revenue growth in the second half of the year.

• Focused on profitable growth, leveraging leadership in mission-critical services and delivery excellence.

Financial highlights

• Adjusted EBITDA for Q2 was $641 million (17.2% margin), up 15% year-over-year; adjusted pretax income was $123 million (3.3% margin), up from $45 million.

• Adjusted net income was $89 million, or $0.38 per diluted share, up from $3 million, or $0.01 per share, a year ago.

• Free cash flow for the quarter was $22 million; cash and equivalents at quarter-end were $1.33 billion.

• Share repurchases totaled $154 million for the six months, with 4.6 million shares repurchased.

• Signings for the trailing twelve months were $15.6 billion, exceeding revenue of $15.0 billion.

Outlook and guidance

• Fiscal 2026 outlook reaffirmed: adjusted pretax income of at least $725 million, adjusted EBITDA margin of ~18%, and free cash flow of ~$550 million.

• Constant-currency revenue growth for fiscal 2026 expected at 1%, with 4%-5% growth in the second half.

• Q3 expected to deliver positive constant currency revenue growth and 15%-25% higher adjusted pre-tax income year-over-year.

• Management expects workforce rebalancing activities to reduce annual payroll costs by more than $100 million.

• The company believes existing cash and credit facilities are sufficient for at least the next twelve months.