Kyndryl (KD) Morgan Stanley Technology, Media & Telecom Conference summary

Growth strategy and financial objectives

• Targeting a tripling of free cash flow, doubling of profitability, and achieving single-digit revenue growth over the next few years, driven by improved tax position and backlog transition.

• Revenue growth expected to return in Q4 FY2025, with mid-single-digit growth targeted by FY2028.

• Consult and Alliance businesses are key growth vectors, with Consult showing double-digit growth and alliances exceeding $1 billion in revenue.

• Backlog-based business model provides strong visibility, with over 90% of P&L expected to be from post-spin signings within three years.

• Margin improvement supported by engineered revenue declines and focus on higher-profit contracts.

Business model evolution and operational focus

• Shift from inherited backlog to post-spin contracts, with 50% of current revenue from new signings and this share increasing annually.

• Gross Profit Book-to-Bill metric above 1.3x, indicating strong future profit potential.

• Customer retention rate exceeds 95%, with over 300 new customers added since the spin-out.

• New customer engagements typically start small and grow over time, with occasional large contracts exceeding $100 million.

• Focus remains on growing wallet share and profitability within the existing customer base.

Technology, innovation, and AI integration

• Heavy investment in consulting skills, cloud certifications, and ecosystem partnerships has expanded service offerings.

• Kyndryl Bridge platform delivers AIOps-driven insights, automation, and industry benchmarking to customers.

• AI and automation are already delivering accretive margins, with Kyndryl Bridge generating 5–6 million actionable insights monthly.

• Proprietary operational data and machine learning capabilities position the company as a leader in infrastructure AI.

• AI-driven services are expected to enhance customer stickiness, margins, and competitive differentiation.