Kyndryl Holdings Files 10-Q for Period Ending Dec 31, 2024

TL;DR

Kyndryl's Q3 2024 10-Q is in. Check financials.

AI Summary

Kyndryl Holdings, Inc. filed its 10-Q for the period ending December 31, 2024. The company, headquartered at One Vanderbilt Avenue in New York, NY, reported its financial performance. This filing provides an update on the company's operations and financial standing for the specified period.

Why It Matters

This 10-Q filing provides investors and stakeholders with a detailed look into Kyndryl's financial health and operational performance during the third quarter of its fiscal year.

Risk Assessment

Risk Level: medium — As a 10-Q filing, it contains detailed financial information and risk factors that require careful analysis to assess the company's overall risk profile.

Key Players & Entities

• Kyndryl Holdings, Inc. (company) — Filer of the 10-Q
• December 31, 2024 (date) — End of the reporting period
• One Vanderbilt Avenue, New York, NY (location) — Company's business and mailing address
• 0001558370-25-000688 (accession_number) — Unique identifier for the filing

FAQ

Key Financial Figures

• $0.01 — ch registered Common stock, par value $0.01 per share KD New York Stock Exchang

Filing Documents

• kd-20241231x10q.htm (10-Q) — 2797KB
• kd-20241231xex31d1.htm (EX-31.1) — 10KB
• kd-20241231xex31d2.htm (EX-31.2) — 10KB
• kd-20241231xex32d1.htm (EX-32.1) — 6KB
• kd-20241231xex32d2.htm (EX-32.2) — 6KB
• 0001558370-25-000688.txt ( ) — 11892KB
• kd-20241231.xsd (EX-101.SCH) — 55KB
• kd-20241231_cal.xml (EX-101.CAL) — 75KB
• kd-20241231_def.xml (EX-101.DEF) — 275KB
• kd-20241231_lab.xml (EX-101.LAB) — 459KB
• kd-20241231_pre.xml (EX-101.PRE) — 406KB
• kd-20241231x10q_htm.xml (XML) — 2780KB

- Financial Information

Part I - Financial Information :

Consolidated Financial Statements (Unaudited)

Item 1. Consolidated Financial Statements (Unaudited) : 3 Consolidated Income Statement for the three and nine months ended December 31, 2024 and 2023 3 Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended December 31, 2024 and 2023 4 Consolidated Balance Sheet at December 31, 2024 and March 31, 2024 5 Consolidated Statement of Cash Flows for the nine months ended December 31, 2024 and 2023 6 Consolidated Statement of Equity for the three and nine months ended December 31, 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 30

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 42

Controls and Procedures

Item 4. Controls and Procedures 42

- Other Information

Part II - Other Information :

Legal Proceedings

Item 1. Legal Proceedings 43

Risk Factors

Item 1A. Risk Factors 43

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 43

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 43

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 43

Other Information

Item 5. Other Information 43

Exhibits

Item 6. Exhibits 44 2 Table of Contents

- Financial Information

Part I - Financial Information

Consolidated Financial Statements (Unaudited)

Item 1. Consolidated Financial Statements (Unaudited): KYNDRYL HOLDINGS, INC. CONSOLIDATED INCOME STATEMENT (In millions, except per share amounts) (Unaudited) Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 2024 2023 Revenues $ 3,744 $ 3,936 $ 11,257 $ 12,202 Cost of services $ 2,981 $ 3,184 $ 8,939 $ 10,055 Selling, general and administrative expenses 647 705 1,951 2,059 Workforce rebalancing charges 17 19 92 115 Transaction-related costs (benefits) ( 148 ) ( 77 ) ( 128 ) 12 Interest expense 24 31 77 92 Other expense (income) ( 35 ) 21 9 34 Total costs and expenses $ 3,486 $ 3,883 $ 10,940 $ 12,367 Income (loss) before income taxes $ 258 $ 53 $ 317 $ ( 165 ) Provision for income taxes $ 43 $ 65 $ 134 $ 131 Net income (loss) $ 215 $ ( 12 ) $ 183 $ ( 295 ) Basic earnings (loss) per share $ 0.93 $ ( 0.05 ) $ 0.79 $ ( 1.29 ) Diluted earnings (loss) per share $ 0.89 $ ( 0.05 ) $ 0.77 $ ( 1.29 ) Weighted-average basic shares outstanding 232.2 229.6 231.5 228.9 Weighted-average diluted shares outstanding 240.7 229.6 238.3 228.9 The accompanying notes are an integral part of the financial statements. 3 Table of Contents KYNDRYL HOLDINGS, INC. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Dollars in millions) (Unaudited) Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 2024 2023 Net income (loss) $ 215 $ ( 12 ) $ 183 $ ( 295 ) Other comprehensive income (loss), before tax: Foreign currency translation adjustments: Foreign currency translation adjustments ( 248 ) 183 ( 159 ) 58 Unrealized gains (losses) on net investment hedges 55 — 26 — Total foreign currency translation adjustments ( 193 ) 183 ( 133 ) 58 Unrealized gains (losses) on cash flow hedges: Unrealized gains (

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SIGNIFICANT ACCOUNTING POLICIES Description of Business Kyndryl Holdings, Inc. ("we", "the Company" or "Kyndryl") is a leading technology services company and the largest IT infrastructure services provider in the world, serving thousands of enterprise customers whose operations span over 100 countries. Prior to November 3, 2021, the Company was wholly owned by International Business Machines Corporation ("IBM" or "former Parent"). In November 2021, our former Parent effected the spin-off (the "Separation" or the "Spin-off") of the infrastructure services unit of its Global Technology Services segment through the distribution of shares of Kyndryl's common stock to IBM stockholders. Kyndryl's stock began trading as an independent company on November 4, 2021. Basis of Presentation The accompanying Consolidated Financial Statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Management believes the accompanying financial statements include all adjustments necessary to present fairly the Company's financial position and its results of operations for all the periods presented. The information included in this Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024. Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain items have been recast to conform to current-period presentation. Principles of Consolidation The accompanying financial statements are presented on a consolidated basis. All significant transactions and intercompany accounts between Kyndryl entities were eliminated. Use of Estimates The preparation of financial statements in conformity with U.S

Notes to Consolidated Financial Statements (continued)

Notes to Consolidated Financial Statements (continued) income taxes per basic share and $ 0.65 before income taxes per diluted share for the nine months ended December 31, 2024. NOTE 2. ACCOUNTING PRONOUNCEMENTS Recent Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. The guidance should be applied retrospectively, effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures in its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures , which is intended to enhance the transparency and usefulness of income tax disclosures through improved reporting related to the rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures in its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which is intended to improve the usefulness of expense information contained in public entity income statements through the disaggregation of relevant expense captions in the notes to the financial statements. The guidance should be applied prospectively, effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the

Notes to Consolidated Financial Statements (continued)

Notes to Consolidated Financial Statements (continued) Contract Balances The following table provides information about accounts receivable, contract assets and deferred income balances: December 31, March 31, (Dollars in millions) 2024 2024 Accounts receivable (net of allowances for credit losses of $ 13 at December 31, 2024 and $ 22 at March 31, 2024) * $ 1,374 $ 1,599 Contract assets ** 52 30 Deferred income (current) 782 825 Deferred income (noncurrent) 328 314 * Including unbilled receivable balances of $ 371 million at December 31, 2024 and $ 377 million at March 31, 2024. ** Contract assets represent goods or services delivered by the Company, which give the Company the right to consideration that is typically subject to milestone completion or client acceptance and are included within prepaid expenses and other current assets in the Consolidated Balance Sheet. The amount of revenue recognized during the three and nine months ended December 31, 2024 that was included within the deferred income balance at the beginning of the period was $ 338 million and $ 661 million, respectively. The amount of revenue recognized during the three and nine months ended December 31, 2023 that was included within the deferred income balance at the beginning of the period was $ 221 million and $ 501 million, respectively. The following table provides roll-forwards of the accounts receivable allowance for expected credit losses for the nine months ended December 31, 2024 and 2023. Nine Months Ended December 31, (Dollars in millions) 2024 2023 Beginning balance $ 22 $ 32 Additions (releases) ( 6 ) 2 Write-offs ( 1 ) ( 6 ) Other * ( 2 ) ( 4 ) Ending balance $ 13 $ 24 * Primarily represents translation adjustments . The contract assets allowance for expected credit losses was not material in any of the periods presented. Major Clients No single client represented more than 10 percent of the Company'

Notes to Consolidated Financial Statements (continued)

Notes to Consolidated Financial Statements (continued) The following table provides amounts of capitalized costs to acquire and fulfill customer contracts at December 31, 2024 and March 31, 2024: December 31, March 31, (Dollars in millions) 2024 2024 Deferred transition costs $ 679 $ 753 Prepaid software costs 757 770 Capitalized costs to fulfill contracts 210 212 Capitalized costs to obtain contracts 277 265 Total deferred costs * $ 1,922 $ 2,000 * Of the total deferred costs, $ 889 million was current and $ 1,033 million was noncurrent at December 31, 2024, and $ 1,081 million was current and $ 920 million was noncurrent at March 31, 2024. The amount of total deferred costs amortized for the three months ended December 31, 2024 was $ 436 million, composed of $ 72 million of amortization of deferred transition costs, $ 255 million of amortization of prepaid software and $ 109 million of amortization of capitalized contract costs. The amount of total deferred costs amortized for the nine months ended December 31, 2024 was $ 1,288 million, composed of $ 219 million of amortization of deferred transition costs, $ 754 million of amortization of prepaid software and $ 314 million of amortization of capitalized contract costs. The amount of total deferred costs amortized for the three months ended December 31, 2023 was $ 452 million, composed of $ 87 million of amortization of deferred transition costs, $ 227 million of amortization of prepaid software and $ 138 million of amortization of capitalized contract costs. The amount of total deferred costs amortized for the nine months ended December 31, 2023 was $ 1,364 million, composed of $ 259 million of amortization of deferred transition costs, $ 686 million of amortization of prepaid software and $ 418 million of amortization of capitalized contract costs. NOTE 4. SEGMENTS Our reportable segments correspond to how the chief operating decision maker ("CODM") reviews perfo

Notes to Consolidated Financial Statements (continued)

Notes to Consolidated Financial Statements (continued) benefits, and currency impacts of highly inflationary countries. The use of revenue and adjusted EBITDA aligns with how the CODM assesses performance and allocates resources for the Company's segments. Our geographic markets frequently work together to sell and implement certain contracts. The resulting revenues and costs from these contracts may be apportioned among the participating geographic markets. The economic environment and its effects on the industries served by our geographic markets affect revenues and operating expenses within our geographic markets to differing degrees. Currency fluctuations also tend to affect our geographic markets differently, depending on the geographic concentrations and locations of their businesses. The following table reflects the results of the Company's segments: Three Months Ended December 31, Nine Months Ended December 31, (Dollars in millions) 2024 2023 2024 2023 Revenue United States $ 961 $ 1,032 $ 2,907 $ 3,305 Japan 579 581 1,753 1,761

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