Overview
Kyndryl Holdings Inc., a managed infrastructure-service company that recently spun off from International Business Machines Corp., announced a better-than-expected break-even quarter and projected a pretax profit for this year. After the news, Kyndryl’s shares surged over 15% in after-hours trading.
Financial Performance
In the fiscal first quarter, Kyndryl reported a loss of $141 million, or 62 cents per share, compared to a loss of $250 million, or $1.11 per share, in the same period last year. However, the company’s adjusted earnings, which included stock-based compensation and other costs, came in at break-even per share, a significant improvement from an adjusted loss of 44 cents per share in the prior year.
Revenue
Although Kyndryl experienced a slight decline in revenue from $4.29 billion to $4.19 billion year-over-year, it surpassed analysts’ expectations. According to FactSet, analysts were anticipating a loss of 95 cents per share on revenue of $4.09 billion.
Future Outlook
Kyndryl remains optimistic about its future performance. The company expects to achieve adjusted pretax income of “at least $100 million” in fiscal year 2024. Martin Schroeter, Kyndryl’s Chair and CEO, expressed confidence in the company’s ability to generate profit going forward and emphasized the importance of this milestone as an indication of its strong execution and potential for significant margin expansion.
Revenue Forecast
Kyndryl reaffirmed its constant-currency revenue outlook and reiterated its previous estimate of full-year revenue ranging from approximately $16 billion to $16.4 billion based on foreign-exchange rates at the time. Analysts are predicting revenue of $16.15 billion.
Kyndryl’s solid performance in the first quarter, along with its positive outlook and ambitious goals, has generated significant market excitement and investor confidence.
