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Kyndryl FY 2Q25 Earnings: Reaffirms Return to Revenue Growth in FY25 with Signings and Three-As Momentum

Jason Bremner — Fri, 08 Nov 2024 05:00:00 GMT

Kyndryl hosted a webcast with financial analysts on November 7, 2024 after releasing its FY 2Q25 earnings the previous day. Kyndryl reported revenue of $3.8 billion (-7%, y/y at constant currency, -7% y/y as reported) for the quarter ending September 30, 2024. Signings were $5.6 billion (growing 133% y/y in constant currency, 132% y/y as reported). Adjusted EBITDA for the quarter was $557 million, representing a 14.8% margin that was an improvement of 70 basis points y/y. Adjusted pretax income grew 80% y/y to $45 million, a margin of 1.2%, representing a y/y adjusted pretax margin improvement of 60 basis points. Adjusted free cash flow was $56 million. The remainder of this document analyzes and reports on y/y revenue growth in constant currency unless otherwise noted, rounded to the nearest percentage point as Kyndryl disclosed in its financial release.

Kyndryl delivered revenue growth in several important areas while its overall revenue declined due to its intentional exit from low margin revenue streams in ongoing customer engagements rather than lower demand. In constant currency, Kyndryl's revenue in Japan grew 9% y/y, which was offset by revenue declines in its other reporting segments (principal markets -5% y/y, strategic markets -11% y/y, and the United States -13% y/y). Kyndryl Consult revenue grew 23% y/y (reported as per GAAP), and it is growing at a faster rate than the previous quarter. Hyperscaler-related revenue was $260 million in the quarter.

Kyndryl's signings were up 133% y/y in constant currency, a record for the company post-spin and the quarter was the fourth consecutive quarter of signings growth. Kyndryl signed 10 deals exceeding $100 million in total contract value (TCV), including a $2 billion TCV, 5-year deal – its single largest deal post-spin. Kyndryl Consult signings were up 81% y/y (reported as per GAAP), and up 41% over the last 12 months. Kyndryl saw signings growth in each of its six service practices and its four geographic segments. Kyndryl also noted that its managed services signings have increased 32% in the last 12 months.

Kyndryl reaffirmed its financial outlook for the fiscal year that ends March 31, 2025. Revenue growth is expected to be $15.2 to $15.5 billion, representing a decline of 2-4% in constant currency. Adjusted pretax income is expected to be at least $460 million, a $295 million increase y/y. Adjusted EBITDA margin is expected to be at least 16.3%, up 160 basis points over the previous year. Adjusted free cash flow is expected to be approximately $300 million. And Kyndryl reaffirmed its guidance on achieving constant currency revenue growth in the fourth quarter of this fiscal year.

Workloads repatriation: How intense it is in Latin America

Pietro Delai — Fri, 08 Nov 2024 05:00:00 GMT

This IDC Survey provides insights into repatriation plans—workloads move from the public cloud to dedicated cloud or traditional environments— in Latin America. These insights are supported by a larger survey, completed in July 2024, that assessed plans and preferences of 630 technology executives for choosing infrastructure environments to run corporate workloads.

Hybrid multicloud implementation continues to expand in Latin America, but ongoing environment reassessment may lead to workload repatriation. This study assesses the intensity of repatriation that has taken place over the past 12 months and plans for the next 12 months.

How Important Are Virtual Machines and Containers for Future Cloud Deployments?

Penny Madsen, Ryan Caskey — Thu, 07 Nov 2024 05:00:00 GMT

This IDC Survey Spotlight highlights the importance of virtual machines and containers for future cloud deployments. IDC uses Cloud Pulse quarterly survey data to investigate the growing use of virtual machines, which remain an important component of workload deployments, and the challenges that could be holding back some container deployments.

Does Network Application Portability Drive Telco Container-as-a-Service Implementation?

Ajeet Das — Wed, 06 Nov 2024 05:00:00 GMT

This IDC Survey Spotlight presents the telco’s strategy for container-as-a-service (CaaS) implementation of the network functions. It contains data from IDC’s May 2024 Telecom DX Survey, based on the response from 100 telco operators worldwide.

“Telcos have realized some cost savings from their network function virtualization implementations but are still to see measurable business benefits in comparison with physical network infrastructure deployments. Telcos are now looking into the cloud-native function (CNF) deployments by taking advantage of container as a service for network application portability and service agility,” said Ajeet Das, research director, Telecom Infrastructure, IDC.

Google Cloud Interconnect Service Gains Application Awareness and Enhanced Management

Taranvir Singh, Mark Leary, Paul Nicholson — Wed, 06 Nov 2024 05:00:00 GMT

Application demands play a key role in shaping an enterprise's choice of network services from cloud service providers. Data workflows from modern business-critical applications and generative AI workloads constitute complex traffic patterns that traverse through clouds and on-premises environments. Google's recent introduction of application-awareness capabilities on Cloud Interconnect is a positive step toward network services truly aligning with application priorities.

IDC MarketScape: Asia/Pacific Managed Cloud Services 2024–2025 Vendor Assessment

Pushkaraksh Shanbhag — Wed, 06 Nov 2024 05:00:00 GMT

This IDC study represents a vendor assessment of the 2024 managed cloud services market through the IDC MarketScape model. This research is a quantitative and qualitative assessment of the characteristics that explain a vendor's success in the marketplace and help anticipate its ascendancy. The IDC MarketScape covers a variety of vendors participating in the Asia/Pacific MCS space. Its evaluation is based on a comprehensive framework and set of parameters expected to be most conducive to success in providing cloud professional services in both the short term and the long term. A key component of this evaluation is the inclusion of the perception of buyers of both the key characteristics and the capabilities of their MCS provider.

"Multicloud and hybrid cloud architectures have emerged as foundational digital infrastructure requirements to help enterprises address evolving digital sovereignty, privacy, and compliance requirements shaping the AI market today, while continuing to benefit from the proven business value and technological innovation that public clouds offer," said Pushkaraksh Shanbhag, associate director, Cloud and IT Services. "Seamless orchestration, efficient management, and continuous optimization of these multi–public cloud and hybrid IT environments, particularly for use cases focused on data, AI, and digital sovereignty, will drive differentiated value creation for enterprises for the foreseeable future. These requirements need to guide enterprise decision making around identifying the right partner for their cloud operations management. This report is intended to help enterprises with such an evaluation."

Take a Bold Step into the Future of AI-Driven Business at the 18th Edition of the IDC Middle East CIO Summit

Wed, 06 Nov 2024 05:00:00 GMT

Dubai – As the dawn of AI revolutionizes industries globally, the IDC Middle East CIO Summit 2025 is set to return on February 19–20 at the Grand Hyatt Dubai with a transformative new vision: 'Architecting an AI-Fueled Business'. This prestigious summit, now in its 18th edition, will focus on the extraordinary potential of AI and its power to reshape the future of business.

Will 5G Be the Preferred WAN Connectivity for SD-WAN Solution?

Ajeet Das — Wed, 06 Nov 2024 05:00:00 GMT

This IDC Survey Spotlight presents the growing adoption of 5G wireless WAN as primary and secondary connectivity for SD-WAN solution. It contains data from IDC’s May 2024 Software-Defined WAN (SD-WAN) Survey, based on the response from 1,018 enterprises worldwide.

5G wireless WAN connectivity is emerging as the best primary and secondary access options for various deployment scenarios, applications, and business operations. Although 4G/LTE has a larger share of the wireless WAN connectivity deployment, in next two years, 5G wireless will become the dominant wireless access connectivity method for corporatewide WAN. Besides increased mobility, ease of setting up a cellular connection to a new branch location is becoming a key factor in selecting wireless connectivity for SD-WAN solution,” said Ajeet Das, research director — Telecom Infrastructure, IDC.

Worldwide IT Operations Management Software Forecast, 2024–2028: Addressing the Chaos of Digital Operations

Shannon Kalvar — Wed, 06 Nov 2024 05:00:00 GMT

This IDC study provides the market size and forecast for the ITOM software market for 2023–2028, including cuts by geographic region as well as deployment model. It also provides commentary on drivers and inhibitors to market growth.

“IT has to become more agile and adaptive as the shift to digital operations exposes the entire business to the customer-pulled value stream,” said Shannon Kalvar, research director, Enterprise Systems Management, Observability, and AIOps, IDC. “This transition is already driving massive changes in the operations software market, which will only accelerate when we move into a cloud operating model.”

Worldwide Top 3 Strategic Connectivity Priorities Segmented by Region

Paul Hughes — Wed, 06 Nov 2024 05:00:00 GMT

This IDC Tech Buyer Survey Spotlight highlights the results of IDC's Future Enterprise Connectivity Survey, fielded in August of 2024, capturing connectivity technology priorities, networking challenges, and investment expectations from 751 enterprise decision-makers worldwide across 19 countries and 18 vertical industries.

IDC's August 2024 Future Enterprise Connectivity Survey shows that enterprises remain steadfast in their focus on expanding cloud networking, improving employee productivity, and holistically embracing a zero trust cybersecurity strategy. With businesses accelerating digital transformation in the form of growing hybrid workforce and migration of workloads to cloud, taking zero trust approach results higher in overall security operations and let enterprises securely and selectively connect users to applications, data, services, and systems on a one-to-one basis.