Q2 2024 Kyndryl Holdings Inc Earnings Call

November 8, 2023

Yeah.

Good day, and thank you for standing by and welcome to the Kindle Earnings Conference call. At this time, all participants are in listen only mode. After.

After the Speakers' presentation there'll be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again, we'd be advised today's conference is being recorded.

I'd now like to hand, the conference over to your first speaker of the day, Laurie Chapman head of Investor Relations.

Good morning, everyone and welcome to handle the earnings call for the second fiscal quarter ended September 32023.

Before we begin I'd like to remind you that our remarks today will include forward looking statements. These statements are subject to the risk factors that may cause our actual results to differ materially from those expressed or implied.

Forward looking statements speak only to our expectations as of today and we are under no obligation to update them.

For more details on some of these risks please see the risk factors section of our annual report on Form 10-K for the year ended March 31 2023.

In today's remarks will also refer to certain non-GAAP financial measures.

Corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP measures for historical periods are provided in the presentation materials for today's events, which are available on our website at investors that 10 year old Dot com.

With me here today are kindled, Chairman and Chief Executive Officer, Martin Schroeter, and Kendall Chief Financial Officer, David Why Shneur.

Following our prepared remarks, we will hold a Q&A session I'd now like to turn the call over to Martin Martin.

Thank you Laurie and thanks to each of you for joining us.

Last week, we marked our second anniversary as an independent company and we are delivering progress at an accelerated pace.

I don't want to talk about why we've been able to succeed of course, our first half performance reflects continued progress and strong execution.

Additionally, on us really well for the year as a whole and we're raising our full year earnings outlook.

Three as initiatives centered on alliances and advanced delivery and accounts are paving the way for profitable growth.

Consults control bridge and our efficiency efforts are also driving our results and as an organization. We're delivering strong performance that is evident both in our financial metrics and in our customer satisfaction scores.

On today's call David will review our recent financial results are raised fiscal 2020 for outlook and how we're changing <unk> profile for the better.

However, let's not lose sight of why this performance is happening we are vital to our customers' current and future technology needs our capabilities aligned with the powerful secular trends in it.

And this makes us an indispensable partner for our customers.

In other words, our progress is being fueled by the leadership position, we have in our industry, our new freedom of action, we have as an independent company and how that perfectly aligns with the larger forces shaping the evolution of it.

We're helping customers navigate these secular trends and we're already capturing the growth opportunities they present.

And because we are at the heart of these trends of enabling our customers' futures as well as their current operations performing mission critical work across a broader technology ecosystem, our business is sustainable and important over the long term.

That's why we're seeing growth in alliances with our Hyperscale or partners in adoption of Kinzel bridge in consult signings and revenue in customer satisfaction in public cloud management and in areas like apps data and AI. So yes. We're fixing focus accounts that are so that our margins are better but central's transformation is about <unk>.

So much more than that it's.

It's about <unk> being the leader in providing and enabling our customers to have and leverage the technology they need to win.

The results, we're presenting today just as they did last quarter and last year are evidence of our strength market leadership and ability to fix the challenges we inherited.

The margins on the signings, we're putting into our backlog the execution of our three year initiatives, our success with our new partners and our ability to enable our customers to harness secular it trends are reminders that were always more than just a turnaround and we've always been a market leader a leader that is well positioned to capture future.

<unk>.

To appreciate our growth opportunities, it's important to understand how we are building on our heritage and leveraging our expertise to meet customer needs and forge new higher value revenue streams.

Our 30, plus year heritage and managing mission critical.

Systems is a very powerful asset.

And we're seeing a hybrid it states supplant migrate everything to cloud as a central theme among large enterprise cio's.

A recent survey of hundreds of it and business leaders indicated that while they aim to run nearly 40% of their workloads on our cloud our distributed platform. The overwhelming majority also view mainframes is essential to their business operations and likely to remain at the core of their tech stack.

With that in mind, our new alliances with Hyperscale is combined with our expansive knowledge of legacy technologies give general a unique ability to help organizations achieve there.

And business objectives.

With kindred consult our technology experts advise our customers and co create with our partners to modernize and optimize hybrid solutions and accelerate business outcomes.

With a hybrid infrastructure businesses can strategically choose where and how to host specific workloads based on their requirements.

We're working with customers everywhere to ensure that the right workload runs on the right platform. This leads to improved performance and cost savings.

And we've been consistently generating double digit revenue growth in clinical consult by delivering thought leadership and mainframe modernization and strong capabilities in automation and cloud migration and management data optimization and security and resiliency.

Additionally, Kindle bridge integrates AI operational data and kindles expertise to give customers visibility across their technology as states, including multi cloud and hybrid landscapes with insights to help them understand predict and act for better business outcomes.

Have more tech stack operating data than anyone in the world and through our ability to leverage AI, we are providing our customers and ourselves and advantage in managing and developing their systems.

Kingsville Bridge uses automation to enable more secure stable and reliable technology operations for our customers with the benefit of AI and machine learning kinzel bridges identifying patterns in systems and infrastructure and is now performing 1 billion automation as a year for our customers across secure tech stacks.

And one of the benefits that we're seeing from bridge and its ability to operate as a self healing architecture is that the frequency of significant incidence is down more than 30%. So far this year and those accounts who've moved onto bridge.

So through our heritage Kinder consult and control bridge, we're meeting customers, where they are in their digital evolution and helping them move forward.

Our capabilities and innovation are putting us at the center of collaborative customer relationships, and which technology drives business outcomes in a reliable and secure way.

This is allowing us to access incremental market opportunities to grow our share of wallet with existing customers and to win new customers and obviously transform parts of central.

Beyond enterprises need to manage and optimize their infrastructures our market position and our capabilities are allowing us to benefit from the key secular trends in it.

The adoption of artificial intelligence technology skills shortages, the needs to modernize and partial in many cases cloud migration all of which are creating growth opportunities for us.

Given our presence across a range of enterprise technologies AI represents a multifaceted opportunity for us as I mentioned AI sits at the center of our Kingsville Bridge platform and is producing actionable insights for us and our customers everyday.

As the largest infrastructure services provider in the world, we generate large amounts of data about it systems. We use this data Enkindle bridge and it gives us the ability to identify application performance patterns under almost any condition. So we can prevent incidents from occurring and reduce required maintenance.

AI is also a go to market opportunity for us as customers seek to build AI in their own generative AI into processes. They know that their AI is only going to be as good as their data. This.

This is creating demand for our expertise and how to architect data to set the foundation for AI and Virgin AI applications.

And we're working with both existing and New Alliance partners to help facilitate AI in complex environments and to develop joint capabilities.

We see this both as a growth opportunity for us and is a natural extension of the data network digital workplace and security services, we already offer in fact signings and air applications data and AI practice are up more than 30% this year.

A second trend is that many organizations just can attract and develop the range in scale of skilled resources they need.

Particularly in certain disciplines skills are in short supply throughout the world and in sourced infrastructure work doesn't benefit from the scale. The know how the training and the investment in the innovation that <unk> brings to the table as a third party service provider, including the expansion of our hyperscale or certifications since our spin.

Our scale and associated ability to home grow talented resources the skills shortages in the marketplace are making kimco value proposition even stronger.

We manage today more than 60% of the outsourced mainframe capacity in the world and we invest in maintaining this world class team.

Our knowhow and alliances with leading technology providers also give us unparalleled expertise and enterprise cio's need to modernize complex environments simply put nobody can retrofit their planed wallet flying like weekend.

And when we combine these capabilities with customers' needs to enhance security and resiliency and efficiency with their desire for innovation, we've become an indispensable business partner.

As I mentioned earlier selective migration of certain workloads to the cloud is a prime example of where at large organizations are looking to modernize innovate and drive efficiency.

Our hyperscale or related signings are up more than 35%. So far this year and our hyperscale or related revenues were up even more.

And some of our largest new logo signings have been for customers, who want to leverage our hyperscale or alliances and cloud migration expertise.

And because we serve as an operator, an integrator and an advisor to our customers in their digital business transformation, we naturally find ourselves at the nexus of each of these broader market currents.

And a central theme underlying our strategies and our approach to the market is that we're capturing and building value in our business as we've shared previously our gross margin at the time of our spin the margin that our backlog was producing was in the mid teens.

But we have dramatically changed the projected margins on new business that we're signing and raising these margins more than 50% to 26% over the last 12 months.

From a financial perspective, this is a game changer for our business.

David will walk you through the math of our gross profit book to bill ratio being above one, but the growth vector the source of value creation that we're delivering is that even even though we're engineering a decline in our revenue. This year. We are building absolute profit dollar growth into our backlog.

We're adding more to the top of our earnings funnel that is flowing out into our P&L. This year.

And at the same time as we move further from our spin more and more of our revenues are coming from higher margin post spin signings. This fiscal year only about a third of our revenues coming from post spin signings next year it'll be roughly half of our revenue coming from post spin signings and in fiscal 2026, it'll be roughly two thirds from our posts.

<unk> signings so the inflection point when our P&L is largely determined by our higher margin post spin signings will dramatically change our earnings profile again.

As we shared last quarter.

Where this will show up is in our adjusted pre tax income and margins, we put adjusted pretax losses behind us and our forecast implies more than $350 million of adjusted pre tax income improvement this year compared to last in.

And the margins, which were signing contracts and the other actions, we're implementing have us on path to deliver higher earnings each year on our way to high single digit adjusted pre tax margins.

And yes, the math associated with that is ultimately a $1 billion or more of adjusted PTA with a high conversion of our net earnings into cash.

In short.

While we continue to do the important vital work, we always have for our customers. We're successfully transforming elements of our business very quickly because of our great people, our new culture, our unique capabilities to meet mission critical needs are powerful IP and data and Eric outstanding execution, each of which is.

Aligned with the secular trends in the market.

We are pleased with the significant progress we've made so far we are enthusiastic about our momentum going into the second half of the year and very excited about the path in front of us.

Now with that I'll hand over to David to take you through our results and our outlook.

Thanks, Martin and Hello, everyone today I'd like to discuss our quarterly results were outstanding progress, we're making on our three as the growth in gross profit that we've been building into our contracted book of business and our updated outlook for fiscal year 2024, we have a lot of good news to share.

Our second quarter results reflect strong operational execution and continued progress on our key initiatives.

In the quarter revenue totaled $4 1 billion.

A 5% decline in constant currency.

The year over year decline in revenue was anticipated and primarily driven by our intentional exit from negative no and low margin revenue streams within ongoing customer relationships not by macro factors.

We continued to gain momentum in higher merchant advisory services Kindred consult revenues grew 17% year over year in constant currency, which highlights how we're growing our share in this higher margin higher value add space.

Signings grew even faster increasing 32% year over year in constant currency.

This performance reflects how the opportunities for growth in kindred consult services stemming from our new alliances with third party technology providers are outweighing, the macro issues pressuring some other firms.

Our Q2 signings were down 3% year over year in constant currency.

Outside of our core enterprise practice, where we've concentrated on removing pass through revenue and addressing focus accounts signings were up in the single digits.

Our adjusted EBITDA grew 34% to $574 million.

Our adjusted EBITDA margin was 14, 1% a year over year increase of 390 basis points.

At the risk of being a modest we view this is remarkable execution.

Nearly four points of margin expansion is a proof point for our ability to drive meaningful profit growth in our business.

Adjusted pre tax income was $25 million.

A $127 million improvement in profit compared to the prior year quarter.

As I'll discuss in a moment our continued progress on our <unk> is the key driver of our earnings growth.

We address our customers' needs through a geographic operating segments and also through our six global practices cloud applications data and AI security and resiliency networking edge digital workplace and core enterprise.

Our business mix continues to evolve to reflect demand with most of our signings, including kindred consult signings coming from cloud apps state in AI security and other growth areas.

More generally as we look back on the quarter. We're thrilled to have delivered results that position us to exceed the full year earnings targets that we've already raised once before.

Our strategy is working our three initiatives are driving continuous improvement throughout our operations and fostering additional progress each quarter.

As a reminder, at the start of the year, we provided fiscal 2024 targets of $300 million in revenue tied to hyperscale or alliances $450 million in cumulative annualized cost savings from advanced delivery by fiscal year end.

$400 million of cumulative annualized pre tax benefit from our accounts initiative.

Heading into the second half of our fiscal year, we are well on track to exceed our alliances target and are raising our targets for our advanced delivery and accounts initiatives.

Through our alliances we're building a portion of our customer relationships that include cloud based content in the second quarter, we recognized more than $100 million in hyper scaler related revenue.

Our run rate ahead of our $300 million full year target.

Our hyper scaler certifications totaled more than 37000, which is more than double what they were two years ago and now include even more advanced certifications.

Our advanced delivery initiative is transforming the way, we deliver our services and Kindred bridge is driving our progress.

To date, we've been able to free up more than 7500 delivery professionals to address new revenue opportunities and backfill attrition.

This is worth roughly $425 million a year to us representing a $50 million increase in our annual run rate this past quarter.

We continue to see significant automation opportunities across our delivery operations as we increased service levels reduce our costs and incorporate more technology into our offerings.

Our accounts initiatives has been and will continue to be a global effort focused on fixing elements of contracts with substandard margins in the second quarter, we increased the annual profitability of our focus accounts to $400 million.

Which was our initial target for year end.

Successful execution of our three eighths is our fastest path toward achieving sustainable profitable growth and the progress. Our teams have made on these initiatives is incredible as a result, we're increasing our annualized savings target for both our advanced delivery and accounts initiatives by 100 million.

Yeah.

Turning to our cash flow and balance sheet.

In the quarter, we generated positive adjusted free cash flow of $69 million.

Our gross capital expenditures in the quarter were $175 million and we received $113 million of proceeds from asset dispositions as a disproportionate amount of our planned FY 'twenty four asset sales occurred in Q2.

Our financial position remains strong and we continue to expect that our full year adjusted free cash flow will be positive.

We provided a bridge from our adjusted pre tax income to our free cash flow as well as a bridge from our adjusted EBITDA to our free cash flow in the appendix.

Our cash balance at September 30 was $1 4 billion.

Our cash combined with available debt capacity under committed borrowing facilities gave us $4 $6 billion of liquidity at quarter end.

Our debt maturities are well ladder from late 2024% to 2041, we had no borrowings outstanding under our revolving credit facility and our net debt at quarter end was $1 8 billion.

As a result, our net leverage sits well within our target range.

Were rated investment grade by Moody's Fitch, and S&P and all three agencies recently reaffirmed our ratings.

We're thrilled to have exited the transition services agreement with our former parent and to have completed the migration to our fit for purpose operating financial and HR systems in the two years following our spin.

This was a large complex and important series of projects delivered on time and on budget that will allow us to adapt our product.

Processes and drive operating efficiencies and ways that we couldnt until now.

On capital allocation, our top priorities continue to be to maintain strong liquidity remain investment grade and reinvest in our business our.

Our leadership position in it infrastructure services combined with benefits from our three initiatives is significantly expanding our margins and will drive meaningful free cash flow growth.

And over time, we'll be in a position to consider regularly returning capital to shareholders all while remaining investment grade.

As encouraged as I am by the earnings growth, we delivered in Q2.

Even more enthusiastic about how we continue to position Kindle for future margin and profit growth.

As an independent company, we've combined pricing disciplined and collaborative engagement with customers to move our projected margins on all new signings up to the mid <unk> for gross profit in the high single digits for pre tax profit.

As Martin mentioned the September quarter was a continuation of that favorable trend and as our business mix increasingly shifts towards more postpaid contracts.

You will see significant margin expansion.

In our earnings presentation, we shared a simple analysis that accentuates, how we've been creating and capturing value in our business.

With an average projected gross margin of 26% on our $12 billion of signings over the last 12 months, we've added over $3 billion of gross profit to our backlog.

Over the same period of time, we've reported gross profit of $2 7 billion.

This means we've been adding more gross profit to our backlog and our contracted book of business has been throwing off in the form of gross profit reported in our P&L.

Having a gross profit book to Bill ratio above one at 1.1 is a measure of how we're growing what matters most the.

Expected future profit from committed contracts.

We continue to make significant progress on our <unk> initiatives and the momentum to date supports our continued expectation that over the medium term our alliances initiative will drive signings revenue and roughly $200 million in annual pretax income our advanced delivery initiative will drive cost savings equating.

Roughly $600 million in annual pre tax income.

And our accounts initiative will drive annual pre tax income of $800 million or more.

We're also driving growth in kindred consult and among our global practices, which is incremental to the benefits coming from our <unk> initiatives and we see opportunities to control expenses throughout our business.

We expect that these efforts will contribute roughly $400 million in annual pretax income over the next few years.

In total then the magnitude of the earnings growth opportunity. We're tackling is tremendous relative to our current margins Prague.

Progress on our three eight is a central source of value creation for kindred.

With another strong quarter to build on we're again raising our profit outlook for our 2020 for fiscal year, we're growing our margins. This year largely due to the three initiatives growth in kimbro consult and productivity gains.

We now expect our fiscal 2024, adjusted EBITDA margin to be roughly 14, 5% a half point higher than our previous estimate.

This represents an increase of roughly 290 basis points versus fiscal 2023.

And we are raising our outlook for adjusted pre tax income to be at least $140 million versus our prior outlook of at least $100 million.

This increase implies more than a 200 basis point margin expansion compared to last year.

<unk>, we would have increased our full year outlook for adjusted pre tax income by $30 million more were it not for the strengthening of the dollar and weakening of the yen over the last several months.

The three A's workforce rebalancing real estate consolidation growth in kimbro consult our pricing strategies and other actions are all contributing to our margin growth.

Our outlook for revenue is a decline of 6% to 7% year over year in constant currency, which translates to 15, 8% to $16 billion based on recent exchange rates.

The strength of the U S dollar over the last six months has reduced our revenue as measured in dollars, but it doesn't impact our constant currency outlook, which we are narrowing to the favorable end of our initial range driven in part by the strength in our consult signings.

Also as a reminder, the year over year revenue decline, we're projecting is primarily due to the soft backlog of fiscal 2020 for revenue. We were born with plus intentional near term actions, we're taking to transform our business.

These changes typically involve removing selected low or negative margin scope from ongoing customer relationships.

We've accelerated these actions over the last six to nine months to the year over year revenue decline in the second half of our fiscal year will be greater than in the first half.

For the December quarter on a year over year basis, we expect revenues to decline in the high single digits in constant currency and for the revenue decline to be most pronounced in our U S and strategic market segments, where a reduction of pass through elements is most impactful.

We expect adjusted pre tax income to be positive with adjusted pre tax margin up year over year in the quarter. Despite it being a quarter that is our toughest earnings comp this year due to the exaggerated seasonality that we had in Q3 last year.

As I mentioned, we expect adjusted free cash flow to be positive. This fiscal year, we now project roughly $700 million of net capital expenditures in fiscal 2024, which is 7% lower than our initial projections as we push to be less capital intensive and we project about 850 million.

Of depreciation expense.

We continue to expect about $300 million of cash outlays for separation related work, primarily systems migrations and for workforce rebalancing actions that are driving significant cost savings.

This will be the last year in which we incur spin related charges, we expect our adjusted earnings to move closer to our reported GAAP earnings overtime. In fact next year, our principal adjustments should be only noncash stock based comp and non cash intangibles amortization.

We remain committed to our target of returning to revenue growth by calendar 2025, and over the medium term delivering significant margin expansion and driving free cash flow growth.

We have a solid game plan to drive our strategic progress and this gameplay and it starts with the steps we've already taken to expand our technology alliances manage our costs and earn a return on all of our revenues.

To wrap up our business model centered around providing mission critical services to large complex organizations that are dependent on technology and pursuing digital evolution.

We call this operating at the heart of progress.

Operating at the heart of progress is also becoming a distinguishing feature of who we are as a corporation <unk>.

Delivering progress on alliances advanced delivery and unprofitable accounts delivery.

Delivering progress with kindred consult and AI enabled kindred bridge.

Delivering progress through our global migration to new operating financial and HR systems following our spin.

Levering progress in our margins and adjusted earnings as an independent company and delivering.

Our progress in our winning culture and in the breadth of solutions, we provide to customers.

As Martin highlighted we are symbiotically delivering progress for our customers and for ourselves as the world's leading provider of it infrastructure services with that Martin and I would be happy to take your questions.

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced and withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Our first question comes surrounding the via <unk> from Scotiabank. Please go ahead.

Good morning, everyone.

This quarter.

David and Martin.

Comments overall, we can see obviously the company doing the right things progressing the right way I wanted to get some color on what your overall discussions with your clients like obviously Kinder delivers mission critical projects and mission critical infrastructure work, but given the broad.

At a macro and geopolitical concerns out there how are the client thinking and how do you see that progressing into early part of 2024 and towards the latter part of 2024, and how does that fit in with Kindred continued progress.

Please go ahead youre off mute.

Sorry did you hear my question, we didn't hear your question I think you're on mute bear with US one second.

Can you hear me now.

Can go ahead. Thank you.

So thanks for the question Vivien Thanks for the nice intro to the question as well.

And you said it well we experiences is driven by the role we play in our customers' environments. We are mission critical.

We are the trusted partner as we have been for for many of our customers for decades, and so so the nature of the discussion and you see this in some of our charge the nature of the discussion that we have with our customers is really about the secular trends there.

They want to take advantage of and <unk>.

<unk> that they need to manage.

Victor.

The industry skill industry wide skills shortages very real for Cio's today, and we see we see the results of that NBC the effect of that in.

Strongly we are able to drive our consulting consulting performance and the role we can play in helping them navigate what are obviously very complex infrastructures, we see it in helping them with even the basics right. When you think about what Kindred bridge helps our customers do it helps them understand there.

Environments it helps them keep up with.

With the never ending best practices that every technology provider is putting out constantly in order to optimize their systems and so so the role we play I think makes us a bit different from others.

And and.

Is it.

I guess, it's reflective if you will of the two things are the things we can do for them one is.

We can help them save money.

Part of what bridge helps them do it helps them optimize their systems and that's important and I wouldn't say that saving money today is any more important than it has been in the past.

And then we can help them prepare them get themselves prepared.

To take advantage of the innovation no matter, where they see it which is part of what creates these hybrid environments that we're so good at helping them manage so we don't see again I think it is unique to us because of the role we don't see the macro in any of the places in which we operate we don't see the macro having a profound difference in the nature of.

The discussions the discussions for us are still around the secular trends that they wanted to take advantage of and prepare themselves for whatever the macro is either today or whatever the macro is going to be in a year's time.

Thanks Scott.

Operator next question please.

And with that.

Our next question comes from David Toga from Evercore. Please go ahead.

Thank you and good to see the outperformance, especially on advanced delivery and accounts initiatives just focusing there.

Even against you raised targets Youre already at 80% year to date of the raise targets for both advanced delivery in accounts with half of the year to go. So can you can you flesh out.

The dynamics around both.

For the back half of this year end.

Why why wouldn't your targets be even higher given your high attainment. So far this year.

Sure David Thanks, when you look at our targets for the for advanced delivery and for focus accounts remember that there are cumulative targets. So we started the year.

Started this fiscal year with the progress we made last year, which was.

200 over $200 million related to <unk>.

Advanced delivery in over $200 million.

Related to.

Two the focus accounts.

And we've increased each of those significantly and.

As you point out where we're at our full year target for accounts, we're within $25 million of our initial target for.

For advanced delivery, and that's really why we raise them each by $100 million and so with that.

Translates into.

For accounts is about $50 million of incremental progress each quarter in the back half of the year, which is consistent with where we ran last year.

And.

Obviously, we over performed relative to that in the first half of this year.

Then on the advanced delivery side are our forecast calls for $125 million of further improvement in.

In the back half of the year.

Which again is pretty consistent with where we've where we've been running other than they had a really strong performance. The over performance. We had in the first half of this fiscal year.

I appreciate that and just as a follow up.

Given the unique dynamics of your large.

In Japan, where you're generating revenue in yen and your cost basis in dollars USD is there anything you can do.

To kind of manage that.

Let's say currency mismatch on revenue and expenses going forward and set a limit the headwinds to revenue and earnings yes, David there. There are things we can do there and part of it is our starting point, where we started out with the software contract that we did and the customer.

<unk> that we did and as we go forward there are things, we can do to increase the the matching.

Tween knows so as provisions that we built.

Into our customer contracts that will help protect us more going forward that becomes the most immediate step second when we actually get to negotiate the software contract.

We will look to.

Not have it all be.

Dollar denominated so that's part of it as well and then there is intra year theres. Some theres hedging that we do to mitigate the impact.

That only helps that only mitigates it and really only four eight.

For a limited period of time and then the last thing.

We.

Look at and we'll look at.

Going forward is broader asset liability matching and we started off with our.

With our <unk>.

That all being dollar denominated and going forward I think I would like to see a little bit better mix, a little bit different mix.

Our debt that's more aligned with where our assets are where are.

Embedded equity is around the world. So that's an opportunity for us as well and then lastly, just going back to your prior question I think the.

On the with respect to the 80%.

And where we stand already.

I think we can make it really clear that if we achieve when we achieve the.

<unk>.

The expected benefits from any of the initiatives.

We're not standing down we're going to keep powering ahead, and so there are opportunities to over perform over deliver on the initial targets, we laid out two years ago.

Actually we're actively going to look to take advantage of those.

Thank you I appreciate your comprehensive answer thanks.

Hey, Ben Operator next question please.

Sure.

Okay.

Our next question comes from Tien Tsin from J P. Morgan. Please go ahead.

Hey, guys. This is brendan on for attention.

Thanks, So much for taking my question and congratulations on the results.

Great job.

Yeah.

So question from me on just qualification of like.

Revenue array is a tick up in the revenue midpoint. So.

You guys, obviously outperformed on the accounts initiative to the tune of.

To the tune of $100 million per quarter in the first half but the.

Revenue.

<unk>.

Moves up.

So I think obviously there is kendall consoled outperformance going on there.

But could you help us understand the puts and takes on the on the revenue line. If there is anything we're kind of missing aside from the main drivers of accounts initiative chemical thank you.

Sure I think.

On accounts and advanced delivery there on the three AC impact on on revenue there ends up being fairly limited.

Obviously, we are making significant.

Progress there in the earnings contribution.

When we look at are the.

The revenue raise the narrowing to the favorable half of the range I would say that that Kimberly consult is very much the biggest driver of that that scenario, where we're outperforming.

And in the outperformance there is probably even a little bit greater than may be apparent because we've been more aggressive in stepping away from.

Pass through revenue from OEM type revenue and are still are nonetheless able to narrow to the upper half of the range. So we are very much holding onto accounts, we're optimizing them and taking out content that doesn't make sense, we're growing kindred consult which tends to be higher margin revenue.

And all of that is helping us really drive more income out of it.

Revenue that was that is fairly consistent but in the upper half of the range. We initially went out with.

Thanks, Dan.

And I'll jump back in the queue other questions. Thanks.

Thanks, Brandon operator, I believe there's one more question in the queue.

Okay.

Yes, please standby.

And our last question comes from Jamie Friedman. Please go ahead.

Okay.

Jamie Your lab on stage. Please go ahead.

Okay.

Jamie are there.

It did Brendan operated Brendan rejoin the queue with another question.

He has.

You can bring on the stage.

You said you had another question. So maybe Jamie has been work on a technical challenge and we will keep moving.

Yeah.

Brendan Youre live on stage. Please go ahead.

Oh, Great Hey, guys.

Thanks, so much.

Yes. My question number two is is on visibility into this.

Gross profit backlog, so love to hear that it's above one.

Because that's how you guys are obviously managing the business and that makes sense at a sensible target for me I'm curious just to think about because of the kind of lengthy.

Some of it some of these deals.

Or what if any variable as you guys think about.

Still being out there in between booked.

Booking those gross profits and.

Realizing that and whether that's.

Potentially something like wage inflation or just how should we think about any variables outstanding. Yes. So look the estimates we provided Brendan capture our view today of the things you had like how much how much we're going to have to invest in our teams and all that stuff. So we have a we have a view of the cons.

Correct.

The longer the contract the more conservative we tend to be on the view because we know that we're going to want to maintain the best workforce in this space in the world et cetera et cetera. So we have a series of assumptions around how we have to invest in our workforce. We have a series of assumptions around where for instance deals include other peoples IP what those price.

Rises are going to be so all of that all of that gets captured.

And ill point out that our our what we would short hand to the did versus bid rate.

What did we actually get versus how we bid is very close to what we're showing in our in our data now for what's going into backlog. So we're realizing if you will.

What we are assuming that's one of the reasons, we're so comfortable with sharing the data. This way it represents what we what we have been realizing now now.

A big.

The big execution element is not really all of the assumptions around how we're going to invest in our people and the skills you have to bring et cetera et cetera. So those are important and we get those right.

We have to keep delivering.

The 80, plus thousand generals out of out of the 80 plus thousand two thirds of US every day are delivering in front of customers and we're really really good at it and that's why our customer sat scores are so high that's why customers love, what we do for them and that's quite frankly, why they trust us. So so when we get comfortable with sharing.

What we put into the backlog, it's it's driven by the confidence that we're getting from that we're actually delivering those over time.

And importantly, we just have to keep the organization executing on delivering everyday which is again, what we've been good at and what in fact, we've been getting better at and things like bridge help us with that as well. So so we're very comfortable that we can deliver the margins that we have the assumptions are.

Our robust enough and well proven by now enough that we are delivering those.

And then we have opportunities obviously to keep getting even better at it by using bridge and more customers. As we said a couple of months ago. We had bridge in about 500 customers and by the end of the year, we will have it in 1000 customers. So so the assumptions are robust our delivery is phenomenal the future for us is even.

As even.

More robust with things like bridge with our ways of working et cetera, et cetera, So I think.

You should assume that we will keep delivering the margins that we're putting in the backlog.

Sure.

Great. Thanks, so much.

I believe Cisco back in the queue operator please.

Please standby.

Jamie here on stage. Please go ahead.

Okay, sorry about my technical difficulties there Laurie.

So congrats on the good execution.

Had two questions, maybe one for Mark and one for David So first in terms of free cash flow expectations in the second half could you help us unpack.

What youre thinking about if there's anything that we need to remember from last year call outs from the first half that's one thing and then.

David I'd be interested in understanding your perspective on.

Which of the.

New service lines and new signings are the most accretive tomorrow no I understand everything is probably accretive to margins, but if you just would help unpacking a couple of these as what you feel are the most strategic or the most margin accretive I think would be insightful. Thank you both.

Sure. Let me let me go first on your second question and I'll ask David to.

Unpack if he has anything to unpack on cash flow. So so look the.

You are right everything is accretive to margins in fact part of the reason that we want to make sure we're sharing everything thats going into backlog is because it's representative.

Of each of the pieces as well as we start to think about.

More or less on a relative basis right on an absolute basis, all accretive all looking quite good in all consistent with where we want to be in the medium term as more of more of our P&L as is defined and reflects as we as we covered in our prepared remarks more of more of it reflects.

We put into backlog as opposed to what we inherited were hitting that inflection point.

There is a difference we see a difference already and I think the difference exists in the marketplace between the margins, we can earn in or consult business and the margins we earned in our run business.

Don't know if that persists forever, but we do see higher margins in the console business right. Now then than we do in the run business now the opportunity for us and the consult businesses, obviously to keep it growing which we expect it well and the opportunity for US is to make sure that we keep our skills in <unk>.

Our people at the forefront of all those secular trends that they're sitting at the forefront of today. There is an opportunity for us in the run side of the business.

To continue to improve margins as well.

Simple Central Bridge is a great example of how we will continue to drive margin improvements in the run business. So so right now the on a relative basis I would point to our console business as we see in the market the consult business drives.

Slightly higher margin profile for us and we'll see how that how that.

Changes over time, but right now, it's slightly better than our run business, David you want to cover sure.

I do on free cash flow for the full year, we expect our adjusted free cash flow to be positive with the year to date number being slightly negative certainly that implies that the second half will be stronger and that's what we would expect in particular, because some of the working capital and cash flow seasonality that we have.

You may remember that in the first quarter, we have a disproportionate amount of our software license payments, which get amortized over the course of the year or in some cases <unk> over the course of many years indicate we also have annual incentive payments that are where all the outflows in Q1 and the crew.

<unk> happens over the course of the year. So so it's natural for our seasonality to be skewed more towards.

The last three quarters, a year and toward the back half and as a result, we expect stronger cash flow in the second half of the year.

The other point I'd make is that the composition.

Our free cash flow will probably.

<unk>.

Slip a little bit in the <unk>.

First half of the year, we've been underwriting are full year run rate on capital expenditures and working capital.

<unk> has worked against us capital expenditures it should pick up a little bit we're targeting to get to about $700 million of net capex for the year.

That will be a little bit more of a usage.

Use of cash and working capital.

We expect will be more of a source of cash in the second half of the year.

We get to positive for the year overall, and then what I really want to highlight is that as we as we go forward and grow earnings we expect free cash flow growth to coincide with our.

Adjusted pre tax earnings growth with strong conversion.

Our adjusted pre tax income to free cash flow over time.

Thank you both for the detailed response, if I could just follow up with.

On this slide 22.

This is the one that breaks out the services by revenue.

If you.

If you wouldn't mind sharing how you think of.

What this will look like in the future like at the end of your guidance and if that's too specific if at least qualitatively you could share like which of these are going to get bigger.

Or smaller and why I think that would be helpful context. Thank you.

Sure Let me let me.

Taking a swing in those David when something he wants to add to it will certainly give him a chance.

For us the the secular trends, we see in the marketplace as we head into an earlier chart around cloud and hybrid cloud around the need to be the need to manage in that world around skills shortages et cetera.

US suggest applications data and AI to us suggests that the our cloud practice, our security and resiliency practice, our network and edge practice, our applications and data and AI practice, all become really strong high single digit kind of getting close to double digit kind of growers I think thats the market in which they sit in.

A long term.

A long term secular arc that we're part of that is going to drive those and so they'll mix a bit stronger.

In our in our signings streams, and therefore over time and our revenue streams digital workplaces.

As a practice for us that is is it is a grower it's in a growing space, but probably not at the same rate as those other four practices that I mentioned and then over time look core enterprise and Z club because of the role we play.

Because of the role we play in the scale and the magnitude of the of the skills that we have while this is probably a market. That's declining I would expect this could still represent a growth opportunity for us once we get through getting the hardware and the software content.

As much as possible out of our revenue streams, our labor piece of this of this market and our labor piece of our business is growing and I would expect over time, given the skills challenges that our customers have that they express around around that the teams that they're relying on and how do they get more et cetera, et cetera, I would I would.

Overtime, even the core enterprise and.

Z cloud business for us could be the labor component could be and should be and will be a growth opportunity. Although in a declining market because of the nature of where customers are going with with cloud and multi cloud et cetera, et cetera, et cetera, So I see it.

The mix shifting a bit because I see very high really good high growth in the secular trends, but every one of our practices I think still sits in an area. Sometimes it's unique to us every one of our practices and it sits in an area, where we can continue to drive growth for each of them, even if its just the labor piece.

But we can drive growth in each of the practices, but that will cause us.

Remix if you will of the revenue weighting over over the kind of Timeframes that you are talking about David anything you'd add I'd just add that the other axis. It's really important to us is the growth in consult which really runs across the practices.

As you know we started off with consulting around 10% of our revenue is growing at 14% our target is to move it up to 20% and again this really plays across the practices.

And highlights the fact that we expect to grow our share.

In consult in advisory work in advisory and implementation work as well and so that's an important part of how we think about each of the practices.

Okay.

Thank you. Thank you. Thank you thanks, Jamie for your question and thanks, everyone for joining us today and Martin Yes.

Thank you Laurie.

So look.

Again, thanks, everybody for joining.

I am really proud of the progress that we made again this quarter and in the team as you can tell us just executing very very well and bear in mind that we only had our second birthday last weekend right. So this is this is a company that has made a ton of progress and delivered a ton.

And well ahead I think of what of what many thought we could.

In a pretty short period of time I'd also encourage you.

Two to have a look at the corporate citizenship report our first and again. This was just before our second birthday republished it back in September So we werent, even two years old yet we published what I think is just a phenomenal example of how we're building this business the right way, so we're delivering on our business goals and where.

Also we're also.

Having an impact on how the world works and so as we head into our third year as a as an independent company I remain more excited is.

As excited we're more excited than I've ever been about about where we're going I see how.

Our teams are moving toward.

Where our customers are going and supporting them on their journeys on these these really important secular trends and helping them helping.

Helping them prepare and we're building that.

The capabilities that allow all of that to happen within those mission critical workloads, which is the role. We've always played so thank you again for joining and we look forward to talking with you in a few months. Thank you operator were done.

Sure.

Thank you for your participation in today's conference. This concludes the program you may now disconnect.

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Good morning, everyone and welcome to <unk> earnings call for the second fiscal quarter ended September 32023 before.

Before we begin I'd like to remind you that our remarks today will include forward looking statements.

These statements are subject to the risk factors that may cause our actual results to differ materially from those expressed or implied.

These forward looking statements speak only to our expectations as of today only.

Under no obligation to update them.

More details on some of these risks.

Please see the risk factors section of our annual report on Form 10-K for the year ended March 31 2023.

In today's remarks, we will also refer to certain non-GAAP financial measures.

With me here today are kinda of Chairman and Chief Executive Officer, Martin Charter and Kendall Chief Financial Officer, David Why Shneur.

Following our prepared remarks, we will hold a Q&A session I would now like to turn the call over to Martin Martin.

Thank you Laurie and thanks to each of you for joining us.

Last week, we marked our second anniversary as an independent company and we are delivering progress at an accelerated pace.

I don't want to talk about why we've been able to succeed of course, our first half performance reflects continued progress and strong execution.

Positioning us really well for the year as a whole and we're raising our full year earnings outlook.

Our <unk> initiatives centered on alliances and advanced delivery and accounts are paving the way for profitable growth.

Consult <unk> bridge and our efficiency efforts are also driving our results and as an organization. We're delivering strong performance that is evident both in our financial metrics and in our customer satisfaction scores.

On today's call David will review our recent financial results are raised fiscal 2020 for outlook and how we're changing <unk> profile for the better.

However, let's not lose sight of why this performance is happening we are vital to our customers' current and future technology needs our capabilities aligned with the powerful secular trends in it.

And this makes us an indispensable partner for our customers.

We're helping customers navigate these secular trends and we're already capturing the growth opportunities they present.

And because we are at the heart of these trends of enabling our customers' <unk> futures as well as their current operations performing mission critical work across a broader technology ecosystem, our business is sustainable and important over the long term.

That's why we're seeing growth in alliances with our Hyperscale or partners in adoption of Kindle bridge in consult signings and revenue and customer satisfaction in public cloud management and in areas like apps data and AI. So yes. We're fixing focus accounts that are so that our margins are better but <unk> transformation is about <unk>.

So much more than that it's about <unk> being the leader in providing and enabling our customers to have and leverage the technology they need to win.

The results, we're presenting today just as they did last quarter and last year are evidence of our strength market leadership and ability to fix the challenges we inherited the.

The margins on the signings, we're putting into our backlog the execution of our three <unk> initiatives, our success with our new partners and our ability to enable our customers to harness secular it trends are reminders that we were always more than just a turnaround and then we've always been a market leader a leader that is well positioned to capture future growth.

<unk>.

To appreciate our growth opportunities. It is important to understand how we are building on our heritage and leveraging our expertise to meet customer needs and forge new higher value revenue streams.

Our 30, plus year heritage and managing mission critical IC.

Systems is a very powerful asset.

And we're seeing high a hybrid it estate supplant migrate everything to cloud as a central theme among large enterprise cio's are.

A recent survey of hundreds of it and business leaders indicated that while they aimed to run nearly 40% of their workloads on our cloud our distributed platform. The overwhelming majority also viewed mainframes is essential to their business operations and likely to remain at the core of their tech stack.

With that in mind, our new alliances with Hyperscale is combined with our expansive knowledge of legacy technologies give Ken a unique ability to help organizations achieve there.

And business objectives.

With Kinder consult our technology experts advise our customers and co create with our partners to modernize and optimize hybrid solutions and accelerate business outcomes.

With a hybrid infrastructure businesses can strategically choose where and how to host specific workloads based on their requirements.

We are working with customers everywhere to ensure that the right workload runs on the right platform. This leads to improved performance and cost savings.

And we've been consistently generating double digit revenue growth in casual consult by delivering thought leadership and mainframe modernization and strong capabilities in automation and cloud migration and management data optimization and security and resiliency.

Additionally, Kindle bridge integrates AI operational data and kindles expertise to give customers visibility across our technology and states, including multi cloud and hybrid landscapes with insights to help them understand predict and act for better business outcomes.

So through our heritage Kendra consult and control bridge, we're meeting customers, where they are in their digital evolution and helping them move forward.

Our capabilities and innovation are putting us at the center of collaborative customer relationships, and which technology drives business outcomes in a reliable and secure way.

This is allowing us to access incremental market opportunities to grow our share of wallet with existing customers and to win new customers and obviously transform parts of jingle.

Beyond enterprises need to manage and optimize their infrastructures our market position and our capabilities are allowing us to benefit from the key secular trends in it.

The adoption of artificial intelligence technology skills shortages, the needs to modernize and partial in many cases cloud migration all of which are creating growth opportunities for us.

As the largest infrastructure services provider in the world, we generate large amounts of data about it systems. We use this data in casual bridge and it gives us the ability to identify application performance patterns under almost any condition. So we can prevent incidents from occurring and reduce required maintenance.

AI is also a go to market opportunity for us as customers seek to build AI in their own generative AI into processes. They know that their AI is only going to be as good as their data. This.

This is creating demand for our expertise and how to architect data to set the foundation for AI and Virgin AI applications.

And we're working with both existing and New Alliance partners to help facilitate AI in complex environments and to develop joint capabilities.

A second trend is that many organizations just can attract and develop the range in scale of skilled resources they need.

Particularly certain disciplines skills are in short supply throughout the world and in sourced infrastructure work doesn't benefit from the scale. The know how the training the investment and the innovation that <unk> brings to the table as a third party service provider, including the expansion of our hyperscale or certifications since our spin.

Our scale and associated ability to home grow talented resources the skill shortages in the marketplace are making kimco value proposition even stronger.

We manage today more than 60% of the outsourced mainframe capacity in the world and we invest in maintaining this world class team.

Our knowhow and alliances with leading technology providers also give us unparalleled expertise and enterprise cio's need to modernize complex environments simply.

Simply put nobody can retrofit their plain wallet flying like weekend and.

And when we combine these capabilities with customers' needs to enhance security and resiliency and efficiency with their desire for innovation, we become an indispensable business partner.

As I mentioned earlier selective migration of certain workloads to the cloud is a prime example of where at large organizations are looking to modernize innovate and drive efficiency.

Our hyperscale or related signings are up more than 35%. So far this year and our hyperscale are related revenues were up even more.

And some of our largest new logo signings have been for customers, who want to leverage our hyperscale or alliances and cloud migration expertise and.

And a central theme underlying our strategies and our approach to the market is that we're capturing and building value in our business as we've shared previously our gross margin in the time of our spin the margin that our backlog was producing was in the mid teens.

But we've dramatically changed the projected margins on new business that we're signing and raising these margins more than 50% to 26% over the last 12 months from a financial perspective. This is a game changer for our business.

The top of our earnings funnel that is flowing out into our P&L this year.

Signings so the inflection point when our P&L is largely determined by our higher margin post spin signings will dramatically change our earnings profile again.

As we shared last quarter.

Where this will show up is in our adjusted pre tax income and margins.

Adjusted pre tax losses behind us and our forecast implies more than $350 million of adjusted pre tax income improvement this year compared to last in.

And the margins, which were signing contracts and the other actions, we're implementing have us on path to deliver higher earnings each year on our way to high single digit adjusted pre tax margins.

And yes, the math associated with that is ultimately a $1 billion or more of adjusted PTC pie with a high conversion of our net earnings into cash.

In short.

While we continue to do the important vital work, we always have for our customers. We're successfully transforming elements of our business very quickly because of our great people, our new culture, our unique capabilities to meet mission critical needs are powerful and data and outstanding execution each of which is.

Aligned with the secular trends in the market.

We are pleased with the significant progress we've made so far we are enthusiastic about our momentum going into the second half of the year and very excited about the path in front of us.

Now with that I'll hand over to David to take you through our results and our outlook.

Thanks, Martin and Hello, everyone today, I'd like to discuss our quarterly results. The outstanding progress, we're making on our three as the growth in gross profit that we've been building into our contracted book of business and our updated outlook for fiscal year 2024, we have a lot of good news to share.

Our second quarter results reflect strong operational execution and continued progress on our key initiatives in.

In the quarter revenue totaled $4 1, billion% to 5% decline in constant currency.

We continued to gain momentum in our higher margin advisory services Kindred consult revenues grew 17% year over year in constant currency, which highlights how we're growing our share in this higher margin higher value add space.

Signings grew even faster increasing 32% year over year in constant currency.

Our Q2 signings were down 3% year over year in constant currency.

Outside of our core enterprise practice, where we've concentrated on removing pass through revenue and addressing focus accounts signings were up in the single digits.

Our adjusted EBITDA grew 34% to $574 million or.

<unk> EBITDA margin was 14, 1% a year over year increase of 390 basis points.

At the risk of being a modest we view this remarkable execution.

Nearly four points of margin expansion is a proof point for our ability to drive meaningful profit growth in our business.

Adjusted pre tax income was $25 million a.

A $127 million improvement in profit compared to the prior year quarter.

As I'll discuss in a moment our continued progress on our three <unk> is the key driver of our earnings growth.

Leading kindred consult signings coming from cloud apps data and AI security and other growth areas.

More generally as we look back on the quarter. We're thrilled to have delivered results that position us to exceed the full year earnings targets that we've already raised once before.

Our strategy is working our three initiatives are driving continuous improvement throughout our operations and fostering additional progress each quarter.

As a reminder, at the start of the year, we provided fiscal 2024 targets of $300 million in revenue tied to hyperscale or alliances.

$450 million in cumulative annualized cost savings from advanced delivery by fiscal year end and.

And $400 million of cumulative annualized pre tax benefit from our accounts initiative.

Heading into the second half of our fiscal year, we are well on track to exceed our alliances target and are raising our targets for our advanced delivery and accounts initiatives.

Through our alliances we are building a portion of our customer relationships that include cloud based content in the second quarter, we recognized more than $100 million in hyperscale or related revenue, putting our run rate ahead of our $300 million full year target are hyper scaler certifications.

More than 37000, which is more than double what they were two years ago and now include even more advanced certifications.

Our advanced delivery initiative is transforming the way, we deliver our services and Kindle bridge is driving our progress today.

To date, we've been able to free up more than 7500 delivery professionals to address new revenue opportunities and backfill attrition. This.

This is worth roughly $425 million a year to us representing a $50 million increase in our annual run rate this past quarter.

We continue to see significant automation opportunities across our delivery operations as we increased service levels reduce our costs and incorporate more technology into our offerings.

Our accounts initiative has been and will continue to be a global effort focused on fixing elements of contracts with substandard margins in the second quarter, we increased the annual profitability of our focus accounts to $400 million.

Which was our initial target for year end.

Turning to our cash flow and balance sheet.

In the quarter, we generated positive adjusted free cash flow of $69 million.

Our financial position remains strong and we continue to expect that our full year adjusted free cash flow will be positive.

We provided a bridge from our adjusted pretax income to our free cash flow as well as a bridge from our adjusted EBITDA to our free cash flow in the appendix.

Our cash balance at September 30 was $1 4 billion.

Our cash combined with available debt capacity under committed borrowing facilities gave us $4 6 billion of liquidity at quarter end.

Our debt maturities are well lettered from late 2024 to 2041, we had no borrowings outstanding under our revolving credit facility and our net debt at quarter end was $1 8 billion.

As a result, our net leverage sits well within our target range.

Were rated investment grade by Moody's Fitch, and S&P and all three agencies recently reaffirmed our ratings.

This was a large complex and important series of projects delivered on time and on budget that will allow us to adapt our product.

The disease and drive operating efficiencies in ways that we couldnt until now.

On capital allocation, our top priorities continue to be to maintain strong liquidity remain investment grade and reinvest in our business.

Our leadership position in it infrastructure services combined with benefits from our three initiatives is significantly expanding our margins and will drive meaningful free cash flow growth.

And over time, we'll be in a position to consider regularly returning capital to shareholders all while remaining investment grade.

As encouraged as I am by the earnings growth, we delivered in Q2.

Even more enthusiastic about how we continue to position Kindle for future margin and profit growth.

As Martin mentioned the September quarter was a continuation of that favorable trend and as our business mix increasingly shifts towards more postpaid contracts you will see significant margin expansion.

In our earnings presentation, we shared a simple analysis that accentuates, how we've been creating and capturing value in our business.

With an average projected gross margin of 26% on our $12 billion of signings over the last 12 months, we've added over $3 billion of gross profit to our backlog.

Over the same period of time, we've reported gross profit of $2 7 billion.

This means we've been adding more gross profit to our backlog and our contracted book of business has been throwing off in the form of gross profit reported in our P&L.

Having a gross profit book to Bill ratio above one at one one is a measure of how we're growing what matters most.

The expected future profit from committed contracts.

Roughly $600 million in annual pretax income.

And our accounts initiative will drive annual pre tax income of $800 million or more.

We expect that these efforts will contribute roughly $400 million in annual pretax income over the next few years.

In total then the magnitude of the earnings growth opportunity. We're tackling is tremendous relative to our current margins progress on our three eight is a central source of value creation for kindred.

With another strong quarter to build on.

Q2 2024 Kyndryl Holdings Inc Earnings Call

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