Kyndryl's Q2 Revenue Beats Estimates, Driven by AI Consulting Strength

Kyndryl Beats Second-Quarter Revenue Estimates on Consulting Strength

(Reuters) - IT services provider Kyndryl narrowly beat estimates for second-quarter revenue on Wednesday as businesses adopting generative AI technology turned to its consulting services. The company, the former infrastructure services business of IBM, posted a 23% rise in consulting business revenue. Kyndryl has benefited from companies upgrading their IT systems to incorporate the extensive data and processing needs of artificial intelligence technology. "For every company which is considering AI and generative AI, the heart of that always requires data," CEO Martin Schroeter told Reuters. "We play a role in helping them with their data architecture before they could even start to consider Gen AI." Kyndryl's second-quarter revenue fell about 7% to $3.77 billion. The average estimate of four analysts polled by LSEG was $3.72 billion. The company inherited multiple no-margin contracts from IBM and has been looking to re-work them to generate higher profits, a move that has led to an "engineered decline" in its revenue. It will return to revenue growth by the end of this fiscal year, Schroeter said. Kyndryl has a target of generating $1 billion in revenue in its fiscal year 2025 from so called hyperscalers. In the second quarter, Kyndryl recognized $260 million in revenue tied to customers using services from large-scale cloud providers. The company narrowed its net loss to $43 million in the quarter ended Sept. 30, compared with a net loss of $142 million in the year-ago-period. In response to a question on Donald Trump's election as U.S. president, Schroeter said: "I do expect there will be continued focus on the security aspects of data and importantly on the resiliency aspects of the systems that countries rely on." "Helping customers get ready for a regulatory environment is going to be a tailwind for us." (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Anil D'Silva)

Kyndryl beats second-quarter revenue estimates on consulting strength

Nov 6 (Reuters) - IT services provider Kyndryl (KD.N), opens new tab narrowly beat estimates for second-quarter revenue on Wednesday as businesses adopting generative AI technology turned to its consulting services. The company, the former infrastructure services business of IBM (IBM.N), opens new tab, posted a 23% rise in consulting business revenue. Kyndryl has benefited from companies upgrading their IT systems to incorporate the extensive data and processing needs of artificial intelligence technology. "For every company which is considering AI and generative AI, the heart of that always requires data," CEO Martin Schroeter told Reuters. "We play a role in helping them with their data architecture before they could even start to consider Gen AI." Kyndryl's second-quarter revenue fell about 7% to $3.77 billion. The average estimate of four analysts polled by LSEG was $3.72 billion. The company inherited multiple no-margin contracts from IBM and has been looking to re-work them to generate higher profits, a move that has led to an "engineered decline" in its revenue. It will return to revenue growth by the end of this fiscal year, Schroeter said. Kyndryl has a target of generating $1 billion in revenue in its fiscal year 2025 from so called hyperscalers. In the second quarter, Kyndryl recognized $260 million in revenue tied to customers using services from large-scale cloud providers. The company narrowed its net loss to $43 million in the quarter ended Sept. 30, compared with a net loss of $142 million in the year-ago-period. In response to a question on Donald Trump's election as U.S. president, Schroeter said: "I do expect there will be continued focus on the security aspects of data and importantly on the resiliency aspects of the systems that countries rely on." "Helping customers get ready for a regulatory environment is going to be a tailwind for us." Reporting by Arsheeya Bajwa in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab

Kyndryl sees good traction with AI consulting services, and its stock moves higher - SiliconANGLE

Kyndryl sees good traction with AI consulting services, and its stock moves higher Kyndryl Holdings Inc., the information technology infrastructure services company that was formerly a part of IBM Corp., delivered a narrow earnings and revenue beat today, nudging its stock higher after-hours. The company reported a second-quarter loss before certain costs such as stock compensation of 19 cents per share, better than the 24-cent-per-share loss expected by analysts. Revenue for the period dropped by 7% from a year earlier, but at $3.77 billion, it was still higher than the Wall Street analysts' consensus estimate of $3.72 billion. The positive results enabled Kyndryl to reduce its net loss from $142 million in the year-ago period to just $43 million at the end of the quarter. Investors liked what they saw, as the company's stock moved 2% higher in late trading, adding to a gain of almost 5% earlier in the day. Kyndryl is exclusively focused on providing IT services, having split off from IBM in November 2021. It's organized into six global managed services practices, each managing a different aspect of technology: applications, data and artificial intelligence; core enterprise and zCloud, IBM's mainframe-as-a-service offering; digital workplace; network and edge; security and resiliency; and cloud. It also offers a customer advisory practice that combines managed services, advisory services and implementation. In addition to its six core practices, it offers services designed to help companies set up and maintain their workloads on leading cloud infrastructure platforms, such as Amazon Web Services, Google Cloud, Microsoft Azure and IBM Cloud. The company said it is benefiting from enterprise's desire to implement AI-powered applications and services, as many lack the expertise to go it alone. That was the main reason why its consulting revenue increased 23% in the quarter, it added. "For every company which is considering AI and generative AI, the heart of that always requires data," Kyndryl Chief Executive Martin Schroeter (pictured) said in an interview with Reuters shortly after the earnings release went live. "We play a role in helping them with their data architecture before they could even start to consider generative AI." Kyndryl has high hopes for generative AI, and has set itself a target of generating $1 billion in revenue from so-called "hyperscalers" during fiscal 2025. It appears to be on track to hitting that goal, recognizing $260 million in revenue tied to customers using cloud infrastructure services. During the quarter, Kyndryl announced the launch of new consulting services for Microsoft's Copilot tool, which has befuddled many enterprises due to the difficult of setting it up and extracting value. When the company split from IBM, it inherited a number of "no-margin" contracts, and it has been trying to rework those to generate greater profits, and the result of that has been what Schroeter termed an "engineered decline" in its overall revenue. However, the CEO insisted that the company is making good progress in that respect, and said it hopes to return to revenue growth by the end of the fiscal year. Looking ahead, the company reaffirmed its fiscal 2025 revenue forecast of between $15.2 billion and $15.5 billion, the midpoint of which is above the Street's target of $15.27 billion. Kydryl declined to provide guidance for the current quarter, saying it will do so when it holds its conference call with analysts on Thursday.