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Kyndryl Q2 Revenue Declines To $4.2B; Net Loss Cut Significantly

Joseph F. Kovar

Kyndryl, which one year ago this month was spun out of IBM where it was that company’s managed infrastructure business unit, saw a significant cut in its net loss despite a slight drop in overall revenue, igniting company expectations that it is on the way to profitable growth.

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Global IT infrastructure services provider Kyndryl seems to have found a way to stem its losses despite a drop in second fiscal quarter 2023 revenue.

New York-based Kyndryl, which a year ago this month was launched out of IBM, where it was previously known as IBM’s managed infrastructure services business, came to market with both debt and restrictions laid on by its former parent company.

However, it is making the changes it needs to find profitable growth, said Kyndryl Chairman and CEO Martin Schroeter, in a prepared statement.

[Related: Kyndryl CEO Martin Schroeter: We Are Exiting The Influence Of IBM]

“We continue to execute on our three key initiatives – Alliances, Advanced Delivery and Accounts – which are driving us toward profitable growth,” Schroeter said. “We’re leveraging our hyperscaler partnerships to serve even more of our customers’ needs, enhancing our service delivery through upskilling and automation, and addressing elements of our business with substandard margins.”

Schroeter in August told CRN in an interview that he knows Kyndryl has a lot of investment to make to succeed, given that IBM in the past under-invested in the managed infrastructure business which it saw as gradually declining.

“IBM didn’t want to invest in it,” he said at the time. “I think their point of view was, without investment, it’ll never turn around, and therefore it’s always going to be 1 to 2 points of drag on IBM’s revenue growth.”

Kyndryl also updated its outlook for fiscal 2023 with expectations of annual revenue of between $16.3 billion and $16.5 billion when adjusted for constant currency.

Kyndryl reported its second fiscal quarter 2023 financials on Wednesday, but is planning to hold its quarterly financial analyst conference call early Thursday morning.

For the quarter, which ended September 30, Kyndryl reported total revenue of $4.18 billion, down from the $4.58 billion the company reported for its second fiscal quarter 2022.

This included U.S. revenue of $1.15 billion, down 2 percent year over year; Japan revenue of $614 million, down 16 percent, and revenue from the rest of the world of $2.42 billion, up 10 percent.

However, the company also reported a GAAP net loss of $281 million or $1.24 per share, down significantly from the loss it reported last year of $690 million or $3.08 per share. On a non-GAAP basis, Kyndryl reported EBITDA of $428 million.

Joseph F. Kovar

Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at jkovar@thechannelcompany.com.

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