Kyndryl Holdings, Inc.

Previous wording

FOR THE THREE MONTHS ENDED JUNE 30, 2025

Current wording

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2025

Previous wording

Most economists, including the International Monetary Fund, expect positive global macroeconomic growth in calendar year 2025. Global markets have experienced increased volatility in recent months, driven by geopolitical developments, concerns over the imposition of import tariffs by the United States, reactions from other nations and proposed U.S. government spending reductions. Increased economic uncertainty may impact the level of global macroeconomic activity.

Current wording

Most economists, including the International Monetary Fund, expect positive but subdued global macroeconomic growth in calendar year 2025 and calendar year 2026 amid ongoing trade tensions and heightened macroeconomic uncertainties. Global markets have experienced volatility from time to time in recent months, driven by geopolitical developments, concerns over changes in global trade policies and the imposition of import tariffs by the United States, reactions from other nations and proposed U.S. government spending reductions. Increased economic uncertainty can impact the level and composition of global macroeconomic activity.

Previous wording

For the three months ended June 30, 2025, we reported $3.7 billion in revenue, a slight increase compared to the prior-year period. The revenue performance included a favorable currency exchange rate impact of three points. United States revenue declined 8 percent, Japan revenue increased 2 percent, Principal Markets revenue increased 3 percent and Strategic Markets revenue increased 3 percent, in each case compared to the three months ended June 30, 2024. Net income of $56 million increased by $45 million versus the prior-year period reflecting a $17 million decline in the provision for income taxes, an $11 million decline in workforce rebalancing charges and no current-period transaction-related costs.

Current wording

For the three months ended September 30, 2025, we reported $3.7 billion in revenue, a decrease of 1% compared to the prior-year period. The revenue performance included a favorable currency exchange rate impact of three points. United States revenue declined 6 percent, Japan revenue decreased 4 percent, Principal Markets revenue increased 1 percent and Strategic Markets revenue increased 2 percent, in each case compared to the three months ended September 30, 2024. Net income of $68 million increased by $111 million versus the prior-year period, reflecting progress on our key initiatives to drive operating efficiencies and higher margins on recent signings.

Previous wording

The following table presents our reportable segments’ revenue and adjusted EBITDA for the three months ended June 30, 2025 and 2024. Segment revenue and revenue growth in constant currency exclude any transactions between the segments.

Current wording

The following table presents our reportable segments’ revenue and adjusted EBITDA for the three and six months ended September 30, 2025 and 2024. Segment revenue and revenue growth in constant currency exclude any transactions between the segments.

Previous wording

Additionally, management uses adjusted EBITDA to evaluate our performance. Adjusted EBITDA is a non-GAAP measure and defined as net income (loss) excluding income taxes, interest expense, depreciation and amortization (excluding depreciation of right-of-use assets and amortization of capitalized contract costs), charges related to ceasing to use leased/fixed assets, charges related to lease terminations, transaction-related costs, pension expenses other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, workforce rebalancing charges incurred prior to March 31, 2024, impairment expense, significant litigation costs and benefits, and currency impacts of highly inflationary countries. We believe that adjusted EBITDA is a helpful supplemental measure to assist investors in evaluating our operating results as it excludes certain items whose fluctuation from period to period does not necessarily correspond to changes in the operations of our business.

Current wording

pension servicing costs and multi-employer plan costs, stock-based compensation expense, workforce rebalancing charges incurred prior to March 31, 2024, impairment expense, significant litigation costs and benefits, and currency impacts of highly inflationary countries. We believe that adjusted EBITDA is a helpful supplemental measure to assist investors in evaluating our operating results as it excludes certain items whose fluctuation from period to period does not necessarily correspond to changes in the operations of our business.

Previous wording

The following table provides a reconciliation of U.S. GAAP net income to adjusted EBITDA:

Current wording

The following table provides a reconciliation of U.S. GAAP net income (loss) to adjusted EBITDA:

Previous wording

For the three months ended June 30, 2025, United States revenue of $911 million decreased 8 percent compared to the prior-year quarter, driven by the Company’s efforts to reduce certain low-margin revenues and the expiration of certain low- and negative-margin contracts entered into before the Spin-off. Adjusted EBITDA increased $63 million from the prior-year quarter, primarily driven by progress on our key initiatives to drive operating efficiencies, including lower sales, general and administrative expenses.

Current wording

For the three months ended September 30, 2025, United States revenue of $899 million decreased 6 percent compared to the prior-year quarter, driven by the Company’s efforts to reduce certain low-margin revenues and the expiration of certain low- and negative-margin contracts entered into before the Spin-off. Adjusted EBITDA increased $36 million from the prior-year quarter, primarily driven by progress on our key initiatives to drive operating efficiencies.

Previous wording

For the three months ended June 30, 2025, Principal Markets revenue of $1.4 billion increased 3 percent compared to the prior-year quarter, driven by a favorable currency exchange rate impact of four points. Adjusted EBITDA decreased $44 million from the prior-year quarter, primarily due to a vendor credit in the prior year.

Current wording

For the six months ended September 30, 2025, Principal Markets revenue of $2.7 billion increased 2 percent compared to the prior-year period, driven by a favorable currency exchange rate impact of four points. Adjusted EBITDA decreased $21 million from the prior-year period, primarily due to a vendor credit in the prior year, partially offset by progress on our key initiatives to drive operating efficiencies and higher margins on recent signings.

Previous wording

For the three months ended June 30, 2025, Strategic Markets revenue of $898 million increased 3 percent compared to the prior-year quarter, driven by higher signings in fiscal year 2025. Adjusted EBITDA increased $43 million from the prior-year quarter, primarily due to progress on our key initiatives to drive operating efficiencies and higher margins on recent signings.

Current wording

For the six months ended September 30, 2025, Strategic Markets revenue of $1.8 billion increased 2 percent compared to the prior-year period, driven by a favorable currency exchange rate impact of two points. Adjusted EBITDA increased $48 million from the prior-year period, primarily due to progress on our key initiatives to drive operating efficiencies and higher margins on recent signings.

Previous wording

Corporate and other had an adjusted EBITDA loss of $26 million in the three months ended June 30, 2025, compared to a loss of $21 million in the three months ended June 30, 2024.

Current wording

Corporate and other had an adjusted EBITDA loss of $28 million in the three months ended September 30, 2025, compared to a loss of $22 million in the three months ended September 30, 2024. Corporate and other had an adjusted EBITDA loss of $53 million in the six months ended September 30, 2025, compared to a loss of $42 million in the six months ended September 30, 2024.

Previous wording

Cost of services was 78.7% of revenue in the three months ended June 30, 2025, compared to 78.5% in the three months ended June 30, 2024, driven by a vendor credit in the prior-year quarter, almost fully offset by progress on our key initiatives to drive operating efficiencies and higher margins on recent signings. Selling, general and administrative expenses were 17.3% of revenue in the three months ended June 30, 2025 compared to 17.6% in the prior-year quarter, driven bythe impact of currency on revenue compared to our U.S. dollar-denominated expenses.

Current wording

Cost of services was 78.5% of revenue in the three months ended September 30, 2025, compared to 80.1% in the three months ended September 30, 2024, driven by progress on our key initiatives to drive operating efficiencies and higher margins on recent signings. Selling, general and administrative expenses were 17.7% of revenue in the three months ended September 30, 2025 compared to 17.1% in the prior-year quarter, driven by lower revenue. Workforce rebalancing charges were 0.5% of revenue in the three months ended September 30, 2025 versus 1.0% of revenue in the prior-year quarter. Interest expense was 0.5% of revenue in the three months ended September 30, 2025 compared to 0.7% in the prior-year quarter. Other expense was 0.1% of revenue in the three months ended September 30, 2025, compared to 1.2% of revenue in the prior-year quarter, driven by currency-related hedging losses recorded last year.

Previous wording

During the three months ended June 30, 2025, management initiated actions to reduce the Company’s overall cost structure and enhance operating efficiency. As a result of these actions, the Company recorded workforce rebalancing charges of $25 million in the period.

Current wording

During the three and six months ended September 30, 2025, management initiated actions to reduce the Company’s overall cost structure and enhance operating efficiency. As a result of these actions, the Company recorded workforce rebalancing charges of $19 million and $44 million for the three and six months ended September 30, 2025, respectively.

Previous wording

Total cash outlays for this program are expected to be approximately $80 million, of which approximately $11 million has been paid through June 30, 2025, and the remainder is expected to be paid thereafter. Management expects that these workforce rebalancing activities will reduce annual payroll costs and related expenses by more than $100 million. There can be no guarantee that we will achieve our expected cost savings.

Current wording

Total cash outlays for this program are expected to be approximately $80 million, of which approximately $28 million has been paid through September 30, 2025, and the remainder is expected to be paid thereafter. Management expects that these workforce rebalancing activities will reduce annual payroll costs and related expenses by more than $100 million. There can be no guarantee that we will achieve our expected cost savings.

Previous wording

During the year ended March 31, 2025, management implemented actions to reduce the Company’s overall cost structure and increase our operating efficiency. During the year ended March 31, 2025, the Company recorded $114 million in workforce rebalancing charges and $48 million in charges related to ceasing to use leased and owned fixed assets, including lease termination charges.

Current wording

During the year ended March 31, 2025, management implemented actions to reduce the Company’s overall cost structure and increase our operating efficiency. During the year ended March 31, 2025, the Company recorded $114 million in workforce rebalancing charges and $48 million in charges related to ceasing to use leased and owned fixed assets.

Previous wording

Total cash outlays for this program are expected to be approximately $150 million, of which approximately $125 million has been paid through June 30, 2025, and the remainder is expected to be paid thereafter. Management expects that these workforce rebalancing and site-rationalization activities will reduce payroll costs, rent expenses and depreciation of property and equipment by more than $200 million in fiscal year 2026. There can be no guarantee that we will achieve our expected cost savings.

Current wording

Total cash outlays for this program are expected to be approximately $150 million, of which approximately $132 million has been paid through September 30, 2025, and the remainder is expected to be paid thereafter. Management expects that these workforce rebalancing and site-rationalization activities will reduce payroll costs, rent expenses and depreciation of property and equipment by more than $200 million in fiscal year 2026. There can be no guarantee that we will achieve our expected cost savings.

Previous wording

The provision for income taxes for the three months ended June 30, 2025 was $36 million of expense, compared to $53 million of expense for the three months ended June 30, 2024. Our income tax expense for each of the three months ended June 30, 2025 and 2024 was primarily related to taxes on foreign operations and valuation allowances recorded in certain jurisdictions against deferred tax assets that are not more likely than not to be realized.

Current wording

The provision for income taxes for the three months ended September 30, 2025 was $30 million, compared to $38 million for the three months ended September 30, 2024. Our income tax expense for the three months ended September 30, 2025 and 2024 was primarily related to taxes on foreign operations and valuation allowances recorded in certain jurisdictions against deferred tax assets that are not more likely than not to be realized.

Previous wording

differences, and the feasibility of ongoing tax planning strategies and actions. Estimates of future taxable income and loss could change, perhaps materially, which may require us to revise our assessment of the recoverability of the deferred tax asset at that time.

Current wording

In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction, including past operating results, estimates of future taxable income, the reversal of existing temporary differences, and the feasibility of ongoing tax planning strategies and actions. Estimates of future taxable income and loss could change, perhaps materially, which may require us to revise our assessment of the recoverability of the deferred tax asset at that time.

Previous wording

Total assets of $11.5 billion increased by $1.0 billion (and increased by $628 million adjusted for currency) from March 31, 2025, primarily driven by an increase in deferred costs of $1.1 billion mainly due to an extended and amended multi-year, third-party software agreement and an increase of $134 million in prepaid expenses and other current assets mainly due to prepayment for software subscriptions, partially offset by a decrease in cash and cash equivalents of $324 million mainly due to payments for annual incentive compensation.

Current wording

Total assets of $11.2 billion increased by $792 million (and increased by $372 million adjusted for currency) from March 31, 2025, primarily driven by an increase in deferred costs of $942 million mainly due to an extended and amended multi-year, third-party software agreement and an increase in operating right-of-use assets, net, of $138 million due to additions outpacing amortization, partially offset by a decrease in cash and cash equivalents of $455 million mainly due to share repurchases and payments for annual incentive compensation.

Previous wording

Total liabilities of $10.2 billion increased by $1.0 billion (and increased by $746 million adjusted for currency) from March 31, 2025, primarily as a result of an increase in other noncurrent liabilities of $893 million driven by the extended and amended multi-year, third-party software agreement, partially offset by a decrease in accrued compensation and benefits of $215 million due to payments of annual incentive compensation.

Current wording

Total liabilities of $9.9 billion increased by $784 million (and increased by $526 million adjusted for currency) from March 31, 2025, primarily as a result of an increase in other noncurrent liabilities of $748 million driven by the extended and amended multi-year, third-party software agreement.

Previous wording

Total equity of $1.3 billion increased by $12 million from March 31, 2025, principally due to our net earnings of $56 million and other comprehensive income of $66 million in the period, and activity related to employee stock plans of $26 million, partially offset by $65 million of share repurchases under our Share Repurchase Program and $67 million of shares repurchased for tax withholdings.

Current wording

Total equity of $1.3 billion increased by $8 million from March 31, 2025, principally due to our net earnings of $124 million and other comprehensive income of $72 million in the period, as well as activity related to employee stock plans of $55 million, partially offset by $154 million of share repurchases under our Share Repurchase Program and $89 million of shares repurchased for tax withholdings.

Previous wording

Net cash used by operating activities was $124 million in the three months ended June 30, 2025, compared to net cash used of $48 million in the prior-year period, mainly due to a decline of $117 million in accounts receivables as a source of cash in the current quarter compared to the prior-year quarter when the collection of receivables outpaced revenues, partially offset by $45 million higher earnings in the current quarter.

Current wording

Net cash provided by operating activities was $22 million in the six months ended September 30, 2025, compared to $101 million in the prior-year period mainly due to a decline of $187 million in accounts receivables as a source of cash in the current year compared to the prior year when the collection of receivables outpaced revenues, partially offset by $161 million in higher earnings in the current year.

Previous wording

Net cash used in investing activities was $74 million in the three months ended June 30, 2025, compared to a net cash use of $166 million in the prior-year period due to an acquisition in the prior-year period.

Current wording

Net cash used in investing activities was $196 million in the six months ended September 30, 2025, compared to a net cash use of $241 million in the prior-year period due to an acquisition in the prior-year period.

Previous wording

Net cash used in financing activities totaled $170 million in the three months ended June 30, 2025, compared to net cash used by financing activities of $51 million in the prior-year period, mainly due to share repurchases of $65 million under the Company’s Share Repurchase Program and $67 million of shares repurchased to settle tax withholdings related to the vesting of stock-based awards.

Current wording

Net cash used in financing activities totaled $310 million in the six months ended September 30, 2025, compared to net cash used by financing activities of $101 million in the prior-year period, mainly due to share repurchases of $154 million under the Company’s Share Repurchase Program and $89 million of shares repurchased to settle tax withholdings related to the vesting of stock-based awards.

Previous wording

The following table presents the Company’s signings for the three months ended June 30, 2025 and 2024.

Current wording

The following table presents the Company’s signings for the three and six months ended September 30, 2025 and 2024.

Previous wording

Signings increased by $72 million in the three months ended June 30, 2025, or 2%, compared to the prior-year quarter. Management uses signings to monitor the performance of the business, as a measure of customer engagement and our ability to drive growth. There are no third-party standards or requirements governing the calculation of signings. We define signings as an initial estimate of the value of a customer’s commitment under a contract. The calculation involves estimates and judgments to gauge the extent of a customer’s commitment, including the type and duration of the agreement and the presence of termination charges or wind-down costs. Contract extensions and increases in scope are treated as signings only to the extent of the incremental new value. Signings can vary over time due to a variety of factors including, but not limited to, the timing of signing a small number of larger outsourcing contracts as well as the length of those contracts. The conversion of signings into revenue may vary based on the types of services and solutions, customer decisions and other factors, which may include, but are not limited to, the macroeconomic environment or external events.

Current wording

Signings decreased by $2.8 billion, or 49% in the three months ended September 30, 2025, compared to the prior-year quarter, and signings decreased by $2.7 billion, or 31%, in the six months ended September 30, 2025, compared to the six months ended September 30, 2024, primarily because the quarter ended September 30, 2024 included a $1.8 billion signing, the largest signing in Kyndryl’s history as an independent company. Management uses signings to monitor the performance of the business, as a measure of customer engagement and our ability to drive growth. There are no third-party standards or requirements governing the calculation of signings. We define signings as an initial estimate of the value of a customer’s commitment under a contract. The calculation involves estimates and judgments to gauge the extent of a customer’s commitment, including the type and duration of the agreement and the presence of termination charges or wind-down costs. Contract extensions and increases in scope are treated as signings only to the extent of the incremental new value. Signings can vary over time due to a variety of factors including, but not limited to, the timing of signing a small number of larger outsourcing contracts as well as the length of those contracts. The conversion of signings into revenue may vary based on the types of services and solutions, customer decisions and other factors, which may include, but are not limited to, the macroeconomic environment or external events.

Previous wording

We believe that our existing cash and cash equivalents and our revolving credit agreement will be sufficient to meet our anticipated cash needs for at least the next twelve months.

Current wording

We believe that our existing cash and cash equivalents and our revolving credit agreement will be sufficient to meet our anticipated operating cash needs and to fund our planned capital investments, debt maturities and stock repurchases for at least the next twelve months.

Previous wording

(“SOFR”). In March 2025, we further amended the agreement, extending the maturity to March 2030. Interest rates on borrowings under the Revolving Credit Agreement will be based on prevailing market interest rates, plus a margin, as further described in the Revolving Credit Agreement. As of June 30, 2025, there has been no drawdown on the Revolving Credit Agreement.

Current wording

In October 2021, we entered into a $3.15 billion multi-currency revolving credit agreement (the “Revolving Credit Agreement”), which expires, unless extended, in October 2026. The Revolving Credit Agreement was amended in June 2023, replacing the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”). In March 2025, we further amended the agreement, extending the maturity to March 2030. Interest rates on borrowings under the Revolving Credit Agreement will be based on prevailing market interest rates, plus a margin, as further described in the Revolving Credit Agreement. As of September 30, 2025, there has been no drawdown on the Revolving Credit Agreement.

Previous wording

The Company has entered into arrangements with third-party financial institutions to sell certain financial assets (primarily trade receivables) without recourse. The Company has determined these are true sales. The carrying value of the financial asset sold is derecognized, and a net gain or loss on the sale is recognized, at the time of the transfer. An agreement, which was executed in November 2021 and subsequently amended, enabled us to sell certain of our trade receivables to the counterparty. The initial term of this agreement was 18 months, and the agreement automatically resets to a term of 18 months after every six months, unless either party elects not to extend. This agreement was further amended during the quarter ended September 30, 2024 to reduce the committed facility limit from $1 billion to $600 million and to add an incremental uncommitted facility limit of $200 million that is subject to the counterparty’s sole discretion to purchase such incremental amounts. We have also entered into additional agreements with a separate third-party financial institution that enable us to sell receivables contingent on the approval of the counterparty. These agreements were first executed in June 2022 and renew automatically on their anniversary date, unless either party elects not to extend.

Current wording

The Company has entered into arrangements with third-party financial institutions to sell certain financial assets (primarily trade receivables) without recourse. The Company has determined these are true sales. The carrying value of the financial asset sold is derecognized, and a net gain or loss on the sale is recognized, at the time of the transfer. An agreement, which was executed in November 2021 and subsequently amended, enabled us to sell certain of our trade receivables to the counterparty. The initial term of this agreement was 18 months, and the agreement automatically resets to a term of 18 months after every six months, unless either party elects not to extend. This agreement was further amended during the quarter ended September 30, 2024 to reduce the committed facility limit from $1 billion to $600 million and to add an incremental uncommitted facility limit of $200 million that is subject to the counterparty’s sole

Previous wording

The net proceeds from these agreements are reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows. Gross proceeds from receivables sold to third parties under the aforementioned programs were $0.6 billion and $0.8 billion for the three months ended June 30, 2025 and June 30, 2024, respectively. The fees associated with the transfers of receivables were $5 million and $10 million for the three months ended June 30, 2025 and June 30, 2024, respectively.

Current wording

The net proceeds from these agreements are reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows. Gross proceeds from receivables sold to third parties under the aforementioned programs were $563 million and $1.2 billion for the three and six months ended September 30, 2025, respectively, and $1.1 billion and $1.9 billion for the three and six months ended September 30, 2024, respectively. The fees associated with the transfers of receivables were $5 million and $10 million for the three and six months ended September 30, 2025, and were $10 million and $20 million for the three and six months ended September 30, 2024, respectively.

Previous wording

In November 2024, the Company’s Board of Directors authorized a share repurchase program of up to $300 million of the Company’s common stock. Under the Share Repurchase Program, the Company may repurchase shares of its common stock from time to time in open market transactions and may also repurchase shares in accelerated share buyback programs, tender offers, privately negotiated transactions or by other means. Repurchases may also be made under a Rule 10b5-1 trading plan. The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal requirements and other factors.

Current wording

In November 2024, the Company’s Board of Directors authorized a share repurchase program of up to $300 million of the Company’s common stock. Under the Share Repurchase Program, the Company may repurchase shares of its common stock from time to time in open market transactions and may also repurchase shares in accelerated share buyback programs, tender offers, privately negotiated transactions or by other means. Repurchases may also be made under a Rule 10b5-1 trading plan. The timing and amount of repurchase transactions will be determined by the Company’s management based on its evaluation of market conditions, share price, legal requirements and other factors. The program does not have a set expiration date and may be suspended, modified or discontinued at any time without prior notice.

Previous wording

During the three months ended June 30, 2025, the Company repurchased 1.8 million shares of its common stock at an aggregate cost of $65 million under the Share Repurchase Program. As of June 30, 2025, $141 million remained of our $300 million Share Repurchase Program authorization.

Current wording

During the three and six months ended September 30, 2025, the Company repurchased 2.9 and 4.6 million shares of its common stock at an aggregate cost of $89 and $154 million, respectively, under the Share Repurchase Program.