Kyndryl reports loss for third quarter

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Kyndryl reports loss for third quarter

Kyndryl, the spin-off of IBM’s managed infrastructure business that started trading as a public company on November 4, reported US$4.6 billion in revenue for the three months ended Sept. 30, down 5 percent year over year, in a new regulatory filing with the U.S. Securities and Exchange Commission.

Kyndryl, now listed on the New York Stock Exchange as a company independent of IBM, also reported a net loss of US$692 million for the fiscal third quarter, according to the Form 8-K filing.

That net loss is almost triple the loss of US$238 million for the same period in 2020. The quarterly results include charges of US$273 million related to the spin-off of the company from IBM, according to the filings. The company also reported pro forma adjusted earnings of US$714 million before interest, taxes, depreciation and amortization for the quarter, up from US$710 million one year prior.

Kyndryl previously reported on business troubles in recent years while part of IBM. Kyndryl executives have said the new company sees a potential US$510 billion market by 2024, more than doubling its US$240 billion market while part of IBM. The path to conquering that market includes new and expanded partnerships with IBM competitors that were not possible during the company’s time as part of the tech giant.

After becoming a separate company, Kyndryl announced expanded partnerships with Microsoft and VMware.

A Kyndryl representative was not immediately available to comment on the financial results before publication.

As of Sept. 30, the company had about US$12 billion in total assets, including $1.7 billion in accounts receivable and $735 million in cash, according to the filing. The company had about $12 billion in liabilities and equity, including $823 million in operating lease liabilities and $995 million in retirement and non-pension post-retirement benefit obligations.

Kyndryl’s remaining performance obligation, defined as “a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed,” was $51.1 billion as of Sept. 30, according to the filings.

“Approximately 53 percent of the amount is expected to be recognized as revenue in the subsequent two years, approximately 36 percent in subsequent years three through five years, and the balance thereafter,” according to the filing.

During the third quarter, the company saw US$2.8 billion in contract signings. All of the signings greater than US$100 million for the quarter came from existing clients.

The company expects fourth quarter pro forma revenue of between US$4.5 billion and US$4.7 billion, resulting in US$18.5 billion to US$18.7 billion in revenue for 2021, according to Kyndryl.

The filing also mentions a pending court case that could affect Kyndryl. The case is between BMC Software and IBM in which BMC alleges IBM’s removal of BMC software from a client’s sites at the client’s request constituted breach of contract and trade secret misappropriation. The lawsuit was filed in 2017.

Kyndryl’s stock traded at just under $18 per share Tuesday morning, down more than 4 percent. The company traded at about $26 at market open Nov. 4.

This article originally appeared at crn.com

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