https://www.crn.com/news/managed-services/kyndryl-reports-net-loss-for-third-quarter-offers-2021-full-year-forecast
Kyndryl, the spin-off of IBM’s managed infrastructure business that started trading as a public company on Nov. 4, reported $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 (ticker symbol “KD”) as a company independent of IBM, also reported a net loss of $692 million for the fiscal third quarter, according to the Form 8-K filing.
That net loss is almost triple the loss of $238 million for the same period in 2020. The quarterly results include charges of $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 $714 million before interest, taxes, depreciation and amortization for the quarter, up from $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 $510 billion market by 2024, more than doubling its $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.
A Kyndryl representative was not immediately available to comment on the financial results before publication.
As of Sept. 30, the company had about $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.
As for each of Kyndryl’s geographical areas, the Americas and the combined region of Europe, the Middle East and Africa each saw about $1.7 billion in total revenue for the quarter ended Sept. 30. The Americas saw a pre-tax loss of $89 million and the EMEA region saw a loss of $381 million. The company has about 90,000 employees serving more than 4,000 customers in 60-plus countries.
During the third quarter, the company saw $2.8 billion in contract signings. All of the signings greater than $100 million for the quarter came from existing clients.
The company expects fourth quarter pro forma revenue of between $4.5 billion and $4.7 billion, resulting in $18.5 billion to $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.