Kyndryl (KD) Q1 FY27 earnings call: guidance and Q&A

Can you elaborate on the assumptions embedded in the FY27 outlook, particularly regarding Kyndryl Consult growth, signings conversion, and sales cycle duration? What are the main sources of upside and downside for the revenue range?

Management is confident in the initial guidance for Kyndryl Consult, expecting high single to low double-digit growth, supported by strong Q1 signings. Sales cycles are not dramatically different, reflecting the long-term, mission-critical nature of their services and the increasing complexity of technology, including new dynamics like data sovereignty in Europe.

“So first, let's start where you did, which is on consult at the beginning of the year when we provided our guidance -- revenue guidance, we said consult would be kind of high single, low double digit. And I think we've just printed at 10%, so we feel very good about the start we had to stay within that range and have Consulteliver what we've embedded in our initial guidance.”

asked by Jonathan Lee · answered by Martin Schroeter

Given continued weakness in European markets (down 8% constant currency), is this performance in line with expectations, and how do you foresee trends evolving in Q2 and Q3?

The trends in Europe are consistent with the company's assumptions for the year and do not impact the full-year guidance. While sovereignty discussions can occur, the primary factor is the overall complexity of the IT environment and rapid technological changes, which customers navigate with long-term commitments.

“So no, the short answer is all consistent with what we assumed for our guidance. We're not seeing any trends, if you will, that would suggest the deal cycles are getting longer. It's just a world in which we live, and it's the role we play in our customers.”

asked by Kevin Krishnaratne · answered by Martin Schroeter

With robust signings and workforce rebalancing savings, how do you view workforce resourcing, headcount, and reskilling efforts to support AI-led monetization and value-added services? Do you expect increased revenue or PTI per head?

Kyndryl leverages AI and agentic solutions (like Kyndryl Bridge) to automate operations, freeing up and redeploying tens of thousands of employees into higher-value roles. This approach improves quality and efficiency, allowing the company to retain savings while enhancing customer outcomes and Net Promoter Scores. The company is confident in its ability to manage its workforce for AI-led growth.

“Our use of AI, which we've talked about for a number of years already, starting with the machine learning we use from the bridge data that we have in order to automate things now moving into an a genic world. And for us, we have 1,800 or so agents in the infrastructure, helping us get to solutions faster, helping us reduce impact events, helping us reduce error is helping us automate things.”

asked by Tien-Tsin Huang · answered by Martin Schroeter

How is Kyndryl approaching new logos in the current competitive environment, and what are its key advantages, especially in the consulting business? Can you comment on pricing dynamics for new logos versus existing customer renewals?

Kyndryl wins new logos due to its leadership with the Kyndryl Agentic framework, which industrializes design, integration, and operations of infrastructure. Kyndryl Bridge acts as a control plane, providing real-time data and automations. The company's expertise and talent in Kyndryl Consult, along with its ability to integrate and orchestrate complex IT environments at scale, are highly differentiated. Pricing dynamics were not explicitly detailed, but the focus is on higher-value services.

“We win for a number of reasons. And the most recent wins are tied to our our leadership with the Kindragentic framework, which allows -- provides the architecture and the delivery framework so that our customers, we can really industrialize both not both, but the design and the integration and then the operations of their infrastructure.”

asked by Bradley Clark · answered by Unknown Executive

What is the opportunity in mainframe modernization, how might it affect Kyndryl's business, and what is its impact on the relationship with IBM?

Mainframe modernization is a significant opportunity where Kyndryl has unparalleled scale and expertise, running over half the world's outsourced mainframes. This drives customer interest as they seek to modernize infrastructure for new technologies like AI. The relationship with IBM remains good and evolving, with both companies cooperating to help customers, often involving mainframe solutions. Kyndryl's role is to bring high-value services across the entire ecosystem, including mainframe, private, and public cloud environments.

“So look, mainframe modernization is a thing. It's real. It's something we're experts in have more scale than anybody else in mainframe and mainframe services. And that scale allows us to -- it allows us to invest and create career paths for that next generation of mainframe talent.”

asked by Fencer Anson · answered by Martin Schroeter