Slides
Page 1
Second Quarter 2027 EarningsNovember 4, 2026
Page 2
2 Forward-looking statementsThis presentation and the related conference call contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this presentation, including statements concerning the Company's plans, objectives, goals, beliefs, business strategies, future events, business condition, results of operations, financial position, business outlook, business trends and other non-historical statements, including without limitation the outlook and financial objectives in this presentation and the related conference call (which does not assume any future acquisitions or divestitures), are forward-looking statements. Such forward-looking statements often contain words such as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “objectives,” “opportunity,” “plan,” “position,” “predict,” “project,” “seek,” “should,” “signpost,” “target,” “will,” “would” and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are based on the Company's current assumptions and beliefs regarding future business and financial performance. The Company's actual business, financial condition or results of operations may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others: failure to attract new customers, retain existing customers or sell services to customers; failure to meet growth and productivity objectives and maintain our capital allocation strategy; competition; impacts of relationships with critical suppliers and partners; failure to address and adapt to technological developments and trends; inability to attract and retain key personnel and other skilled employees; impact of economic, geopolitical, public health and other conditions; damage to the Company's reputation and impact on the Company and the Company's stock price resulting from negative publicity; inability to accurately estimate the cost of services and the timeline for completion of contracts; service delivery issues; the Company's ability to successfully complete and manage acquisitions and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; the Company’s ability to refinance maturing debt on favorable terms in a timely manner, or at all, and risks related to the Company’s access to capital and credit markets; failure of the Company's intellectual property rights to prevent competitive offerings and the failure of the Company to obtain, retain and extend necessary licenses; the impairment of the Company's goodwill or long-lived assets; risks relating to cybersecurity, data governance and privacy; risks relating to non-compliance with legal and regulatory requirements and changes in laws, regulations and policies in the U.S. and countries where the Company and its customers do business, including with respect to tariffs, taxes and other controls on imports or exports; adverse effects from tax matters; risks related to legal and regulatory claims, suits, investigations, proceedings and other matters, and consequences related thereto; the Company’s ability to remediate, and the timing and costs related to the remediation of, material weaknesses in internal control over financial reporting, as well as the Company’s ability to maintain effective controls in the future; the impact of changes or developments in credit ratings, market liquidity conditions and customer credit risk on receivables; the Company's pension plans; the impact of currency fluctuations; and risks related to the Company's common stock and the securities market. Additional risks and uncertainties include, among others, those risks and uncertainties described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026, as such factors may be updated from time to time in the Company’s subsequent filings with the Securities and Exchange Commission. Any forward-looking statement in this presentation speaks only as of the date on which it is made. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.Non-GAAP financial measuresFinancial information contained in this presentation includes certain financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America (GAAP), such as adjusted EBITDA, adjusted pretax income (loss), adjusted net income (loss), adjusted EPS, adjusted EBITDA margin, adjusted pretax income margin, net debt, net leverage ratio, free cash flow, adjusted free cash flow and constant currency results, which include or exclude certain items from the most directly comparable GAAP financial measure. These non-GAAP measures differ from reported GAAP measures and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing Kyndryl's expected ongoing operating performance. Exclusion of items in our non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Definitions and additional information about our calculation of the non-GAAP measures are included in the appendix of this presentation. A reconciliation of non-GAAP financial measures for historical periods to the most directly comparable GAAP financial measure appears in the appendix to this presentation. Any non-GAAP financial measure used in this presentation is in addition to, and not meant to be considered superior to, or a substitute for, measures prepared in accordance with GAAP. A reconciliation of forward-looking non-GAAP financial information is not included in this presentation because the Company is unable to predict with reasonable certainty some individual components of such reconciliation without unreasonable effort. These items are uncertain, depend on various factors and could have a material impact on future results computed in accordance with GAAP. In this presentation, projections are based on exchange rates as of October 2026. Additionally, certain amounts may not add due to the use of rounded numbers; percentages presented are calculated based on the underlying amounts. Disclaimers
Page 3
SpeakersLori Chaitman, Global Head of Investor Relations Martin Schroeter, Chairman and Chief Executive OfficerEllen Johnson, Chief Financial Officer3
Page 4
4 Executing a differentiated strategy in a rapidly changing market Building on our leadership position in mission-critical technology services1 2 3 4Drivingprofitable growth Targeting consistent revenue growth and ongoing margin expansionLeveraging our leadership positionCapitalizing on our alliances, AI-led modernization and mission-critical expertiseProgressing on key initiatives Growing Kyndryl Consult, winning new logos and sustaining delivery excellenceFocusing on growth areasInvesting in Kyndryl Bridge and AI capabilities, alliances and Consult
Page 5
Signposts to fiscal 2028 5 H1 progressDrivers in FY27 outlookExiting FY26SignpostSignings performance and mix5-point improvementBacklog trajectory entering yearConsult capacity and productivity improvement$4B signings, $3.5B revenueKyndryl Consult signings > revenueContinued momentum in alliance activity+59% in FY26Hyperscaler-related revenue growthFocus on scope expansion and new logosSufficient with better mixPipeline at start of FY27 vs. FY26Maintain pricing discipline8% projected pretax margin on post-spin signingsMaintain priced margins at high-single digit Agentic AI infused Advanced Delivery$1B cumulative savings from Advanced DeliveryOptimize labor costs and skills mixWorkforce rebalancing actionsReduce SG&ASimilar full-year conversionLast two years on trackStrong conversion of earnings to free cash flow
Page 6
6 Driving growth through our mission-critical capabilities Delivering value and driving incremental opportunities with existing and new customers LTM is last twelve months. Growth rates are as reported1Approximately 35% of hyperscaler-related revenue is a subset of Kyndryl Consult • Strength in Kyndryl Consult and hyperscaler-related revenue streams driven by demand for AI-led modernization• Kyndryl Consult LTM signings of $4.6B • LTM total signings exceeded revenue• 43 deals >$50M over LTM with 11 in Q2• 154 deals >$10M deals over LTM, of which one-third contains scope expansion and new logosSignposts highlightsHyperscaler-related revenue1LTM Sept. 2026$2.1BLTM Sept. 2025$1.5BKyndryl Consult revenue1LTM Sept. 2026$3.6BLTM Sept. 2025$3.4B+8%+39%
Page 7
7 Faster return on investmentAdvanced cybersecurity and resiliencyCost visibility and optimizationTransform business workflowsKyndryl’s differentiated mission-critical solutions accelerate customers’ modernization Delivering faster, consistent, scalable AI solutions aligned to business outcomesPlatform choice and data controlBusiness outcomes we deliverOur capabilitiesOpen ecosystem expands technology choice and access to partner capabilitiesCustomer challengesKyndryl Agentic Framework methods and blueprints for AI-native workflowsKyndryl Bridge for data insights, AI governance and orchestrationAI Innovation Labs to co-create with designers, industry experts and engineersRegulatory demandsBusiness continuity riskRate and pace of AI innovationComplex hybrid IT estatesDrive efficiency and productivityKnowledge from IT estate, operating and engineering data
Page 8
Global luxury goods company15-year relationshipMajor European bank20-year relationshipGlobal marketing services company16-year relationshipData-ledGovernance-ledInfrastructure-ledApproachProvide critical tech support across key functions, while enabling business transformation with AI capabilitiesScale AI safely across highly regulated environment and business adoptionUnify technology operations across public cloud and business applications, accelerate enterprise modernization with AICustomer needsAI-powered operational excellence, leveraging Kyndryl Bridge data insights, automation and digital twins to accelerate operationsEmbed regulatory and risk controls directly into their AI platform, using Kyndryl policy-as-code to ensure compliance is automated, consistent and auditable by designAI-enabled application rationalization using the Kyndryl Agentic Framework as foundation for AI development and management in a unified global operating modelKyndryl Solution• Enhanced quality of services• Impactful cost savings• Capacity to scale geographically• Governed foundation for AI at scale• Compliance by design• Accelerate use case to production• Streamlined business applications• Operating model simplification• Significant cost savings Customer outcomesAI to cloud environmentScale AI across all business areasAI-enabled operationsWhat’s next AI-led modernization customer wins Expanding scope with long-standing customers8
Page 9
Second quarter 2027 financial results 9Includes workforce rebalancing charges of $38M in Q2 2027, compared to $19M in Q2 2026 Quarter ended Sept. 30, 2025Quarter ended Sept. 30, 2026$3,721$3,651Revenue1 (3.6%)(0.8%)Growth in constant currency$641$699Adjusted EBITDA17.2%19.1%Adjusted EBITDA margin$123$150Adjusted pretax income3.3%4.1%Adjusted pretax income margin($ in millions)$980 $555 $1,177 $939 Strategic MarketsUnited StatesPrincipal MarketsJapanQuarterlyrevenue by segment1Revenue growth (year-over-year) as reported was (1.9%) in the quarter ended September 30, 2026 and (1.3%) in the quarter ended September 30, 20252Principal Markets represents the aggregation of our operations in Canada, the United Kingdom / Ireland and certain European markets comprised of France, Germany, Italy and Spain / Portugal. 3 Strategic Markets represents the aggregation of our operations in all other countries in which we operate, which includes countries in regions such as Latin America, Europe, Middle East & Africa, as well as Asia Pacific (including India and excluding Japan). Kyndryl’s operations in India transitioned from Principal Markets to Strategic Markets in the quarter ended September 30, 20264United States segment revenue growth increased 9% year-over-year and includes 3 points of growth from the resolution of a commercial matterSee appendix for reconciliation of non-GAAP metrics; numbers may not add due to rounding 423
Page 10
$372 ($297)$851 ($815)($109)($447)($103)$113 ($434)Adjustedpretax incomeDepreciationexpenseNet capitalexpendituresAmortization of deferred contract costsDeferredcontract costsCash taxespaidWorkingcapitalLong-termand otherFreecash flow First half 2027 adjusted pretax income to free cash flow 1012Reaffirming our free cash flow outlook of $400M to $500M in FY27 ($ in millions)3 54($102)Working capital (excl. deferred contract costs)41Depreciation expense reflects depreciation of property, equipment and capitalized software2Net capital expenditures consists of capital expenditures less proceeds from disposition of property and equipment3Deferred contract costs reflects deferred transition costs and prepaid software, and capitalized contract costs. These costs are in support of servicing our customer contracts4Working capital (excluding deferred contract costs) reflects accounts payable, accounts receivable, workforce rebalancing liabilities and other current assets and current liabilities5Long-term and other reflects the non-current portion of deferred taxes, lease receivables, changes in right-to-use assets and other long-term assets and liabilities
Page 11
Maintaining investment-grade balance sheet and financial flexibility Expect to exit FY27 below our net leverage ratio target of <1x adjusted EBITDA111 Consists of $1.7B of cash and $3.15B of undrawn senior unsecured credit facility as of September 30, 20262 Net leverage ratio is calculated by dividing net debt at period end by the last twelve months’ adjusted EBITDASee appendix for reconciliation of non-GAAP metrics $4.8BAvailable liquidity1$1.7BCash$2.4BNet debtWell-laddered debt maturity(as of September 30, 2026)0.5xMarch20260.6xMarch20250.7xMarch2024Net leverage ratio20.9xSept.2026
Page 12
Strong projected margins on signings support our goals 12Continuing to sign deals with pretax income margins in the high-single-digits Pretax income margin expected on signingsGross margin expected on signingsFY26FY25Gross profit book-to-bill126%26%LTMSept.202625%FY26FY25LTMSept.20261.5x1.0xFY26FY259%8%LTMSept.20268% Supports ourhigh-single-digitmargin target1.2x 1 See appendix for further information on gross profit book-to-bill
Page 13
Reaffirming our fiscal 2027 outlook Focused on delivering innovation, expanding margins and growing revenue13Outlook assumes adjusted EBITDA margin of ~19%Based on recent exchange rates, currency effects are expected to unfavorably impact revenue by ~$50M year-over-yearOther outlook items: Workforce rebalancing charges ~$200M; depreciation expense ~$730M; amortization expense of transition costs and prepaid software ~$1.3B; interest expense ~$160M; income tax expense (related to adjusted pretax income) ~$200M; diluted shares outstanding ~220M, excluding any future share repurchases; cash taxes ~$200M1 See appendix for additional information about our calculation of free cash flow. Free cash flow outlook included in this presentation or the Company's other earnings materials reflects the historical and expected application of the Company’s cash management practices Fiscal 2027 outlook$600 to $700 millionAdjusted pretax income$400 to $500 millionFree cash flow1Constant-currency flat to down 2% year-over-yearRevenue
Page 15
Recent accolades and industry recognition 15 Recognized as a Leader in the 2026 Gartner® Magic Quadrant for Data Center Outsourcing ServicesA Leader for Mainframe Technology Consulting, Mainframe as a Service, and Application Modernization Services: 2026 ISG Provider Lens®Mainframes – Services and Solutions U.S. Report Kyndryl named a Customers' Choice in Gartner® Peer Insights “Voice of the Customer” for Outsourced Digital Workplace Services for second consecutive year2026 Dell Strategic Impact GSI Partner of the Year – North AmericaA Leader in 2026 IDC MarketScape Worldwide for Digital Workplace Services Vendor Assessment* Received a Gold sustainability rating from Ecovadis, placing Kyndryl in the top 5% of participating companies in 2025 2025 Cloudflare Americas Systems Integrator Partner of the Year2026 Google Cloud Global Partner of the Year Award for Infrastructure Modernization 2026 HPE Global System Integrator Momentum Partner of the Year Ranked #2 by Economist Enterprise on the 2026 Global Top 100 Most Loved Workplaces® list A Leader for Insurance GenAI and Agentic AI Services Quadrants, Insurance Services - Strategic Capabilities 2025 ISG Provider Lens®Study – Global Report Awarded the Microsoft Frontier Partner badge reflecting our advanced capabilities across Microsoft Cloud and AI*IDC MarketScape: Worldwide Digital Workplace Services 2026 Vendor Assessment, doc #US54119026, September 2026Gartner, Voice of the Customer for Outsourced Digital Workplace Services, Peer Community Contributor, 24 April 2026Gartner, Magic Quadrant for Data Center Outsourcing Services, Biswajit Maity et al., 30 September 2026GARTNER, PEER INSIGHTS and MAGIC QUADRANT are trademarks of Gartner, Inc. and its affiliates. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and is not a representation of fact. Gartner Content speaks as of its original publication date (and not as of the date of this earning deck, and the opinions expressed in the Gartner Content are subject to change without notice.
Page 16
$189 ($206)($461)($34)($107)$150 $425 $10 ($34)Adjustedpretax incomeDepreciationexpenseNet capitalexpendituresAmortization of deferred contract costsDeferredcontract costsCash taxespaidWorkingcapitalLong-termand otherFreecash flow Fiscal second quarter 2027 adjusted pretax income to free cash flow 16 ($ in millions) 123 5Working capital (excl. deferred contract costs)41Depreciation expense reflects depreciation of property, equipment and capitalized software2Net capital expenditures consists of capital expenditures less proceeds from disposition of property and equipment3Deferred contract costs reflects deferred transition costs and prepaid software, and capitalized contract costs. These costs are in support of servicing our customer contracts4Working capital (excluding deferred contract costs) reflects accounts payable, accounts receivable, workforce rebalancing liabilities and other current assets and current liabilities5Long-term and other reflects the non-current portion of deferred taxes, lease receivables, changes in right-to-use assets and other long-term assets and liabilities
Page 17
$102 ($206)($461)($40)$699 ($34)($107)$13 ($34)AdjustedEBITDAAdditional non-cashamortizationNet capitalexpendituresDeferredcontract costsCash taxespaidInterestpaidWorkingcapitalLong-termand otherFreecash flow Fiscal second quarter 2027 adjusted EBITDA to free cash flow 171 2 51Additional non-cash amortization reflects the amortization of capitalized contract costs2Net capital expenditures consists of capital expenditures less proceeds from disposition of property and equipment3Deferred contract costs reflects deferred transition costs and prepaid software, and capitalized contract costs. These costs are in support of servicing our customer contracts4Working capital (excluding deferred contract costs) reflects accounts payable, accounts receivable, workforce rebalancing liabilities and other current assets and current liabilities 5Long-term and other reflects the non-current portion of deferred taxes, lease receivables, changes in right-to-use assets and other long-term assets and liabilities ($ in millions)($39)$12Working capital (excl. deferred contract costs)3 4
Page 18
$196 ($297)($815)($90)($447)$1,211 ($109)($83)($434)AdjustedEBITDAAdditional non-cashamortizationNet capitalexpendituresDeferredcontract costsCash taxespaidInterestpaidWorkingcapitalLong-termand otherFreecash flow18 First half 2027 adjusted EBITDA to free cash flow 23 5 ($ in millions)($89)($84)Working capital (excl. deferred contract costs)41Additional non-cash amortization reflects the amortization of capitalized contract costs2Net capital expenditures consists of capital expenditures less proceeds from disposition of property and equipment3Deferred contract costs reflects deferred transition costs and prepaid software, and capitalized contract costs. These costs are in support of servicing our customer contracts4Working capital (excluding deferred contract costs) reflects accounts payable, accounts receivable, workforce rebalancing liabilities and other current assets and current liabilities 5Long-term and other reflects the non-current portion of deferred taxes, lease receivables, changes in right-to-use assets and other long-term assets and liabilities1
Page 19
Definitions and rationale for non-GAAP metrics 19 Non-GAAP Metrics: We present certain non-GAAP financial measures to provide useful supplemental information to investors. We provide these non-GAAP financial measures as we believe it enhances investors' visibility to management decisions and their impacts on operational performance; enables better comparison to peer companies; and allows us to provide a long-term strategic view of the business going forward.Adjusted EBITDA and adjusted EBITDA marginAdjusted EBITDA is defined as net income (loss) excluding net interest expense, income taxes, depreciation of property, equipment and capitalized software and amortization of transition costs and prepaid software, charges related to ceasing to use leased/fixed assets, charges related to lease terminations, transaction-related costs (benefits), pension costs 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, the impact of significant legal and related regulatory matters, and currency impacts of highly inflationary countries. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.Adjusted pretax income and adjusted pretax income marginAdjusted pretax income is defined as pretax income excluding transaction-related costs (benefits), charges related to ceasing to use leased/fixed assets, charges related to lease terminations, pension costs other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, amortization of acquisition-related intangible assets, impairment expense, the impact of significant legal and related regulatory matters, and currency impacts of highly inflationary countries. Adjusted pretax income margin is calculated by dividing adjusted pretax income by revenue.Adjusted net income and adjusted earnings per share (EPS)Adjusted net income is defined as adjusted pretax income less the reported provision for income taxes, minus or plus the tax effect of the non-GAAP adjustments made to calculate adjusted pretax income, and excluding exceptional items impacting the reported provision for income taxes. Adjusted earnings per share (EPS) is defined as adjusted net income divided by diluted weighted average shares outstanding to reflect shares that are dilutive or anti-dilutive based on the amount of adjusted net income.Constant-currencyConstant-currency information compares results between periods as if exchange rates had remained constant period over period. We define constant-currency revenues as total revenues excluding the impact of foreign exchange rate movements and use it to determine the constant-currency revenue growth on a year-over-year basis. Constant-currency revenues are calculated by translating current period revenues using corresponding prior-period exchange rates.Net debt and net leverage ratioNet debt is defined as total debt less cash and cash equivalents. Net leverage ratio is calculated by dividing net debt at period end by the last twelve months’ adjusted EBITDA. Management uses net debt and net leverage ratio to evaluate its leverage.Free cash flow and adjusted free cash flowFree cash flow is defined as cash flows from operating activities, less net capital expenditures (consisting of capital expenditures less proceeds from disposition of property and equipment). Adjusted free cash flow is defined as cash flows from operating activities after adding back transaction-related payments, charges related to lease terminations, and the impact of significant legal and related regulatory matters, less net capital expenditures. Management uses free cash flow and adjusted free cash flow as measures to evaluate our operating results, plan strategic investments and assess our ability and need to incur and service debt. We believe these metrics are useful supplemental financial measures to aid investors in assessing our ability to pursue business opportunities and investments and to service our debt. Free cash flow and adjusted free cash flow are financial measures that are not recognized under U.S. GAAP and should not be considered as an alternative to cash flows from operations or liquidity derived in accordance with U.S. GAAP. For more information about the Company’s ongoing cash and commercial management strategy, see our latest Form 10-K or Form 10-Q filing with the Securities and Exchange Commission, including in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” of our second-quarter 2027 Form 10-Q expected to be filed later today.Other Metrics:Signings, book-to-bill and gross profit book-to-billSignings are defined by Kyndryl 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 as well as 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. Signings should not be considered a comprehensive measure of future revenue, and 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, macroeconomic environment or external events. Management uses signings to monitor the performance of the business, as a measure of customer engagement and our ability to drive growth.Our book-to-bill is defined as signings for the last twelve months divided by our revenues for the same period. Our gross profit book-to-bill is defined as our projected gross profit on signings ("book") for the last twelve months divided by our gross profit ("bill") for the same period. Projected gross profit on signings is calculated by multiplying the Company's projected gross margin for the last twelve months by total signings for the same period; and reported gross profit is revenue for the last twelve months less cost of services for the same period. Management uses book-to-bill and gross profit book-to-bill as supplemental color to illustrate to investors how our signings support future revenue growth and the quality of our signings growth in describing the financial and strategic progress on the Company's long-term strategy.
Page 20
Reconciliation of non-GAAP metrics 20Three months endedSept. 30, 2025Threemonths endedSept. 30, 2026Reconciliation of cash flows from operations to free cash flow ($147)$172Cash flow from operating activities (GAAP)(125)(206)Less: Net capital expenditures2($22)($34)Free cash flow (non-GAAP)3Three months endedSept. 30, 2025Three months endedSept. 30, 2026Reconciliation of net income to adjusted pretax income and adjusted EBITDA$68$59Net income (GAAP)3053Plus: Provision for income taxes$98$112Pretax income (GAAP)1.8%1.6%Net income margin2.6%3.1%Pretax income marginNon-operating adjustments (before tax)–3Transaction-related costs (benefits)2622Stock-based compensation expense76Amortization of acquisition-related intangible assets(9)7Other adjustments1$123$150Adjusted pretax income (non-GAAP)3.3%4.1%Adjusted pretax income margin2037Interest expense193189Depreciation of property, equipment and capitalized software306323Amortization of transition costs and prepaid software$641$699Adjusted EBITDA (non-GAAP)17.2%19.1%Adjusted EBITDA margin$3,721$3,651Revenue (GAAP)Reconciliation of revenue growth to constant currency revenue growth(1.3%)(1.9%)Revenue growth (GAAP)(3.6%)(0.8%)Constant currency revenue growth (non-GAAP) Three months endedSept. 30, 2025Three months endedSept. 30, 2026Reconciliation of adjusted pretax income to adjusted net income and adjusted EPS$123$150Adjusted pretax income (non-GAAP)(30)(53)Provision for income taxes (GAAP)(3)(4)Tax effect of non-GAAP adjustments$89$92Adjusted net income (non-GAAP)235.9219.1Diluted weighted average shares outstanding$0.29$0.27Diluted earnings per share (GAAP)$0.38$0.42Adjusted EPS (non-GAAP)Balance as ofMar. 31, 2024Balance as ofMar. 31, 2025Balance as ofMar. 31, 2026Balance as ofSept. 30, 2026Reconciliation of debt, cash and leverage ratio$126$1291,796$778Short-term debt3,1123,0422,2933,281Long-term debt$3,238$3,172$4,089$4,059Total debt1,5531,7862,6231,659Cash1,6851,385$1,466$2,400Net debt (non-GAAP)$2,367$2,516$2,672$2,595LTM adjusted EBITDA (non-GAAP)0.7x0.6x0.5x0.9xNet leverage ratio (non-GAAP) ($ in millions, except per-share amounts) Numbers may not add due to rounding1 Other adjustments represent pension costs other than pension servicing costs and multi-employer plan costs, impact of significant legal and related regulatory matters, and currency impacts of highly inflationary countries2Net capital expenditures consists of capital expenditures less proceeds from dispositions of property and equipment3Free cash flow for the three months ended September 30, 2026 includes transaction-related payments of $4 million and the impact of significant legal and related regulatory matters of $5 million. See definitions slide for additional information about our calculation of free cash flow
Page 21
21Numbers may not add due to rounding1 Kyndryl’s reported results for the six months ended September 30, 2026 include a transaction-related gain of $40 million from the sale of a digital solutions subsidiary in the Principal Markets segment2Kyndryl’s reported results for the six months ended September 30, 2026 include an impairment expense for the sale of a facility in the United States3Other adjustments represent pension costs other than pension servicing costs and multi-employer plan costs, impact of significant legal and related regulatory matters, and currency impacts of highly inflationary countries4Net capital expenditures consists of capital expenditures less proceeds from dispositions of property and equipment5Free cash flow for the six months ended September 30, 2026 includes transaction-related payments of $6 million and impact of significant legal and related regulatory matters of $17 million. See definitions slide for additional information about our calculation of free cash flow Reconciliation of non-GAAP metrics($ in millions, except per-share amounts)Six months endedSept. 30, 2025Sixmonths endedSept. 30, 2026Reconciliation of cash flows from operations to free cash flow ($22)($137)Cash flow from operating activities (GAAP)(222)(297)Less: Net capital expenditures4($200)($434)Free cash flow (non-GAAP)5Six months endedSept. 30, 2025Six Months endedSept. 30, 2026Reconciliation of net income to adjusted pretax income and adjusted EBITDA$124$4Net income (GAAP)6639Plus: Provision for income taxes$190$43Pretax income (GAAP)1.7%0.1%Net income margin2.5%0.6%Pretax income marginNon-operating adjustments (before tax)–(36)Transaction-related (benefits)15043Stock-based compensation expense1413Amortization of acquisition-related intangible assets–38Impairment expense2(4)12Other adjustments3$251$113Adjusted pretax income (non-GAAP)3.3%1.6%Adjusted pretax income margin3971Interest expense384372Depreciation of property, equipment and capitalized software613655Amortization of transition costs and prepaid software$1,288$1,211Adjusted EBITDA (non-GAAP)17.3%16.7%Adjusted EBITDA margin$7,464$7,269Revenue (GAAP)Six months endedSept. 30, 2025Six months endedSept. 30, 2026Reconciliation of adjusted pretax income to adjusted net income and adjusted EPS$251$113Adjusted pretax income (non-GAAP)(66)(39)Provision for income taxes (GAAP)(6)(8)Tax effect of non-GAAP adjustments$179$66Adjusted net income (non-GAAP)237.5221.3Diluted weighted average shares outstanding$0.52$0.02Diluted earnings per share (GAAP)$0.75$0.30Adjusted EPS (non-GAAP)
Page 22
22 Reconciliation of non-GAAP metrics($ in millions)Twelve months endedMar. 31, 2024Twelve months endedMar. 31, 2025Twelve months endedMar. 31, 2026Twelve months endedSept. 30, 2026Reconciliation of net income to adjusted pretax income and adjusted EBITDA($340)$252$198$78Net income (loss) (GAAP)172184215189Plus: Provision for income taxes($168)$435$414$267Pretax income (loss) (GAAP)(2.1)%1.7%1.3%0.5%Net income (loss) margin(1.0)%2.9%2.7%1.8%Pretax income (loss) marginNon-operating adjustments (before tax)138–––Workforce rebalancing payments related to charges incurred prior to March 31, 20243948––Charges related to ceasing to use leased/ fixed assets and lease terminations(46)(125)415Transaction-related costs (benefits)951006456Stock-based compensation expense30302726Amortization of acquisition-related intangible assets–––38Impairment expense1 78(6)3652Other adjustments2 $165$482$581$443Adjusted pretax income (non-GAAP)1.0%3.2%3.9%3.0%Adjusted pretax margin12210089121Interest expense824656762750Depreciation of property, equipment and capitalized software1,2561,2781,2391,281Amortization of transition costs and prepaid software$2,367$2,516$2,672$2,595Adjusted EBITDA (non-GAAP)14.7%16.7%17.7%17.4%Adjusted EBITDA margin$16,052$15,057$15,092$14,897Revenue (GAAP)Numbers may not add due to rounding1Kyndryl’s reported results for the twelve months ended September 30, 2026 include an impairment expense for the sale of a facility in the United States2 Other adjustments represent pension costs other than pension servicing costs and multi-employer plan costs, impact of significant legal and related regulatory matters, and currency impacts of highly inflationary countries