Kyndryl Holdings, Inc.

Good day and thank you for standing by. Welcome to the Kindrel Fiscal Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Lori Chapman, Global Head of Investor Relations at Kindrel.

Please go ahead. Good morning, everyone, and welcome to Kindrel's earnings call for the fourth quarter and fiscal year ended March 31st, 2023. Before we begin, I'd like to remind you that our remarks today will include forward-looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied, and these statements speak only to our expectations as of today. For more details on some of these risks, please see the risk factors section of our annual report on Form 10-K. Tindrell does not update forward-looking statements and disclaims any obligation to do so. In today's remarks, will also refer to certain non-GAAP financial measures. Corresponding GAAP measures and a reconciliation of non-GAAP measures to GAAP measures for historical periods are provided in the presentation materials for today's event, which are available on our website at investors.kindrel.com. With me here today are Kindrel's Chairman and Chief Executive Officer, Martin Schroeder, and Kindrel's Chief Financial Officer, David Weichner. Following our prepared remarks, we will hold a Q&A session. I'd now like to turn the call over to Martin. Martin?

Thank you, Laurie, and thanks to each of you for joining us today. I am enthusiastic about all that we at Kindrel have accomplished in our first full fiscal year as an independent company, and I could not be more proud of our teams around the world. We delivered solid fourth quarter results, exceeding our recent guidance, We exceeded our year one targets for all three of our alliances, advanced delivery and accounts. We're solidifying our leadership position and mission critical IT services, and we are signing new contracts that will drive margin expansion going forward. In short, we are taking full advantage of the new freedom associated with our independence and autonomy. We've proven we can deliver on ambitious plans to transform and strengthen our business. This gives us tremendous confidence as we look ahead to fiscal 2024 and beyond. On today's call, I'll update you on our strategy, on the remarkable progress we've made to date on our three A's initiatives, and on the opportunities we see ahead. David will then review our recent financial results and discuss our fiscal year 2024 outlook. Just over a year ago, we introduced our three A's, and since then, we've successfully executed each of these initiatives and exceeded the year one milestones that we laid out. We've reshaped our business through our global practices and alliances, and we've created new avenues for delivering higher value services to customers through Kindrel Consult, Kindrel Bridge, and Kindrel Vital. We're building resiliency and productivity through advanced delivery, and we're fixing focus accounts. We're expanding our capabilities across our six global practices from cloud, core and security to network data and workplace services. And along the way, we've also made great strides in creating a services-oriented culture, one that is flat and fast and focused on Kindrel's and our customers' shared success. I can say confidently that we have laid a solid foundation, and this year, our fiscal 2024, will be a year of acceleration. will continue to execute our strategy, deliver on cost optimization, and serve even more of our customers' needs. Our efforts will strengthen our overall business performance and drive meaningful margin expansion, putting us on track toward our aggressive medium-term transformation goals and setting us up to deliver more value to our customers and our shareholders. Let me start with our progress on our three A's initiatives, which were at the heart of our efforts in fiscal 2023. Through our alliances, we delivered $1.2 billion in hyperscaler signings, exceeding our billion-dollar target for this brand-new line of business by about 20%. We've expanded the portion of customer relationships that include hyperscaler-related content, and we've also continued to increase our hyperscaler certifications to 35,000, more than double where we were a year ago. Our advanced delivery initiative is transforming the way we deliver our services with automation tools and resources. To date, we've been able to free up more than 5,500 delivery professionals to address new revenue opportunities and to backfill attrition. As a result, we're generating annualized savings of approximately $275 million, well above our $200 million year-end objective. In our accounts initiative, we're aggressively addressing elements of our business with substandard margins, and we're now realizing approximately $210 million in pre-tax benefits a year, surpassing our $200 million fiscal year target. Each quarter, there are more customer examples that demonstrate our team's successful execution on our three A's. The underlying theme among them is that our combination of alliances and our expanded capabilities, including Kindrel, Consult, Bridge, and Vital, is resonating with our customers and providing Kindrel with new revenue streams and higher value opportunities. For instance, we recently revamped our scope of work with a long-standing global communications customer by leveraging our relationship with a hyperscale partner. This resulted in an expanded multi-year contract valued at more than $100 million that incorporates Kindle Consult and many of our practices, including cloud, security, digital workplace, and ongoing mission-critical managed services. Under this contract, we'll accelerate our customers' digital transformation in roughly 100 countries while also driving significant efficiencies for their operations. As a business, we come to the table with great attributes, doing mission critical work, possessing inherent customer stickiness, generating recurring revenue, and having industry leading scale. In just over a year as an independent company, we've proven through our new alliances that leading technology providers see value in partnering with us because of the vital role we play for thousands of enterprise customers. We've proven that customers see value in working with us and are doing so in new and expanded ways as demonstrated by incremental signings and growth in Kindrel Consult. We've proven that we can drive increased profitability in our business with our focus accounts. And we've proven that we can execute on an aggressive, multifaceted global strategy to position our business for future success. The proof points we've delivered over the last year highlight how we're leveraging our strengths to drive value creation both for our customers and our shareholders. Importantly, our fiscal 2024 launching point is a strong one. We've set new milestones for each of our three A's that will reflect further progress toward the ambitious multi-year goals we shared a year ago. For alliances, we expect to generate more than $300 million in hyperscale-related revenue in fiscal 2024 and to continue growing our hyperscale-related signings as we build the portion of our customer relationships that include cloud-based content. Our growth will stem from joint enable activities with our partners, co-marketing to enterprise customers, and incremental training programs, all of which are directed toward kindle delivering solutions that address customers' most pressing needs. For advanced delivery, we expect to exit fiscal 2024 with $450 million in annualized savings on a cumulative basis. This will give us $200 million more of in-year savings than in fiscal 2023. And we continue to see significant automation opportunities across our delivery operations as we incorporate more technology into our services offerings, increasing service levels, and reduce our costs to serve. Our accounts initiative has been and will continue to be a global effort focused on customer relationships and contracts with substandard margins. Exiting fiscal 2024, we expect to be generating roughly 400 million of cumulative annualized benefits from this initiative, a roughly $200 million year-over-year increase. I want to highlight how energized we are by our progress and by the opportunities these initiatives still represent. We're executing a powerful transformation strategy, and we continue to lean into it 24-7 around the world. We view successful execution of our 3As as the clearest and fastest path toward achieving sustainable, profitable growth. And our experience in reshaping customer relationships gives us great confidence in our future trajectory. When we launched these initiatives, we shared medium-term objectives expected to take four to five years to achieve. And with another year of solid progress, we will be well on track to achieve these aggressive goals on or ahead of schedule. As I said earlier, fiscal 2024 will be a year of acceleration for Kindle. We expect to again make significant progress on our three A's to benefit from our cost optimization efforts and to grow Kindle Consult. We'll drive toward higher margins and sustainable, profitable growth. and will continue to serve our customers in what we call the Kindrel way, being restless and empathetic and devoted in our pursuit of operational, strategic, and financial progress. Looking at 2024 and beyond, the successful execution of our three A's will shift our business towards scalable intellectual property and aiding IT decisions further up the technology stack. To drive progress, we're focusing our customer engagements on how Kindrel delivers innovation and thought leadership. With Kindrel Consult, we're focused on delivering and accelerating customer business outcomes in areas our customers want to transform. Cloud applications, cybersecurity, digital workplace, next generation networks, and of course, mainframe modernization. Our scale and expertise in running large IT environments enables us to gain insights that no one else has and to capture those insights in Kindrel Bridge, our open integration platform that gives our customers more control over their mission-critical systems. The dashboards, tools, and real-time insights available in Bridge enhance service visibility, deliver higher service-level performance, and increase speed to problem resolution. They're creating opportunities for us to expand into selected domains within the application layer, which will drive additional customer value. We then leverage the unique co-creation approach of Kindrel Vitals, with Bridge to break complex problems into sustained innovative solutions that are both innovative and pragmatic. And AI already plays an important role for us in our services and our operations. Kindrel is both an enabler of AI and machine learning for our customers and a user of these tools. In the IT environments we operate, Kindrel helps customers implement AI at scale by providing end-to-end data availability for processing and analytics. And as an IT services provider, we develop and utilize AI-enhanced tools like the console in Bridge, which is a self-learning data fabric for control and operations that is driving insights and productivity. Our customers recognize our capabilities are unique and in demand, and they appreciate the value we're bringing to the table. And that's evident through our Kindrel Consult performance this past year. Consult signings were up 31% in constant currency in fiscal 2023, and we anticipate another year of double digit growth in fiscal 2024. This growth demonstrates how we're capitalizing the opportunities we have as an independent company, regardless of the macro environment we're operating in. In the process, we're leveraging the attributes that make Kindrel of unique value. The unmatched experience of our team in managing complex IT estates, the intellectual property we've developed to do this efficiently, and the vast amount of operational data we collect that permits a level of intelligence no competitor can match. These actions will allow us to access incremental market opportunities, grow our share of wallet with existing customers, and win new customers. What we've done then is create an exciting value proposition for all of us at Kindrel as we head into our second fiscal year as a standalone company. So the three key messages I hope you take away from our discussion today are, first, We did what we said we were going to do and more in fiscal 2023, exceeding our targets for each of the three A's. Second, we're a leader in our space and are leveraging our capabilities to advise, implement, manage, and optimize advanced delivery solutions that are absolutely best in class, money-making, and money-saving for customers and more profitable for us. And third, the three A's, plus Kindrel Consult, Kindrel Bridge, and our cost-saving efforts our deep understanding of the entanglements between infrastructure and applications, and our experience in fiscal 2023 all give us great confidence and momentum as we move forward. Now, with that, I'll hand it over to David to take you through our results and our outlook.