Kyndryl Holdings, Inc.

Good day, and thank you for standing by. Welcome to the Kindrel fourth quarter 2025 earnings conference call. At this time, our participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will 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 first speaker today, Lori Chapman, Global Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Kindle's earnings call for the fourth quarter and fiscal year ended March 31, 2025. Before we begin, I'd like to remind you that our remarks today 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. These forward-looking 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 for the year ended March 31, 2024. Also, in today's remarks, we refer to certain non-GAAP financial metrics. corresponding gap metrics and a reconciliation of non-gap metrics to gap metrics 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 for today's call 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. Kindle has been an independent company for over three years now, and I am so proud of what our global team continues to accomplish. We've solidified our market leadership position in mission-critical technology services, and we've been executing a powerful and highly effective strategy centered around building our capabilities, skills, partnerships, and innovation to drive sustainable growth. With relentless focus and dedication to our customers, our people have propelled their success and will continue to do so. So on today's call, we'll focus on how we'll accelerate our momentum going forward. But first, I want to share the highlights from fiscal 2025. Simply put, we had another great year. Signings were up 48% in constant currency to more than $18 billion. Earnings increased $317 million to $482 million in adjusted pre-tax income. We generated $446 million in adjusted free cash flow, a 53% increase from last year. And in the fourth quarter, we achieved a significant milestone by returning our top line to positive constant currency growth. Kindrel Consult continued to deliver above market growth, with revenue increasing more than 25% this year, and Kindrel Bridge continues to enhance the value we deliver to our customers through actionable insights. Our 3A initiatives have transformed our company, and we once again surpassed our full-year targets for each of them. Among our alliances, hyperscaler-related revenue more than doubled this year to $1.2 billion. We reached $775 million in annual savings from advanced delivery and another $900 million from our accounts initiative. As we enter a new fiscal year for Kindrel, Our 3As have shifted from being initiatives that drove our turnaround to pillars of our profitable growth strategy. In fact, our fiscal 2025 results not only exceeded the earnings, cash flow, and 3As projections we laid out at the beginning of the year, they also proved the investment thesis for Kindrel's evolution that we laid out three years ago. We are leaders in our space. We are important to our customers. We can execute on our strategy that is unique to us. We can grow. We are profitable. and we generate cash. In fiscal 2026, we're expecting another year of substantial earnings and cash flow growth, as well as positive constant currency revenue growth. And as I'll discuss in a few minutes, our outlook for this year is consistent with the financial objectives for fiscal 2028 that we laid out at our investor day last November. As many of you have heard me say before, we are uniquely positioned to address the secular IT trends like cloud migration, increasingly hybrid IT environments, cybersecurity risks, and the adoption of AI. Our approach to designing, optimizing, running, and transforming mission-critical hybrid IT estates is driving increased demand for our services. This is reflected in the strong signings growth we delivered in fiscal 2025, which brought our full-year revenue book-to-bill to 1.2 and included consult signings growth that was right in line with our aggregate signings growth. We've previously highlighted how our freedom of action as an independent company has unlocked long-term growth opportunities that were unique to Kindrel, and our signings growth in fiscal 2025 is a powerful evidence of that. Moreover, having our revenue book-to-bill ratio above one foreshadows future revenue growth from committed contracts since our signings typically convert into revenue over a three- to five-year period. In fact, our signings growth has been significant and broad-based across a range of geographies, vertical markets, and our practices. We secured 55 contracts valued at over $50 million in fiscal 2025 and increased from 40 such contracts in the prior year. These larger deals accounted for nearly $10 billion of total signings and spanned 22 countries, reflecting the important work we're doing for our blue-chip customers all around the world. Nearly half of these contracts were over $100 million. In the fourth quarter alone, we signed a large deal that will generate a billion dollars of revenue for us over the next six years with a financial services firm that we've been serving for a long time. Going forward, we'll be modernizing and transforming the firm's IT estate and implementing AI technology at scale with Kindrel Bridge. And at the same time, we'll continue supporting their core technology, providing security and resiliency, and driving compliance with regulatory requirements. We also displaced an incumbent to win a new logo contract with the European FinTech to build the new hybrid IT infrastructure platform and provide cloud migration, cybersecurity, resiliency, and regulatory compliance services. And with one of our large online retail customers, we signed new scope and extended our contract for the next five years. We're now providing application management services and software engineering development to deliver innovation that complements the modernization work we were already doing, supported by Kindle Bridge. What's key here is the pattern of leveraging our expanded capabilities, partnerships, strong customer relationships, and great reputation to win more scope and higher value opportunities. In fact, under each of these three new contracts, we're providing hyperscaler-related services. This pattern highlights Kendrell's position as a trusted advisor for IT services, embrace for how we can help customers operate in the present, and for how we can help organizations modernize for the future. Our expanding scope not only strengthens our customers' technology operations, it also drives revenue and earnings growth for us. This share of wallet opportunity is so strategically important to us that I want to drill down for a moment into one more example. Another significant signing this quarter was in the healthcare sector. We've been partnering with this U.S. healthcare provider for years, and they were ready to invest in more innovation. So together with one of our hyperscaler partners and leveraging insights from Kindrel Bridge, we're co-developing a comprehensive solution designed to transform and optimize their IT environment. This entails cloud migration, system consolidation, data rationalization, and application modernization, all of which will enhance patient experience and practitioner efficacy. As we design, implement, and manage this new hybrid IT estate, we'll focus on optimization, agility, and ongoing innovation. And as a result of the increased scale and scope of services, our annual revenue with this customer will grow by 33% over the next five years. The takeaway here is that Kindrel, as a deeply trusted, scaled services provider with differentiated capabilities across hybrid IT landscapes, can help large enterprises modernize in the cloud. And we can do this in ways that present significant growth opportunities for us. Kindrel Consult has also been a key driver of our signing strength and our return to revenue growth. In fiscal 2025, consult signings grew 50% in constant currency and accounted for 22% of our total signings. This is our third consecutive year of above-market Kindrel consult signings growth, and as I mentioned, we saw that convert into 29% constant currency revenue growth this year. Many of our customer engagements are focused on putting the right workload on the right platform, cloud migration, optimization, addressing tech debt, and more recently, application management services. With our expanded capabilities and heritage in mission-critical systems and data management, we're very well positioned to build robust data foundations for the AI-enabled future through project-based consult engagements. We're also seeing demand in security and resiliency, leveraging our capabilities in data discovery, data integrity, AI assessment, and governance programs. These trends are driving double-digit signings growth across all six of our practices. And they will continue to be meaningful growth opportunities, especially since 95% of our companies are adopting AI, but nearly two-thirds haven't yet implemented an AI governance framework. So because of our strong fiscal 2025 results and expanding capabilities, we're entering our new fiscal year with a lot of momentum. And we're laser focused on driving profitable growth and delivering value to our customers. The strategy we outlined three years ago continues to resonate, and our competitive advantages are powering multiple avenues for our growth, increasing scope with existing customers and winning new logos, providing industry-leading managed services and growing our Kindrel consult advisory revenues, and expanding our capabilities through our practices with our strategic alliances and with Kindrel Bridge. Our position as a vital partner to our customers in both running and transforming their mission-critical technology estates is very powerful, and through our six global practices in Kindrel Consult, we'll continue to build new capabilities and skills that our customers need to advance their business objectives. Our alliances with hyperscalers and leading technology providers are extensive and continually expanding, and our AI-powered Kindrel Bridge operating platform distinguishes us from our peers, powers service excellence, and drives efficiency. This combination of leading expertise, strategic alliances, and technological innovation opens new doors with existing customers and attracts new customers, creating incremental growth opportunities for us and ensuring that we remain a critical part of our customers' IT evolution. And this combination is what will fuel our top line growth in fiscal 2026 and beyond. I want to reiterate the targets we set for fiscal 2028 at our Investor Day in November. We expect to deliver more than a billion in adjusted free cash flow. We expect to deliver more than a billion to an adjusted pre-tax income. And to achieve these earnings and cash flow targets, we only need to reach mid-single-digit revenue growth that will progress toward by fiscal 2028. With strong conversion of earnings to free cash flow, we'll balance our approach to capital allocation by investing in organic growth opportunities and occasional tuck-in acquisitions, and at the same time, returning capital to shareholders through our share repurchase program. It should be clear that the fiscal 2026 outlook we published yesterday is consistent with the path we previously laid out for our growth from fiscal 2025 to fiscal 2028. And as David will discuss, in fiscal 2026, we expect to generate approximately $550 million in adjusted free cash flow. We'll grow our pre-tax earnings by more than $240 million to at least $725 million, and we'll generate positive constant currency revenue growth. This fiscal year, two-thirds of our P&L will be derived from our higher margin post-spin signings. And while we understand that it's a challenging environment in which to provide guidance given the heightened macro uncertainty since our last earnings call, let's remember, though, there are always reasons for companies to delay investment decisions. But the nature of our business, providing mission-critical services under multi-year contracts, means that we are significantly insulated from, although not immune, to macro factors. enterprise tech debt isn't going away because of potential tariffs or other geoeconomic factors our q4 and fiscal 2025 signings growth is a testament to the unique kindle specific opportunities available to us our technology services are essential and non-discretionary and we provide efficiency resiliency and innovation to our customers as a result while we'll continue to monitor economic and geopolitical developments carefully Our significant insulation from macro factors gives us confidence in the outlook we provided and in our longer-term trajectory. With that, I'd like to pass the call over to David.