Kyndryl Holdings, Inc.

Good day and thank you for standing by. Welcome to the Kindrel Fiscal First Quarter 2026 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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, Laurie Chapman, Global Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Kindrel's earnings call for the first fiscal quarter ended June 30th, 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, 2025. 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.kindle.com. With me for today's call are Kindle's Chairman and Chief Executive Officer, Martin Schroeder, and Kindle'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. In the first quarter, we made significant progress on our strategic initiatives, continued to drive margin expansion, and delivered a substantial increase in earnings. We're reaffirming our outlook for fiscal 26 and advancing well toward our fiscal 2028 objectives. On today's call, I'll update you on how we're executing our differentiated growth strategy. I'll also highlight how our leadership position and investments in innovation are driving demand for our services, empowering sustainable, profitable growth. David will provide more detail on our recent financial results and our outlook. I'm very enthusiastic about our progress and our outlook because of the 39% year-over-year increase in our adjusted pre-tax income in Q1 because of the continued growth in Kindle Consult revenue our ongoing collaboration with cloud hyperscalers and other leading technology partners, and the expanded capabilities we're bringing to the market related to cloud, cybersecurity, AI, and Kindle Bridge, resulting in record high customer satisfaction scores. Q1 revenue declined in constant currency as we continued to drive progress on our accounts initiatives. In fact, all of the Q1 revenue change was attributed to our actions to address eight focus accounts where we reduced our revenue by half and significantly increased our gross margin over the last year. We also saw some deals that we had targeted for Q1 move out of the quarter. Throughout our global operations, we're leveraging our leadership in essential mission-critical services and benefiting from the investments we've made in our skills, innovation, and alliances. By focusing on delivery excellence, automation, and insights through Kindrel Bridge and expanded technology partnerships, we've continued to achieve above-market growth in Kindrel Consult, win new logos, and add new scope to our customer relationships. Our progress is driving strong earnings growth and gives us the flexibility to regularly return capital to shareholders through our share repurchase program. And there's a reason why we're winning. We're delivering innovation and best of breed solutions. Our expertise in both running and transforming is unmatched and differentiates us among other IT service providers and consulting firms. And we're uniquely positioned as an innovation partner at the center of secular trends, from AI adoption and cloud migration to managing increasingly complex hybrid IT estates, addressing skill shortages, and building cyber resiliency, all of which are fueling our signings. Over the last 12 months, our signings have increased 44% in constant currency, our book-to-bill ratio is above one, and the projected pre-tax margin on our signings continues to be in the high single digits. Our performance in the quarter was once again led by Kindle Consult and hyperscaler-related revenues, as well as strong signings in the U.S. Over the last 12 months, Kindle Consult revenue has grown 32% in constant currency and is now running at an annual pace of more than $3 billion. Hyperscaler-related revenue nearly doubled from a year ago to $400 million in Q1 and is progressing well toward our $1.8 billion fiscal 2026 target. We've been executing a highly effective strategy to build our capabilities, skills, ecosystem, and innovation to drive profitable growth with the three A's, alliances, advanced delivery, and accounts, plus Kindle Consult and Kindle Bridge at the center. These initiatives are an integral part of how we operate and create value every day. Through this strategy, we're showing up differently for our customers and partners, demonstrating our competitive advantages, and unlocking multiple avenues for growth. By harnessing a range of technologies to accelerate digital innovation, Kindle meets more customer needs with our alliance partners. Being an expert ecosystem orchestrator, collaborating closely with leading technology providers is why we're essential to our customers' future. We're regularly and selectively expanding our portfolio of technology alliances to meet the evolving needs of our customers. For example, we recently announced a new partnership with Databricks, a leading AI and data services provider, to enable the delivery of AI at scale and further modernize enterprise IT estates. By infusing AI and automation into how we deliver our mission-critical services, we're getting even better at what we do for our customers every day. We deeply understand our customer systems. Combined with our alliances, this enables us to design, implement, and manage multi-vendor solutions focused on business outcomes. Kindrel Consult leverages our leadership position in mission-critical managed services, Our credibility, access, and longstanding customer relationships make it seamless for us to move into more advisory engagements and expand our presence throughout our customers' technology stacks. We expect Kindrel Consult to continue growing double digits, and we continue to invest in our people so we have the business and technical skills to meet customer demand. Fueling both mission-critical services and Kindrel Consult growth is our AI-powered Kindrel Bridge operating platform. It combines operational data, agentic AI, and machine learning with our expertise to deliver actionable insights, innovation, and operational efficiency across our customers' entire tech stack. As a result, Kindle Bridge helps us integrate and manage customer IT environments, enabling us to expand our services and win new business. And a common theme here is the enduring demand for IT modernization, including the need for large enterprises to address tech debt. For us, modernization encompasses all six of our global practices and is connected with our alliance partners' technologies. We've built solutions frameworks that are tailored to meet market needs from design through delivery. Our customers rely on us for cost-effective solutions to complex IT challenges. We're partnering with them to align their business and technology strategies to drive hybrid IT modernization that provides a strong return on investment. Among each of these growth factors, we're demonstrating our capabilities, unlocking our competitive advantages, and driving demand for our services with existing and new customers. I want to double-click on one of our growth factors, Kindrel Consult, and highlight why it's gained so much momentum and how it's positioned for long-term success. As businesses increasingly prioritize initiatives like adopting AI and deploying new security solutions and migrating to the cloud, They're turning to us to navigate this dynamic landscape with our advisory and implementation expertise. What differentiates Kindle Consult is our infrastructure-first mindset in how we approach IT evolution and complex digital transformations. We start by assuring that our customer's IT foundation is not only strong, but also adaptable and reliable. This approach allows us to help our customers scale and innovate effectively while tackling challenges like security, data processing, and regulatory compliance. This is especially true for our AI consulting engagements and how we enable our customers to turn AI pilots into scalable solutions. With the investments we've made in AI and the recently announced Kindrel Agendic AI Framework, we help customers design, implement, and run AI models in the same way that we help enterprises design, build, manage, and modernize mission-critical information systems. For example, with this framework, we're working hand in hand with the national government to deploy agentic AI to enhance citizen experiences and improve public service across major sectors like transportation, education, and healthcare. Our holistic, customizable tools give us confidence in our ability to capitalize on the significant multi-year opportunity associated with AI adoption. Our recent investments in technology hubs in England, France, and Singapore are great examples of how we're innovating to support our customers' IT futures by accelerating their AI adoption and digital transformation. Our dedicated AI private cloud in Japan, built in collaboration with Dell and NVIDIA, is allowing organizations to develop, test, and implement AI services in a security-rich environment. And we recently announced a new virtual Kindle Microsoft Acceleration Hub that will enable AI-driven, industry-specific development and modernization. By working closely with customers on AI, cybersecurity, cloud migration, and other modernization initiatives, Kindle Consult has become a powerful growth engine for us. And this revenue stream is valuable, both because of the margins directly associated with it and because of the ongoing managed services work that accompanies so many IT modernization assignments. To be more specific, I want to highlight two customers where our expanded capabilities, technology alliances, and Kindrel Consult are enabling us to provide a broader scope of services and to generate revenue growth for Kindrel. For a travel sector customer for whom we've managed their IT estate for years, we're now modernizing their infrastructure using state-of-the-art technologies, providing efficiencies, enhanced security, and sustainability benefits. In collaboration with AWS, we're migrating select workloads to the cloud and running the environments that connect the customer's legacy and cloud systems. We're also optimizing and further automating our customer's network resiliency solution. And as a result, our annual revenues related to this account are growing by more than 30%. And for a large company that wasn't a customer of ours just 18 months ago, Our mission-critical expertise and solutioning helped us add this firm to our customer roster with an eight-figure-a-year contract. And the equality of our services and the innovation we're bringing to bear have allowed us to expand our scope so that our annual revenue from this account will be three times what it was originally. 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 their complex IT estates. And we do this in ways that present significant growth opportunities for us. Our expanding scope in large and mid-sized accounts is fueling growth in key financial metrics for fiscal 2026 and beyond. As a reminder, by fiscal 2028, which for us begins less than 20 months from now, we expect to deliver more than a billion in adjusted free cash flow. We expect to deliver more than 1.2 billion in adjusted pre-tax income. And achieving these earnings and cash flow targets only requires us to reach the mid-single-digit revenue growth that we'll progress toward by fiscal 2028. With strong conversion of our earnings to free cash flow, we're optimizing our capital allocation by investing in organic growth opportunities, returning capital to shareholders through our share repurchase program, and occasionally pursuing tuck-in acquisitions. Also, with our free cash flow adjustments having become minimal as anticipated, you'll hear us talking about free cash flow rather than adjusted free cash flow. And importantly, our fiscal 2026 outlook is consistent with our expected growth trajectory from fiscal 2025 to fiscal 2028. As David will discuss, we're expecting to generate approximately 550 million in free cash flow, grow our adjusted pre-tax earnings by more than 240 million to at least 725 million, and generate positive 1% constant currency revenue growth this fiscal year. We expect our revenue growth to accelerate from Q1 to Q2 and further in the second half. Keep in mind, two-thirds of our P&L this year will be derived from our higher margin post-spend signings, the first time that a significant majority of our revenue is coming from contracts that we signed as independent Kindrel. In short, we remain committed to our progress and the multiple avenues of revenue and profit growth that we're capitalizing on as we help our customers achieve their IT and business objectives. And with that, I'd like to pass the call over to David. David?