Kyndryl Holdings, Inc.

    KD ·NYSE ·Services-Computer Integrated Systems Design ·Inc. in DE
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    Item 1. Business.

    In this report, we use the terms “Kyndryl,” the “Company,” “we,” “us” and “our” to refer to Kyndryl Holdings, Inc. and its consolidated subsidiaries.

    Our Company

    Kyndryl is a leading provider of mission-critical enterprise technology services, offering advisory, implementation and managed service capabilities to thousands of customers in more than 60 countries. As the world’s largest IT infrastructure services provider, the Company designs, builds, manages and modernizes the complex information systems that the world depends on every day.

    Our purpose is to design, build and manage secure and responsive private, public and multi-cloud environments to serve our customers’ needs and accelerate their digital transformations. We offer services across a number of areas of expertise, such as cloud services, core enterprise services, applications, data and artificial intelligence (“AI”) services, digital workplace services, security and resiliency services and network and edge services as we continue to support our customers through technological change. Our services enable us to modernize and manage cloud, on-premises and hybrid IT environments as “one” for our customers, enabling them to scale seamlessly.

    To deliver these services, we rely on our global team of skilled practitioners. Our employees leverage their deep engineering expertise and extensive experience operating complex and heterogeneous technology environments to drive service quality and intellectual property development and develop and maintain our long-term trusted customer relationships.

    We partner with a broad ecosystem, including a wide range of hyperscale cloud providers, system integrators and independent software and technology vendors from startups to market leaders. This enables us to serve our customers with innovative technology capabilities that best fit their modernization needs, advancing their digital transformations, with automation and agentic AI-led solutions, and open new avenues for growth. This is all underpinned by our ability to integrate and operate mission-critical technology at scale using deep engineering expertise and intellectual property.

    Kyndryl was formed in November 2021 from a spin-off (the “Separation,” the “Spin-off” or “spin”) from International Business Machines Corporation (“IBM” or “former Parent”) of the infrastructure services unit of IBM’s Global Technology Services segment.

    The Company is organized, managed and classified into four reportable segments by geography: United States, Japan, Principal Markets and Strategic Markets. For additional information on these segments, refer to Note 4, Segments, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

    Our Services

    We provide advisory, implementation and managed services in and across a range of agentic AI, IT modernization, public and private clouds and cybersecurity solutions to help customers modernize at scale, strengthen

    4

    resilience and unlock greater business value. Our services are differentiated based on our expertise, quality of service and intellectual property and data around IT patterns across customers in a number of areas of expertise, including:

    Cloud: We design, build and manage distributed computing platforms, including on-premises, private, public and hybrid multi-cloud environments. With visibility across customers’ infrastructures, applications and networks, supported by automation, we help customers improve their operational agility, security and cost efficiency.
    Core Enterprise: We modernize, operate and integrate mainframe and other core enterprise systems across hybrid environments, supporting mission-critical platforms while connecting to private and public clouds. Our services include infrastructure optimization and hybrid integration, leveraging AI for analysis, code transformation and operational efficiency, and partnering with hyperscalers to extend core systems into secure and scalable hybrid architecture.
    Applications, Data & AI: We provide application modernization, data management and AI-related services, with an increased focus on AI-driven transformation. This includes agentic AI capabilities supported by AI innovation centers and an agentic AI framework for responsible deployment at scale. We work with customers to design and implement AI-enabled workflows within enterprise systems, using a policy-as-code approach to address governance, security and compliance requirements.
    Digital Workplace: We provide technology infrastructure, mobility, security and access solutions to support a global workforce that is constantly evolving. Our services include enterprise mobility solutions that provide users with the ability to work seamlessly across environments and locations.
    Security & Resiliency: We deliver a full line of cybersecurity, business continuity and disaster recovery services, with a focus on cyber resilience and recovery. Our services include cloud-based, AI-enabled recovery capabilities that automate and orchestrate disaster recovery across hybrid environments, supported by centralized visibility and orchestration tools. Our offerings also include zero-trust security architectures, continuous compliance and cyber defense services developed through technology partnerships.
    Network & Edge: We provide unified network services for cloud and data center connectivity to assist customers in meeting their technological and commercial requirements. We offer secure access service edge (SASE) and private wireless network services, as well as network automation through new partnerships.

    With our large and diversified customer base operating in multiple industries and geographies, our managed services utilize a flexible labor and delivery model with a balanced mix of global and local talent as needed to meet customer-specific needs, regulatory requirements and data protection and labor laws. Our advisory and implementation services, which are branded as Kyndryl Consult, leverage co-creation methodologies to address complex technological challenges and drive business outcomes and operational improvements. Through our AI-powered open integration digital business platform, Kyndryl Bridge, we are increasing automation across service delivery by embedding agentic AI within our own operations to drive productivity and efficiency. We are leveraging machine learning to proactively identify risks before they impact our customers’ operations and use AI-driven recommendations to empower our teams to resolve issues in real-time. We believe AI agents help streamline knowledge discovery and accelerate incident response, to build greater efficiency and resilience across the IT environments we manage.

    As the landscape evolves across applications, infrastructure and operations, we are well positioned to help customers with their digital transformations and modernization, in designing, implementing, scaling and running AI-driven services, embedding AI into decision-making data flows and infrastructure management, and designing strategies tailored to our customers’ business goals – whether through machine learning, traditional AI, generative AI or agentic AI. We are expanding our capabilities to enable our customers to deploy AI-driven solutions at scale through our data architecture, data governance, network, security, applications and AI services. Last year, we introduced, and have continually enhanced, a dynamic enterprise-grade agentic AI framework that enables customers to adopt, deploy and scale agentic AI solutions to transform and improve their business operations. We are continuing to invest in AI innovation labs and in related capabilities and skills to deliver emerging technologies to customers at increasing scale.

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    Our Strategy

    Several trends underpin the growth of our market and the strategy we are executing, including greater demand for modernization and digital transformation services, ongoing migration to cloud, rapid data growth and increasing need for secure systems, and the accelerating pace of technological advancement. Our strategy is centered on our ability to build and enrich trusted relationships with customers and technology partners, differentiating Kyndryl through our proven ability to create and deploy scale-derived intellectual property, provide mission-critical expertise across industries and partner with a broad ecosystem of leading technology providers for contemporary capabilities that best suit customers’ needs.

    To execute these strategies, our operating model increasingly reflects that of a flat, fast and focused services company, centered around our customers’ success. We have built a strong foundation for our business with our “three-A” initiatives – Alliances, Advanced Delivery and Accounts – that have become a core part of our operational discipline and that enable us to adapt to customer needs, enhance operation efficiency and accelerate investments in our growth:

    Alliances initiative – Driving signings, certifications and revenues with our broad ecosystem of partners and capabilities. We maintain business alliances, and leverage our relationships, with key hyperscale cloud providers and other leading technology vendors to expand our cloud and other offerings in the market, and the range of technology solutions we can offer to, and implement for, our customers. We continue to expand the cloud-related capabilities we offer to customers and hold tens of thousands of hyperscale cloud provider certifications.
    Advanced Delivery initiative – Transforming service delivery through upskilling, automation and agentic AI. Through our Kyndryl Bridge operating platform, we continue to drive automation throughout our delivery operations and incorporate other technology tools to allow us to further strengthen the quality of services we deliver to our customers, drive efficiency in our operations, and redeploy professionals in our organization to serve new revenue streams and backfill attrition. Our increased use of automation and agentic AI within our delivery operations enables our customers to modernize at scale, strengthen resilience and unlock greater business value.
    Accounts initiative – Addressing elements of our business with substandard margins. We have been working to transform the profitability of certain revenue streams that represent a meaningful portion of our business. For instance, we are frequently expanding the scope of customer relationships by adding higher-value services and leveraging our ecosystem partners’ capabilities. When necessary, we have reduced scope by removing, or not renewing, unprofitable elements of a contract. We are also able to reduce costs by applying our Advanced Delivery tools and processes to replace labor-intensive and/or customized services with automated and/or more standardized solutions. We seek to adjust pricing and other terms of managed services contracts with substandard margins to enhance our margins through renegotiation or at renewal.

    Our Customers

    We have a long track record of running customers’ technology environments to enhance their IT operations to meet their business objectives. Given the nature of the work we do, we have a unique perspective on the operating paradigms that enable the high-quality technology environments which our customers have come to rely on for their most critical systems. This position enables us to meet customers where they are in their unique digital transformations, work alongside our customers to modernize and enhance their IT operations and in turn enable them to realize the full, at-scale value of that progression.

    We are the trusted advisor and partner to thousands of customers worldwide, in technology-intensive and often highly regulated environments, managing mission-critical technology environments across a wide range of industries. As of our fiscal year ended March 31, 2026:

    Approximately 45 percent of our revenue is derived from companies in the financial services industry, where we serve hundreds of global, multinational and regional banks, insurance companies, mutual fund complexes, credit card and transaction processors and providers of other financial services.

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    17 percent of our revenue is from retail, travel and logistics companies.
    14 percent of our revenue is generated from the industrial sector, which includes some of the largest automotive manufacturers in the world.
    13 percent of our revenue is generated from healthcare companies and the public sector.
    11 percent of our revenue is generated from technology, media and telecom companies.

    Within these sectors, our revenues are diversified across a broad set of customers. In fiscal year 2026, our five largest customers accounted for approximately 10 percent of our revenue.

    Sales and Marketing

    Our customer engagement and brand positioning are focused on deepening our existing customer relationships, attracting and winning new customers and creating an ecosystem built on go-to-market relationships with leading technology providers, advisors and integrators to offer best-in-class advisory, implementation and managed services tailored to each existing and new customer’s environment and requirements.

    Customer-centric account approach. We have dedicated account coverage teams within our global operating structure. The teams leverage our intellectual capital and tools underpinned by insights and proven practices derived from operating at scale. We tailor the full suite of our services to customers’ needs to deliver value and business outcomes across a wide range of technology environments. Account leaders are supported by dedicated, multi-disciplinary technical sales, delivery and consulting teams, as well as by shared services teams, to support an effective and efficient engagement. This account coverage model ensures consistent and reliable delivery of services for our existing relationships over the lifetime of current and renewal contracts. In addition, the model supports the potential expansion of existing relationships based on our deep industry perspective and expertise and knowledge of customers’ unique needs. Finally, this account-based model seeks to build and expand existing relationships with line-of-business buyers, as they have become critical decision makers working alongside our customers.

    Customer growth and new customer acquisition. In line with our customer-centric approach, we are focused on co-creating and innovating with customers to advance and deepen our relationships. We leverage our broad base of expertise, capabilities and partners to prototype, test and develop innovative solutions across various approaches and technologies. Additionally, we offer Kyndryl Consult capabilities in advisory, implementation and transformation services to help customers enhance and evolve their technology environments. We deploy our talent, thought leadership, proven practices, intellectual capital and partnership ecosystem as part of our project engagements to mature them into longer-tail managed services opportunities. In addition, we attract and develop new customers across the globe through account-based marketing, insights derived from operating at scale and direct sales teams with years of sector-specific experience and proven practices to generate unique insights for customers. As we gain new customers, we apply our account coverage model to expand our relationships and footprint over time.

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    Financial statements

    data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .

    From 10-Q filed 2026-08-05 (period ending 2026-06-30).

    Item 2.

    MANAGEMENT’S DISCUSSION AND ANALYSIS

    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    FOR THE THREE MONTHS ENDED JUNE 30, 2026

    Overview

    Kyndryl is a leading provider of mission-critical enterprise technology services, offering advisory, implementation and managed service capabilities to thousands of customers in more than 60 countries. As the world’s largest IT infrastructure services provider, the Company designs, builds, manages and modernizes the complex information systems that the world depends on every day.

    The Company is organized, managed and classified into four reportable segments by geography: United States, Japan, Principal Markets and Strategic Markets. For additional information on these segments, refer to Note 4 – Segments to our consolidated financial statements included elsewhere in this report.

    Financial Performance Summary

    Three Months Ended June 30, 

    (Dollars in millions)

    2026

    2025

    Revenue

    $

    3,618

    $

    3,743

    Revenue growth (GAAP)

    (3)

    %

    0

    %

    Revenue growth in constant currency*

    (3)

    %

    (3)

    %

    Net income (loss)

    $

    (55)

    $

    56

    Adjusted EBITDA*

    $

    512

    $

    647

    *Revenue growth in constant currency and adjusted EBITDA are non-GAAP financial metrics. For definitions of these metrics and a reconciliation of adjusted EBITDA to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, see “Segment Results” below.

      ​ ​ ​

    June 30,

    March 31,

    (Dollars in millions)

      ​ ​ ​

    2026

      ​ ​ ​

    2026

    Assets

    $

    12,026

    $

    12,551

    Liabilities

    10,859

    11,259

    Equity

    1,167

    1,293

    For the three months ended June 30, 2026, we reported $3.6 billion in revenue, a decrease of 3 percent compared to the prior-year period. United States revenue increased 5 percent; Japan revenue decreased 8 percent, and increased 2 percent in constant currency; Principal Markets revenue decreased 7 percent; and Strategic Markets revenue decreased 3 percent, in each case compared to the three months ended June 30, 2025. During the period, growth in Kyndryl Consult and hyperscaler-related revenues were partially offset by lengthening sales cycles and evolving content from the Company’s former parent in the Company’s customer engagements. The net loss was $55 million in the three months ended June 30, 2026 compared to net income of $56 million in the three months ended June 30, 2025, driven by a $127 million increase in workforce rebalancing charges, a $38 million increase in impairment expense driven by the sale of a facility in the United States, and a $22 million increase in selling, general and administrative expenses driven by increased expenses to support future growth, partially offset by a lower provision for income taxes of $50 million and a $40 million gain from the sale of a wholly-owned digital solutions subsidiary in the Principal Markets segment (classified as a transaction-related benefit) in the current period.

    Macro Dynamics

    Global markets have continued to experience volatility in 2026, amid ongoing trade tensions and heightened macroeconomic uncertainties, driven by geopolitical developments and conflicts, concerns over changes in global trade policies and the imposition of import tariffs by the United States, reactions from other nations and proposed U.S.

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    Table of Contents

    Management Discussion (continued)

    government spending reductions. Increased economic uncertainty has impacted and may continue to impact the level and composition of global macroeconomic activity.

    Recent Developments

    The Company continues to cooperate with the SEC Division of Enforcement’s investigation relating to the Company’s cash management practices, related disclosures, the efficacy of the Company’s internal control over financial reporting, and certain other matters. The matter is ongoing and the Company cannot currently predict its final outcome. See Note 11 – Commitments and Contingencies in the consolidated financial statements included elsewhere in this report for further information about this and other contingency matters.

    In addition, as previously disclosed, the Company identified material weaknesses in internal control over financial reporting. For more information, see “Controls and Procedures” in Part I, Item 4 in this report.

    Acquisitions and Divestitures Update

    For information concerning our recent acquisitions and divestitures activity, see Note 8 – Acquisitions and Divestitures in the consolidated financial statements included elsewhere in this report.

    Segment Results

    The following table presents our reportable segments’ revenue and adjusted EBITDA for the three months ended June 30, 2026 and 2025. Segment revenue and revenue growth in constant currency exclude any transactions between the segments.

    Three Months Ended June 30,

    Year-over-Year Change

    (Dollars in millions)

      ​ ​ ​

    2026

    2025

    2026 vs. 2025

    Revenue

    United States

    $

    954

    $

    911

    5

    %

    Japan

    534

    578

    (8)

    %

    Principal Markets

    1,262

    1,356

    (7)

    %

    Strategic Markets

    868

    898

    (3)

    %

    Total revenue

    $

    3,618

    $

    3,743

    (3)

    %

    Revenue growth in constant currency(1)

    (3)

    %

    (3)

    %

    Adjusted EBITDA(1)

    United States

    $

    220

    $

    196

    12

    %

    Japan

    109

    115

    (5)

    %

    Principal Markets

    151

    197

    (24)

    %

    Strategic Markets

    62

    163

    (62)

    %

    Corporate and other(2)

    (30)

    (26)

    NM

    Total adjusted EBITDA(1)

    $

    512

    $

    647

    (21)

    %

    NM – not meaningful

    (1)Revenue growth in constant currency and adjusted EBITDA are non-GAAP financial metrics. See the information below for definitions of these metrics and a reconciliation of adjusted EBITDA to net income (loss).
    (2)Represents net amounts not allocated to segments.

    We report our financial results in accordance with U.S. GAAP. We also present certain non-GAAP financial measures to provide useful supplemental information to investors. We provide these non-GAAP financial measures as we believe they enhance visibility to underlying results and the impact of management decisions on operational performance, enable better comparison to peer companies and allow us to provide a long-term strategic view of the business going forward.

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    Management Discussion (continued)

    Revenue growth in constant currency is a non-GAAP measure that eliminates the effects of exchange rate fluctuations when translating from foreign currencies to the United States dollar. It is calculated by using the average exchange rates that existed for the same period of the prior year. Constant-currency measures are provided so that revenue can be viewed without the effect of fluctuations in currency exchange rates, which is consistent with how management evaluates our revenue results and trends.

    Additionally, management uses adjusted EBITDA to evaluate our performance. Adjusted EBITDA is a non-GAAP measure and defined as net income (loss) excluding income taxes, interest expense, depreciation and amortization (excluding depreciation of right-of-use assets and amortization of capitalized contract costs), charges related to ceasing to use leased/fixed assets, charges related to lease terminations, transaction-related costs and benefits, pension expenses other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, impairment expense, significant litigation costs and benefits, and currency impacts of highly inflationary countries. We believe that adjusted EBITDA is a helpful supplemental measure to assist investors in evaluating our operating results as it excludes certain items whose fluctuation from period to period does not necessarily correspond to changes in the operations of our business.

    These disclosures are provided in addition to and not as a substitute for the percentage change in revenue and profit or loss measures on a U.S. GAAP basis compared to the corresponding period in the prior year. Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of these measures for comparative purposes.

    The following table provides a reconciliation of U.S. GAAP net income (loss) to adjusted EBITDA:

    Three Months Ended June 30,

    (Dollars in millions)

      ​ ​ ​

    2026

      ​ ​ ​

    2025

    Net income (loss)

    $

    (55)

    $

    56

    Provision for income taxes

    (14)

    36

    Interest expense

    34

    19

    Depreciation of property, equipment and capitalized software

    183

    191

    Amortization expense

    338

    315

    Transaction-related costs (benefits)

    (38)

    Stock-based compensation expense

    21

    24

    Impairment expense

    38

    Other adjustments*

    5

    5

    Adjusted EBITDA (non-GAAP)

    $

    512

    $

    647

    *Other adjustments represent pension expenses other than pension servicing costs and multi-employer plan costs, significant litigation costs and benefits, and currency impacts of highly inflationary countries.

    United States

    Three Months Ended June 30,

    (Dollars in millions)

      ​ ​ ​

    2026

    2025

    Revenue

    $

    954

    $

    911

    Revenue year-over-year change

    5

    %

    (8)

    %

    Adjusted EBITDA

    $

    220

    $

    196

    Adjusted EBITDA year-over-year change

    12

    %

    For the three months ended June 30, 2026, United States revenue of $954 million increased 5 percent compared to the prior-year quarter, driven by higher revenue from recent signings. Adjusted EBITDA increased $24 million from the prior-year quarter, driven by the higher revenue from recent signings and progress on our key initiatives to drive operating efficiencies, partially offset by a $15 million increase in workforce rebalancing charges.

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    Management Discussion (continued)

    Japan

    Three Months Ended June 30,

    (Dollars in millions)

      ​ ​ ​

    2026

    2025

    Revenue

    $

    534

    $

    578

    Revenue year-over-year change

    (8)

    %

    2

    %

    Revenue growth in constant currency

    2

    %

    (6)

    %

    Adjusted EBITDA

    $

    109

    $

    115

    Adjusted EBITDA year-over-year change

    (5)

    %

    For the three months ended June 30, 2026, Japan revenue of $534 million decreased 8 percent and included a 10 point impact from currency. Revenue growth in constant currency of 2 percent was driven by higher revenue from recent signings. Adjusted EBITDA decreased $6 million from the prior-year quarter, driven by a $5 million increase in workforce rebalancing charges.

    Principal Markets

    Three Months Ended June 30,

    (Dollars in millions)

      ​ ​ ​

    2026

    2025

    Revenue

    $

    1,262

    $

    1,356

    Revenue year-over-year change

    (7)

    %

    3

    %

    Revenue growth in constant currency

    (8)

    %

    (1)

    %

    Adjusted EBITDA

    $

    151

    $

    197

    Adjusted EBITDA year-over-year change

    (24)

    %

    For the three months ended June 30, 2026, Principal Markets revenue of $1.3 billion decreased 7 percent, and decreased 8 percent in constant currency, compared to the prior-year quarter, primarily driven by actions the Company has taken to reduce certain low-margin components of its customer relationships entered into before the Spin-off. Adjusted EBITDA decreased $46 million from the prior-year quarter, driven by a $33 million increase in workforce rebalancing charges and lower revenue.

    Strategic Markets

    Three Months Ended June 30,

    (Dollars in millions)

      ​ ​ ​

    2026

    2025

    Revenue

    $

    868

    $

    898

    Revenue year-over-year change

    (3)

    %

    3

    %

    Revenue growth in constant currency

    (8)

    %

    3

    %

    Adjusted EBITDA

    $

    62

    $

    163

    Adjusted EBITDA year-over-year change

    (62)

    %

    For the three months ended June 30, 2026, Strategic Markets revenue of $868 million decreased 3 percent and included a 5 point impact from currency. Revenue declined 8 percent in constant currency, compared to the prior-year quarter, primarily driven by actions the Company has taken to reduce certain low-margin components of its customer relationships entered into before the Spin-off. Adjusted EBITDA decreased $101 million from the prior-year quarter, driven by a $73 million increase in workforce rebalancing charges and lower revenue.

    Corporate and Other

    Corporate and other had an adjusted EBITDA loss of $30 million in the three months ended June 30, 2026, compared to a loss of $26 million in the three months ended June 30, 2025.

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    Management Discussion (continued)

    Costs and Expenses

    Three Months Ended June 30,

    Percent of Revenue

    Change

    (Dollars in millions)

      ​ ​ ​

    2026

    2025

      ​ ​ ​

    2026

    2025

      ​ ​ ​

    2026 vs. 2025

    Revenue

    $

    3,618

    $

    3,743

    100.0

    %

    100.0

    %

    (3)

    %

    Cost of services

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    Held by

    holders ( registered funds via N-PORT, institutional investors via 13F). Showing top by dollar value.

    Holder Type ETF MF Position ($) % of holder Δ % of holder Holder AUM

    Next expected filings

    • ~2026-11-05 10-Q expected by 2026-11-07 (in 53 days)
    • ~2027-02-17 10-Q expected by 2027-02-19 (in 157 days)
    • ~2027-05-31 10-K expected by 2027-05-31 (in 260 days)
    • ~2027-08-05 10-Q expected by 2027-08-07 (in 326 days)

    Predicted from historical filing cadence; not an SEC commitment.

    Recent SEC filings

    • 2026-08-05 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-08-05 10-Q Quarterly Report
    • 2026-08-05 S-8 Employee Benefit Plan Registration
    • 2026-07-31 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
    • 2026-07-06 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
    • 2026-06-16 DEF 14A Proxy Statement
    • 2026-05-29 10-K Annual Report
    • 2026-05-06 8-K Earnings Release; Costs Associated with Exit; Financial Statements and Exhibits
    • 2026-02-17 10-K/A Annual Report (Amended)
    • 2026-02-17 10-Q/A Quarterly Report (Amended)
    • 2026-02-17 10-Q/A Quarterly Report (Amended)
    • 2026-02-17 10-Q Quarterly Report
    • 2026-02-17 8-K/A Officer/Director Change
    • 2026-02-09 8-K Earnings Release; Financial Statements and Exhibits
    • 2026-02-09 8-K Officer/Director Change; Regulation FD Disclosure