Kyndryl Holdings, Inc. (KD): Business Model Canvas [Dec-2025 Updated]

You're looking at the new reality for a giant in IT infrastructure management, and honestly, the story for Kyndryl Holdings in fiscal year 2025 is all about a successful pivot. Gone is the old cost-center image; what we see now is a focused growth engine driven by strategic alliances and high-margin services. With total revenues hitting $15.1 billion and their consulting arm growing a sharp 26% year-over-year, plus $1.2 billion flowing from hyperscaler partnerships, the shift is clearly working. If you want to see exactly how they are transforming complex, mission-critical services into a modern, profitable model using platforms like Kyndryl Bridge, dive into the full Business Model Canvas below.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Key Partnerships

You're looking at the engine room of Kyndryl Holdings, Inc.'s strategy-the partnerships that fuel their managed services and consulting growth. Honestly, the success of a spin-off like Kyndryl hinges on these external relationships, especially with the hyperscalers.

Strategic Alliances with Hyperscalers (AWS, Google Cloud, Microsoft Azure)

The relationship with the big three cloud providers is central to Kyndryl Holdings, Inc.'s revenue story. These alliances are how they drive clients through complex cloud migration and hybrid estate management. For the fiscal year ending in 2025, the numbers show real traction here; Kyndryl Holdings, Inc.'s hyperscaler-related revenues more than doubled, hitting $1.2 billion for FY2025, marking a 25% year-over-year revenue growth. Management has projected this momentum to continue, targeting another 50% growth in the next fiscal year, aiming for roughly $1.8 billion tied to these cloud alliances. Cloud leaders, as defined in Kyndryl Holdings, Inc.'s own research, are 15 times more likely to co-innovate with cloud providers.

The focus is heavily on hybrid environments and AI enablement. The expansion with Microsoft, for instance, integrates Kyndryl Distributed Cloud services with Azure Arc and Azure Local hybrid management tools. For generative AI, Kyndryl Holdings, Inc. has specific collaborations, such as a mainframe migration effort with AWS focused on generative AI applications.

Ecosystem of Hardware and Software Vendors for Integrated Solutions

Beyond the hyperscalers, Kyndryl Holdings, Inc. maintains a broad ecosystem of technology partners that allow them to offer integrated, end-to-end solutions. These partnerships are often recognized through annual awards, showing the depth of collaboration. For example, HPE named Kyndryl Holdings, Inc. their Systems Integrator Momentum Partner of the Year 2025, and Broadcom appointed them VMware Cloud Service Provider (VCSP) Americas Partner of the Year. Google Cloud also designated them the Global Partner of the Year Award for Infrastructure Modernization.

These vendor relationships are critical for specific workloads, such as data modernization with Teradata or specialized cyber resilience offerings.

Here's a quick look at the scope of these key technology alliances:

Technology Partners for Security and Observability

Security and observability are non-negotiable for mission-critical infrastructure, so Kyndryl Holdings, Inc. embeds specialized vendor capabilities directly into its service delivery. The Kyndryl Bridge platform, their AI-powered open integration platform, is a key enabler here. As of late 2025, more than 1,200 enterprises are using Kyndryl Bridge, which generates 12 million AI-driven insights monthly. This platform integrates with security partners like Palo Alto Networks, whose Prisma SASE is used to provide a unified network security posture. Furthermore, 75% of leaders surveyed in the 2025 Cloud Readiness Report indicated they are investing in AI for cybersecurity, more than any other AI capability.

Collaboration with WPP's VML for AI-driven Customer Experience Transformation

Announced in September 2025, the partnership with VML, a WPP company, targets the customer experience layer. This collaboration pairs Kyndryl Consult advisory services and Kyndryl Vital co-creation services with VML Enterprise Solutions' experience transformation expertise. The goal is to remove friction in experience transformation by orchestrating seamless customer journeys supported by modernized infrastructure. This is designed to help brands develop deeply personalized interactions using AI and data.

The combination of services includes:

• Kyndryl Bridge AI-powered platform
• Kyndryl Consult advisory services
• VML Enterprise Solutions' real-time data solutions
• WPP Open, VML's AI-powered operating system

Renewed and Expanded Agreements with Major Enterprise Clients

Securing and expanding long-term contracts with major enterprises demonstrates customer trust in Kyndryl Holdings, Inc.'s ability to manage mission-critical services. A prime example is the recent announcement regarding EQUATE Group. Kyndryl Holdings, Inc. renewed and expanded its five-year managed infrastructure services partnership with the global petrochemical producer. This agreement specifically focuses on enhancing operational reliability and cybersecurity across EQUATE Group's worldwide sites, leveraging Kyndryl Bridge for integrated monitoring and automation. Kyndryl Holdings, Inc. also saw significant deal momentum, closing 55 contracts in excess of $50 million in FY2025, up from 40 the prior year, totaling $10 billion across 22 countries.

Finance: review the annualized benefit from contract optimization efforts, which reached $900 million in FY2025, beating the target by $50 million.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Key Activities

You're looking at the core engine driving Kyndryl Holdings, Inc. right now, focusing on what they actually do to generate revenue and expand margins as of late 2025. It's all about execution on their transformation strategy.

Delivering mission-critical IT infrastructure managed services globally

Kyndryl Holdings, Inc. is fundamentally in the business of running and transforming the complex IT systems the world relies on. For the fiscal year ended March 31, 2025, the total reported revenue was $15.1 billion. This revenue base reflects the ongoing, albeit managed, decline in legacy, low-margin third-party content, which was down 6% year-over-year in reported terms for that fiscal year. Still, the company is focused on the quality of service delivery for these essential systems.

Executing cloud migration and mainframe modernization projects

The mainframe remains central, but the approach is pragmatic and hybrid. In 2025, the average cost for organizations modernizing directly on the mainframe dropped to $7.2 million, down from $9.1 million in 2024. This shift is yielding better returns; expected ROI for modernizing on the mainframe is now 288%, compared to 114% the prior year. Interestingly, the full migration away from the mainframe is slowing down; only 28% of workloads are planned to move off the mainframe in 2025, a decrease from 36% last year. The focus is on integration and on-platform modernization. Hyperscaler-related revenue, a key indicator of cloud engagement, exceeded the target of nearly $1 billion in fiscal year 2025. For the first fiscal quarter of 2026, hyperscaler-related revenue hit $400 million.

Developing and deploying AI/Generative AI solutions for clients

Artificial Intelligence is now baked into the modernization conversation. According to Kyndryl's 2025 survey, nearly 90% of organizations are deploying or planning Generative AI on the mainframe. Respondents expect these AI initiatives to collectively save $13 billion and generate new revenues of $20 billion over the next three years. Furthermore, as of the second quarter of fiscal 2026, one quarter of the company's new contracts included AI-related services. That's a clear signal of where the work is heading.

Driving the three-A initiatives (Alliances, Advanced Delivery, Accounts) for margin expansion

The three-A initiatives are the primary lever for improving profitability, which is showing up clearly in the financial results. For fiscal year 2025, adjusted pretax income reached $482 million, a 192% increase over the prior year's adjusted pretax income of $165 million. The Advanced Delivery initiative, using Kyndryl Bridge, achieved annualized savings of approximately $775 million by the end of fiscal 2025, beating the $750 million goal. The Accounts initiative contributed to $725 million of annualized benefits as of the first quarter of fiscal 2025, tracking toward the $850 million target for that fiscal year. The overall impact is clear:

Providing high-value advisory and consulting services (Kyndryl Consult)

Kyndryl Consult is a significant growth engine, pulling the overall revenue mix toward higher-value services. For fiscal year 2025, Kyndryl Consult revenues grew 26%. Signings for Kyndryl Consult were even stronger, growing 47% in that same fiscal year. The momentum continued into the next fiscal year; in the fourth quarter of fiscal 2025, Kyndryl Consult revenue grew 45% year-over-year, and in the first quarter of fiscal 2026, it was up 30% year-over-year. This segment is definitely outpacing the core business.

• Kyndryl Consult Revenue Growth (FY2025): 26%
• Kyndryl Consult Signings Growth (FY2025): 47%
• Kyndryl Consult Revenue Growth (Q4 FY2025): 45% year-over-year

The company ended fiscal year 2025 with cash of $1.8 billion and debt of $3.2 billion, resulting in a net debt balance of $1.4 billion.

Finance: draft 13-week cash view by Friday.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Key Resources

You're looking at the core assets Kyndryl Holdings, Inc. (KD) relies on to run its massive global operation as of late 2025. These aren't just line items; they are the engines driving their value proposition.

Kyndryl Bridge: AI-powered open integration digital business platform

This platform is a major intellectual resource, using operational data and embedded Artificial Intelligence to give visibility across an enterprise's entire IT setup. Honestly, the scale of its use is what matters here. As of the data reported in late 2025, Kyndryl Bridge has more than 1,200 enterprises actively using it. The platform is churning out a massive amount of intelligence, delivering 12 million AI-driven insights monthly, based on August 2025 data. This capability directly translates into efficiency gains for Kyndryl's own operations; for example, it helped free up more than 13,000 delivery professionals, generating annualized savings of approximately $775 million as of the fiscal year-end.

Here's a quick look at the platform's impact metrics:

Global workforce of thousands of IT infrastructure professionals

The human capital is immense, though it's been rebalancing. For the fiscal year ended March 31, 2025, Kyndryl Holdings' total employee count stood at 73,000. This is a significant asset, representing deep, specialized knowledge in managing the world's most complex systems. Remember, this workforce is what executes the value Kyndryl promises its clients.

Decades of deep engineering expertise in complex enterprise IT

This resource is less about a single number and more about institutional memory and proven capability. You see the result of this expertise in their deal flow. For instance, Kyndryl Consult revenues hit $3 billion in fiscal year 2025, growing 26% year-over-year, showing that the market values this specialized knowledge. Furthermore, their total signings for fiscal year 2025 hit a record $18.2 billion, which included a record 55 contracts valued in excess of $50 million each. That kind of contract volume requires deep, trusted engineering depth.

Long-term, sticky contracts with over 4,000 enterprise customers

The base of over 4,000 enterprise customers forms the foundation of their recurring revenue base. These long-term relationships are what provide the stability needed to invest in platforms like Kyndryl Bridge. The focus on cleaning up inherited low-margin contracts is designed to make these existing relationships more profitable, which is a key strategic action you should watch. The company is actively managing its portfolio to ensure these contracts are not just long-term, but also high-quality.

Cash balance of $1.8 billion as of fiscal year-end 2025

Financial flexibility is a key resource. Kyndryl Holdings, Inc. ended its fiscal year 2025 (March 31, 2025) with a cash balance of $1.8 billion. This strong liquidity position, coupled with debt of $3.2 billion, resulted in a net debt balance of $1.4 billion at that time. This cash on hand allows them to fund internal initiatives, like the continued expansion of Kyndryl Consult, and support shareholder returns, such as the share repurchase program initiated in late 2024.

Here is a snapshot of the financial and human capital base:

• Fiscal Year 2025 Revenues: $15.1 billion.
• Fiscal Year 2025 Record Signings: $18.2 billion.
• Total Workforce (2025): 73,000 professionals.
• Cash and Equivalents (FYE 2025): $1.8 billion.

Finance: draft 13-week cash view by Friday.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Value Propositions

You're looking at the core promises Kyndryl Holdings, Inc. is making to its enterprise clients as of late 2025. These aren't abstract goals; they are tied to concrete financial and operational shifts they are driving.

Modernizing core enterprise systems (mainframe to cloud) for agility

Kyndryl Holdings, Inc. is positioning the mainframe not as a legacy anchor, but as a central, resilient component of a hybrid IT estate, heavily infused with AI. The focus has shifted from wholesale migration to pragmatic, phased modernization. For instance, in 2025, only 28% of workloads were planned to move off the mainframe, down from 36% the prior year, showing a commitment to integrating existing core systems. This approach is delivering significant financial returns for clients.

Here's the quick math on the reported Return on Investment (ROI) clients are seeing across different modernization paths, according to Kyndryl's 2025 survey of 500 leaders:

Furthermore, the cost to modernize on the mainframe actually dropped to an average of $7.2 million in 2025, down from $9.1 million the year before. This agility is also being fueled by technology adoption; 88% of respondents are deploying or planning Generative AI on the mainframe.

Delivering operational efficiency via the AI-powered Kyndryl Bridge platform

The AI-enabled Kyndryl Bridge operating platform is a key enabler for efficiency across Kyndryl Holdings, Inc.'s services. This platform helped the company achieve annualized savings of approximately $775 million as of the end of fiscal year 2025, beating its internal goal of $750 million. This internal efficiency translates to external value, as organizations surveyed expect AI and GenAI on mainframes to generate $13 billion in cost savings over the next three years.

Providing vendor-agnostic, multi-cloud managed services and integration

Kyndryl Holdings, Inc. is deeply embedded in the multi-cloud shift, evidenced by the explosive growth in its alliance revenue. Revenue tied to large cloud providers (hyperscalers) hit $440 million in the second quarter of fiscal year 2026 (ending September 30, 2025), marking a 65% year-over-year increase. The company is set to exceed its initial target of nearly $1 billion in hyperscaler-linked revenue for fiscal year 2025, and is now projecting to exceed its $1.8 billion target for the fiscal year ending March 2026. Kyndryl Holdings, Inc. offers managed services across public, private, and hybrid cloud environments, providing a single interface for monitoring and management.

Enhancing cyber resilience and security posture for mission-critical workloads

Security and resiliency are foundational drivers for modernization efforts. Kyndryl Holdings, Inc. has organized its service delivery around a dedicated global practice for Security and Resiliency. The broader security services segment is expected to see a compound annual growth rate (CAGR) of 10.9% between 2022 and 2026. The company is actively helping customers prepare for evolving regulatory environments, which acts as a tailwind for their services.

Offering high-margin advisory services through Kyndryl Consult

Kyndryl Consult, the advisory arm, is a major growth engine, reflecting the shift toward higher-margin, strategic work. In the second quarter of fiscal year 2026, Kyndryl Consult revenue grew 28% year-over-year. For the full fiscal year 2025, Kyndryl Consult revenue grew 26% year-over-year, while its signings grew 47%. To be fair, the Q4 FY2025 growth rate was even higher at 45% year-over-year for revenue. This segment is also integrating future-focused services, with one quarter of the company's new contracts now including artificial intelligence-related services.

Finance: Finance needs to track the Q3 FY2026 Kyndryl Consult growth rate by the end of January 2026.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Customer Relationships

You're looking at how Kyndryl Holdings, Inc. structures its interactions with its global enterprise base as of late 2025. It's a model built on deep, long-term commitments supported by digital acceleration.

Dedicated account management for large, long-term enterprise contracts

Kyndryl Holdings, Inc. focuses significant relationship resources on its largest clients, which resulted in substantial forward-looking commitments in the last fiscal year. Total signings for fiscal year 2025 reached a record $18.2 billion, marking a 46% year-over-year increase. This growth was anchored by major deals, specifically a record 55 contracts valued in excess of $50 million each. These large contracts, which totaled $10 billion, spanned 22 different countries. This focus on securing high-value, long-term engagements is further evidenced by the Accounts initiative, which delivered $900 million in annualized benefits by the end of fiscal year 2025, surpassing its $850 million objective.

The scale of these relationships can be seen in the following snapshot of large deal activity:

Co-creation model via Kyndryl Vital for business and infrastructure transformation

The co-creation aspect is centered on designing future-state environments. While specific usage metrics for Kyndryl Vital weren't explicitly detailed in the latest financial releases, its inclusion in discussions around growth initiatives for the first quarter of fiscal year 2026 shows its role in expanding the scope of customer relationships. This practice is about working directly with clients to architect transformations, often in conjunction with cloud strategy alignment, where 60% of cloud leaders report being completely aligned on cloud objectives with hyperscalers.

High-touch, consultative selling through the Kyndryl Consult practice

Kyndryl Consult is clearly a major driver of new, profitable business. Revenues for this advisory practice grew 26% in fiscal year 2025, reaching $3.0 billion. Signings for Kyndryl Consult were even stronger, growing 47% year-over-year in fiscal 2025. This high-touch approach is translating directly to the bottom line; projected pretax income margins on recent signings were in the high-single-digit range.

Here's how Kyndryl Consult's financial performance stacked up in the last reported fiscal year:

• Kyndryl Consult revenue for fiscal year 2025: $3.0 billion.
• Year-over-year revenue growth for Kyndryl Consult in FY2025: 26%.
• Year-over-year signings growth for Kyndryl Consult in FY2025: 47%.
• Revenue growth for Kyndryl Consult in Q3 FY2025 (quarter ending December 31, 2024): 26% year-over-year.

The consulting arm is definitely gaining traction. It's a key part of their strategy to move away from low-margin work.

Automated, proactive service delivery and insights via Kyndryl Bridge

The Kyndryl Bridge platform is central to delivering proactive service and generating efficiency savings, which reinforces the value proposition to existing clients. As of August 2025, more than 1,200 enterprises were operational on the platform. This platform is busy, delivering 12 million AI-driven insights monthly. The impact of the Advanced Delivery initiative, which leverages Kyndryl Bridge, was significant in FY2025, generating annualized savings of approximately $775 million, beating the internal goal of $750 million. This platform helps free up delivery professionals; it helped Kyndryl Holdings, Inc. free up more than 13,000 delivery professionals by year-end.

Strategic partnership approach with key clients for joint innovation

The relationship extends deeply into the hyperscaler ecosystem, which is a form of strategic partnership. Hyperscaler-related revenue for fiscal year 2025 hit $1.2 billion, which was more than double the prior year and exceeded the initial $1 billion target. Looking ahead to fiscal year 2026, the company is progressing well toward a new target, having already generated $400 million in hyperscaler-tied revenue in the first quarter ending June 30, 2025, against a fiscal year 2026 goal of $1.8 billion. Furthermore, recent contract renewals, like the one with EQUATE Group, explicitly detail the use of Kyndryl Bridge for integrated monitoring and automation to enhance reliability across global sites.

You can see the growth in this partnership channel:

• Hyperscaler Revenue (FY2025): $1.2 billion.
• Hyperscaler Revenue Target (FY2025): Exceeded the $1 billion goal.
• Hyperscaler Revenue (Q1 FY2026): $400 million.
• Hyperscaler Revenue Target (FY2026): $1.8 billion.

Finance: draft 13-week cash view by Friday.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Channels

You're looking at how Kyndryl Holdings, Inc. gets its services into the hands of its enterprise customers as of late 2025. The channel strategy is clearly multi-faceted, moving well beyond the traditional direct sales model inherited from its past structure.

Direct enterprise sales force and dedicated client relationship managers

The core of Kyndryl Holdings, Inc.'s engagement remains its direct interaction with large, complex organizations. While the exact headcount of the dedicated client relationship managers isn't public, the effectiveness of this channel is reflected in the overall contract performance. The company secured record total signings for the fiscal year ended March 31, 2025, hitting $18.2 billion, which was a year-over-year increase of 46%. This volume suggests a highly engaged, high-value sales and relationship management function driving significant deal flow.

Kyndryl Consult advisory team for high-value service sales

The Kyndryl Consult advisory team is a key growth engine, focusing on high-value advisory and implementation services. This channel is showing serious traction, which is great for margin expansion. For the full fiscal year 2025, Kyndryl Consult revenues grew 26%, reaching $3 billion. Furthermore, signings for Kyndryl Consult grew 47% in fiscal 2025. In the fourth quarter alone, Kyndryl Consult revenue growth was 45% year-over-year.

Hyperscaler alliance channels (co-selling with AWS, Microsoft, Google Cloud)

The hyperscaler alliance channel is a major success story, demonstrating Kyndryl Holdings, Inc.'s pivot toward a vendor-agnostic ecosystem. The company set a target of nearly $1 billion in hyperscaler revenue for fiscal year 2025 and exceeded it.

This revenue stream is more than double the prior-year levels, showing rapid scaling in co-selling motions with major cloud providers.

Global delivery centers across more than 60 countries

Kyndryl Holdings, Inc. supports its global client base through an extensive physical footprint. The company is a leading provider of mission-critical enterprise technology services, operating in more than 60 countries. This global reach is essential for delivering consistent, outcome-focused solutions to multinational enterprises.

• Global presence confirmed in over 60 countries.
• The delivery capability is evaluated by Gartner for its Ability to Execute, which includes operational effectiveness and global delivery.

Digital platforms for customer self-service and observability (Kyndryl Bridge)

The AI-enabled Kyndryl Bridge operating platform is central to the Advanced Delivery initiative, enhancing service delivery and creating new revenue opportunities. This platform provides observability across an enterprise's entire IT estate using operational data, intellectual property (IP), and embedded Artificial Intelligence (AI).

As of the data reported in late 2025 (metrics from August 2025), the platform usage and impact are substantial:

• More than 1,200 enterprises are on the Kyndryl Bridge platform.
• The platform delivers 12 million AI-driven insights monthly.
• The platform helped Kyndryl Holdings, Inc. free up more than 13,000 delivery professionals.
• Annualized savings generated by Kyndryl Bridge reached approximately $725 million as of the end of Q4 FY25, putting it on track to exceed the fiscal 2025 goal of $750 million.

This digital channel directly impacts operational efficiency, which is a key part of the value proposition delivered through Kyndryl Holdings, Inc.'s channels.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Customer Segments

You're looking at the core of Kyndryl Holdings, Inc.'s business-who they serve and why those clients depend on them for their most critical IT functions. Honestly, it's all about scale and complexity; they target the biggest players who simply cannot afford downtime.

Large, global enterprises requiring mission-critical IT infrastructure services form the bedrock. These are the organizations that entrust Kyndryl Holdings, Inc. to deliver the services needed to run the backbones of their respective industries. This focus translated into a substantial revenue base, with Kyndryl Holdings, Inc. reporting total revenues of $15.1 billion for fiscal year 2025, which concluded on March 31, 2025. Furthermore, the demand for their services is clearly growing, evidenced by record fiscal year 2025 signings reaching $18.2 billion, a year-over-year increase of 46%.

The customer base is heavily concentrated in sectors where operational stability is non-negotiable. You see this clearly in their focus on:

• Companies in highly regulated sectors: Financial services (BFSI), energy, healthcare, and manufacturing.
• Organizations with complex, multi-vendor technology environments that need a single integrator to manage the sprawl.

A major theme driving new business is the need to evolve legacy systems. This means Kyndryl Holdings, Inc. is segmenting customers actively engaged in:

• Customers seeking mainframe modernization, supported by their Core Enterprise and zCloud service line.
• Hybrid cloud adoption, which is supported by their hyperscaler alliance strategy; they recognized nearly $1 billion in revenue tied to these alliances in fiscal year 2025.

To give you a clearer picture of where the revenue comes from geographically, here is the breakdown based on their reporting segments as of the end of fiscal year 2025. Remember, Kyndryl Holdings, Inc. organizes its global operations into specific regions:

The total revenue for the fourth quarter of fiscal year 2025 was $3.8 billion. The Principal Markets and Strategic Markets segments saw revenue declines in earlier quarters due to the intentional reduction of low-margin third-party content, a strategy that is clearly paying off in margin expansion on new deals.

Finally, the customer base is global, with specific attention paid to major economic centers. The company explicitly tracks its performance across key geographies:

• Global customers across the US.
• Japan, where Kyndryl Holdings, Inc. continues to strengthen its local tech partnerships, such as with petrochemical manufacturers like EQUATE Group.
• Principal Markets, which includes operations outside the US and Japan.

The depth of engagement is significant; more than 1,200 enterprises are actively using their AI-enabled Kyndryl Bridge operating platform, which delivers 12 million AI-driven insights monthly as of August 2025. That's a lot of mission-critical infrastructure being monitored.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Cost Structure

You're looking at the core expenses Kyndryl Holdings, Inc. faces to keep its massive global infrastructure services running. Honestly, the cost structure is heavily influenced by the legacy contracts it took on from IBM and the ongoing, necessary transformation to a higher-margin business.

Significant Costs of Service Delivery

The most immediate and recurring costs are tied directly to delivering services-that's primarily labor and the technology Kyndryl manages or uses. For the first quarter of fiscal year 2026, covering the three months ended June 30, 2025, the Cost of services hit $2,947 million. This is the engine room expense. On top of that, the overhead for running the business, categorized as Selling, general and administrative expenses, was $646 million for that same quarter.

To give you the full picture for the most recently completed fiscal year, which ended March 31, 2025, the Total costs and expenses amounted to $14,622 million.

Here's a look at those key operational costs for Q1 FY2026:

• Cost of services: $2,947 million
• Selling, general and administrative expenses: $646 million
• Workforce rebalancing charges: $25 million

Contractually Required Increase in IBM Software Costs

This is a big one, a direct cost consequence of the spin-off structure. The contractually required increase in IBM software costs is a known headwind that management has cited as offsetting gains from other initiatives. For the full fiscal year 2025, these costs were explicitly noted as an offset to the growth in adjusted pretax income. You should know that IBM has been implementing annual global price harmonization, with software increases reaching up to 6% globally across the portfolio starting January 1, 2025, for new contracts and renewals.

What this estimate hides is the compounding effect. If you don't have a cap, those standard uplifts can balloon your total spend significantly over time. Here's the quick math on that risk:

If onboarding takes 14+ days, churn risk rises, but if you're locked into an IBM contract without a cap, your costs are definitely rising faster than inflation.

Workforce Rebalancing Charges

Kyndryl Holdings, Inc. is actively managing its workforce size to align it with the current revenue base and future operating model, which involves charges for restructuring. You specifically asked about the charge for Q1 FY2026, and the company reported $25 million in Workforce rebalancing charges for the three months ended June 30, 2025.

To show the trend of this cost reduction effort, look at the charges taken in the prior fiscal year:

• Total FY2025 Workforce Rebalancing Charges (Year Ended March 31, 2025): $115 million (sum of $41M US, $6M Japan, $23M Principal Markets, $45M Strategic Markets).
• Q4 FY2025 Workforce Rebalancing Charges: $36 million.

The company had projected $100 million in workforce rebalancing charges for the entirety of fiscal year 2025.

Investment in the Kyndryl Bridge Platform Development and AI Capabilities

Investment in the Kyndryl Bridge platform is a key part of the strategy to drive efficiency and reduce service delivery costs, which directly impacts the cost structure by lowering the labor component needed per service dollar. The platform is an AI-powered open-integration digital business platform. As of the end of fiscal year 2025, Kyndryl Bridge had already generated annualized savings of approximately $775 million, surpassing its internal goal of $750 million.

Furthermore, Kyndryl is making significant capital commitments to build out its AI capabilities globally. For instance, the company announced a commitment to invest $2.25 billion in India over the next three years, which includes establishing an AI Innovation Lab in Bengaluru. This is a clear investment in future cost-saving and value-creation technology.

Costs Associated with Reducing Inherited Low-Margin Contracts

A major focus has been on the Accounts initiative-actively addressing contracts with substandard margins inherited from IBM. This is a cost-avoidance/margin-improvement activity that often involves upfront costs or revenue reduction in the short term to achieve long-term profitability. By the end of fiscal year 2025 (March 31, 2025), this initiative had delivered $900 million of annualized benefits, exceeding the initial $850 million objective for that year.

In the first quarter of fiscal year 2025, the total impact from this accounts initiative was $725 million in annualized benefits. The revenue decline in FY2025, which was 4% in constant currency, directly reflects this progress in reducing that low-margin third-party content. Finance: draft 13-week cash view by Friday.

Kyndryl Holdings, Inc. (KD) - Canvas Business Model: Revenue Streams

You're looking at how Kyndryl Holdings, Inc. actually brings in the money, which is really about the mix between its established base and its growth engines. The foundation is definitely the managed services revenue, which comes from those long-term infrastructure contracts you know they've been managing for years.

The real momentum, though, is coming from the high-growth revenue stream: Kyndryl Consult advisory services. This part of the business saw 26% year-over-year growth in fiscal year 2025, which is a strong signal that clients are leaning into their advice on modernization and transformation. To be fair, the core managed services are still the bulk, but Consult is the area management is clearly pushing for margin expansion.

Another key component feeding the top line is the revenue tied to cloud hyperscaler alliances. For fiscal year 2025, this specific stream brought in $1.2 billion. This figure is more than double the prior year's level, showing Kyndryl Holdings, Inc. is successfully embedding itself within the major cloud ecosystems.

Here's a quick look at the overall financial picture for the fiscal year ended March 31, 2025, to put those streams in context:

The revenue generation is clearly being driven by a few specific, high-potential areas, which you can see when you break down the growth drivers:

• Managed services revenue from long-term infrastructure contracts (core business).
• High-growth revenue from Kyndryl Consult advisory services (26% YoY growth in FY2025).
• Kyndryl Consult revenue reached $3.0 billion in fiscal 2025.
• Kyndryl Consult signings grew 47% in fiscal 2025.
• Revenue from cloud hyperscaler alliances exceeded the target, hitting $1.2 billion.

Honestly, the $18.2 billion in record signings for fiscal year 2025 is what tells the story about future revenue potential, even though total revenue for the year was $15.1 billion. That gap between signings and recognized revenue is the pipeline you're watching.

Finance: draft 13-week cash view by Friday.