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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _________________ TO _________________

001-40853

(Commission file number)

Kyndryl Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware		86-1185492
(State or other jurisdiction of incorporation or organization)		(IRS employer identification number)

One Vanderbilt Avenue, 15th Floor
New York, New York		10017
(Address of principal executive offices)		(Zip Code)

855-596-3795

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		KD		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, par value $0.01 per share, outstanding as of October 29, 2025 was 228,564,347.

Table of Contents

Index

9

	Page
Part I - Financial Information:

Item 1. Consolidated Financial Statements (Unaudited):	3

Consolidated Income Statement for the three and six months ended September 30, 2025 and 2024	3

Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended September 30, 2025 and 2024	4

Consolidated Balance Sheet at September 30, 2025 and March 31, 2025	5

Consolidated Statement of Cash Flows for the six months ended September 30, 2025 and 2024	6

Consolidated Statement of Equity for the three and six months ended September 30, 2025 and 2024	7

Notes to Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3. Quantitative and Qualitative Disclosures About Market Risk	40

Item 4. Controls and Procedures	40

Part II - Other Information:

Item 1. Legal Proceedings	41

Item 1A. Risk Factors	41

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	41

Item 3. Defaults Upon Senior Securities	41

Item 4. Mine Safety Disclosures	41

Item 5. Other Information	41

Item 6. Exhibits	42

Table of Contents

Part I - Financial Information

Item 1. Consolidated Financial Statements (Unaudited):

KYNDRYL HOLDINGS, INC.
CONSOLIDATED INCOME STATEMENT
(In millions, except per share amounts)
(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Revenues	$	3,721	$	3,774	$	7,464	$	7,513

Cost of services	$	2,920	$	3,024	$	5,867	$	5,958
Selling, general and administrative expenses		659		647		1,305		1,304
Workforce rebalancing charges		19		39		44		74
Transaction-related costs		—		—		—		21
Interest expense		20		25		39		52
Other expense		5		44		18		44
Total costs and expenses	$	3,622	$	3,779	$	7,274	$	7,454

Income (loss) before income taxes	$	98	$	(5)	$	190	$	59
Provision for income taxes	$	30	$	38	$	66	$	91
Net income (loss)	$	68	$	(43)	$	124	$	(32)

Basic earnings (loss) per share	$	0.29	$	(0.19)	$	0.54	$	(0.14)
Diluted earnings (loss) per share	$	0.29	$	(0.19)	$	0.52	$	(0.14)

Weighted-average basic shares outstanding		230.6		231.6		230.4		231.1
Weighted-average diluted shares outstanding		235.9		231.6		237.5		231.1

The accompanying notes are an integral part of the financial statements.

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KYNDRYL HOLDINGS, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Dollars in millions)

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2025		2024		2025		2024
Net income (loss)	$	68	$	(43)	$	124	$	(32)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments:
Foreign currency translation adjustments		(15)		151		207		88
Unrealized gains (losses) on net investment hedges		14		(42)		(138)		(28)
Total foreign currency translation adjustments		(2)		109		69		60
Unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses) arising during the period		5		(14)		(4)		(15)
Reclassification of (gains) losses to net income		1		—		3		—
Total unrealized gains (losses) on cash flow hedges		7		(14)		(1)		(15)
Retirement-related benefit plans – amortization of net (gains) losses		3		4		5		8
Other comprehensive income (loss), before tax		8		99		73		53
Income tax (expense) benefit related to items of other comprehensive income (loss)		(1)		3		(1)		1
Other comprehensive income (loss), net of tax		7		102		72		54
Total comprehensive income (loss)	$	74	$	59	$	196	$	22

The accompanying notes are an integral part of the financial statements.

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KYNDRYL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEET

(In millions, except per share amount)

(Unaudited)


	September 30,		March 31,
	2025		2025
Assets:
Current assets:
Cash and cash equivalents	$	1,331	$	1,786
Restricted cash		5		3
Accounts receivable (net of allowances for credit losses of $9 at September 30, 2025 and $13 at March 31, 2025)		1,316		1,345
Deferred costs (current portion)		1,101		1,009
Prepaid expenses and other current assets		538		446
Total current assets	$	4,291	$	4,589

Property and equipment, net	$	2,628	$	2,570
Operating right-of-use assets, net		869		731
Deferred costs (noncurrent portion)		1,890		1,040
Deferred taxes		227		204
Goodwill		791		790
Intangible assets, net		168		218
Pension assets		173		148
Other noncurrent assets		206		162
Total assets	$	11,244	$	10,452

Liabilities:
Current liabilities:
Accounts payable	$	1,117	$	1,351
Value-added tax and income tax liabilities		286		256
Current portion of long-term debt		124		129
Accrued compensation and benefits		459		652
Deferred income (current portion)		827		746
Operating lease liabilities (current portion)		291		274
Accrued contract costs		415		437
Other accrued expenses and liabilities		679		454
Total current liabilities	$	4,197	$	4,300

Long-term debt	$	3,004	$	3,042
Retirement and nonpension postretirement benefit obligations		513		483
Deferred income (noncurrent portion)		393		341
Operating lease liabilities (noncurrent portion)		607		511
Other noncurrent liabilities		1,191		443
Total liabilities	$	9,904	$	9,121
Commitments and contingencies

Equity:
Stockholders’ equity
Common stock, par value $0.01 per share, and additional paid-in capital (shares authorized: 1,000.0; shares issued: September 30, 2025 – 243.9, March 31, 2025 – 238.2)	$	4,686	$	4,631
Accumulated deficit		(1,943)		(2,067)
Treasury stock, at cost (shares: September 30, 2025 – 14.5, March 31, 2025 – 7.5)		(427)		(184)
Accumulated other comprehensive income (loss)		(1,088)		(1,160)
Total stockholders’ equity before non-controlling interests	$	1,227	$	1,219
Non-controlling interests		112		113
Total equity	$	1,340	$	1,331
Total liabilities and equity	$	11,244	$	10,452

The accompanying notes are an integral part of the financial statements.

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KYNDRYL HOLDINGS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)


	Six Months Ended September 30,
	2025		2024
Cash flows from operating activities:
Net income (loss)	$	124	$	(32)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization:
Depreciation of property, equipment and capitalized software		384		276
Depreciation of right-of-use assets		147		154
Amortization of transition costs and prepaid software		613		647
Amortization of capitalized contract costs		231		205
Amortization of acquisition-related intangible assets		14		17
Stock-based compensation		50		49
Deferred taxes		(17)		17
Net (gain) loss on asset sales and other		—		(14)
Change in operating assets and liabilities:
Right-of-use assets and liabilities (excluding depreciation)		(173)		(145)
Workforce rebalancing liabilities		(1)		(13)
Receivables		6		193
Accounts payable		(328)		(237)
Taxes		23		(31)
Deferred costs (excluding amortization)		(1,697)		(852)
Other assets and other liabilities		645		(133)
Net cash provided by operating activities	$	22	$	101

Cash flows from investing activities:
Capital expenditures	$	(272)	$	(256)
Proceeds from disposition of property and equipment		51		54
Acquisitions and divestitures, net of cash acquired		1		(46)
Other investing activities, net		26		7
Net cash used in investing activities	$	(196)	$	(241)

Cash flows from financing activities:
Debt repayments	$	(70)	$	(73)
Common stock repurchases		(151)		—
Common stock repurchases for tax withholdings		(89)		(24)
Other financing activities, net		(1)		(5)
Net cash used in financing activities	$	(310)	$	(101)

Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	30	$	17
Net change in cash, cash equivalents and restricted cash	$	(453)	$	(224)

Cash, cash equivalents and restricted cash at beginning of period	$	1,789	$	1,554
Cash, cash equivalents and restricted cash at end of period	$	1,336	$	1,330

Supplemental data
Income taxes paid, net of refunds received	$	92	$	89
Interest paid on debt	$	58	$	60

The accompanying notes are an integral part of the financial statements.

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KYNDRYL HOLDINGS, INC.

CONSOLIDATED STATEMENT OF EQUITY

(In millions)

(Unaudited)


	Common Stock and				Accumulated
	Additional				Other						Non-
	Paid-In Capital				Comprehensive		Treasury		Accumulated		Controlling		Total
	Shares		Amount		Income (Loss)		Stock		Deficit		Interests		Equity
Equity – July 1, 2025		231.1	$	4,656	$	(1,094)	$	(317)	$	(2,011)	$	110	$	1,343
Net income										68				68
Other comprehensive income (loss), net of tax						7								7
Activity related to employee stock plans		1.7		30										30
Purchases of treasury stock		(3.4)						(111)						(111)
Changes in non-controlling interests												3		3
Equity – September 30, 2025		229.4		4,686		(1,088)		(427)		(1,943)		112		1,340


	Common Stock and				Accumulated
	Additional				Other						Non-
	Paid-In Capital				Comprehensive		Treasury		Accumulated		Controlling		Total
	Shares		Amount		Income (Loss)		Stock		Deficit		Interests		Equity
Equity – July 1, 2024		231.0	$	4,549	$	(1,192)	$	(53)	$	(2,308)	$	105	$	1,101
Net income (loss)										(43)				(43)
Other comprehensive income (loss), net of tax						102								102
Activity related to employee stock plans		1.9		26										26
Purchases of treasury stock		(0.7)						(17)						(17)
Changes in non-controlling interests												2		2
Equity – September 30, 2024		232.2	$	4,575	$	(1,090)	$	(69)	$	(2,351)	$	107	$	1,172


	Common Stock and				Accumulated
	Additional				Other						Non-
	Paid-In Capital				Comprehensive		Treasury		Accumulated		Controlling		Total
	Shares		Amount		Income (Loss)		Stock		Deficit		Interests		Equity
Equity – April 1, 2025		230.6	$	4,631	$	(1,160)	$	(184)	$	(2,067)	$	113	$	1,331
Net income										124				124
Other comprehensive income (loss), net of tax						72								72
Activity related to employee stock plans		5.7		55										55
Purchases of treasury stock		(7.0)						(243)						(243)
Changes in non-controlling interests												—		—
Equity – September 30, 2025		229.4	$	4,686	$	(1,088)	$	(427)	$	(1,943)	$	112	$	1,340


	Common Stock and				Accumulated
	Additional				Other						Non-
	Paid-In Capital				Comprehensive		Treasury		Accumulated		Controlling		Total
	Shares		Amount		Income (Loss)		Stock		Deficit		Interests		Equity
Equity – April 1, 2024		230.4	$	4,524	$	(1,145)	$	(45)	$	(2,319)	$	107	$	1,122
Net income (loss)										(32)				(32)
Other comprehensive income (loss), net of tax						54								54
Activity related to employee stock plans		2.8		51										51
Purchases of treasury stock		(1.0)						(24)						(24)
Changes in non-controlling interests												—		—
Equity – September 30, 2024		232.2	$	4,575	$	(1,090)	$	(69)	$	(2,351)	$	107	$	1,172

The accompanying notes are an integral part of the financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Kyndryl Holdings, Inc. (“we”, “the Company” or “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.

Prior to November 3, 2021, the Company was wholly owned by International Business Machines Corporation (“IBM” or “former Parent”). In November 2021, our former Parent effected the spin-off (the “Separation” or the “Spin-off”) of the infrastructure services unit of its Global Technology Services segment through the distribution of shares of Kyndryl’s common stock to IBM stockholders.

Basis of Presentation

The accompanying condensed Consolidated Financial Statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management believes the accompanying financial statements include all adjustments necessary to state fairly the Company’s financial position and its results of operations for all the periods presented. The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.

Principles of Consolidation

The accompanying financial statements are presented on a consolidated basis. All significant transactions and intercompany accounts between Kyndryl entities were eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts that are reported in the consolidated financial statements and accompanying disclosures. Estimates are used in determining the following, among others: revenue, costs to complete service contracts, income taxes, pension assumptions, valuation of assets including goodwill and intangible assets, the depreciable and amortizable lives of long-lived assets, loss contingencies, allowance for credit losses, deferred transition costs, and other matters. We prepared these estimates based on the most current and best available information, but actual results could differ materially from these estimates and assumptions.

The Company uses the estimated annual effective tax rate method in computing its interim tax provision in accordance with U.S. GAAP. The estimated annual effective tax rate is applied to the year-to-date ordinary income, exclusive of discrete items, to arrive at the reported interim tax provision.

NOTE 2. ACCOUNTING PRONOUNCEMENTS

Recent Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, which is intended to enhance the transparency and usefulness of income tax disclosures through improved reporting related to the rate reconciliation

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Notes to Consolidated Financial Statements (continued)

and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures in its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which is intended to improve the usefulness of expense information contained in public entity income statements through the disaggregation of relevant expense captions in the notes to the financial statements. The guidance should be applied prospectively, effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures in its consolidated financial statements.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which amends the guidance for determining the acquirer in certain transactions. The guidance should be applied prospectively, effective for the fiscal years beginning after December 15, 2026 and interim reporting periods within fiscal years beginning after December 15, 2026, with early adoption permitted. The Company has evaluated the impact of the guidance and does not expect it to have a material impact on the Company’s consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other (Topic 350): Targeted Improvements to the Accounting for Internal-Use Software, which amends the criteria for capitalization of internal-use software costs. The guidance is effective for the fiscal years beginning after December 15, 2027 and interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company has evaluated the impact of the guidance and does not expect it to have a material impact on the Company’s consolidated financial statements.

NOTE 3. REVENUE RECOGNITION

Disaggregation of Revenue

The Company views its segment results to be the best view of disaggregated revenue. Refer to Note 4 – Segments.

Remaining Performance Obligations

The remaining performance obligation (“RPO”) represents the aggregate amount of contractual deliverables yet to be recognized as revenue at the end of the reporting period. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts for which the customer is not committed. The customer is not considered committed when it is able to terminate for convenience without payment of a substantive penalty. The RPO also includes estimates of variable consideration. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustments for revenue that has not materialized and adjustments for currency.

At September 30, 2025, the aggregate amount of RPO related to customer contracts that are unsatisfied or partially unsatisfied was $34.0 billion. Approximately 57 percent of the amount is expected to be recognized as revenue in the next two years, approximately 38 percent in the subsequent three years, and the balance thereafter.

During the three and six months ended September 30, 2025, revenue was increased by $18 million and $25 million, respectively, and during the three and six months ended September 30, 2024, revenue was increased by $13 million and $20 million, respectively, for performance obligations satisfied (or partially satisfied) in previous periods, mainly due to changes in estimates.

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Notes to Consolidated Financial Statements (continued)

Contract Balances

The following table provides information about accounts receivable, contract assets and deferred income balances:


	September 30,		March 31,
(Dollars in millions)	2025		2025
Accounts receivable (net of allowances for credit losses of $9 at September 30, 2025 and $13 at March 31, 2025)*	$	1,316	$	1,345
Contract assets†		52		50
Deferred income (current)		827		746
Deferred income (noncurrent)		393		341

*	Included unbilled receivable balances of $442 million at September 30, 2025 and $425 million at March 31, 2025.

†	Contract assets represent goods or services delivered by the Company which give the Company the right to consideration that is typically subject to milestone completion or client acceptance and are included within prepaid expenses and other current assets in the Consolidated Balance Sheet.

The amount of revenue recognized during the three and six months ended September 30, 2025 that was included within the deferred income balance at the beginning of the period was $362 million and $517 million, respectively. The amount of revenue recognized during the three and six months ended September 30, 2024 that was included within the deferred income balance at the beginning of the period was $335 million and $524 million, respectively.

The following table provides roll-forwards of the accounts receivable allowance for expected credit losses for the six months ended September 30, 2025 and 2024.


	Six Months Ended September 30,
(Dollars in millions)	2025		2024
Beginning balance	$	13	$	22
Additions (releases)		1		(6)
Write-offs		(5)		1
Other*		1		—
Ending balance	$	9	$	17

*	Primarily represents translation adjustments.

The allowance for expected credit losses for contract assets was not material in any of the periods presented.

Major Clients

No single client represented more than 10 percent of the Company’s total revenue during the three and six months ended September 30, 2025 and 2024. No single client represented more than 10 percent of the Company’s total accounts receivable balance as of September 30, 2025 and March 31, 2025.

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Notes to Consolidated Financial Statements (continued)

Deferred Costs

The following table provides amounts of capitalized costs to acquire and fulfill customer contracts at September 30, 2025 and March 31, 2025:


	September 30,		March 31,
(Dollars in millions)	2025		2025
Deferred transition costs	$	777	$	697
Prepaid software costs		1,720		876
Capitalized costs to fulfill contracts		221		195
Capitalized costs to obtain contracts		274		281
Total deferred costs*	$	2,991	$	2,049

*	Of the total deferred costs, $1,101 million was current and $1,890 million was noncurrent at September 30, 2025, and $1,009 million was current and $1,040 million was noncurrent at March 31, 2025.

The amount of total deferred costs amortized for the three months ended September 30, 2025 was $431 million, composed of $59 million of amortization of deferred transition costs, $246 million of amortization of prepaid software and $125 million of amortization of capitalized contract costs. The amount of total deferred costs amortized for the six months ended September 30, 2025 was $844 million, composed of $122 million of amortization of deferred transition costs, $491 million of amortization of prepaid software and $231 million of amortization of capitalized contract costs. The amount of total deferred costs amortized for the three months ended September 30, 2024 was $435 million, composed of $75 million of amortization of deferred transition costs, $262 million of amortization of prepaid software and $98 million of amortization of capitalized contract costs. The amount of total deferred costs amortized for the six months ended September 30, 2024 was $852 million, composed of $147 million of amortization of deferred transition costs, $500 million of amortization of prepaid software and $205 million of amortization of capitalized contract costs.

NOTE 4. SEGMENTS

Our reportable segments correspond to how the chief operating decision maker (“CODM”), our chief executive officer, reviews performance and allocates resources. Our four reportable segments consist of the following:

United States: This reportable segment is comprised of Kyndryl’s operations in the United States.

Japan: This reportable segment is comprised of Kyndryl’s operations in Japan.

Principal Markets: This reportable segment represents the aggregation of our operations in Canada, France, Germany, India, Italy, Spain / Portugal, and the United Kingdom / Ireland.

Strategic Markets: This reportable segment is comprised of our operations in all other countries in which we operate.

The measure of segment operating performance used by Kyndryl’s CODM is adjusted EBITDA, which allows our CODM to evaluate operating results excluding certain items whose fluctuation from period to period do not necessarily correspond to changes in the operations of our business. Adjusted EBITDA is 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 and owned 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, workforce rebalancing charges incurred prior to March 31, 2024, impairment expense, significant litigation costs and benefits, and currency impacts of highly inflationary countries. The CODM reviews revenue and adjusted EBITDA to assess performance and allocate resources to the segments. The Company does not allocate assets to the above reportable segments for our CODM’s review.

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Notes to Consolidated Financial Statements (continued)

Our geographic markets frequently work together to sell and implement certain contracts. The resulting revenues and costs from these contracts may be apportioned among the participating geographic markets. The economic environment and its effects on the industries served by our geographic markets affect revenues and operating expenses within our geographic markets to differing degrees. Currency fluctuations also tend to affect our geographic markets differently, depending on the geographic concentrations and locations of their businesses.

The following tables reflect the results of the Company’s segments:


	Three Months Ended September 30, 2025
	United				Principal		Strategic		Total
(Dollars in millions)	States		Japan		Markets		Markets		Segments
Revenue	$	899	$	581	$	1,334	$	906	$	3,721
Cost of service, excluding depreciation and amortization*		557		366		904		599		2,425
Selling, general and administrative expenses, excluding depreciation and amortization*		145		90		216		155		605
Other items†		3		3		5		10		21
Segment adjusted EBITDA	$	195	$	123	$	210	$	142	$	669

	Three Months Ended September 30, 2024
	United				Principal		Strategic		Total
(Dollars in millions)	States		Japan		Markets		Markets		Segments
Revenue	$	960	$	604	$	1,318	$	892	$	3,774
Cost of service, excluding depreciation and amortization*		620		416		901		593		2,529
Selling, general and administrative expenses, excluding depreciation and amortization*		161		85		209		135		590
Other items†		20		10		21		25		77
Segment adjusted EBITDA	$	159	$	94	$	187	$	138	$	579

* Cost of service, excluding depreciation and amortization and selling, general and administrative expenses, excluding depreciation and
amortization are both used in calculating segment adjusted EBITDA and exclude depreciation of property, equipment and capitalized software
and amortization of transition costs and prepaid software.

† Other items include workforce rebalancing charges and other expense.

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Notes to Consolidated Financial Statements (continued)


	Six Months Ended September 30, 2025
	United				Principal		Strategic		Total
(Dollars in millions)	States		Japan		Markets		Markets		Segments
Revenue	$	1,810	$	1,160	$	2,690	$	1,804	$	7,464
Cost of service, excluding depreciation and amortization*		1,127		737		1,832		1,183		4,879
Selling, general and administrative expenses, excluding depreciation and amortization*		282		175		434		298		1,188
Other items†		10		11		17		17		55
Segment adjusted EBITDA	$	391	$	238	$	407	$	306	$	1,342

	Six Months Ended September 30, 2024
	United				Principal		Strategic		Total
(Dollars in millions)	States		Japan		Markets		Markets		Segments
Revenue	$	1,946	$	1,174	$	2,633	$	1,761	$	7,513
Cost of service, excluding depreciation and amortization*		1,278		814		1,753		1,183		5,028
Selling, general and administrative expenses, excluding depreciation and amortization*		343		171		428		279		1,220
Other items†		33		11		23		41		108
Segment adjusted EBITDA	$	292	$	177	$	428	$	258	$	1,156

† Other items include workforce rebalancing charges and other expense.

The following table reconciles segment adjusted EBITDA to consolidated pretax income (loss):


	Three Months Ended September 30,				Six Months Ended September 30,
(Dollars in millions)	2025		2024		2025		2024
Segment adjusted EBITDA	$	669	$	579	$	1,342	$	1,156
Charges related to ceasing to use leased/fixed assets and lease terminations		—		(10)		—		(20)
Transaction-related costs		—		—		—		(21)
Stock-based compensation expense		(26)		(25)		(50)		(49)
Interest expense		(20)		(25)		(39)		(52)
Depreciation of property, equipment and capitalized software		(193)		(150)		(384)		(276)
Amortization expense		(312)		(347)		(627)		(664)
Corporate expense not allocated to the segments		(28)		(22)		(53)		(42)
Other adjustments*		9		(5)		4		27
Pretax income (loss)	$	98	$	(5)	$	190	$	59

*	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.

NOTE 5. TAXES

For the three months ended September 30, 2025, the Company’s effective tax rate was 30.6%, compared to (703.7%) for the three months ended September 30, 2024. For the six months ended September 30, 2025, the Company’s effective tax rate was 34.7%, compared to 154.2% for the six months ended September 30, 2024. The Company’s

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Notes to Consolidated Financial Statements (continued)

negative effective tax rate for the three months ended September 30, 2024 reflects a tax expense on a pretax book loss in that period.

The Company’s effective tax rate for the three and six months ended September 30, 2025, and the six months ended September 30, 2024, was higher than the Company’s statutory tax rate primarily due to taxes on foreign operations and valuation allowances recorded in certain jurisdictions against deferred tax assets that are not more likely than not to be realized.

In July 2025, the U.S. government enacted new tax legislation that, among other things, made permanent items such as 100% bonus depreciation on certain fixed assets, immediate expensing of domestic research costs and an increased business interest expense limitation. It also included modifications to several international tax provisions. The Company recorded no material incremental tax expense or benefit in the current quarter related to the legislation.

NOTE 6. EARNINGS PER SHARE

We did not declare any dividends in the periods presented. The following table provides the computation of basic and diluted earnings per share of common stock for the three and six months ended September 30, 2025 and 2024.


	Three Months Ended September 30,				Six Months Ended September 30,
(In millions, except per share amounts)	2025		2024		2025		2024
Net income (loss) on which basic and diluted earnings per share is calculated	$	68	$	(43)	$	124	$	(32)

Number of shares on which basic earnings (loss) per share is calculated		230.6		231.6		230.4		231.1
Dilutive effect of stock options and equity awards		5.2		—		7.0		—
Number of shares on which diluted earnings per share is calculated		235.9		231.6		237.5		231.1

Basic earnings (loss) per share	$	0.29	$	(0.19)	$	0.54	$	(0.14)
Diluted earnings (loss) per share		0.29		(0.19)		0.52		(0.14)

The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive:


	Three Months Ended September 30,		Six Months Ended September 30,
(In millions)	2025	2024	2025	2024
Nonvested restricted stock units	2.5	7.4	1.6	7.8
Nonvested performance-conditioned stock units	4.2	5.4	3.7	5.0
Nonvested market-conditioned stock units	—	3.2	—	3.1
Stock options issued and outstanding	—	3.4	—	3.5
Total	6.7	19.4	5.3	19.3

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Notes to Consolidated Financial Statements (continued)

NOTE 7. FINANCIAL ASSETS AND LIABILITIES

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company classifies certain assets and liabilities based on the following fair value hierarchy:

●

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date,

●

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly and

●

Level 3 – Unobservable inputs for the asset or liability.

The level of an asset or liability within the fair value hierarchy is determined based on the lowest level of any input that is significant to the fair value measurement. The determination of fair value considers various factors including yield curves and time value underlying the financial instruments. For derivatives and debt securities, the Company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument.

In determining the fair value of financial instruments, the Company considers certain market valuation adjustments to the “base valuations” using the methodologies described below for several parameters that market participants would consider in determining fair value:

●

Counterparty credit risk adjustments are applied to financial instruments, taking into account the actual credit risk of a counterparty as observed in the credit default swap market to determine the true fair value of such an instrument.

●

Credit risk adjustments are applied to reflect the Company’s own credit risk when valuing liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s credit risk as observed in the credit default swap market.

Certain non-financial assets such as property, plant and equipment, operating right-of-use assets, land, goodwill and intangible assets are recorded at fair value or at cost, as appropriate, in the period they are initially recognized, and such balances may be adjusted in subsequent periods if an event occurs or circumstances change that indicate that the asset may be impaired. The impairment models used for non-financial assets depend on the type of asset. The fair value measurements, in such instances, would be classified in Level 3 of the fair value hierarchy.

We perform a qualitative assessment of asset impairments on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value is less than carrying value. There were no impairments of non-financial assets recognized for the three and six months ended September 30, 2025 and 2024.

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Notes to Consolidated Financial Statements (continued)

Financial Assets and Liabilities Measured at Fair Value

The following table presents the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis at September 30, 2025 and March 31, 2025:


	Fair Value
	Hierarchy	At September 30, 2025						At March 31, 2025
(Dollars in millions)	Level	Assets		Liabilities		Fair Value		Assets		Liabilities		Fair Value
Derivatives designated as hedging instruments:
Foreign exchange contracts	2	$	11	$	106	$	(95)	$	6	$	29	$	(23)
Cross-currency swap contracts	2		17		30		(13)		12		11		—
Derivatives not designated as hedging instruments:
Foreign exchange contracts	2		6		2		4		27		2		25
Total		$	34	$	139	$	(105)	$	45	$	43	$	2

The gross balances of derivative assets, including accrued interest, are contained within prepaid expenses and other current assets and other noncurrent assets in the Consolidated Balance Sheet. The gross balances of derivative liabilities are contained within other accrued expenses and liabilities and other noncurrent liabilities in the Consolidated Balance Sheet. The Company may enter into master netting agreements with certain counterparties that allow for netting of exposures. There was no netting of derivative assets against liabilities in the Consolidated Balance Sheet at September 30, 2025 and March 31, 2025. The Company manages counterparty risk by seeking counterparties of high credit quality and by monitoring credit ratings, credit spreads and other relevant public information about its counterparties. The Company does not anticipate nonperformance by any of the counterparties.

Financial Assets and Liabilities Not Measured at Fair Value

Accounts receivable are financial assets with carrying values that approximate fair value. Accounts payable, other accrued expenses and short-term debt are financial liabilities with carrying values that approximate fair value. If measured at fair value in the consolidated financial statements, these financial instruments would be classified as Level 3 in the fair value hierarchy, except for short-term debt, which would be classified as Level 2.

The Company also has time deposits that have maturities of 90 days or less, and their carrying values approximate fair value. They are measured for impairment on a recurring basis by comparing their fair value with their amortized cost basis. There were no impairments of financial assets recognized for any of the periods presented. The balances of these time deposits with maturities of 90 days or less contained within cash and cash equivalents in the Consolidated Balance Sheet at September 30, 2025 and March 31, 2025 were $471 million and $765 million, respectively. If measured at fair value in the consolidated financial statements, time deposits with maturities of 90 days or less would be categorized as Level 2 in the fair value hierarchy.

The fair value of our outstanding debt (excluding finance lease obligations) is based on various methodologies, including quoted prices in active markets for identical debt instruments, which is a Level 1 measurement, or calculated fair value using an expected present value technique that uses rates currently available to the Company for debt in active markets with similar terms and remaining maturities, which is a Level 2 measurement. See Note 9 – Borrowings for additional information. Our outstanding debt (excluding finance lease obligations) had a carrying value of $2.9 billion as of September 30, 2025 and March 31, 2025, with an estimated fair value of $2.8 billion and $2.7 billion as of September 30, 2025 and March 31, 2025, respectively.

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Notes to Consolidated Financial Statements (continued)

Transfers of Financial Assets

The Company has entered into agreements with third-party financial institutions to sell certain financial assets (primarily trade receivables) without recourse. The Company has determined these are true sales. The carrying value of the financial asset sold is derecognized, and a net gain or loss on the sale is recognized, at the time of the transfer.

The net proceeds from these arrangements are reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows. Gross proceeds from receivables sold to third parties under this program were $563 million and $1.2 billion for the three and six months ended September 30, 2025, respectively, and $1.1 billion and $1.9 billion for the three and six months ended September 30, 2024, respectively. The fees associated with the transfers of receivables were $5 million and $10 million for the three and six months ended September 30, 2025, respectively, and $10 million and $20 million for the three and six months ended September 30, 2024, respectively.

Derivative Financial Instruments

The following table summarizes the notional amounts of the Company’s outstanding derivatives:


	At September 30, 2025						At March 31, 2025
(Dollars in millions)	Foreign Exchange Contracts		Cross-currency Swap Contracts		Total Notional Amount		Foreign Exchange Contracts		Cross-currency Swap Contracts		Total Notional Amount
Derivatives designated as hedging instruments
Cash flow hedges	$	668	$	—	$	668	$	357	$	—	$	357
Net investment hedges		1,082		500		1,582		1,485		500		1,985
Derivatives not designated as hedging instruments	$	1,446	$	—	$	1,446	$	1,148	$	—	$	1,148

The notional amounts of derivative instruments do not necessarily represent the amounts exchanged by the Company with third parties and are not necessarily a direct measure of the financial exposure.

Derivatives Designated as Hedging Instruments

Cash Flow Hedges

The Company has foreign exchange derivative financial instruments designated as cash flow hedges to manage the volatility of cash flows that relate to operating expenses and intercompany payments for royalties denominated in certain currencies. Changes in fair value of derivatives designated as cash flow hedges are recorded, net of applicable taxes, in other comprehensive income (“OCI”) and subsequently reclassified into the same income statement line item as the hedged exposure when the underlying hedged item is recognized in earnings. The cash flows associated with derivatives designated as cash flow hedges are reported in cash flows from operating activities in the Consolidated Statement of Cash Flows.

At September 30, 2025, the maximum remaining length of time over which the Company has hedged its exposure is approximately one year. At September 30, 2025 and March 31, 2025, the weighted-average remaining maturity of these instruments was approximately 0.4 years and 0.5 years, respectively. At September 30, 2025 and March 31, 2025, in connection with cash flow hedges of foreign currency transactions, the Company had unrealized losses of $2 million and $1 million (each before taxes), respectively, in accumulated other comprehensive income (“AOCI”). The Company estimates that $2 million (before taxes) of deferred net losses on derivatives in AOCI at September 30, 2025 will be reclassified to net income within the next twelve months, providing an offsetting economic impact against the underlying anticipated transactions.

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Notes to Consolidated Financial Statements (continued)

Net Investment Hedges

The Company has entered into and designated cross-currency interest rate swap contracts and currency forward contracts as net investment hedges to mitigate foreign exchange exposure related to net investments. Under the terms of the cross-currency swaps, the Company makes fixed-rate payments in foreign currencies and receives fixed-rate amounts in U.S. dollars, with the exchange of the underlying notional amounts at maturity whereby the Company will receive U.S. dollars and pay foreign currencies at exchange rates which are determined at contract inception. Under the terms of the currency forward contracts, the Company commits to sell the local currency of certain subsidiaries in exchange for U.S. dollars at specified forward rates. Derivatives designated as net investment hedges are accounted for using the spot method, with changes in the fair value of the derivatives attributable to changes in spot rates recorded within foreign currency translation (“CTA”) as a component of other comprehensive income (loss) and remaining there until the hedged net investments are sold or substantially liquidated. The changes in the fair value of the derivatives that are attributable to changes in the difference between the forward rate and spot rate are excluded from the assessment of hedge effectiveness. The changes in fair value that are attributable to the excluded components are initially recorded in CTA and then recognized in interest expense on the Consolidated Income Statement over the life of the derivative instruments. Cash flows from derivatives designated as net investment hedges are reported as cash flows from investing activities in the Consolidated Statement of Cash Flows, except for cash flows from the periodic interest settlements of cross-currency interest rate swaps designated as net investment hedges, which are reported as cash flows from operating activities in the Consolidated Statement of Cash Flows.

At September 30, 2025, the maximum remaining length of time over which the Company has hedged its exposure is approximately eight years. The weighted-average remaining maturity of the Company’s net investment hedge instruments was approximately three years at September 30, 2025 and March 31, 2025. At September 30, 2025 and March 31, 2025, the Company had unrealized losses of $145 million and $6 million (each before taxes), respectively, in AOCI related to net investment hedges.

Derivatives Not Designated as Hedging Instruments

The Company enters into currency forward and swap contracts to hedge exposures related to assets, liabilities and earnings across its subsidiaries. These contracts are not designated as hedging instruments, and therefore changes in fair value of these contracts are reported in earnings in other expense in the Consolidated Income Statement. The gains and losses on these contracts generally offset the gains and losses in the underlying hedged exposures, which are also reported in other expense in the Consolidated Income Statement. Cash flows from derivatives not designated as hedges are reported in cash flows from investing activities in the Consolidated Statement of Cash Flows. The terms of these swap contracts are generally less than one year.

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Notes to Consolidated Financial Statements (continued)

The Effect of Derivative Instruments in the Consolidated Income Statement

The effects of derivatives designated as hedging instruments on the Consolidated Income Statement and Other Comprehensive Income are as follows:


(Dollars in millions)	Unrealized Gain (Loss)				Consolidated	Gain (Loss) Reclassified				Amounts Excluded from
Three months ended	Recognized in OCI				Income Statement	from AOCI to Income				Effectiveness Testing
September 30:	2025		2024		Line Item	2025		2024		2025		2024
Derivative instruments in cash flow hedges:
Foreign exchange contracts	$	5	$	(14)	Cost of services	$	(1)	$	—	$	—	$	—
					Other expense		3		—		—		—
Derivative instruments in net investment hedges:
Cross-currency swaps		11		(16)	Interest expense		—		2		3		2
Foreign exchange contracts		3		(21)	Interest expense		—		3		7		3
Total	$	19	$	(51)		$	1	$	6	$	10	$	5


	Unrealized Gain (Loss)				Consolidated	Gain (Loss) Reclassified				Amounts Excluded from
(Dollars in millions)	Recognized in OCI				Income Statement	from AOCI to Income				Effectiveness Testing
Six months ended September 30:	2025		2024		Line Item	2025		2024		2025		2024
Derivative instruments in cash flow hedges:
Foreign exchange contracts	$	(4)	$	(15)	Cost of services	$	(3)	$	—	$	—	$	—
					Other expense		3		—		—		—
Derivative instruments in net investment hedges:
Cross-currency swaps		(8)		—	Interest expense		—		6		6		6
Foreign exchange contracts		(130)		(19)	Interest expense		—		3		15		3
Total	$	(142)	$	(34)		$	(1)	$	10	$	20	$	9

The effects of derivatives not designated as hedging instruments on the Consolidated Income Statement are as follows:


	Consolidated	Gain (Loss)
(Dollars in millions)	Income Statement	Recognized on Derivatives
Three months ended September 30:	Line Item	2025		2024
Foreign exchange contracts	Other expense	$	(5)	$	31
Total		$	(5)	$	31


	Consolidated	Gain (Loss)
(Dollars in millions)	Income Statement	Recognized on Derivatives
Six months ended September 30:	Line Item	2025		2024
Foreign exchange contracts	Other expense	$	42	$	3
Total		$	42	$	3

For the three months ended September 30, 2025 and 2024, our net income included a gain of $1 million and a loss of $74 million (each before taxes), respectively, from foreign currency transactions. For the six months ended September 30, 2025 and 2024, our net income included a loss of $60 million and a loss of $47 million (each before taxes), respectively, from foreign currency transactions.

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Notes to Consolidated Financial Statements (continued)

NOTE 8. INTANGIBLE ASSETS INCLUDING GOODWILL

Intangible Assets

The following table presents the Company’s intangible asset balances by major asset class.


	At September 30, 2025						At March 31, 2025
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
(Dollars in millions)	Amount		Amortization		Amount		Amount		Amortization		Amount
Capitalized software	$	147	$	(44)	$	103	$	216	$	(76)	$	141
Customer relationships*		123		(71)		51		121		(60)		61
Completed technology		13		(4)		9		13		(2)		11
Patents and trademarks*		15		(11)		4		15		(10)		5
Total	$	298	$	(131)	$	168	$	365	$	(148)	$	218

* Amounts include effects from foreign currency translation.

The net carrying amount of intangible assets decreased by $50 million during the six months ended September 30, 2025, primarily due to the reclassification of certain capitalized software intangibles to prepaid assets and other noncurrent assets resulting from the migration of on-premises software to a cloud-based solution. The aggregate intangible asset amortization expense was $13 million and $28 million for the three and six months ended September 30, 2025, compared to $17 million and $36 million for the three and six months ended September 30, 2024, respectively. This included amortization of capitalized software of $7 million and $14 million for the three and six months ended September 30, 2025, respectively, which was reported in “Depreciation of property, equipment and capitalized software” on the Consolidated Statement of Cash Flows.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at September 30, 2025:


	Capitalized		Customer		Completed		Patents and
(Dollars in millions)	Software		Relationships		Technology		Trademarks		Total
Year ending March 31:
2026 (remaining six months)	$	14	$	11	$	1	$	1	$	28
2027		28		19		3		2		52
2028		27		5		3		—		35
2029		22		5		3		—		29
2030		11		4		—		—		15
Thereafter		1		8		—		—		9

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Notes to Consolidated Financial Statements (continued)

Goodwill

The changes in the goodwill balances by segment for the six months ended September 30, 2025 were as follows:



			Foreign Currency
(Dollars in millions)	Balance at		Translation		Balance at
Segment	March 31, 2025		Adjustments		September 30, 2025
United States	$	11	$	—	$	11
Japan		489		1		489
Principal Markets		92		—		92
Strategic Markets		198		—		198
Total	$	790	$	1	$	791

There were no goodwill impairment losses recorded for the six months ended September 30, 2025 and 2024. Management reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable by first assessing qualitative factors to determine if it is more likely than not that fair value is less than carrying value.

NOTE 9. BORROWINGS

Debt

The following table presents the components of our debt:


			September 30,		March 31,
(Dollars in millions)	Interest Rate	Maturity	2025		2025
Unsecured senior notes due 2026	2.05%	October 2026	$	700	$	700
Unsecured senior notes due 2028	2.70%	October 2028		500		500
Unsecured senior notes due 2031	3.15%	October 2031		650		650
Unsecured senior notes due 2034	6.35%*	February 2034		500		500
Unsecured senior notes due 2041	4.10%	October 2041		550		550
Finance lease and other obligations	5.49%†	2025-2031		244		290
			$	3,144	$	3,190
Less: Unamortized discount				4		4
Less: Unamortized debt issuance costs				13		14
Less: Current portion of long-term debt				124		129
Total long-term debt			$	3,004	$	3,042

*	Including the cross-currency swaps that the Company entered into subsequent to the issuance of the unsecured senior notes due 2034, the effective interest rate on such notes was approximately 3.84% at the time of issuance. For more information, see Note 7 – Financial Assets and Liabilities.

†Weighted-average discount rate.

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Notes to Consolidated Financial Statements (continued)

Contractual obligations of long-term debt outstanding at September 30, 2025, exclusive of finance lease obligations, are as follows:


(Dollars in millions)*	Principal
Year ending March 31:
2026 (remaining six months)	$	15
2027		710
2028		—
2029		500
2030		—
Thereafter		1,700
Total	$	2,925

*	Contractual obligations approximate scheduled repayments.

As of September 30, 2025, there were no borrowings under the Company’s revolving credit agreement. The Company is in compliance with its debt covenants in all periods presented.

NOTE 10. COMMITMENTS AND CONTINGENCIES

The Company guarantees certain loans and financial commitments. The maximum potential future payment under these financial guarantees and the fair value of these guarantees recognized in the Consolidated Balance Sheet at September 30, 2025 and March 31, 2025 were not material. Additionally, the Company has contractual commitments that are noncancellable with certain software, hardware and cloud partners used in the delivery of services to customers. During the six months ended September 30, 2025, contractual commitments decreased due to satisfaction of existing commitments outpacing new additions.

As a Fortune 500 company with customers and employees around the world, Kyndryl is subject to, or could become subject to, either as plaintiff or defendant, a variety of contingencies, including claims, demands and suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business. Given the rapidly evolving external landscape of cybersecurity, privacy and data protection laws, regulations and threat actors, the Company or its clients could become subject to actions or proceedings in various jurisdictions. Also, as is typical for companies of Kyndryl’s scope and scale, the Company is subject to, or could become subject to, actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the Company’s benefit plans), as well as actions with respect to contracts, securities, foreign operations, competition law and environmental matters. These actions may be commenced by a number of different parties, including competitors, clients, employees, government and regulatory agencies, stockholders and representatives of the locations in which the Company does business. Some of the actions to which the Company is, or may become, party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise. Additionally, the Company is, or may be, a party to agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters.

The Company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In accordance with the relevant accounting guidance, the Company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible. In addition, the Company may also disclose matters based on its consideration of other matters and qualitative factors.

The Company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses

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Notes to Consolidated Financial Statements (continued)

(individually or in the aggregate) to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter.

Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the Company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including the timing and amount of such losses or damages; the structure and type of any such remedies; the significance of the impact any such losses, damages or remedies may have in the consolidated financial statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. While the Company will continue to defend itself vigorously, it is possible that the Company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters.

NOTE 11. EQUITY

The following tables present reclassifications and taxes related to items of other comprehensive income (loss) for the three and six months ended September 30, 2025 and 2024:


	Pretax		Tax (Expense)		Net-of-Tax
(Dollars in millions)	Amount		Benefit		Amount
For the three months ended September 30, 2025:
Foreign currency translation adjustments:
Foreign currency translation adjustments	$	(15)	$	—	$	(15)
Unrealized gains (losses) on net investment hedges		14		—		14
Total foreign currency translation adjustments	$	(2)	$	—	$	(2)
Unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses) arising during the period	$	5	$	—	$	5
Reclassification of (gains) losses to net income		1		—		1
Total unrealized gains (losses) on cash flow hedges	$	7	$	—	$	6
Retirement-related benefit plans – amortization of net (gains) losses	$	3	$	(1)	$	2
Other comprehensive income	$	8	$	(1)	$	7

For the three months ended September 30, 2024:
Foreign currency translation adjustments:
Foreign currency translation adjustments	$	151	$	—	$	151
Unrealized gains (losses) on net investment hedges		(42)		—		(42)
Total foreign currency translation adjustments	$	109	$	—	$	109
Unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses) arising during the period	$	(14)	$	4	$	(9)
Reclassification of (gains) losses to net income		—		—		—
Total unrealized gains (losses) on cash flow hedges	$	(14)	$	4

Kyndryl Holdings, Inc. 10-Q