Kyndryl stock (NYSE:KD) released their IPO on the market after its spin-off from IBM (NYSE:IBM) and started trading as an independent company. KD has “90,000 of the best and brightest professionals, a strong balance sheet and a path to growth,” said Martin Schroeter, Kyndryl’s chairman and CEO.

The company launches as the world’s largest IT infrastructure provider, with a differentiated approach that integrates development, security and operations. 

Journey for growth

The independence that Kyndryl now offers brings freedom to operate differently and invest for growth, unlocking a total addressable market of $510B by 2024. Independence from IBM offers new freedom to reshape their strategy in ways that will be favourable to long term trajectory. KD will expand beyond an IBM-centric ecosystem to gain access to areas of the market where they’ve previously been underrepresented. They will pivot to participate more fully in a broader ecosystem and invest in transformation services that align to customers’ digital journeys (cloud, data, security and intelligent automation) will allow services of higher value and will project faster growth than their historical business mix.

The competitive advantage stems from their “people, data and intellectual property”. Kyndryl have global scale with state-of-the-art delivery operations and intellectual property with more than 3,000 patents issued and 800 patents pending.

The company: has operations in 63 countries which allows them to serve customers domestically and globally, provides 2 million terabytes of storage, manages 750,000 virtual servers and 270,000 network devices and also manages over 25,000 SAP and Oracle systems.

What helps Kyndryl is that they are starting from a position of strength. They have a strong balance sheet with $19B in annual revenues The long-standing customer relationships produce recurring revenue streams. KD also boasts adjusted EBITDA margins of roughly 15%. The primary use of their cash flow will be to re-invest in their business and drive their value.

Kyndryl’s growth strategy centres around investing in people and business, not about consolidation or cost cutting. They won’t be paying dividends or repurchasing shares. This will allow them to use their cash to reinvest. The value that comes to the investor is through the share price rising.

Kyndryl stock

Kyndryl stock has a price of $25. We believe that the foundation and expertise that Kyndryl is built on makes it a good investment long term. They are tapping into an addressable market worth $510B. KD have a great outlook and growth strategy that investors can have trust in to return value.

Leave a Reply