2024-11-07 02:48:23 :
(Reuters) – IT services provider Kyndryl reported second-quarter revenue slightly above forecasts on Wednesday as businesses adopting generative artificial intelligence technology turned to its consulting services.
Revenue from the company’s consulting business, IBM’s former infrastructure services business, grew 23%.
Kyndryl benefits from the company’s extensive data and processing needs as it upgrades its IT systems to incorporate artificial intelligence technology.
“For every company that is thinking about artificial intelligence and generative artificial intelligence, at the core there is always a need for data,” Chief Executive Martin Schroeter told Reuters.
“We play a role in helping them build their data architecture before they start thinking about Gen AI.”
Kyndryl’s second-quarter revenue fell about 7% to $3.77 billion. The average estimate of four analysts surveyed by London Stock Exchange Group (LSEG) was $3.72 billion.
The company inherited a number of unprofitable contracts from IBM and has been seeking to rework them to generate higher profits, a move that has resulted in an “artificial decline” in its revenue.
Revenue will return to growth by the end of the fiscal year, Schroeter said.
Kyndryl aims to generate $1 billion in revenue from so-called hyperscalers in fiscal 2025. In the second quarter, Kyndryl recognized $260 million in revenue related to customers using services from large cloud providers.
The company’s net loss narrowed to $43 million in the quarter ended Sept. 30, compared with a net loss of $142 million in the same period last year.
Responding to a question about Donald Trump’s election as U.S. president, Schroeter said: “I do expect that there will continue to be a focus on the security aspects of data and especially the resiliency of the systems that countries rely on.”
“Helping clients prepare for the regulatory environment will be a tailwind for us.”
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Anil D’Silva)
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