Kyndryl Holdings, Inc. Goodwill & Intangibles Disclosure
NOTE 11. INTANGIBLE ASSETS INCLUDING GOODWILL
Intangible Assets
The following table presents the Company’s intangible asset balances by major asset class:
At March 31, 2026 | 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 | $ | 175 | $ | (59) | $ | 116 | $ | 216 | $ | (76) | $ | 141 | ||||||
Customer relationships* |
| 116 |
| (77) |
| 39 |
| 121 |
| (60) |
| 61 | ||||||
Completed technology |
| 13 |
| (5) |
| 8 |
| 13 |
| (2) |
| 11 | ||||||
Patents and trademarks* |
| 14 |
| (12) |
| 2 |
| 15 |
| (10) |
| 5 | ||||||
Total | $ | 318 | $ | (153) | $ | 165 | $ | 365 | $ | (148) | $ | 218 | ||||||
* Amounts include effects from foreign currency translation.
There was no impairment of identifiable intangible assets recorded in the periods reported. The net carrying amount of intangible assets decreased by $53 million during the year ended March 31, 2026, 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 $57 million, $72 million, and $63 million for the years ended March 31, 2026, 2025 and 2024, respectively. Aggregate amortization expense in fiscal year 2026 included amortization of capitalized software of $30 million, 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 March 31, 2026:
Capitalized | Customer | Completed | Patents and | ||||||||||||
(Dollars in millions) | Software | | Relationships | Technology | Trademarks | Total | |||||||||
Year ending March 31: | |||||||||||||||
2027 | $ | 34 | $ | 18 | $ | 3 | $ | 2 | $ | 57 | |||||
2028 | 33 | 5 | 3 | — |
| 40 | |||||||||
2029 | 27 | 5 | 3 | — |
| 35 | |||||||||
2030 | 16 | 4 | — | — |
| 20 | |||||||||
2031 | 6 | 4 | — | — |
| 10 | |||||||||
Thereafter | — | 4 | — | — |
| 4 | |||||||||
Goodwill
The following table presents a roll-forward of goodwill balances by segment for the years ended March 31, 2026 and 2025:
United | Principal | Strategic | |||||||||||||
(Dollars in millions) | States | | Japan | | Markets | Markets | | Total | |||||||
Balance as of March 31, 2024 | $ | — | $ | 488 | $ | 141 | $ | 176 | $ | 805 | |||||
Acquisitions and (Divestitures)* | $ | 11 | $ | — | $ | (27) | $ | — | $ | (15) | |||||
Translation Adjustments | — | 1 | — | — | 1 | ||||||||||
Reallocation | — | — | (23) | 23 | — | ||||||||||
Balance as of March 31, 2025 | $ | 11 | $ | 489 | $ | 92 | $ | 198 | $ | 790 | |||||
Translation Adjustments | $ | — | $ | (4) | $ | — | $ | — | $ | (4) | |||||
Balance as of March 31, 2026 | $ | 11 | $ | 484 | $ | 92 | $ | 198 | $ | 786 | |||||
* | Represents the goodwill acquired as part of the purchase of Skytap and the removal of goodwill related to the divestiture of the SIS platform using the relative fair value approach. See Note 10 – Acquisitions and Divestitures for additional details. |
As discussed in Note 4 – Segments, Kyndryl’s operations in Australia/New Zealand transitioned from the Principal Markets segment to the Strategic Markets segment in the quarter ended June 30, 2024. As a result, the Company reallocated the goodwill associated with Australia/New Zealand from the Principal Markets segment to the Strategic Markets segment. The Company also performed a qualitative impairment test immediately before and after the change in reporting units and determined that it is not more likely than not that the fair value of the reporting units is less than their carrying amounts, including goodwill. Accordingly, the Company concluded that the goodwill related to those reporting units was not impaired.
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.
We conducted an impairment assessment as of January 1, 2026. After evaluating and weighing all relevant qualitative factors, the Company concluded that it is unlikely that the fair value of any of its reporting units is less than its carrying amount as of the date of the assessment. Accordingly, there were no goodwill impairment losses recorded for the year ended March 31, 2026. Cumulatively, the Company has recorded $469 million in goodwill impairment charges within its former EMEA ($293 million) and current United States ($176 million) reporting units, all of which occurred immediately following the Separation.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 29, 2026 | Showing above |
| 2025 | May 30, 2025 | |
| 2024 | May 30, 2024 | |
| 2023 | May 26, 2023 | |
| 2021 | Mar 10, 2022 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.