Kyndryl (NYSE:KD) Announces Quarterly Earnings Results, Beats Estimates By $0.04 EPS

Key Points

• Kyndryl beat EPS estimates, reporting a loss of $0.12 per share versus the expected $0.16 loss, while quarterly revenue of $3.62 billion slightly missed estimates and fell 3.3% year over year.
• Results were pressured by $152 million in workforce-rebalancing charges, an IBM-related revenue headwind and a $401 million seasonal free-cash-flow outflow. Shares fell 5.5% following the report.
• Management maintained its fiscal 2027 outlook, citing momentum in growth areas: Kyndryl Consult revenue rose 14%, hyperscaler-related revenue increased 48%, and Consult signings climbed 50%.

Kyndryl (NYSE:KD - Get Free Report) posted its earnings results on Wednesday. The company reported ($0.12) earnings per share (EPS) for the quarter, topping the consensus estimate of ($0.16) by $0.04, FiscalAI reports. The firm had revenue of $3.62 billion for the quarter, compared to analyst estimates of $3.64 billion. Kyndryl had a return on equity of 20.43% and a net margin of 1.31%.Kyndryl's revenue was down 3.3% on a year-over-year basis. During the same quarter in the prior year, the company earned $0.37 EPS.

Here are the key takeaways from Kyndryl's conference call:

• Q1 revenue fell 3% year over year to $3.6 billion, while adjusted pre-tax income was a $37 million loss, primarily reflecting $152 million in workforce rebalancing charges.
• Kyndryl maintained its fiscal 2027 outlook, including constant-currency revenue ranging from flat to down 2%, adjusted pre-tax income of $600 million–$700 million, and free cash flow of $400 million–$500 million.
• Targeted growth areas continued to perform well, with Kyndryl Consult revenue up 14% and hyperscaler-related revenue streams up 48% over the last 12 months; Q1 Consult signings increased 50%.
• Management cited improving signings quality, with new scope and new logos representing about 30% of the value of large deals versus 15% in fiscal 2025, supporting its fiscal 2028 goals of more than $1.2 billion in adjusted pre-tax income and $1 billion in free cash flow.
• Customers procuring more IBM hardware and software directly from IBM remain a revenue headwind, while Q1 free cash flow was a seasonal $401 million outflow due to renewal payments and weaker billing and collections.

Kyndryl Stock Down 5.5%

Shares of Kyndryl stock traded down $0.81 on Wednesday, reaching $13.88. 9,373,980 shares of the company were exchanged, compared to its average volume of 4,054,625. Kyndryl has a 1-year low of $10.10 and a 1-year high of $33.90. The company has a market cap of $3.06 billion, a P/E ratio of 16.32 and a beta of 1.65. The company has a debt-to-equity ratio of 1.77, a current ratio of 0.88 and a quick ratio of 0.88. The stock's 50 day moving average price is $12.09 and its 200-day moving average price is $13.73.

Institutional Trading of Kyndryl

Hedge funds have recently added to or reduced their stakes in the company. Invesco Ltd. increased its position in shares of Kyndryl by 26.6% in the 4th quarter. Invesco Ltd. now owns 2,213,986 shares of the company's stock valued at $58,803,000 after purchasing an additional 465,539 shares during the last quarter. Corient Private Wealth LLC lifted its position in shares of Kyndryl by 6.1% during the 4th quarter. Corient Private Wealth LLC now owns 53,014 shares of the company's stock worth $1,378,000 after purchasing an additional 3,047 shares during the last quarter. Empowered Funds LLC grew its stake in shares of Kyndryl by 4.9% during the fourth quarter. Empowered Funds LLC now owns 67,083 shares of the company's stock worth $1,782,000 after purchasing an additional 3,118 shares in the last quarter. XTX Topco Ltd grew its stake in shares of Kyndryl by 216.9% during the fourth quarter. XTX Topco Ltd now owns 126,019 shares of the company's stock worth $3,347,000 after purchasing an additional 86,255 shares in the last quarter. Finally, one8zero8 LLC increased its holdings in Kyndryl by 5.8% in the fourth quarter. one8zero8 LLC now owns 17,682 shares of the company's stock valued at $470,000 after buying an additional 970 shares during the last quarter. Institutional investors and hedge funds own 71.53% of the company's stock.

More Kyndryl News

Here are the key news stories impacting Kyndryl this week:

• Positive Sentiment: Kyndryl reported strong momentum in signings, particularly in Kyndryl Consult and hyperscaler offerings, and said demand for AI-led modernization solutions is increasing. Kyndryl Q1 2027 Earnings Call Transcript
• Positive Sentiment: The company reaffirmed its fiscal 2027 outlook, including revenue guidance of approximately $14.8 billion to $15.1 billion, broadly in line with Wall Street expectations. Adjusted EBITDA was $512 million. Kyndryl Reports First Quarter Fiscal 2027 Results
• Neutral Sentiment: Kyndryl’s reported loss was $0.12 per share on $3.62 billion of revenue. Estimates varied by source, with some indicating an earnings beat and others a miss; revenue was slightly below the approximately $3.64 billion consensus estimate. Kyndryl Earnings Results
• Negative Sentiment: Revenue declined 3.3% year over year, while the company swung from earnings of $0.37 per share in the year-ago quarter to a net loss. Kyndryl also recorded $152 million in workforce-rebalancing charges tied to its operational streamlining efforts. Kyndryl Reports Q1 Loss
• Negative Sentiment: Unusually heavy put-option activity—15,426 puts traded versus an average of 1,843—signals elevated near-term bearish positioning, although it does not necessarily represent actual selling by long-term shareholders.

Analyst Ratings Changes

Several analysts have recently issued reports on the stock. Scotiabank reduced their price target on shares of Kyndryl from $16.50 to $15.00 and set a "sector perform" rating on the stock in a research report on Friday, May 8th. Wall Street Zen downgraded shares of Kyndryl from a "buy" rating to a "hold" rating in a research note on Saturday, May 9th. Weiss Ratings reiterated a "sell (d+)" rating on shares of Kyndryl in a report on Monday, June 15th. Zacks Research raised shares of Kyndryl from a "strong sell" rating to a "hold" rating in a research report on Monday, July 13th. Finally, Susquehanna downgraded shares of Kyndryl from a "positive" rating to a "neutral" rating and dropped their price target for the stock from $16.00 to $13.00 in a research note on Thursday, May 21st. Seven research analysts have rated the stock with a Hold rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat, Kyndryl presently has an average rating of "Reduce" and an average target price of $16.67.

About Kyndryl

Kyndryl NYSE: KD is a global managed infrastructure services provider formed in November 2021 through the spin-off of IBM's Managed Infrastructure Services business. The company designs, builds, manages and modernizes critical information technology systems for enterprises worldwide. Kyndryl's core offerings include cloud migration and management, network and edge computing solutions, digital workplace services and IT resiliency and security capabilities.

With a workforce of approximately 90,000 professionals and operations in more than 60 countries, Kyndryl serves clients across a broad range of industries, including financial services, telecommunications, healthcare, manufacturing and retail.

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