Kyndryl (NYSE:KD) Posts Quarterly Earnings Results, Misses Expectations By $0.25 EPS

Key Points

• Kyndryl missed quarterly expectations with $0.18 EPS versus a consensus $0.43 (a $0.25 shortfall); revenue was $3.77 billion (down ~0.8% YoY) and shares fell to about $13.11.
• Management reported fiscal 2026 results including $581 million adjusted pre-tax income, $2.7 billion adjusted EBITDA and $406 million free cash flow, and guided fiscal 2027 adjusted pre-tax income of $600–700 million while targeting >$1.2 billion pre-tax income and >$1 billion free cash flow for fiscal 2028.
• Higher‑value services are driving growth—hyperscaler‑related revenue rose ~59% to nearly $2 billion and Kyndryl Consult posted another year of double‑digit growth—yet overall revenue remains pressured (FY26 ~$15.1 billion, down 3% cc) with FY27 expected flat to down ~2% cc due to elongated sales cycles and customers procuring IBM innovation directly.

Kyndryl (NYSE:KD - Get Free Report) announced its earnings results on Wednesday. The company reported $0.18 EPS for the quarter, missing the consensus estimate of $0.43 by ($0.25), FiscalAI reports. The firm had revenue of $3.77 billion during the quarter, compared to analysts' expectations of $3.75 billion. Kyndryl had a net margin of 1.65% and a return on equity of 25.91%. The business's revenue for the quarter was down .8% on a year-over-year basis. During the same quarter in the prior year, the company earned $0.52 EPS.

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

• Kyndryl reported fiscal 2026 adjusted pre-tax income of $581 million, adjusted EBITDA of $2.7 billion, and generated $406 million in free cash flow, and it guides fiscal 2027 adjusted pre-tax income of $600–700 million while targeting >$1.2 billion adjusted pre-tax income and >$1 billion free cash flow for fiscal 2028.
• Growth is being driven by higher‑value services — Kyndryl Consult delivered its third consecutive year of double‑digit revenue growth and hyperscaler‑related revenue rose ~59% to nearly $2 billion, with Consult signings exceeding revenue entering fiscal 2027.
• Revenue headwinds persist — fiscal 2026 revenue was flat at $15.1 billion (down 3% cc) and management expects fiscal 2027 revenue to be flat to down ~2% cc, citing elongated sales cycles (especially in the U.K./Europe) and a multi‑point adverse impact from customers procuring IBM innovation directly.
• Operational efficiency and AI adoption are material levers — Advanced Delivery and Kyndryl Bridge AI agents are driving faster incident resolution and root‑cause analysis, the Accounts/alliances work yielded ~$1 billion of savings/profit improvement, and planned workforce rebalancing will incur ~$200 million charges in FY27 to achieve ~$400–500 million annualized savings in FY28.

Kyndryl Stock Performance

Shares of KD traded down $1.60 during trading hours on Wednesday, hitting $13.11. The company's stock had a trading volume of 11,598,758 shares, compared to its average volume of 4,905,385. The company has a market cap of $2.95 billion, a price-to-earnings ratio of 12.48 and a beta of 1.72. The company has a debt-to-equity ratio of 1.75, a current ratio of 0.86 and a quick ratio of 0.86. The business has a 50 day simple moving average of $13.02 and a two-hundred day simple moving average of $20.53. Kyndryl has a 52-week low of $10.10 and a 52-week high of $44.20.

Hedge Funds Weigh In On Kyndryl

Several large investors have recently modified their holdings of the business. AQR Capital Management LLC increased its stake in shares of Kyndryl by 53.9% in the fourth quarter. AQR Capital Management LLC now owns 6,443,037 shares of the company's stock worth $170,934,000 after purchasing an additional 2,255,860 shares in the last quarter. Dimensional Fund Advisors LP increased its stake in shares of Kyndryl by 1.7% in the fourth quarter. Dimensional Fund Advisors LP now owns 4,684,443 shares of the company's stock worth $124,420,000 after purchasing an additional 76,614 shares in the last quarter. Zimmer Partners LP increased its stake in shares of Kyndryl by 7.4% in the third quarter. Zimmer Partners LP now owns 2,227,904 shares of the company's stock worth $66,904,000 after purchasing an additional 153,247 shares in the last quarter. Invesco Ltd. increased its stake in shares of Kyndryl by 26.6% in the fourth quarter. Invesco Ltd. now owns 2,213,986 shares of the company's stock worth $58,803,000 after purchasing an additional 465,539 shares in the last quarter. Finally, UBS Group AG increased its stake in shares of Kyndryl by 50.0% in the third quarter. UBS Group AG now owns 2,028,338 shares of the company's stock worth $60,911,000 after purchasing an additional 675,943 shares in the last quarter. Hedge funds and other institutional investors own 71.53% of the company's stock.

Wall Street Analyst Weigh In

A number of research firms recently issued reports on KD. Guggenheim downgraded shares of Kyndryl from a "buy" rating to a "neutral" rating in a report on Tuesday, February 10th. Morgan Stanley decreased their price objective on shares of Kyndryl from $28.00 to $13.00 and set an "equal weight" rating for the company in a report on Tuesday, March 24th. BMO Capital Markets began coverage on shares of Kyndryl in a report on Monday, April 20th. They set a "market perform" rating and a $15.00 price objective for the company. Zacks Research downgraded shares of Kyndryl from a "hold" rating to a "strong sell" rating in a report on Wednesday, February 18th. Finally, Wall Street Zen upgraded shares of Kyndryl from a "hold" rating to a "buy" rating in a report on Sunday, February 22nd. One investment analyst has rated the stock with a Buy rating, five have given a Hold rating and three have assigned a Sell rating to the stock. According to data from MarketBeat.com, Kyndryl currently has an average rating of "Reduce" and an average price target of $22.79.

Kyndryl Company Profile

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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