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

Kyndryl (NYSE:KD) posted its quarterly earnings data on Wednesday. The company reported ($0.12) earnings per share for the quarter, topping analysts’ consensus estimates of ($0.16) by $0.04, FiscalAI reports. Kyndryl had a net margin of 1.31% and a return on equity of 20.43%. The firm had revenue of $3.62 billion during the quarter, compared to analysts’ expectations of $3.64 billion. During the same quarter last year, the company posted $0.37 EPS. The firm’s quarterly revenue was down 3.3% on a year-over-year basis.

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 Up 0.6%

KD stock traded up $0.09 during trading on Thursday, hitting $13.99. 4,040,947 shares of the company’s stock were exchanged, compared to its average volume of 4,687,403. The business has a 50-day moving average price of $12.09 and a two-hundred day moving average price of $13.73. The company has a current ratio of 0.88, a quick ratio of 0.88 and a debt-to-equity ratio of 1.77. The stock has a market capitalization of $3.09 billion, a price-to-earnings ratio of 16.46 and a beta of 1.65. Kyndryl has a 52-week low of $10.10 and a 52-week high of $33.90.

Kyndryl News Roundup

Here are the key news stories impacting Kyndryl this week:

• Positive Sentiment: Kyndryl introduced “Agentic Modernization” services-as-software, using its Agentic AI Framework and Kyndryl Bridge to automate and scale enterprise modernization. The offering could support demand for AI-led services, improve delivery efficiency and strengthen Kyndryl’s competitive position. Kyndryl Introduces New Agentic Modernization Services-as-Software Scaled through Kyndryl Bridge
• Positive Sentiment: Management reaffirmed its fiscal 2027 outlook, including revenue of approximately $14.8 billion to $15.1 billion, broadly in line with Wall Street expectations. Kyndryl also targets $1.2 billion of adjusted pretax income and $1 billion of free cash flow in fiscal 2028 as workforce actions and operating efficiencies ramp. Kyndryl fiscal 2028 targets
• Neutral Sentiment: First-quarter signings reportedly showed momentum, particularly in Kyndryl Consult, hyperscaler work and AI-led modernization. However, investors will look for evidence that these bookings translate into sustained revenue growth and improved profitability. Kyndryl Reports First Quarter Fiscal 2027 Results
• Negative Sentiment: Quarterly revenue was $3.6 billion, down 3.3% year over year and slightly below estimates. Kyndryl reported a $55 million net loss, or $0.12 per share, compared with a profit of $0.37 per share a year earlier. The results prompted reports of a sharp initial selloff. Kyndryl falls after Q1 revenue decline
• Negative Sentiment: The company recorded $152 million in workforce-rebalancing charges, while adjusted pretax and net losses were $37 million and $26 million, respectively. Unusually heavy put-option activity—more than seven times typical volume—also signals heightened near-term investor caution.

Analyst Ratings Changes

Several research analysts have recently commented on the company. Susquehanna lowered Kyndryl from a “positive” rating to a “neutral” rating and lowered their price target for the stock from $16.00 to $13.00 in a research report on Thursday, May 21st. Scotiabank lowered their price target on shares of Kyndryl from $16.50 to $15.00 and set a “sector perform” rating for the company in a report on Friday, May 8th. Weiss Ratings reissued a “sell (d+)” rating on shares of Kyndryl in a research report on Monday, June 15th. Zacks Research upgraded shares of Kyndryl from a “strong sell” rating to a “hold” rating in a report on Monday, July 13th. Finally, BMO Capital Markets reaffirmed a “market perform” rating and set a $16.00 price objective on shares of Kyndryl in a research report on Thursday. Seven investment analysts have rated the stock with a Hold rating and two have given a Sell rating to the stock. According to data from MarketBeat, the stock currently has a consensus rating of “Reduce” and a consensus target price of $16.83.

Institutional Trading of Kyndryl

Hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Invesco Ltd. boosted its holdings 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 buying an additional 465,539 shares in the last quarter. Corient Private Wealth LLC raised its stake in 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 acquiring an additional 3,047 shares in the last quarter. Empowered Funds LLC raised its stake in Kyndryl by 4.9% during the 4th quarter. Empowered Funds LLC now owns 67,083 shares of the company’s stock worth $1,782,000 after acquiring an additional 3,118 shares in the last quarter. XTX Topco Ltd lifted its position in Kyndryl by 216.9% in the fourth quarter. XTX Topco Ltd now owns 126,019 shares of the company’s stock valued at $3,347,000 after acquiring an additional 86,255 shares during the last quarter. Finally, one8zero8 LLC lifted its position 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 acquiring an additional 970 shares during the last quarter. Institutional investors and hedge funds own 71.53% of the company’s stock.

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.