Kyndryl Holdings, Inc. (KD): Results of Operations and Financial Condition
Kyndryl Holdings, Inc. (KD) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 KYNDRYL REPORTS FIRST QUARTER FISCAL 2027 RESULTS ● Revenues for the quarter ended June 30, 2026 total $3.6 billion, pretax loss is $69 million, and net loss is $55 million ● Adjusted EBITDA is $512 million, adjusted pretax loss is $37 million, and adju
How this was made
The 30-second read
Why it matters
Traders can update valuation and positioning based on the combination of quarterly financials, cash flow drivers, restructuring charge expectations for FY2027, and the company’s reiterated FY2027 ranges for adjusted pretax income and free cash flow.
Market read
This is a primary earnings-and-guidance disclosure with quantified restructuring charges, cash flow usage, signings momentum, and explicit FY2027 targets.
What to watch
Workforce rebalancing charges are embedded in both reported and adjusted metrics, so investors should separate one-time restructuring effects from underlying margin and cash conversion trends.
Kyndryl reports first-quarter revenue decline and losses while signings, Kyndryl Consult and hyperscaler-related revenue grew; fiscal 2027 outlook was reaffirmed.
Revenue declined 3% year-over-year and the company reported GAAP and adjusted losses, alongside higher cash use, but signings, Kyndryl Consult growth and hyperscaler-related revenue growth were positive and the fiscal 2027 outlook was reaffirmed.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $3.6 billion | – | down 3% |
| Revenue constant-currency changenon-GAAP | down 3% | – | down 3% in constant currency |
| Pretax lossGAAP | $69 million | – | – |
| Net lossGAAP | $55 million | – | – |
| Diluted loss per shareGAAP | ($0.25) per diluted share | – | – |
| Workforce rebalancing chargesother | $152 million | – | – |
| Cash used from operationsGAAP | $310 million | – | – |
| Adjusted pretax lossnon-GAAP | $37 million | – | – |
| Adjusted net lossnon-GAAP | $26 million | – | – |
| Adjusted diluted loss per sharenon-GAAP | ($0.12) per diluted share | – | – |
| Adjusted EBITDAnon-GAAP | $512 million | – | – |
| Free cash flownon-GAAP | a use of $401 million | – | – |
| Trailing twelve months signingsother | $14.2 billion | – | – |
| First-quarter signingsother | $3.9 billion | – | – |
| Customer contracts exceeding $50 million each signed in the last twelve monthsother | 40 | – | – |
| Customer contracts exceeding $50 million each signed in the first quarterother | 10 | – | – |
| Kyndryl Consult revenue growthother | grew 10% year-over-year | – | 10% |
| Kyndryl Consult revenue, last twelve monthsother | $3.6 billion | – | a 14% increase year-over-year |
| Kyndryl Consult signings, last twelve monthsother | $4.4 billion | – | an 8% increase year-over-year |
| Hyperscaler-related revenuesother | more than $530 million | – | grew 34% year-over-year |
| Hyperscaler-related revenue annualized revenue run-rateother | more than $2.1 billion | – | – |
| Enterprises that have embedded AI in core business processesother | 57% | – | – |
| Enterprises that have achieved their AI goalsother | 32% | – | – |
fiscal 2027, which runs from April 2026 to March 2027 outlook
- RevenueConstant-currency revenue flat to down 2%
- NoteAdjusted pretax income of $600 to $700 million
- NoteFree cash flow of $400 to $500 million
- NoteConsistent with our definition of adjusted pretax income since fiscal 2025, this includes workforce rebalancing charges
- NoteThe Company continues to expect approximately $200 million of charges in fiscal 2027
- NoteThese workforce rebalancing efforts, once completed, are expected to result in annualized run-rate operating expense savings of approximately $400 to $500 million in the Company’s fiscal year 2028
Capital returns
- In the first quarter, the Company repurchased 5.0 million shares of its common stock at a cost of $64 million.
- Since the authorization of its share repurchase program in November 2024, the Company has bought back 19.3 million shares for $462 million, or 8% of its shares outstanding.
What drove it
- Trailing twelve months signings were $14.2 billion, including $3.9 billion signed in the first quarter, supported by strength in the United States segment.
- Kyndryl Consult revenues grew 10% year-over-year in the first quarter.
- Hyperscaler-related revenues of more than $530 million grew 34% year-over-year.
- Kyndryl expanded its AI capabilities with the launch of Kyndryl AI Orchestration for Business and a patented agentic AI capability in Kyndryl Bridge.
- The company incurred $152 million of charges related to workforce-rebalancing actions.
Concerns
- Revenue was down 3% year-over-year on both a reported and constant-currency basis.
- Pretax loss was $69 million, compared to pretax income of $92 million in the prior-year period.
- Adjusted EBITDA was $512 million, compared to $647 million in the prior-year period.
- Cash used from operations was $310 million and free cash flow was a use of $401 million.
- The company expects approximately $200 million of workforce rebalancing charges in fiscal 2027.
What to watch
- Progress toward constant-currency revenue flat to down 2% in fiscal 2027.
- Delivery of adjusted pretax income of $600 to $700 million and free cash flow of $400 to $500 million in fiscal 2027.
- Signings momentum, including strength in the United States segment.
- Growth in Kyndryl Consult and hyperscaler-related revenues.
- Completion of workforce rebalancing actions and the expected annualized run-rate operating expense savings of approximately $400 to $500 million in fiscal 2028.
- Working-capital timing, software payments, billings and collections.
Balance sheet and cash flow
- Cash used from operations was $310 million, compared to $124 million in the prior-year period, primarily due to timing of working capital, including higher software payments and lower billings and collections, partially offset by lower incentive compensation payments.
- Free cash flow was a use of $401 million in the quarter, compared to a use of $222 million in the prior year.
Analysis
Kyndryl reported first-quarter fiscal 2027 revenue of $3.6 billion, down 3% year-over-year on both a reported and constant-currency basis. Profitability moved to losses: pretax loss was $69 million versus pretax income of $92 million in the prior-year period, while net loss was $55 million, or ($0.25) per diluted share, versus net income of $56 million, or $0.23 per diluted share. Adjusted pretax loss was $37 million, adjusted net loss was $26 million, and adjusted EBITDA was $512 million compared with $647 million in the prior-year period.
Demand indicators were stronger than the top-line result. Trailing-twelve-month signings were $14.2 billion, including $3.9 billion signed in the first quarter, supported by strength in the United States segment. Kyndryl Consult revenues grew 10% year-over-year, and its trailing-twelve-month revenue was $3.6 billion, a 14% increase year-over-year. Hyperscaler-related revenues were more than $530 million, up 34% year-over-year, and exited the quarter at an annualized revenue run-rate of more than $2.1 billion.
Cash flow weakened in the quarter. Cash used from operations was $310 million compared with $124 million in the prior-year period, which the company attributed primarily to working-capital timing, including higher software payments and lower billings and collections, partly offset by lower incentive compensation payments. Free cash flow was a use of $401 million compared with a use of $222 million in the prior year. The company also repurchased 5.0 million shares at a cost of $64 million during the quarter.
The quarter included $152 million of workforce rebalancing charges, which are included in reported and adjusted results. Kyndryl continues to expect approximately $200 million of charges in fiscal 2027 and expects the actions, once completed, to result in annualized run-rate operating expense savings of approximately $400 to $500 million in fiscal 2028. Management reaffirmed fiscal 2027 guidance for adjusted pretax income of $600 to $700 million, free cash flow of $400 to $500 million, and constant-currency revenue flat to down 2%.
Management, verbatim
Our first quarter results reflected strong momentum in signings, supported by strength in Kyndryl Consult and hyperscalers, with an increasing demand for AI-led modernization solutions.
Martin Schroeter, Chairman and Chief Executive Officer
We’re encouraged by the progress we’re making to improve business fundamentals and remain focused on driving consistent execution and delivering our fiscal 2027 and multi-year objectives.
Martin Schroeter, Chairman and Chief Executive Officer
Not in the filing
stated, not guessed- Gross profit and gross margin
- Operating income or loss and operating margin
- Operating expenses
- Tax expense or benefit and tax rate
- Cash balance, debt balance and net debt
- Individual reportable-segment revenue and growth
- Prior-quarter comparisons for reported metrics
- Reported revenue amount for the prior-year period
- Prior-year gross margin, operating income, operating expenses and tax rate
- Dividend information
- Full financial statements and non-GAAP reconciliation tables referenced in the release
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Kyndryl filed an SEC Form 8-K with Exhibit 99.1 reporting its first quarter of fiscal 2027 (quarter ended June 30, 2026) and reaffirming its fiscal 2027 outlook.
Ticker impact
Kyndryl reported fiscal Q1 2027 results, including $3.6B revenue, $69M pretax loss, and reaffirmed FY2027 outlook with $400M-$500M free cash flow.
Likely modest volatility around the earnings webcast as traders weigh reaffirmed guidance against weaker reported profitability and higher cash usage.
This is a primary SEC 8-K earnings release with quantified results, workforce rebalancing charges ($152M), cash flow drivers, and explicit FY2027 ranges that can directly reprice the stock’s forward expectations.
Market effects
Enterprise IT services peers may see read-across on AI-led modernization demand and hyperscaler-related revenue growth rates.
Limited direct regional impact; signings strength is noted in the United States segment.
Global hyperscaler-related revenue growth and AI modernization spend are relevant to multinational IT services demand signals.
Counterpoint
Reaffirmed guidance may be less reassuring if cash flow weakness persists, since cash used from operations rose to $310M and free cash flow was a $401M use.
Key entities
- companyKyndryl Holdings, Inc.
Provider of mission-critical enterprise technology services; reported fiscal Q1 2027 results and reaffirmed FY2027 outlook in an SEC 8-K.
- executiveMartin Schroeter
Chairman and CEO, quoted on signings momentum and AI-led modernization demand.
