The in-line print and reaffirmed guidance provide a floor, but revenue declines and negative operating cash flow suggest the restructuring savings need to materialize quickly to stabilize earnings. Watch for cost-out execution in coming quarters and signs of revenue stabilization (flat to down 2% guided). The heavy buyback appetite (5M shares in Q1) signals management confidence, but cash burn is a near-term concern.
Price Chart
Executive Summary
Kyndryl reported Q1 FY2027 revenue of $3.618B (down 3% YoY) and an adjusted EPS loss of ($0.12), matching consensus expectations exactly. GAAP net loss was $55M vs net income of $56M a year ago, driven by $152M in workforce rebalancing charges. The company reaffirmed its full-year FY2027 outlook for adjusted pretax income of $600-700M and free cash flow of $400-500M.
Key Financial Metrics
Key Facts
- Revenue $3.618B, down 3% YoY (reported and constant currency)
- GAAP diluted EPS ($0.25) vs $0.23 prior year; adjusted diluted EPS ($0.12) vs $0.37 prior year
- Adjusted EBITDA $512M, down from $647M in prior-year quarter (margin 14.2% vs 17.3%)
- Workforce rebalancing charges of $152M in the quarter; expects ~$200M for FY2027 with $400-500M annualized savings from FY2028
- Hyperscaler-related revenue >$530M, +34% YoY; Kyndryl Consult revenue +10% YoY
- Signed $3.9B in Q1 contracts; TTM signings $14.2B
- Repurchased 5.0M shares for $64M in the quarter (19.3M total for $462M since program inception)
- Cash used in operations $310M; free cash flow use $401M vs $222M use in prior year
- FY2027 outlook reaffirmed: adjusted pretax income $600-700M, FCF $400-500M, constant-currency revenue flat to down 2%
Financial Impact
Quarterly results were in line with consensus but showed YoY deterioration across revenue, earnings, and cash flow. A $152M workforce rebalancing charge weighed heavily on GAAP results.
Risk Factors
- Revenue continues to decline across multiple segments (Principal Markets -7%, Strategic Markets -3% reported) with only US (+5%) showing growth
- Free cash flow burn of $401M vs $222M last year, driven by working capital timing and higher software payments
- Restructuring execution risk: achieving $400-500M annualized savings by FY2028 depends on sustaining cost discipline without disrupting operations
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001104659-26-090725 |
| Document: kd-20260805x8k.htm | 0001104659-26-090725 |
| Document: 0001104659-26-090725-index-headers.html | 0001104659-26-090725 |
| Document: 0001104659-26-090725-index.html | 0001104659-26-090725 |
| Document: 0001104659-26-090725.txt | 0001104659-26-090725 |
| 8-K Data (Synthetic) | 0001104659-26-090725 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 6, 2026 21d ago | Press Release | $11.48 | awaiting T+20 | — | $14.16 (+23.34%) |
Sep 25, 2026 4w ago | 424B5 | $11.23 $14.68 | ▲ +30.72% | ▲ +30.75% | $14.16 (+26.09%) |
Sep 24, 2026 4w ago | 424B5 | $11.74 $15.20 | ▲ +29.47% | ▲ +29.89% | $14.16 (+20.61%) |
Aug 5, 2026 11w ago | 8-K | $13.90 $13.09 | ▼ −5.83% | ▼ −5.23% | $14.16 (+1.87%) |
Jul 6, 2026 16w ago | 8-K | $12.28 $13.55 | ▲ +10.34% | ▲ +10.91% | $14.16 (+15.31%) |
Jun 16, 2026 19w ago | DEFA14A | $11.45 $12.02 | ▲ +4.98% | ▲ +3.66% | $14.16 (+23.67%) |
Jun 9, 2026 20w ago | 144 | $11.53 $12.39 | ▲ +7.46% | ▲ +6.01% | $14.16 (+22.81%) |
Jun 5, 2026 20w ago | 144 | $11.56 $12.28 | ▲ +6.23% | ▲ +4.60% | $14.16 (+22.49%) |
Jun 5, 2026 20w ago | 144 | $11.56 $12.28 | ▲ +6.23% | ▲ +4.60% | $14.16 (+22.49%) |
Apr 28, 2026 26w ago | Court Ruling | $13.98 $11.78 | ▼ −15.74% | ▼ −21.78% | $14.16 (+1.29%) |
US Market Status
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