Kyndryl shares tumble as revenue misses expectations

Investing.com -- Kyndryl Holdings Inc (NYSE:KD) shares tumbled 9.5% after the IT services provider reported first-quarter revenue that fell short of analyst expectations, despite meeting earnings projections.

The company, which provides mission-critical enterprise technology services, reported first-quarter revenue of $3.74 billion, below the consensus estimate of $3.83 billion. While this represented a slight increase on a reported basis, revenue declined 2.6% in constant currency YoY. Kyndryl delivered adjusted earnings per share of $0.37, in line with analyst expectations.

Investors appeared disappointed by the revenue miss, sending shares sharply lower despite the company reaffirming its fiscal 2026 outlook. The significant stock decline reflects concerns about the company’s top-line performance even as profitability metrics improved.

"We continued to make strategic and financial progress in the quarter, highlighted by our increased earnings and the attractive margins built into our signings," said David Wyshner, Kyndryl’s Chief Financial Officer.

The company reported adjusted pretax income of $128 million, a 39% increase from the prior-year period, while adjusted EBITDA rose 16% YoY to $647 million. Kyndryl’s hyperscaler-related revenue grew 86% YoY to $400 million, and Kyndryl Consult revenues increased 30%.

Kyndryl maintained its fiscal 2026 guidance, projecting adjusted pretax income of at least $725 million, adjusted EBITDA margin of approximately 18%, free cash flow of approximately $550 million, and constant-currency revenue growth of 1%.

The company continued its share repurchase program, buying back 1.8 million shares at a cost of $65 million during the quarter under its $300 million authorization from November 2024.

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