Kyndryl Reports Revenue of $3.651 Billion, Down 1.9% in Second Quarter
Key Facts
Kyndryl reported results on November 4, 2026, for the second quarter of its 2027 fiscal year, which ended September 30, posting revenue of $3.651 billion, down 1.9% on a reported basis and 0.8% in constant currency year over year. The results showed a divergence between improvement in some adjusted profitability measures and declines in revenue and accounting net income. The company released the results on the announcement date, while its shares closed at $12.94 in the November 3 session, according to EL7 data.
Adjusted pretax profit rose to $150 million in the quarter, from $123 million in the year-earlier period. Adjusted earnings before interest, taxes, depreciation and amortization rose to $699 million, compared with $641 million. By contrast, GAAP net income fell to $59 million from $68 million a year earlier. The quarter's results included $38 million in workforce rebalancing costs, compared with $19 million in the year-earlier period. The differing directions of adjusted profit and accounting net income put the composition of results at the center of an assessment of the company's performance during the period.
The decline in total revenue coincided with growth in some of the company's businesses. Kyndryl Consult revenue rose 4.2% year over year, and revenue from services related to hyperscaler cloud providers exceeded $550 million, up 27.2%. Chief Executive Martin Schroeter said strong new signings and continued growth in Kyndryl Consult and hyperscaler-related revenue "reinforce our confidence in our fiscal 2027 outlook." The figures offer a picture of growing segments within the company at a time when overall revenue declined. In the second quarter of fiscal 2026, revenue was $3.7 billion, down 1% on a reported basis and 3.7% in constant currency.
New signings totaled $4.1 billion in the second quarter and reached $15.5 billion over the past twelve months. The company signed 11 contracts worth more than $50 million each during the quarter, out of 43 contracts of that size or larger over the past twelve months. The signings support management's indication of strong bookings, but come amid declining revenue, making their conversion into recognized activity and cash flow an important focus in the coming period. Cash from operations was $172 million, up from $147 million a year earlier. Free cash flow, however, was a cash use of $34 million, compared with cash generation of $22 million in the year-earlier period.
Kyndryl reaffirmed its fiscal 2027 outlook, estimating adjusted pretax profit of between $600 million and $700 million and free cash flow of between $400 million and $500 million. It also expects full-year revenue in constant currency to range from flat to a 2% decline. The outlook follows negative free cash flow in the quarter, while adjusted pretax profit improved year over year. The company said its workforce rebalancing actions are expected to generate annual operating expense savings of between $400 million and $500 million in fiscal 2028 once completed. The second-quarter results conference was scheduled for November 4, 2026, at 8:30 a.m. Eastern time.