Kyndryl reports first quarter fiscal 2027 results

NEW YORK, August 5, 2026 - Kyndryl (NYSE: KD), a leading provider of mission-critical enterprise technology services, today released financial results for the quarter ended June 30, 2026, the first quarter of its 2027 fiscal year.

"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," said Chairman and Chief Executive Officer Martin Schroeter. "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."

Results for the fiscal first quarter ended June 30, 2026

For the first quarter, Kyndryl reported revenues of $3.6 billion, down 3% year-over-year on a reported basis and down 3% in constant currency. The company reported a pretax loss of $69 million, compared to pretax income of $92 million in the prior-year period. Net loss was $55 million, or ($0.25) per diluted share, in the quarter, compared to net income of $56 million, or $0.23 per diluted share, in the prior-year period. The first quarter 2027 results include workforce rebalancing charges of $152 million. 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.

Adjusted pretax loss was $37 million, compared to adjusted pretax income of $128 million in the prior-year period. Adjusted net loss was $26 million, or ($0.12) per diluted share, compared to adjusted net income of $90 million, or $0.37 per diluted share, in the prior-year period. Adjusted EBITDA was $512 million compared to $647 million in the prior-year period. The first quarter 2027 results include workforce rebalancing charges of $152 million. Free cash flow was a use of $401 million in the quarter, compared to a use of $222 million in the prior year, consistent with drivers of cash used from operations as described above. See "Non-GAAP metric definitions and reconciliations."

Highlights

• Signings - In the 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 signed 40 customer contracts exceeding $50 million each in the last twelve months, of which 10 were signed in the first quarter.
• Kyndryl Consult revenue - In the first quarter, Kyndryl Consult revenues grew 10% year-over-year. Over the last twelve months, Kyndryl Consult revenues were $3.6 billion, a 14% increase year-over-year. Kyndryl Consult signings were $4.4 billion over the last twelve months, an 8% increase year-over-year.
• Hyperscaler-related revenue - In the first quarter, hyperscaler-related revenues of more than $530 million grew 34% year-over-year, exiting the quarter at an annualized revenue run-rate of more than $2.1 billion.
• AI-led modernization - During the quarter, Kyndryl expanded its AI capabilities to support AI-led modernization with the launch of Kyndryl AI Orchestration for Business and a patented agentic AI capability in Kyndryl Bridge. Kyndryl also released its People Readiness Report, which found that 57% of enterprises have embedded AI in core business processes, but only 32% have achieved their AI goals, underscoring the opportunity to help enterprises realize greater value from their AI investments.
• Actions to streamline operations - In the first quarter, Kyndryl incurred $152 million of charges related to workforce-rebalancing actions. The company continues to expect approximately $200 million of charges in fiscal 2027. These 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.
• Share repurchases - 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.

Reaffirms fiscal year 2027 outlook

Kyndryl reaffirms its outlook for its fiscal 2027, which runs from April 2026 to March 2027:

• Adjusted pretax income of $600 to $700 million
  • Consistent with our definition of adjusted pretax income since fiscal 2025, this includes workforce rebalancing charges
• Free cash flow of $400 to $500 million
• Constant-currency revenue flat to down 2%

See "Non-GAAP metric definitions and reconciliations."

Earnings Webcast

Kyndryl's earnings call for the first fiscal quarter is scheduled to begin at 8:30 a.m. ET on August 5, 2026. The live webcast can be accessed by visiting investors.kyndryl.com on Kyndryl's investor relations website. A slide presentation will be made available on Kyndryl's investor relations website before the call on August 5, 2026. Following the event, a replay will be available via webcast for twelve months at investors.kyndryl.com.

About Kyndryl
Kyndryl (NYSE: KD) is a leading provider of mission-critical enterprise technology services, offering advisory, implementation and managed service capabilities to thousands of customers in more than 60 countries. As the world's largest IT infrastructure services provider, the company designs, builds, manages and modernizes the complex information systems that the world depends on every day. For more information, visit www.kyndryl.com.

Forward-looking and cautionary statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including statements concerning the company's plans, objectives, goals, beliefs, business strategies, future events, business condition, results of operations, financial position, business outlook and business trends and other non-historical statements, including without limitation the outlook and financial objectives in this press release (which does not assume any future acquisitions or divestitures), are forward-looking statements. Such forward-looking statements often contain words such as "aim," "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "may," "objectives," "opportunity," "plan," "position," "predict," "project," "should," "seek," "target," "will," "would" and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are based on the company's current assumptions and beliefs regarding future business and financial performance.

The company's actual business, financial condition or results of operations may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others: failure to attract new customers, retain existing customers or sell services to customers; failure to meet growth and productivity objectives and maintain our capital allocation strategy; competition; impacts of relationships with critical suppliers and partners; failure to address and adapt to technological developments and trends; inability to attract and retain key personnel and other skilled employees; impact of economic, geopolitical, public health and other conditions; damage to the company's reputation and impact on the company and our stock price resulting from negative publicity; inability to accurately estimate the cost of services and the timeline for completion of contracts; service delivery issues; the company's ability to successfully manage acquisitions and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities and higher debt levels; the company's ability to refinance maturing debt on favorable terms in a timely manner, or at all, and risks related to the company's access to capital and credit markets; failure of the company's intellectual property rights to prevent competitive offerings and the failure of the company to obtain, retain and extend necessary licenses; the impairment of our goodwill or long-lived assets; risks relating to cybersecurity, data governance and privacy; risks relating to non-compliance with legal and regulatory requirements and changes in laws, regulations and policies in the U.S. and countries where the company and its customers do business, including with respect to tariffs, taxes and other controls on imports or exports; 4 adverse effects from tax matters; risks related to legal and regulatory claims, suits, investigations, proceedings and other matters, and consequences relating thereto; the company's ability to remediate, and the timing and costs related to the remediation of, material weaknesses in internal control over financial reporting, as well as the company's ability to maintain effective controls in the future; the impact of changes in market liquidity conditions and customer credit risk on receivables; the company's pension plans; the impact of currency fluctuations; and risks related to the company's common stock and the securities market. Additional risks and uncertainties include, among others, those risks and uncertainties described in the "Risk Factors" section of the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2026, as such factors may be updated from time to time in the company's subsequent filings with the Securities and Exchange Commission. Any forward-looking statement in this press release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In this release, certain amounts may not add due to the use of rounded numbers; percentages presented are calculated based on the underlying amounts. Forecasted amounts are based on currency exchange rates as of July 2026.

Non-GAAP financial measures
In an effort to provide investors with additional information regarding its results, the company has provided certain metrics that are not calculated based on generally accepted accounting principles (GAAP), such as constant-currency results, adjusted EBITDA, adjusted pretax income (loss), adjusted net income (loss), adjusted EPS, adjusted EBITDA margin, adjusted pretax margin, adjusted net margin, net debt and free cash flow. Such non-GAAP metrics are intended to supplement GAAP metrics, but not to replace them. The company's non-GAAP metrics may not be comparable to similarly titled metrics used by other companies. Definitions and additional information about our calculation of non-GAAP metrics and reconciliations of non-GAAP metrics for historical periods to GAAP metrics are included in the tables in this release. A reconciliation of forward-looking non-GAAP financial information is not included in this release because the company is unable to predict with reasonable certainty some individual components of such reconciliation without unreasonable effort. These items are uncertain, depend on various factors and could have a material impact on future results computed in accordance with GAAP.

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