Kyndryl | 8-K: FY2027 Q1 Revenue Misses Estimate at USD 3.618 B

Revenue: As of FY2027 Q1, the actual value is USD 3.618 B, missing the estimate of USD 3.643 B.

EPS: As of FY2027 Q1, the actual value is USD -0.25.

EBIT: As of FY2027 Q1, the actual value is USD -35 M.

Financial Overview

Kyndryl Holdings, Inc. reported revenues of $3.6 billion for the first quarter ended June 30, 2026, marking a 3% decrease year-over-year on both a reported and constant currency basis compared to $3.743 billion in the prior-year period.

Operational Metrics

Kyndryl Holdings, Inc. reported a pretax loss of - $69 million in the first quarter of fiscal year 2027, compared to a pretax income of $92 million in the prior-year period. The net loss for the quarter was - $55 million, or - $0.25 per diluted share, contrasting with a net income of $56 million, or $0.23 per diluted share, in the same period last year. The first quarter of fiscal year 2027 results included $152 million in workforce rebalancing charges.

Adjusted EBITDA was $512 million, down from $647 million in the prior-year period, resulting in an adjusted EBITDA margin of 14.2% compared to 17.3% previously. The adjusted pretax loss was - $37 million, a decline from an 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 an adjusted net income of $90 million, or $0.37 per diluted share, in the prior-year period.

Segment Revenue

• United States: Revenue was $954 million, increasing 5% year-over-year on both a reported and constant currency basis.
• Japan: Revenue totaled $534 million, a decrease of 8% reported but an increase of 2% in constant currency.
• Principal Markets: Revenue was $1,262 million, down 7% reported and 8% in constant currency.
• Strategic Markets: Revenue reached $868 million, a decrease of 3% reported and 8% in constant currency.

Adjusted EBITDA by Segment

• United States: Adjusted EBITDA was $220 million, up from $196 million in the prior-year period.
• Japan: Adjusted EBITDA was $109 million, down from $115 million in the prior-year period.
• Principal Markets: Adjusted EBITDA was $151 million, down from $197 million in the prior-year period.
• Strategic Markets: Adjusted EBITDA was $62 million, down from $163 million in the prior-year period.
• Corporate and other: Adjusted EBITDA was - $30 million, compared to - $26 million in the prior-year period.

Cash Flow

Cash used from operations for the quarter was - $310 million, an increase from - $124 million in the prior-year period. Free cash flow was a use of - $401 million, compared to a use of - $222 million in the prior year. Net cash used in investing activities was - $49 million, while net cash used in financing activities was - $152 million.

As of June 30, 2026, cash and equivalents stood at $2,104 million, down from $2,623 million on March 31, 2026. Total debt (short-term and long-term) was $4,070 million, slightly down from $4,089 million on March 31, 2026.

Unique Metrics

Trailing twelve-month signings were $14.2 billion as of June 30, 2026, with $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, and over the last twelve months, Kyndryl Consult revenues were $3.6 billion, a 14% increase year-over-year. Hyperscaler-related revenues exceeded $530 million in the first quarter, growing 34% year-over-year, reaching an annualized revenue run-rate of over $2.1 billion.

Kyndryl Holdings, Inc. incurred $152 million in workforce rebalancing charges during the first quarter and expects approximately $200 million of such charges for fiscal year 2027, projected to result in annualized run-rate operating expense savings of approximately $400 million to $500 million in fiscal year 2028. The company repurchased 5.0 million shares of its common stock for $64 million in the first quarter, bringing total repurchases since November 2024 to 19.3 million shares for $462 million, representing 8% of shares outstanding.

Outlook / Guidance

Kyndryl Holdings, Inc. reaffirms its fiscal year 2027 outlook, anticipating adjusted pretax income between $600 million and $700 million, inclusive of workforce rebalancing charges. The company projects free cash flow to be between $400 million and $500 million for the fiscal year. Constant-currency revenue is expected to be flat to down 2% for fiscal year 2027.