Kyndryl (NYSE:KD) Posts Earnings Results, Beats Estimates By $0.04 EPS

Kyndryl (NYSE:KD) announced its quarterly earnings data on Wednesday. The company reported $0.42 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.38 by $0.04, FiscalAI reports. Kyndryl had a net margin of 0.58% and a return on equity of 12.24%. The firm had revenue of $3.65 billion during the quarter, compared to analysts’ expectations of $3.62 billion. During the same period in the prior year, the company posted $0.38 earnings per share. The company’s revenue for the quarter was down 1.9% compared to the same quarter last year.

Here are the key takeaways from Kyndryl’s conference call:

• Revenue remained down year over year: Q2 revenue was $3.65 billion, down 0.8% in constant currency, and Kyndryl maintained its full-year forecast of flat to down 2%. U.S. revenue grew 9%, partly benefiting from a one-time commercial matter resolution.
• Profitability improved as adjusted EBITDA margin rose 190 basis points to 19.1% and adjusted pre-tax margin increased 80 basis points to 4.1%. Management attributed margin gains to a better business mix and operating efficiencies, and expects gross margins to keep improving.
• Signings and growth opportunities strengthened: first-half signings grew 34%, while over the last 12 months Kyndryl signed 43 deals exceeding $50 million. Management said a growing share of large deals included new logos or expanded customer scope, supporting future growth in higher-value services.
• Free cash flow guidance was reaffirmed at $400 million–$500 million despite a $434 million use of cash in the first half, primarily from seasonal working-capital needs. Management expects stronger earnings and working-capital contributions in the second half and said its fiscal 2028 goal of $1 billion in adjusted free cash flow remains on track.
• Kyndryl said workforce rebalancing is substantially complete and expects second-half savings to largely offset about $200 million of fiscal 2027 charges; the actions are expected to generate $400 million–$500 million in annualized operating expense savings in fiscal 2028.

Kyndryl Stock Down 4.3%

NYSE KD traded down $0.72 during mid-day trading on Thursday, reaching $16.11. 2,704,192 shares of the company’s stock traded hands, compared to its average volume of 4,512,832. The company has a current ratio of 0.85, a quick ratio of 0.85 and a debt-to-equity ratio of 1.96. The company has a fifty day simple moving average of $12.90 and a 200-day simple moving average of $13.45. Kyndryl has a 1-year low of $10.10 and a 1-year high of $27.83. The company has a market cap of $3.51 billion, a price-to-earnings ratio of 43.58 and a beta of 1.62.

Wall Street Analyst Weigh In

A number of research analysts have recently commented on KD shares. Weiss Ratings reaffirmed a “sell (d)” rating on shares of Kyndryl in a research note on Tuesday. JPMorgan Chase & Co. lifted their price objective on shares of Kyndryl from $13.00 to $14.00 and gave the company an “underweight” rating in a report on Monday, August 10th. Susquehanna upped their target price on shares of Kyndryl from $13.00 to $16.00 and gave the stock a “neutral” rating in a report on Thursday. Zacks Research upgraded Kyndryl from a “strong sell” rating to a “hold” rating in a report on Monday, September 14th. Finally, BMO Capital Markets reaffirmed a “market perform” rating and issued a $16.00 price target on shares of Kyndryl in a research report on Thursday, August 6th. Seven research analysts have rated the stock with a Hold rating and two have issued a Sell rating to the company. Based on data from MarketBeat, the company has an average rating of “Reduce” and a consensus target price of $17.00.

Kyndryl News Summary

Here are the key news stories impacting Kyndryl this week:

• Positive Sentiment: Quarterly results topped estimates: Kyndryl reported adjusted EPS of $0.42 versus consensus of about $0.38, and revenue of $3.65 billion versus expectations of $3.62 billion. Adjusted net income was $92 million. The earnings beat helped lift sentiment after two quarters of declines. Kyndryl second-quarter fiscal 2027 results
• Positive Sentiment: Guidance held firm: The company reaffirmed its fiscal 2027 outlook, including expected free cash flow of $400 million to $500 million. It also targets $400 million to $500 million in annualized operating-cost savings in fiscal 2028. Kyndryl reaffirms cash-flow outlook and savings target
• Positive Sentiment: AI and deal activity offer growth potential: Kyndryl announced an agentic AI modernization solution with AWS. Management cited strong signings, including 43 deals worth more than $50 million over the past year, and continued growth in consulting and hyperscaler-related revenue. Kyndryl and AWS modernization solution
• Negative Sentiment: Revenue softness remains a concern: Quarterly revenue declined 1.9% year over year, despite beating estimates, so investors may look for evidence that growth is improving. Kyndryl profit rises as revenue slips
• Negative Sentiment: Analyst view points to limited upside: Susquehanna raised its price target from $13 to $16 but kept a neutral rating; the new target is below the cited share price. Susquehanna recommendations

About Kyndryl

Kyndryl Holdings, Inc (NYSE:KD) is an information technology services company that designs, builds, manages and modernizes mission-critical technology systems for businesses and public-sector organizations. Its services help customers operate and transform complex IT environments, including cloud, data centers, networks, applications and digital workplaces.

The company provides consulting and implementation services as well as ongoing managed services. Its capabilities include cloud solutions, network and edge services, cybersecurity, data and artificial intelligence, application management, enterprise computing and technology modernization.