Kyndryl Holdings, Inc.

What they do

Kyndryl designs, builds, manages, and modernizes mission-critical IT systems for customers in over 60 countries, offering advisory, implementation, and managed services. It operates in four geographic segments: United States, Japan, Principal Markets, and Strategic Markets. Service areas include cloud, core enterprise (mainframe), applications/data/AI, digital workplace, and security/resiliency.

Revenue drivers

• United States segment — Revenue of $954M in the June 2026 quarter, up 5% year-over-year, the largest growth segment.
• Kyndryl Consult — Revenue grew 10% YoY in the quarter to an annualized $3.6B, with signings up 8%.
• Hyperscaler-related revenue — Over $530M in the quarter, up 34% YoY, with annualized run-rate above $2.1B.
• Principal Markets segment — Largest segment by revenue ($1.262B in the June 2026 quarter) but declined 7% YoY.

Recent performance

For the three months ended June 30, 2026, Kyndryl reported revenue of $3.618B, down 3% YoY in constant currency. Net loss was $55M versus net income of $56M in the prior year, driven by $152M of workforce rebalancing charges and higher impairment and SG&A expenses. Adjusted EBITDA was $512M, down from $647M. Cash used from operations was $310M, compared to $124M used in the prior-year period.

Strategy

Kyndryl is focusing on AI-led modernization, including its Kyndryl Bridge platform with agentic AI capabilities and AI Orchestration for Business. The company is streamlining operations, incurring $152M of workforce rebalancing charges in the quarter, with expected annualized run-rate savings of $400-500M by fiscal 2028. It continues to repurchase shares, buying back 5.0 million shares at $64M in the quarter, and emphasizes growth in Kyndryl Consult and hyperscaler-related revenue.

Risks

• Customer retention and new business — Failure to attract new customers or retain existing ones could reduce revenue; contracts average over five years but no renewal obligation.
• Macroeconomic volatility — Trade tensions, tariffs, and geopolitical conflicts have impacted and may continue to impact spending and sales cycles.
• SEC investigation and material weaknesses — The company is cooperating with an SEC investigation into cash management practices and internal controls, and has identified material weaknesses.
• Lengthening sales cycles and former parent content — Revenue growth is partially offset by lengthening sales cycles and evolving content from IBM in customer engagements.

Outlook

Management reaffirmed fiscal 2027 outlook for revenue, earnings, and free cash flow. They expect approximately $200M of workforce rebalancing charges in fiscal 2027, with savings of $400-500M annualized by fiscal 2028. The company highlighted momentum in signings and AI demand but acknowledged ongoing macroeconomic uncertainty.