Kyndryl Restores Profit After First-Quarter Loss

The Tip Desk · November 4, 2026 · 4 min read

Second-quarter pretax income was $112 million as adjusted EBITDA reached $699 million and the company kept its fiscal 2027 outlook.

Kyndryl Holdings (KD), a provider of mission-critical enterprise technology services, reported pretax income of $112 million for the quarter ended September 30, 2026, reversing a $69 million pretax loss in the immediately preceding quarter.

Revenue was $3.7 billion, down 1.9% year-over-year on a reported basis and down 0.8% in constant currency, a slower decline than the 3% year-over-year drop in the first quarter. Net income was $59 million, or $0.27 a share, compared with $68 million, or $0.29 a share, a year earlier.

Adjusted EBITDA was $699 million, versus $641 million a year earlier, and the adjusted EBITDA margin was 19.1%, compared with 17.2% a year earlier. Adjusted pretax income was $150 million, versus $123 million a year earlier, and adjusted net income was $92 million, or $0.42 a share. Those adjusted figures followed an adjusted pretax loss of $37 million and an adjusted net loss of $26 million in the first quarter.

Workforce rebalancing charges were $38 million, versus $19 million a year earlier. The company said it continues to expect approximately $200 million of such charges in fiscal 2027, of which $190 million were incurred in the first half, with savings expected to begin in the second half that will largely offset the charges. Once completed, the efforts are expected to produce annualized run-rate operating expense savings of approximately $400 million to $500 million in fiscal 2028.

Cash provided by operations was $172 million, versus $147 million a year earlier, after $310 million of cash used from operations in the first quarter. Free cash flow was a use of $34 million, versus a source of $22 million a year earlier. Cash and equivalents were $1,659 million at September 30, 2026.

United States revenue was $980 million, up 9.0% year-over-year on both a reported and constant-currency basis, including a 3-point favorable impact from the resolution of a commercial matter. United States adjusted EBITDA was $273 million, versus $195 million a year earlier, including a 15-point favorable impact from that resolution. Japan revenue was $555 million, down 4.6% as reported and up 2.9% in constant currency. Principal Markets revenue was $1,177 million, down 6.1% as reported and down 4.8% in constant currency. Strategic Markets revenue was $939 million, down 4.8% as reported and down 6.7% in constant currency. India operations moved from Principal Markets to Strategic Markets in the quarter, with historical segment information restated.

Kyndryl Consult revenue grew 4.2% year-over-year in the second quarter, after 10% year-over-year growth in the first quarter. Hyperscaler-related revenue of more than $550 million grew 27.2% year-over-year, after more than $530 million grew 34% year-over-year in the first quarter. Over the last twelve months, hyperscaler-related revenue was $2.1 billion, a 38.5% increase year-over-year.

Trailing-twelve-month signings were $15.5 billion, including $4.1 billion in the second quarter. Kyndryl signed 43 customer contracts exceeding $50 million each in the last twelve months, of which 11 were in the second quarter. Chairman and Chief Executive Officer Martin Schroeter said strong signings and continued growth in Kyndryl Consult and hyperscaler-related revenue reinforce confidence in the fiscal 2027 outlook.

In mid-September the company completed its acquisition of Healthcare IT Leaders, an enterprise IT services provider serving hospitals and health systems across the U.S. On September 28, 2026, Kyndryl issued $600 million of 7.80% senior notes due 2029 and $400 million of 7.875% senior notes due 2032. It used net proceeds to repay $700 million of 2.05% senior notes maturing in October 2026 and, together with cash on hand, to repay the $1 billion revolving-credit balance at the end of September.

Kyndryl reaffirms its fiscal 2027 outlook, which runs from April 2026 to March 2027: adjusted pretax income of $600 million to $700 million, including workforce rebalancing charges; free cash flow of $400 million to $500 million; and constant-currency revenue flat to down 2%.