Kyndryl (NYSE:KD) Releases Quarterly Earnings Results, Beats Expectations By $0.04 EPS

Kyndryl (NYSE:KD) released its quarterly earnings data on Wednesday. The company reported ($0.12) earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of ($0.16) by $0.04, FiscalAI reports. The firm had revenue of $3.62 billion for the quarter, compared to the consensus estimate of $3.64 billion. Kyndryl had a net margin of 0.58% and a return on equity of 11.90%. The company’s quarterly revenue was down 3.3% on a year-over-year basis. During the same period last year, the firm earned $0.37 earnings per share.

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

• Q1 revenue fell 3% year over year to $3.6 billion, while adjusted pre-tax income was a $37 million loss, primarily reflecting $152 million in workforce rebalancing charges.
• Kyndryl maintained its fiscal 2027 outlook, including constant-currency revenue ranging from flat to down 2%, adjusted pre-tax income of $600 million–$700 million, and free cash flow of $400 million–$500 million.
• Targeted growth areas continued to perform well, with Kyndryl Consult revenue up 14% and hyperscaler-related revenue streams up 48% over the last 12 months; Q1 Consult signings increased 50%.
• Management cited improving signings quality, with new scope and new logos representing about 30% of the value of large deals versus 15% in fiscal 2025, supporting its fiscal 2028 goals of more than $1.2 billion in adjusted pre-tax income and $1 billion in free cash flow.
• Customers procuring more IBM hardware and software directly from IBM remain a revenue headwind, while Q1 free cash flow was a seasonal $401 million outflow due to renewal payments and weaker billing and collections.

Kyndryl Stock Performance

Kyndryl stock traded down $0.01 during mid-day trading on Friday, reaching $13.98. 1,855,756 shares of the company traded hands, compared to its average volume of 4,678,774. The firm’s fifty day moving average is $12.13 and its two-hundred day moving average is $13.65. The company has a market capitalization of $3.08 billion, a price-to-earnings ratio of 37.79 and a beta of 1.65. Kyndryl has a fifty-two week low of $10.10 and a fifty-two week high of $33.90. The company has a debt-to-equity ratio of 1.77, a current ratio of 0.88 and a quick ratio of 0.88.

Analyst Ratings Changes

Several research firms have recently commented on KD. Weiss Ratings reissued a “sell (d+)” rating on shares of Kyndryl in a research report on Monday, June 15th. BMO Capital Markets restated a “market perform” rating and issued a $16.00 target price on shares of Kyndryl in a research note on Thursday. Zacks Research raised shares of Kyndryl from a “strong sell” rating to a “hold” rating in a report on Monday, July 13th. Susquehanna downgraded Kyndryl from a “positive” rating to a “neutral” rating and reduced their price target for the stock from $16.00 to $13.00 in a research report on Thursday, May 21st. Finally, Wall Street Zen cut Kyndryl from a “buy” rating to a “hold” rating in a research report on Saturday, May 9th. Seven investment analysts have rated the stock with a Hold rating and two have issued a Sell rating to the company. Based on data from MarketBeat.com, the company currently has an average rating of “Reduce” and a consensus target price of $16.83.

Institutional Investors Weigh In On Kyndryl

Large investors have recently made changes to their positions in the stock. AQR Capital Management LLC lifted its position in Kyndryl by 53.9% during the 4th quarter. AQR Capital Management LLC now owns 6,443,037 shares of the company’s stock worth $170,934,000 after acquiring an additional 2,255,860 shares during the period. Dimensional Fund Advisors LP lifted its holdings in shares of Kyndryl by 1.7% during the fourth quarter. Dimensional Fund Advisors LP now owns 4,684,443 shares of the company’s stock worth $124,420,000 after purchasing an additional 76,614 shares during the period. Zimmer Partners LP lifted its holdings in shares of Kyndryl by 7.4% during the third quarter. Zimmer Partners LP now owns 2,227,904 shares of the company’s stock worth $66,904,000 after purchasing an additional 153,247 shares during the period. Invesco Ltd. lifted its stake in Kyndryl by 26.6% during the 4th quarter. Invesco Ltd. now owns 2,213,986 shares of the company’s stock valued at $58,803,000 after acquiring an additional 465,539 shares during the period. Finally, UBS Group AG lifted its stake in Kyndryl by 50.0% during the 3rd quarter. UBS Group AG now owns 2,028,338 shares of the company’s stock valued at $60,911,000 after acquiring an additional 675,943 shares during the period. 71.53% of the stock is owned by hedge funds and other institutional investors.

Kyndryl Company Profile

Kyndryl (NYSE: KD) is a global managed infrastructure services provider formed in November 2021 through the spin-off of IBM’s Managed Infrastructure Services business. The company designs, builds, manages and modernizes critical information technology systems for enterprises worldwide. Kyndryl’s core offerings include cloud migration and management, network and edge computing solutions, digital workplace services and IT resiliency and security capabilities.

With a workforce of approximately 90,000 professionals and operations in more than 60 countries, Kyndryl serves clients across a broad range of industries, including financial services, telecommunications, healthcare, manufacturing and retail.