Kyndryl's 2026 Q1 Earnings Call: Unraveling Contradictions in Revenue Growth, AI Strategies, and Macro Impacts

Revenue growth and cadence, focused accounts and revenue contribution, AI and technology transitions, macro impact on signings, and 2025Q3 signings versus 2026Q1 revenue performance are the key contradictions discussed in Kyndryl Holdings' latest 2026Q1 earnings call.



Revenue and Earnings Performance:
- Kyndryl Holdings reported revenue of $3.7 billion for Q1 2026, with a 2.6% decline in constant currency.
- The company saw a 39% year-over-year increase in adjusted pretax income, driven by growth in Kyndryl Consult revenue and collaboration with cloud hyperscalers.

Focus Accounts Initiative:
- Kyndryl reduced revenue by half from eight focus accounts, which significantly increased gross margin over the last year.
- The initiative aimed to address specific accounts with substandard margins, improving overall profitability.

Alliance and Signings Growth:
- Hyperscaler-related revenue nearly doubled to $400 million in Q1 2026, on track to deliver $1.8 billion by fiscal 2026.
- The growth in signings, with a book-to-bill ratio above 1, reflects strong demand and successful partnerships with cloud providers.

Margin Expansion and Cost Efficiency:
- Kyndryl's adjusted EBITDA margin improved by 240 basis points year-over-year, reaching 17.3%.
- This was supported by margin expansion in higher-margin advisory services and cost efficiency gains from automation and strategic partnerships.