Kyndryl Holdings 2026 Q1 Earnings Strong Performance as Net Income Surges 409%

Kyndryl Holdings reported better-than-expected profitability despite flat revenue, with net income rising sharply and earnings guidance maintained. The company’s results exceeded expectations on the bottom line, and it reaffirmed its full-year outlook, signaling confidence in its strategic initiatives and long-term growth trajectory.

Revenue
Kyndryl Holdings reported total revenue of $3.74 billion for fiscal 2026 Q1, matching the $3.74 billion recorded in the prior year period. The company did not provide segment-specific revenue figures, and the flat performance reflected consistent demand across its global IT services and infrastructure offerings.

Earnings/Net Income
The company’s earnings per share surged by 380% to $0.24 in Q1 2026, up from $0.05 in the year-ago period. Net income also rose dramatically to $56 million, a 409% increase from $11 million in 2025 Q1. This marked a new five-year high for Q1 net income, underscoring the company’s improved profitability and cost management.

Price Action
Kyndryl’s stock experienced significant downward pressure following the earnings release, with an 8.85% decline in a single day, a 24.83% drop over the past full week, and a 33.33% decline month-to-date. The negative price action highlights investor skepticism despite strong earnings growth.

Post-Earnings Price Action Review
A strategy of buying Kyndryl’s stock when revenues miss estimates and holding for 30 days yielded a modest 8.46% return, underperforming the 31.15% benchmark return. The approach exhibited minimal drawdown, a Sharpe ratio of 0.10, and a volatility of 22.01%, suggesting limited risk-adjusted returns and a lack of conviction in the strategy’s effectiveness.

CEO Commentary
Martin Schroeter, Chairman and Chief Executive Officer, highlighted the company’s progress in key growth areas, including Kyndryl Consult, hyperscaler activity, and productivity improvements. He emphasized Kyndryl’s mission-critical technology and operational capabilities, such as Kyndryl Bridge, as key drivers of customer innovation and future growth. Schroeter reiterated the company’s commitment to reinvesting in growth, meeting fiscal objectives, and returning capital to shareholders through its share repurchase program, expressing confidence in Kyndryl’s long-term strategic direction.

Guidance
Kyndryl Holdings reaffirmed its fiscal 2026 guidance, targeting at least $725 million in adjusted pretax income, an 18% adjusted EBITDA margin, $550 million in free cash flow, and 1% constant-currency revenue growth. The company remains optimistic about its ability to achieve these goals while continuing to expand its service offerings and operational efficiency.

Additional News
On August 5, 2025, Kyndryl reported preliminary results for the quarter ended June 30, 2025, with revenues totaling $3.74 billion. Pretax income reached $92 million, and net income stood at $56 million. Adjusted EBITDA came in at $647 million, while adjusted pretax and net income were $128 million and $90 million, respectively. The company highlighted double-digit revenue growth from Kyndryl Consult, underscoring its strategic importance in driving innovation and customer value. No recent M&A activity or C-level executive changes were disclosed within the three-week period. Kyndryl did not announce any new dividend or buyback initiatives but continued to emphasize its ongoing share repurchase program as part of its capital return strategy.