Kyndryl (KD) Q4 2026 earnings summary

Executive summary

• Achieved four consecutive years of adjusted pre-tax income and margin growth, with fiscal 2026 adjusted pre-tax income at $581 million and margin expansion despite extended sales cycles and revenue headwinds.

• Strategic focus on high-value consult engagements, AI-led modernization, and deepening alliance partnerships, with notable customer wins in banking, insurance, and public sector.

• Kyndryl Consult delivered double-digit revenue growth for the third consecutive year, reaching $3.5 billion in revenue, with signings exceeding revenue.

• Hyperscaler-related revenue grew 59% year-over-year to $1.9 billion, up from zero four years ago, exceeding initial targets.

• Fiscal 2026 signings totaled $13.5 billion, with over 30% from new scope and new logos, doubling the prior year’s proportion.

Financial highlights

• Fiscal 2026 revenue was $15.1 billion, flat year-over-year on a reported basis and down 3% in constant currency.

• Adjusted EBITDA was $2.7 billion (17.7% margin), up 6% year-over-year; adjusted pre-tax income was $581 million (3.9% margin).

• Adjusted EPS for FY26 was $1.46, up from $1.19 in FY25.

• Free cash flow for the year was $406 million, converting nearly 100% of adjusted pre-tax income less cash taxes and exceeding guidance midpoint by $50 million.

• Q4 FY26 revenue was $3.77 billion, with adjusted EBITDA margin at 18.3% and adjusted pre-tax margin at 4.3%.

Outlook and guidance

• Fiscal 2027 adjusted pre-tax income expected between $600 million and $700 million, including $200 million in workforce rebalancing charges.

• Free cash flow for fiscal 2027 projected at $400–$500 million.

• Fiscal 2027 revenue expected to be flat to down 2% in constant currency, with growth in Consult and alliance-related streams.

• Adjusted EBITDA margin expected at approximately 18.3% for FY27.

• Fiscal 2028 targets: over $1.2 billion in adjusted pre-tax income and more than $1 billion in free cash flow, achievable with low single-digit revenue growth.