Kyndryl Holdings reported third‑quarter 2026 revenue of $3.86 billion, a 3% year‑over‑year increase that was flat in constant currency. The growth was driven by a 24% rise in Kyndryl Consult revenue and a 58% jump in hyperscaler‑related revenue, while legacy services lagged behind, partially offsetting the top‑line gain.
The company posted earnings per share of $0.52, missing the consensus estimate of $0.60–$0.67 by 12–22%. The miss was largely attributable to higher operating costs and slower revenue growth in legacy segments, even as the U.S. and Japan divisions saw margin improvement.
Net income fell to $57 million from $215 million a year earlier, reflecting higher SG&A expenses and one‑time restructuring charges. Adjusted pretax income, however, rose to $168 million, up $8 million YoY, indicating that core profitability was still improving.
Adjusted EBITDA reached $696 million, an 18.0% margin that represents a 1% year‑over‑year decline. The compression was driven by a mix shift toward lower‑margin legacy services and the higher cost of hyperscaler contracts, despite margin gains in the U.S. and Japan segments.
Management lowered its constant‑currency revenue outlook for fiscal 2026 to a decline of 2%–3% from prior guidance and maintained an adjusted EBITDA margin target of approximately 17.5%. The company cited longer sales cycles, evolving IBM partnership dynamics, and regulatory uncertainties as key headwinds, while emphasizing continued investment in AI, cloud, and hyperscaler alliances as growth drivers.
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