Kyndryl posts Q1 fiscal 2027 net loss, reaffirms full-year outlook
Revenue fell 3% to $3.6 billion as workforce rebalancing charges weighed on results, while signings, Kyndryl Consult and hyperscaler-related revenue showed continued momentum.
Kyndryl reported a net loss of $55 million for the quarter ended June 30, 2026, the first quarter of its 2027 fiscal year, as revenue fell 3% year over year to $3.6 billion and workforce rebalancing charges weighed on earnings. Pretax loss was $69 million, compared with pretax income of $92 million a year earlier, while adjusted EBITDA declined to $512 million from $647 million. The company said first-quarter results included $152 million of workforce rebalancing charges. Adjusted pretax loss was $37 million, compared with adjusted pretax income of $128 million in the prior-year period, and adjusted net loss was $26 million, or $0.12 per diluted share, versus adjusted net income of $90 million, or $0.37 per diluted share, a year earlier. Cash used from operations widened to $310 million from $124 million, primarily because of working-capital timing, including higher software payments and lower billings and collections, while free cash flow was a use of $401 million versus a use of $222 million a year earlier. Even so, Kyndryl pointed to stronger commercial momentum. Trailing 12-month signings were $14.2 billion, including $3.9 billion in the quarter, with 40 customer contracts above $50 million signed over the past year and 10 of those in the quarter. Kyndryl Consult revenue grew 10% year over year in the quarter, while hyperscaler-related revenue rose 34% to more than $530 million, exiting the period at an annualized revenue run-rate of more than $2.1 billion. The company also launched Kyndryl AI Orchestration for Business and a patented agentic AI capability in Kyndryl Bridge. Kyndryl reaffirmed its fiscal 2027 outlook for adjusted pretax income of $600 million to $700 million, free cash flow of $400 million to $500 million and constant-currency revenue ranging from flat to down 2%. It said it continues to expect about $200 million of workforce rebalancing charges in fiscal 2027, with those actions expected to deliver annualized run-rate operating expense savings of about $400 million to $500 million in fiscal 2028. The company repurchased 5.0 million shares for $64 million during the quarter.
- adjusted EBITDA: A non-GAAP earnings measure that excludes items such as interest, taxes and certain non-operating or one-time costs to show underlying operating performance.
- constant-currency revenue: Revenue growth measured as if exchange rates had stayed the same, helping isolate business performance from currency moves.
- free cash flow: Cash generated from operations after capital expenditures, often used to assess financial flexibility and ability to fund debt, buybacks or investment.