Kyndryl shares jump 30.5% after EBITDA rises, outlook reaffirmed

Kyndryl (KD) shares rose 30.5% in regular trading as of 3:59 p.m. ET, from a previous close of $12.94.

Kyndryl (KD) said in its results release on Nov. 4 that revenue for the fiscal second quarter ended Sept. 30 was $3.65 billion, down 1.9% from a year earlier. Adjusted EBITDA rose to $699 million, and the company reaffirmed its fiscal 2027 outlook.

According to the release, Kyndryl offers advisory, implementation and managed services to thousands of customers in more than 60 countries.

Here's how the company did:

• Revenue: $3.65 billion vs. $3.72 billion a year earlier
• Adjusted EPS: 42 cents per share vs. 38 cents a year earlier
• Net income: $59 million, or 27 cents per diluted share, vs. $68 million, or 29 cents, a year earlier
• Adjusted EBITDA: $699 million vs. $641 million a year earlier

On a constant-currency basis, revenue fell 0.8%, the company said.

Signings reached $4.1 billion in the quarter, up from $2.8 billion a year earlier. Over the last twelve months, signings totaled $15.5 billion.

Kyndryl Consult revenue grew 4.2% in the quarter. Hyperscaler-related revenue of more than $550 million grew 27.2% from a year earlier.

Chairman and Chief Executive Officer Martin Schroeter said, "Strong signings and continued growth in Kyndryl Consult and hyperscaler-related revenue reinforce our confidence in our fiscal 2027 outlook."

Segment results

United States revenue was $980 million, up 9.0% from $899 million a year earlier. The company said a resolution of a commercial matter added 3 points to U.S. revenue growth and 15 points to U.S. adjusted EBITDA growth.

Japan revenue was $555 million, down 4.6% from $581 million. Principal Markets revenue was $1.18 billion, down 6.1%, and Strategic Markets revenue was $939 million, down 4.8%.

Costs and cash

Workforce rebalancing charges were $38 million in the quarter, compared with $19 million a year earlier. The company continues to expect about $200 million of such charges in fiscal 2027, of which $190 million were incurred in the first half. It expects annualized run-rate operating expense savings of about $400 million to $500 million in fiscal 2028.

Net income has fallen in each of the last three quarters, from $68.0 million in the second quarter of fiscal 2025 to a loss of $55.0 million in the first quarter of fiscal 2027, according to its SEC filings.

Cash provided by operations was $172 million, up from $147 million a year earlier. Free cash flow was a use of $34 million, compared with a source of $22 million in the prior-year quarter.

Kyndryl completed its acquisition of Healthcare IT Leaders in mid-September. The company said the deal strengthens its healthcare application implementation and managed services.

Chief Financial Officer Ellen Johnson said, "Our results reflect continued progress against our strategic and financial priorities."

Fiscal 2027 outlook

Kyndryl reaffirmed the ranges it gave on Aug. 5. It expects adjusted pretax income of $600 million to $700 million, including workforce rebalancing charges, and free cash flow of $400 million to $500 million.

The company also expects constant-currency revenue to be flat to down 2% for the fiscal year, which runs from April 2026 to March 2027.

The company will hold its earnings call at 8:30 a.m. ET on Nov. 4.