NEW YORK – November 04, 2026 -- Kyndryl (NYSE: KD) lifted adjusted EBITDA to $699 million in its fiscal second quarter ended September 30, 2026, up from $641 million a year earlier, even as revenue fell 1.9% to $3.7 billion. Revenue declined 0.8% in constant currency. The company reaffirmed its fiscal 2027 outlook.
Profit rises before charges, while net income and free cash flow weaken
Pretax income reached $112 million, compared with $98 million in the prior-year period. Adjusted pretax income rose to $150 million from $123 million.
Net income fell to $59 million, or $0.27 per diluted share, from $68 million, or $0.29. Adjusted net income increased to $92 million, or $0.42 per share, from $89 million, or $0.38.
Workforce rebalancing charges doubled to $38 million from $19 million. Cash provided by operations rose to $172 million from $147 million. Free cash flow was a use of $34 million, against a source of $22 million a year earlier.
Hyperscaler revenue grows 27.2% to more than $550 million
Hyperscaler-related revenue exceeded $550 million in the quarter. Over the last twelve months it totaled $2.1 billion, up 38.5%.
Kyndryl Consult revenue grew 4.2% in the quarter. Trailing-twelve-month Consult revenue was $3.6 billion, up 8.1%, and Consult signings reached $4.6 billion, up 19.1%.
Total signings were $4.1 billion in the quarter and $15.5 billion over the last twelve months. Kyndryl signed 43 contracts above $50 million each in that period, 11 of them in the second quarter.
CEO Martin Schroeter attributed the performance to demand for AI-led modernization. The company cited its 2026 State of Modernization Report, in which 51% of organizations named legacy integration as their top obstacle. Kyndryl added Agentic Modernization services-as-software and is expanding its AI Innovation Lab network in Dallas, Texas, and Luxembourg.
Kyndryl targets $400-$500 million in run-rate savings by fiscal 2028
The company still expects about $200 million of workforce rebalancing charges in fiscal 2027, of which $190 million were incurred in the first half. Savings are due to begin in the second half and largely offset those charges. Once the actions are complete, annualized run-rate operating expense savings are expected to reach approximately $400 million to $500 million in fiscal 2028.
$1 billion note offering refinances 2.05% debt and clears revolver
On September 28, 2026, Kyndryl issued $600 million of 7.80% Senior Notes due 2029 and $400 million of 7.875% Senior Notes due 2032. Proceeds repaid the $700 million of 2.05% Senior Notes at maturity in October 2026. The remaining proceeds, together with cash on hand, repaid the $1 billion outstanding balance under the revolving credit agreement at the end of September.
Healthcare IT Leaders acquisition closes in mid-September
Kyndryl completed its purchase of Healthcare IT Leaders, LLC, an IT services provider to U.S. hospitals and health systems. The deal adds capabilities in healthcare application implementation and managed services.
Fiscal 2027 guidance calls for $600-$700 million in adjusted pretax income
For the fiscal year running from April 2026 to March 2027, Kyndryl expects:
- Adjusted pretax income of $600 million to $700 million, including workforce rebalancing charges
- Free cash flow of $400 million to $500 million
- Constant-currency revenue flat to down 2%
CFO Ellen Johnson said the company remains focused on margin expansion and free cash flow growth.