Kyndryl Cuts FY26 Pretax Income Guidance to $575M–$600M, Shares Plunge 54%
Kyndryl reported Q3 adjusted EPS of $0.52 versus a $0.60 estimate and revenue of $3.86 billion against $3.89 billion expected, then cut FY26 pretax income guidance to $575 million–$600 million and free cash flow to $325 million–$375 million. Shares plunged over 54% after the CFO’s exit and a JP Morgan downgrade with price target cut to $16.
1. Q3 Results Miss
Kyndryl reported adjusted EPS of $0.52 in Q3, missing the $0.60 consensus, and revenue of $3.86 billion versus $3.89 billion expected. Adjusted EBITDA declined to $696 million from $704 million year-over-year, while contract signings reached $15.4 billion over the trailing 12 months, including 11 deals above $50 million.
2. FY26 Outlook Revision
The company revised FY26 adjusted pretax income guidance down to $575 million–$600 million from $725 million and cut free cash flow expectations to $325 million–$375 million from $550 million. It now anticipates a 2%–3% constant-currency revenue decline, steeper than the prior 1% drop forecast.
3. Leadership Changes and Downgrade
CFO David Wyshner departed immediately, with Harsh Chugh named interim CFO. JP Morgan downgraded the stock to Underweight and slashed its price target to $16, citing the earnings miss, guidance cuts and delayed financial filings as key concerns.
4. Business Highlights and Cash Position
Hyperscaler cloud revenue surged 58% year-over-year to $500 million, and consult services grew 24%, contributing $4.1 billion in annual signings. Kyndryl repurchased 3.7 million shares for $100 million during Q3 and exited the quarter with $1.35 billion in cash and equivalents.