Kyndryl Holdings reported a slight drop in second-quarter revenue on Tuesday, as the former IBM unit works to reduce and renegotiate inherited contracts that have hampered margins. ...

Core Insights - Kyndryl Holdings, Inc. reported a second-quarter earnings beat with adjusted earnings per share of 38 cents, surpassing the analyst consensus estimate of 36 cents [1] - The company is expanding its AI services in multiple countries, including the U.K., France, Singapore, and India, while also increasing share buybacks [1][5] Financial Performance - Quarterly revenues were $3.721 billion, a 1% decline year over year, which slightly missed the analyst expectations of $3.840 billion [2] - Sales fell 3.7% in constant currency, reflecting efforts to exit low-margin third-party content and longer sales cycles impacting year-over-year comparisons [2][3] - Adjusted EBITDA was $641 million, representing a 15% year-over-year increase [5] Segment Performance - Hyperscaler cloud revenue surged 65% to $440 million, positioning the company to meet its $1.8 billion target for 2026 [4] - Kyndryl Consult revenues grew 28% year-over-year, with signings increasing by 11% over the past twelve months [4] - The book-to-bill ratio remained above 1 for the fifth consecutive quarter, with AI-related signings accounting for about 25% of last quarter's total [4] AI Expansion - Kyndryl is enhancing its AI capabilities by establishing technology hubs in England, France, and Singapore, and launching an AI Innovation Lab in India [5] Share Buyback and Cash Position - The company repurchased 2.9 million shares for $89 million in the second quarter and has approved an additional $400 million for share buybacks [6] - Kyndryl ended the quarter with cash and equivalents of $1.33 billion, down from $1.786 billion as of March 31, 2025 [6] Future Outlook - For fiscal year 2026, Kyndryl anticipates constant-currency revenue growth of 1%, translating to approximately $15.20 billion, compared to the analyst consensus of $15.60 billion [8] - The firm projects an adjusted EBITDA margin of around 18%, reflecting a year-over-year increase of approximately 130 basis points [9] - The CFO stated that the company is on track to meet its fiscal 2028 targets, including generating over $1 billion in free cash flow [7]

Core Insights - Kyndryl Holdings, Inc. reported a second-quarter earnings beat with adjusted earnings per share of 38 cents, surpassing the analyst consensus estimate of 36 cents [1] - The company is expanding its AI services in multiple countries and has increased share buybacks [1] Financial Performance - Quarterly revenues were $3.721 billion, a 1% decline year over year, which slightly missed the expected $3.840 billion [2] - Sales fell 3.7% in constant currency, reflecting efforts to exit low-margin third-party content and longer sales cycles [3] - Adjusted EBITDA was $641 million, marking a 15% year-over-year increase [5] Segment Performance - Hyperscaler cloud revenue surged 65% to $440 million, positioning the company to meet its $1.8 billion target for 2026 [4] - Kyndryl Consult revenues grew 28% year-over-year, with signings increasing by 11% over the past twelve months [4] - The book-to-bill ratio remained above 1 for the fifth consecutive quarter, with AI-related signings accounting for about 25% of last quarter's total [4] AI Expansion - Kyndryl is enhancing its AI capabilities by establishing technology hubs in England, France, and Singapore, and launching an AI Innovation Lab in India [5] Share Buyback and Cash Position - The company repurchased 2.9 million shares for $89 million in the second quarter and has approved an additional $400 million for share buybacks [6] - Kyndryl ended the quarter with cash and equivalents of $1.33 billion, down from $1.786 billion as of March 31, 2025 [6] Future Outlook - For fiscal year 2026, Kyndryl anticipates constant-currency revenue growth of 1%, equating to approximately $15.20 billion, below the analyst consensus of $15.60 billion [8] - The company projects an adjusted EBITDA margin of around 18%, reflecting a year-over-year increase of approximately 130 basis points [8] - Kyndryl expects activity to strengthen in the second half of fiscal 2026, supported by a robust pipeline and positive discussions with customers [9] Long-term Goals - The company aims to more than double adjusted pretax income by fiscal year 2028, contingent on achieving sustainable mid-single-digit revenue growth [10]

Core Insights - Kyndryl's second quarter performance indicates momentum in key growth areas such as Kyndryl Consult, partnerships with hyperscalers, and innovative services in AI, cloud, and security [1][2] Financial Performance - Kyndryl reported revenues of $3.7 billion for the second quarter, a decrease of 1% year-over-year and 3.7% in constant currency [2][6] - The company achieved pretax income of $98 million, a significant increase from a pretax loss of $5 million in the prior-year period [2][6] - Net income was $68 million, or $0.29 per diluted share, compared to a net loss of $43 million, or ($0.19) per diluted share, in the same quarter last year [2][6] - Adjusted pretax income rose to $123 million, up from $45 million year-over-year, reflecting contributions from Kyndryl's three-A initiatives [3][6] - Adjusted EBITDA increased by 15% year-over-year to $641 million [3][6] Strategic Initiatives - Kyndryl's signings for the trailing twelve months reached $15.6 billion, surpassing the previous twelve months' revenue of $15.0 billion [4][6] - The company is focused on expanding customer relationships and maintaining attractive margins, with a goal of generating over $1 billion in free cash flow by fiscal 2028 [4][6] - Kyndryl announced a $400 million increase in its share repurchase program, in addition to the previously authorized $300 million buyback [5][6] Market Outlook - Kyndryl reaffirms its fiscal 2026 outlook, expecting stronger second-half revenue driven by backlog contributions and growth in Kyndryl Consult and hyperscaler-related revenue [8][6] - The company generated $440 million in revenue from cloud hyperscaler alliances, marking a 65% year-over-year increase, and is on track to exceed its initial hyperscaler revenue target of $1.8 billion for fiscal 2026 [11][6] - Kyndryl Consult revenues grew by 28% year-over-year, with signings increasing by 11% over the last twelve months [11][6]

Core Insights - Kyndryl (KD) is set to report its second-quarter fiscal 2026 results on November 4, after market close, with a strong earnings surprise history, surpassing estimates in three of the last four quarters and averaging a 36.1% earnings surprise [1] Kyndryl's Q2 Expectations - The Zacks Consensus Estimate for Kyndryl's revenues is $3.8 billion, reflecting a 1.1% year-over-year increase, driven by new signings in AI adoption, cyber resiliency, and cloud migration services [2] - The consensus estimate for earnings is 35 cents per share, indicating a more than 100% increase from the same quarter last year, supported by prudent cost control and strong margins [3][10] Earnings Prediction Model - Current analysis does not predict a definitive earnings beat for Kyndryl, as it holds an Earnings ESP of +12.50% and a Zacks Rank of 4 (Sell), which does not align with the conditions typically favorable for an earnings beat [4]

Core Insights - Kyndryl Holdings, Inc. (NYSE:KD) has faced challenges in its recent quarterly performance, with a noted decline of 28% in its stock value, reversing earlier gains [2] - The company is recognized for its IT infrastructure and technology services, including cloud, AI, security, and digital workplace solutions [2] - There is a cautious outlook on Kyndryl's investment potential, with suggestions that other AI stocks may offer better upside potential and lower downside risk [2] Group 1 - Jim Cramer acknowledged that Kyndryl's last quarter performance was not strong, but expressed confidence in CEO Martin Schroeter's ability to improve the company's trajectory [1] - Cramer suggested that investors consider buying Kyndryl shares but recommended waiting for the next quarterly results to assess performance before making further purchases [1] - Greenlight Capital's investor letter indicated that Kyndryl's quarterly results were less impressive compared to previous reports, although not disastrous [2] Group 2 - The company is positioned within a competitive landscape of IT services, where it must navigate challenges while capitalizing on trends such as onshoring and tariffs [2] - Kyndryl's stock is currently viewed as inexpensive, which may attract value-focused investors [1] - The overall sentiment suggests a need for cautious optimism regarding Kyndryl's future performance and market positioning [2]

Group 1 - TeraWulf Inc. is recommended for selling after announcing the pricing of $3.2 billion of senior secured notes [1] - Super Micro Computer, Inc. received a Neutral rating from JPMorgan analyst Samik Chatterjee, with a lowered price target from $45 to $43 [1] - Applied Digital Corporation signed a lease with a U.S.-based investment-grade hyperscaler for its Polaris Forge 2 Campus, representing approximately $5 billion in total contracted revenue over a 15-year term [2] Group 2 - Kyndryl Holdings, Inc. is suggested for purchase, with results for the quarter ended September 30 expected to be released on November 4 [3] - Dell Technologies Inc. is also recommended for purchase [3] Group 3 - Applied Digital shares increased by 2.8% to close at $34.35 [5] - Kyndryl shares rose by 1.4% to close at $28.90 [5] - Super Micro Computer shares climbed by 6.8% to settle at $51.57 [5] - TeraWulf shares decreased by 0.5% to close at $13.64 [5]

Group 1 - Greenlight Capital reported a return of -3.6% for its funds in Q3 2025, underperforming the S&P 500 index which returned 8.1% during the same period [1] - Year-to-date, Greenlight Capital's fund returned 0.4%, compared to 14.8% for the S&P 500 index [1] - Kyndryl Holdings, Inc. (NYSE:KD) experienced a one-month return of -3.76% but gained 19.13% over the last 52 weeks, closing at $28.90 per share with a market capitalization of $6.68 billion on October 27, 2025 [2] Group 2 - Kyndryl Holdings, Inc. (NYSE:KD) fell 28% in the long book, reversing earlier gains, with quarterly results being less impressive than previous reports [3] - Kyndryl Holdings, Inc. was held by 36 hedge fund portfolios at the end of Q2 2025, a decrease from 39 in the previous quarter [3] - While Kyndryl Holdings, Inc. is acknowledged for its investment potential, certain AI stocks are considered to offer greater upside potential and less downside risk [3]

Core Insights - The Kyndryl Readiness Report indicates that while businesses are experiencing momentum in AI investments, they face significant foundational gaps in technology and talent that hinder further progress [1][2]. AI Investment and ROI - AI spending has increased by an average of 33% across industries, with 68% of organizations investing heavily in AI [3]. - There is heightened pressure on business leaders to demonstrate ROI from AI investments, with three in five feeling more pressure this year compared to last [3]. Cloud Infrastructure Challenges - Organizations are reassessing their cloud strategies due to geopolitical risks and regulatory changes, with 75% expressing concerns about data management in global cloud environments [4]. - 65% of leaders have adjusted their cloud strategies, focusing on data repatriation and shifting towards private cloud models [4]. Talent and Cultural Readiness - Nearly 90% of leaders believe AI will transform jobs within the next year, yet only 29% feel their workforce is prepared to leverage AI effectively [5][6]. - Cultural barriers are significant, with 48% of CEOs stating their organizations stifle innovation and 45% indicating slow decision-making processes [5]. Current State of AI Projects - 54% of organizations report positive returns on AI investments, a 12-point increase from the previous year, but 62% have not moved beyond the pilot phase of their AI projects [6]. - Despite confidence in their tools, over half of the organizations find their foundational technology stack a barrier to innovation [6]. Geopolitical and Regulatory Impact - Organizations are reevaluating data storage and processing strategies due to geopolitical pressures, with 70% of CEOs admitting their cloud setups were reached by accident rather than design [6].

Group 1 - Kyndryl will release its earnings results for the quarter ended September 30, 2025, after market close on November 4, 2025 [1] - The earnings conference call will be hosted by Chairman and CEO Martin Schroeter and CFO David Wyshner at 8:30 a.m. ET on November 5, 2025 [1] - A live webcast of the earnings call can be accessed on Kyndryl's investor relations website, with replays available for twelve months [2] Group 2 - Kyndryl is a leading provider of mission-critical enterprise technology services, operating in over 60 countries [3] - The company offers advisory, implementation, and managed service capabilities to thousands of customers [3] - Kyndryl is recognized as the world's largest IT infrastructure services provider, focusing on designing, building, managing, and modernizing complex information systems [3]