Company Overview - Kyndryl is a provider of information technology infrastructure services [2] Recent Developments - On February 9, 2026, Kyndryl announced that its Audit Committee is reviewing cash management practices and related disclosures, including the drivers of the Company's adjusted free cash flow metric, following requests from the SEC [3] - The review has delayed the finalization of the Quarterly Report and the assessment of internal control over financial reporting [3] - Key executive departures were reported, including David Wyshner as Chief Financial Officer and Edward Sebold as General Counsel, effective immediately [3] - Vineet Khurana also stepped down from his position as Senior Vice President and Global Controller, taking on a different role within the Company [3] - Following these announcements, Kyndryl's stock price fell nearly 55% [3]

Core Viewpoint - Kyndryl Holdings, Inc. is under investigation for potential violations of federal securities laws, particularly concerning its cash management practices and financial reporting controls [1][3]. Group 1: Company Overview - Kyndryl is a leading provider of enterprise technology services, offering advisory, implementation, and managed services in over 60 countries, making it the world's largest IT infrastructure services provider [2]. Group 2: Investigation Details - The investigation by Bleichmar Fonti & Auld LLP focuses on whether Kyndryl misrepresented its cash management practices and the drivers of its adjusted free cash flow metric for FY2025 and the first three quarters of FY2026 [3]. - The investigation was prompted by Kyndryl's announcement of a delay in releasing its fiscal Q3 2026 financial statement due to an accounting review related to its cash management practices, following document requests from the SEC [4]. Group 3: Stock Market Reaction - Following the announcement of the investigation and the delay in financial reporting, Kyndryl's stock price dropped over 52% during trading on February 9, 2026 [5].

Core Insights - Kyndryl Holdings, Inc. is under investigation for potential violations of federal securities laws following the sudden departure of its CFO and General Counsel [1] - The company announced it could not file its quarterly report on Form-10-Q on time and is reviewing its cash management practices and internal controls after receiving document requests from the SEC [1] - Following these disclosures, Kyndryl's stock price experienced a decline [1] Company Developments - The immediate departures of key executives, including the CFO and General Counsel, raise concerns about the company's governance and operational stability [1] - Kyndryl's inability to file its quarterly report on time indicates potential issues with financial reporting and compliance [1] - The ongoing review of cash management practices and internal controls suggests that the company is taking steps to address potential weaknesses in its financial practices [1]

The honeymoon period for IBM's spin-off – Kyndryl Holdings (NYSE: KD) – has officially ended in a fiery wreckage of investor confidence. Once marketed as the agile "vendor-agnostic†future of IT infra... ...

Core Viewpoint - Kyndryl Holdings, Inc. is under investigation for potential securities fraud following a significant stock drop of over 52% due to an accounting review and the departure of key executives [1][1][1] Group 1: Investigation Details - The investigation is being conducted by Bleichmar Fonti & Auld LLP to determine if Kyndryl misrepresented its cash management practices and the drivers of its adjusted free cash flow metric [1][1] - The inquiry focuses on Kyndryl's internal controls over financial reporting for FY2025 and the first three quarters of FY2026 [1][1] Group 2: Stock Performance - Kyndryl's stock price fell by more than 52% on February 9, 2026, following the announcement of a delay in the release of its fiscal Q3 2026 financial statement due to an accounting review [1][1] - The stock drop was exacerbated by the immediate departures of the CFO and General Counsel [1][1]

Philadelphia, Pennsylvania--(Newsfile Corp. - February 9, 2026) - Kehoe Law Firm, P.C. is investigating potential securities fraud claims on behalf of investors of Kyndryl Holdings, Inc. ("Kyndryl" or the "Company") (NYSE: KD).On February 9, 2026, Kendryl reported it will delay filing its 10-Q, because it ". . . is reviewing its cash management practices, related disclosures (including regarding the drivers of the Company's adjusted free cash flow metric), the efficacy of the Company's internal control ove ...

For the quarter ended December 2025, Kyndryl Holdings, Inc. (KD) reported revenue of $3.86 billion, up 3.1% over the same period last year. EPS came in at $0.52, compared to $0.51 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $3.91 billion, representing a surprise of -1.38%. The company delivered an EPS surprise of -12.85%, with the consensus EPS estimate being $0.60.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- ...

Financial Data and Key Metrics Changes - The company reported revenue of $3.9 billion for the third quarter, reflecting a 3% increase year-over-year on a reported basis, unchanged in constant currency [15][16] - Adjusted EBITDA decreased by 1% year-over-year to $696 million, while Adjusted Pre-Tax Income grew by 5% year-over-year to $168 million [16][18] - Free cash flow generated in the third quarter was $217 million, with a net CapEx of $210 million [18][19] Business Line Data and Key Metrics Changes - Kyndryl Consult experienced a strong performance with a 20% year-over-year growth in constant currency, now representing 25% of total revenue [15][16] - Hyperscaler-related revenue reached $500 million in the third quarter, marking a 58% increase year-over-year, exceeding initial growth expectations [17] - The company signed contracts totaling $3.9 billion in the quarter, with a trailing 12-month revenue book-to-bill ratio remaining above 1.0 [5][16] Market Data and Key Metrics Changes - The company noted a slowdown in attrition rates, particularly in strategic markets and the UK, which has led to increased local hiring costs [31][32] - The evolving partnership with IBM has resulted in a significant reduction in annualized spend from nearly $4 billion to approximately $2 billion, impacting revenue growth [9][58] Company Strategy and Development Direction - The company is focused on expanding its capabilities in AI and private cloud services, responding to increased demand driven by data sovereignty and security requirements [12][66] - The strategic direction emphasizes the importance of long-term customer relationships and adapting to changing market dynamics [13][66] - The company aims to achieve fiscal 2028 targets, projecting approximately $1.1 billion in Adjusted Pre-Tax Income and over $1 billion in adjusted free cash flow [14][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that longer sales cycles and evolving customer consumption models are impacting revenue expectations [24][28] - The company remains confident in its growth strategy despite current challenges, emphasizing the importance of adapting to industry disruptions caused by AI and regulatory changes [7][39] - Management reiterated that they do not expect a restatement of financial statements despite ongoing SEC reviews [25][36] Other Important Information - The company has repurchased 3.7 million shares in the quarter, representing 1.6% of outstanding shares, as part of its capital allocation strategy [18][19] - The financial position remains strong with a cash balance of $1.35 billion and a net leverage ratio of 0.7x Adjusted EBITDA [20][21] Q&A Session Summary Question: Outlook and Revision Factors - Analysts inquired about the reasons behind the revised outlook, focusing on sales cycle delays and the evolving IBM partnership [27][28] - Management explained that the sales cycles have lengthened due to market dynamics and regulatory discussions, impacting growth expectations [28][29] Question: Strategic Market Changes - Questions were raised regarding changes in strategic markets, particularly in the UK, and the associated costs and benefits [30][31] - Management indicated that investments in local markets are necessary but may take time to yield results [31][32] Question: Free Cash Flow and Working Capital - Analysts sought clarification on the factors affecting free cash flow projections, particularly in relation to pre-tax income revisions [49][50] - Management confirmed that the primary driver of the change in free cash flow guidance is linked to the revision in pre-tax income [50] Question: Confidence in Fiscal 2028 Targets - Questions were posed about the building blocks supporting confidence in achieving fiscal 2028 targets despite current shortfalls [56][57] - Management highlighted the importance of cash flow growth, profitability improvements, and the shift towards higher-margin contracts as key factors [58][59]

Financial Data and Key Metrics Changes - The company reported revenue of $3.9 billion for the third quarter, reflecting a 3% increase year-over-year on a reported basis, unchanged in constant currency [15] - Adjusted EBITDA decreased by 1% year-over-year to $696 million, while Adjusted Pre-Tax Income grew by 5% year-over-year to $168 million [16] - Free cash flow generated in the third quarter was $217 million, with a net CapEx of $210 million [18] Business Line Data and Key Metrics Changes - Kyndryl Consult experienced a strong performance with a 20% year-over-year growth in constant currency, now representing 25% of total revenue [15][16] - Hyperscaler-related revenue reached $500 million in the third quarter, marking a 58% increase year-over-year [17] - Signings for the quarter totaled $3.9 billion, with a trailing 12-month revenue book-to-bill ratio remaining above 1.0x [5][15] Market Data and Key Metrics Changes - The company noted a slowdown in attrition rates, which has led to higher labor costs in the near term [7] - The evolving partnership with IBM has resulted in a significant reduction in annualized spend from nearly $4 billion to approximately $2 billion [9] - The company is addressing market dynamics such as data sovereignty and AI, which are impacting customer decision-making processes [39] Company Strategy and Development Direction - The company is focused on expanding its capabilities in AI and private cloud services, responding to increased demand driven by industry trends [12][66] - The strategic partnership with IBM is evolving, with efforts to enhance the value proposition for customers [8][10] - The company aims to achieve fiscal 2028 targets, with a focus on margin expansion and profitability through high-value service offerings [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that longer sales cycles and evolving customer consumption models are impacting revenue growth expectations [24] - The company remains confident in its growth strategy despite recent challenges, emphasizing the importance of adapting to market dynamics [7][13] - Management expects to generate approximately $800 million in free cash flow over fiscal 2025 and 2026 combined [14][23] Other Important Information - The company disclosed a delay in filing its quarterly report due to an ongoing review of cash management practices by the SEC, but does not expect a restatement of financial statements [25] - The company has repurchased 3.7 million shares in the quarter, representing 1.6% of outstanding shares, as part of its capital allocation strategy [18][19] Q&A Session Summary Question: Outlook and Revision Factors - Analysts inquired about the reasons behind the revised outlook, focusing on longer sales cycles and the evolving IBM partnership [27][28] - Management explained that the sales cycle extension affected multiple business areas, including Consult and hyperscaler services [28][29] Question: Strategic Markets and UK Operations - Questions were raised regarding changes in Strategic Markets and the UK, with management indicating that local investments are more expensive and adjustments will take time [30][31] Question: Impact of Review on Forward Commentary - Analysts asked about the impact of the SEC review on future guidance, to which management reiterated confidence in achieving fiscal 2028 goals without expecting a restatement [36] Question: Sales Cycle Length and Deal Timelines - Analysts sought clarification on the timeframe for closing deals affected by extended sales cycles, with management indicating that many discussions are linked to customer renewals and should stabilize within a couple of quarters [61][63] Question: Free Cash Flow and Working Capital - Questions were raised about the decrease in free cash flow guidance, attributed primarily to changes in pre-tax income [49][50] Question: Confidence in Fiscal 2028 Targets - Analysts asked about the building blocks supporting confidence in fiscal 2028 targets, with management highlighting improved cash flow and profitability driven by high-margin backlog [56][58]

Financial Data and Key Metrics Changes - Revenue for the third quarter totaled $3.9 billion, representing a 3% increase year-over-year on a reported basis, unchanged in constant currency [16] - Adjusted EBITDA decreased by 1% year-over-year to $696 million, while Adjusted Pre-Tax Income grew by 5% year-over-year to $168 million [17] - Free cash flow generated in the third quarter was $217 million, with a net CapEx of $210 million [19] Business Line Data and Key Metrics Changes - Kyndryl Consult experienced a strong performance with a 20% year-over-year growth in constant currency, now representing 25% of total revenue [16][17] - Hyperscaler-related revenue reached $500 million in the third quarter, a 58% increase year-over-year, putting the company on track to exceed 50% growth for the year [18] - Signings for the quarter totaled $3.9 billion, with a trailing 12-month revenue book-to-bill ratio remaining above 1.0 [5][17] Market Data and Key Metrics Changes - The company noted a slowdown in strategic markets, particularly in the UK, which contributed to longer sales cycles [16][32] - The evolving partnership with IBM has impacted revenue growth, with a noted decline in IBM-related spending from nearly $4 billion to approximately $2 billion [10][53] Company Strategy and Development Direction - The company is focused on expanding its capabilities in AI and private cloud services, responding to increased demand driven by data sovereignty and security requirements [13][61] - Kyndryl aims to drive margin expansion through its Three-A's initiative and is committed to maintaining strong liquidity while investing in business growth [21][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that longer sales cycles and evolving customer consumption models are affecting revenue expectations, particularly in the context of AI and data sovereignty [5][24] - The company remains confident in achieving its fiscal 2028 targets, despite the challenges faced in the current fiscal year [35][53] Other Important Information - The filing of the quarterly report will be delayed due to an ongoing review of cash management practices by the SEC, but no restatement of financial statements is expected [25] - The company has repurchased 3.7 million shares in the quarter, representing 1.6% of outstanding shares, as part of its capital allocation strategy [19][20] Q&A Session Summary Question: Outlook and Revision Factors - The management discussed the unexpected lengthening of sales cycles and the evolving IBM partnership as primary factors affecting the revised outlook [27][30] Question: Strategic Market Changes - Management indicated that investments in strategic markets, particularly in the UK, are being addressed, although changes may take time to implement [31][32] Question: Impact of Review on Forward Commentary - The company cannot comment on the ongoing SEC review until it is complete, but remains confident in its fiscal 2028 goals [35] Question: Sales Cycle Elongation - Management noted that the elongation of sales cycles is not expected to be multi-year and is linked to customer renewals [56] Question: Free Cash Flow Changes - The decrease in expected free cash flow is primarily attributed to changes in pre-tax income, with working capital also playing a role [46][47] Question: Confidence in Fiscal 2028 Targets - Management highlighted the importance of cash flow growth and the shift towards higher-margin contracts as key drivers for achieving fiscal 2028 targets [51][53]