Kyndryl Holdings (NYSE:KD) shares edged 0.9% lower in pre-market trading after the enterprise technology services company reported first-quarter fiscal 2027 results that came in below Wall Street forecasts for both earnings and revenue.
For the quarter ended 30 June 2026, the company reported an adjusted loss of $0.12 per share, compared with analyst expectations for break-even earnings. Revenue totalled $3.6 billion, below the consensus estimate of $3.67 billion and down 3% from the same period last year on both a reported and constant-currency basis.
Workforce charges weigh on profitability
Adjusted EBITDA declined to $512 million from $647 million a year earlier.
The quarter included $152 million of workforce rebalancing charges, which affected both reported and adjusted financial results.
Despite the weaker earnings performance, Chairman and Chief Executive Officer Martin Schroeter highlighted continued strength in customer demand.
“Our first quarter results reflected strong momentum in signings, supported by strength in Kyndryl Consult and hyperscalers, with an increasing demand for AI-led modernization solutions,” Schroeter said.
Cash flow impacted by working capital
Kyndryl reported free cash flow of negative $401 million during the quarter, compared with negative $222 million in the same period last year.
The company said the larger cash outflow was primarily driven by the timing of working capital, including higher software-related payments and lower customer billings and collections.
During the quarter, Kyndryl also repurchased 5.0 million shares for a total cost of $64 million as part of its capital return programme.
Full-year outlook maintained
Despite missing analyst expectations in the first quarter, Kyndryl reaffirmed its fiscal 2027 guidance.
The company continues to expect adjusted pretax income of between $600 million and $700 million, along with free cash flow of $400 million to $500 million.
Management also maintained its forecast for constant-currency revenue, which is expected to range from flat to a decline of 2% for the full fiscal year.
Kyndryl Holdings stock price
