Kyndryl Shares Surge 30% Following Strong Q2 Earnings Report
Shares of Kyndryl Holdings Inc. soared by 30% today after the company announced better-than-expected earnings for the second quarter of its 2027 fiscal year.
During the three months ended September 30, Kyndryl reported $3.9 billion in sales. This figure indicates a 1.9% decline from the same period last year, but it exceeded consensus estimates by approximately $50 million. The company’s Kyndryl Consult division played a pivotal role in generating this revenue surprise.
Kyndryl, which was spun off from IBM Corp., previously relied heavily on managing technology infrastructure for other companies. In 2022, Kyndryl launched Kyndryl Consult, aiming to engage in more strategic and higher-margin professional services agreements.
The Consult unit saw a year-over-year revenue increase of 4.2% in the second quarter, although specific quarterly figures were not disclosed. However, the division’s total revenue over the past year reached $3.6 billion.
Notably, Kyndryl Consult’s signings—an indicator of future revenue—increased by 19% compared to the previous year. This growth likely contributed to the significant rise in stock prices following the earnings announcement.
Many initiatives undertaken by Kyndryl Consult are centered around artificial intelligence. The division assists clients in constructing AI agent ensembles and developing training data generation pipelines. Additionally, it offers strategic guidance on key business decisions, including optimal AI budget allocations.
Kyndryl also provides a software platform called Bridge, which facilitates access for AI agents to an organization’s internal data. The platform additionally monitors these agents to ensure compliance with safety standards.
The growth of public cloud services is another critical aspect of Kyndryl’s expansion strategy. The company’s hyperscale-related revenue surpassed $500 million in the second quarter, reflecting a substantial 27% year-over-year growth.
“Strong signings and continued growth in Kyndryl Consult and hyperscaler-related revenue reinforce our confidence in our fiscal 2027 outlook,” said Kyndryl CEO Martin Schroeter. “Our performance demonstrates the demand for Kyndryl’s AI-led modernization capabilities and deep mission-critical expertise that assist customers in managing complex technology systems, enhancing cybersecurity, and attaining measurable business results.”
Kyndryl also reported an adjusted net income of $92 million, translating to 42 cents per share, slightly above analysts’ expectations of 41 cents per share. This figure excludes a $38 million charge related to workforce reductions taken during the second quarter, part of a broader initiative projected to save the company up to $500 million annually, beginning in its 2028 fiscal year.
For the current fiscal year, Kyndryl anticipates an adjusted pretax income ranging from $600 million to $700 million. The company expects its revenue to remain flat or grow by up to 2%.