GET DAILY SIGNALSKyndryl Holdings (KD) Delivers EPS Beat and Margin Expansion in Latest Quarter
Key Takeaways
- Kyndryl reported revenue of $3.65 billion for its second fiscal quarter, down 1.9% year over year on a reported basis and 0.8% in constant currency.
- Adjusted EBITDA rose to $699 million, lifting adjusted EBITDA margin 190 basis points to 19.1%.
- Non-GAAP earnings per share of $0.42 came in $0.04 above analyst expectations, while net income was $59 million.
- U.S. segment revenue grew 9%, marking a third consecutive quarter of growth, and hyperscaler-related revenue rose roughly 27% year over year.
- Management reaffirmed its full fiscal 2027 outlook, including adjusted pretax income of $600 million to $700 million and free cash flow of $400 million to $500 million.
Why the Quarter Matters
Kyndryl, the world's largest IT infrastructure services provider, has been repositioning itself since its spin-off from IBM. The focus has shifted toward higher-margin consulting, cloud alliances, and AI-led modernization. This second-quarter report provides a useful checkpoint on whether that strategy is offsetting ongoing pressure on the top line from customers purchasing hardware and software directly. The results also arrive amid a workforce rebalancing program, so profitability and margin trends offer a clear measure of execution. For investors, the numbers highlight how AI demand, hyperscaler partnerships, and cost discipline are feeding into earnings and cash flow.
Quarterly Results in Detail
For the second quarter of fiscal 2027, ended September 30, 2026, Kyndryl Holdings (KD) reported revenue of $3.65 billion, down 1.9% year over year on a reported basis and 0.8% in constant currency. Net income came in at $59 million versus $68 million a year earlier. Adjusted EBITDA increased to $699 million from $641 million, with the margin expanding 190 basis points to 19.1%. Adjusted pretax income reached $150 million, and the adjusted pretax margin improved 80 basis points to 4.1%. Non-GAAP diluted earnings per share of $0.42 beat consensus estimates by $0.04. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry. Management reaffirmed its fiscal 2027 guidance for adjusted pretax income of $600 million to $700 million, free cash flow of $400 million to $500 million, and constant-currency revenue flat to down 2%.
Market Reaction
Shares of Kyndryl Holdings (KD) moved higher after the release. Investors appeared to focus on the bottom-line beat and continued margin expansion even as revenue declined. The stronger-than-expected earnings per share and rising adjusted EBITDA margin suggested that cost discipline and the move toward higher-value services are taking hold. Sentiment received additional support from the reaffirmed full-year guidance and growth in Kyndryl Consult signings along with hyperscaler-related revenue. At the same time, the ongoing top-line decline and higher net leverage, which rose to 0.9 times adjusted EBITDA from 0.5 times at the end of fiscal 2026, remained points of attention.
Looking Ahead
The near-term focus for Kyndryl Holdings (KD) is converting a healthier signings pipeline into revenue while protecting margins. Management indicated that workforce rebalancing actions are now substantially complete, with cost savings expected to begin contributing in the second half of the fiscal year. Those savings should largely offset earlier charges and support profitability targets.
Several factors will be worth watching in coming quarters. The pace of revenue conversion from post-spin signings will show whether the company can stabilize or return to growth, especially in the United States where momentum has been strongest. Hyperscaler-related revenue and Kyndryl Consult growth will serve as important indicators of enterprise adoption of AI, cloud, and modernization services. Cash generation and the balance sheet also merit attention. The company reiterated its $400 million to $500 million free cash flow outlook despite first-half cash use, pointing to a meaningful step-up in the second half. How effectively management delivers that conversion while managing recent debt issuance and bringing net leverage back below target will influence investor confidence heading into fiscal 2028.
Using AI Tools in My Research
When evaluating names like Kyndryl Holdings (KD) alongside peers, I often rely on Tickeron’s AI Screener to surface comparable opportunities based on fundamentals, technical patterns, and performance metrics. It streamlines the process of identifying stocks that fit similar criteria without manual effort across thousands of tickers.
Disclaimer
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
KD's RSI Oscillator recovers from overbought zone
The 10-day RSI Indicator for KD moved out of overbought territory on October 27, 2026. This could be a sign that the stock is shifting from an upward trend to a downward trend. Traders may want to look at selling the stock or buying put options. Tickeron's A.I.dvisor looked at 24 instances where the indicator moved out of the overbought zone. In 20 of the 24 cases the stock moved lower in the days that followed. This puts the odds of a move down at 83%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on November 03, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on KD as a result. In 62 of 87 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 71%.
The Moving Average Convergence Divergence Histogram (MACD) for KD turned negative on November 03, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 57 similar instances when the indicator turned negative. In 43 of the 57 cases the stock turned lower in the days that followed. This puts the odds of success at 75%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where KD declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 74%.
KD broke above its upper Bollinger Band on October 20, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Stochastic Oscillator is in the oversold zone. Keep an eye out for a move up in the foreseeable future.
KD moved above its 50-day moving average on October 15, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for KD crossed bullishly above the 50-day moving average on October 21, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 9 of 12 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 75%.
Following a +9.43% 3-day Advance, the price is estimated to grow further. Considering data from situations where KD advanced for three days, in 200 of 280 cases, the price rose further within the following month. The odds of a continued upward trend are 71%.
The Aroon Indicator entered an Uptrend today. In 113 of 178 cases where KD Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 63%.
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is 9 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is 55 (best 1 - 100 worst), indicating steady price growth. KD’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of 73 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.634) is normal, around the industry mean (2.796). P/E Ratio (34.053) is within average values for comparable stocks, (18.242). Projected Growth (PEG Ratio) (0.000) is also within normal values, averaging (2.284). Dividend Yield (0.000) settles around the average of (0.207) among similar stocks. P/S Ratio (0.197) is also within normal values, averaging (139.965).
The Tickeron SMR rating for this company is 77 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. KD’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 93, placing this stock worse than average.
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