Kyndryl Holdings Inc. shares closed 10.75% lower Thursday after the IT services provider reported weaker-than-expected fourth quarter earnings.
The company posted adjusted net income of $40 million, or $0.18 per share, well below the $0.45 analysts expected. Revenue was $3.75 billion, a 5% constant currency decline year-over-year, though just above consensus estimates. For fiscal 2026, total revenue reached $15.1 billion.
Bright spots included a 57% surge in hyperscale public cloud contract revenue to $1.9 billion, exceeding internal targets by $100 million. Kyndryl Consult, its advisory unit, saw revenue rise 18% to $3.5 billion, with new deals worth $4 billion signed during the year.
The company is also undertaking a "workforce rebalancing" initiative, with most layoffs expected to be completed this quarter. Kyndryl had approximately 73,000 employees at the end of March and expects to take a $200 million charge related to the job cuts. The restructuring is projected to generate $400 to $500 million in annual savings.
Kyndryl expects adjusted pretax income of $600 to $700 million in fiscal 2027, with revenue flat or down up to 2%. CEO Martin Schroeter said the company is "focused on consistent execution and improving business fundamentals."