Q3 2026 Kyndryl Holdings Inc Earnings Call Transcript
Key Points
- Kyndryl Holdings Inc (KD) reported a 3% increase in revenue for the third quarter, maintaining constant currency levels.
- The company achieved margin expansion, higher earnings, and positive free cash flow during the quarter.
- Kyndryl Consult experienced strong growth, with a 20% year-over-year increase in constant currency, now representing 25% of total revenue.
- The company signed $3.9 billion in contracts during the quarter, with a trailing 12-month revenue book-to-bill ratio above 1.0.
- Kyndryl Holdings Inc (KD) is on track to achieve nearly $2 billion in hyperscaler-related revenue by the end of fiscal 2026, demonstrating significant growth from previous years.
- The company experienced longer sales cycles due to the complexity of new AI capabilities and regulatory uncertainties, impacting revenue expectations.
- Kyndryl Consult's performance, while strong, fell below expectations, contributing to a revised fiscal 2026 outlook.
- The evolving partnership with IBM resulted in a 3.5 point adverse effect on revenue growth, as customers' consumption models for IBM's innovation changed.
- Employee attrition rates declined unexpectedly, leading to higher labor costs in the near term.
- The company is facing challenges in Strategic Markets and UK operations, with actions being taken to address these issues.
Good day and thank you for standing by. Welcome to the Kyndryl fiscal third quarter 2026 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Lori Chaitman, Global Head of Investor Relations. Please go ahead.
Good morning, everyone, and welcome to Kyndryl's earnings call for the third fiscal quarter ended December 31, 2025.
Before we begin, I'd like to remind you that our remarks today includes forward-looking statements. These statements do not guarantee future performance and speak only as of today, and the company assumes no obligation to update its forward-looking statements except as required by law. Actual outcomes or results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties.
For more information on some of these risks and uncertainties, please see the Risk Factors
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