Kyndryl Holdings Incorporation (KD) Q2 2027 Earnings Report

The call was constructive and generally positive. Management highlighted strong signings, improving margins, U.S. growth, modernization and AI demand, completed workforce actions, balance-sheet flexibility, and reaffirmed fiscal 2027 and fiscal 2028 objectives. These positives were partly offset by a 1.9% reported revenue decline, a first-half free cash flow use, higher amortization and interest expense, sequential deceleration in Kyndryl Consult growth, and continued challenges in Europe.

For fiscal 2027, Kyndryl reaffirmed adjusted pre-tax income of $600 million-$700 million, revenue flat to down 2% in constant currency, free cash flow of $400 million-$500 million, amortization expense of approximately $1.3 billion, and interest expense of approximately $160 million; it expects gross margins to expand through the remainder of the year, stronger revenue growth in the second half, and Kyndryl Consult growth of high single or low double-digit growth on a full year basis. The fiscal 2027 pre-tax income outlook includes approximately $200 million of workforce rebalancing charges and a similar amount of savings this year, while fiscal 2028 is expected to yield annualized operating expense savings in the range of $400 million-$500 million; the $1 billion adjusted free cash flow target for fiscal 2028 is still on track, and net leverage is expected to remain below one times adjusted EBITDA exiting the fiscal year.