Shares of Kyndryl Holdings tumbled 11.3% to $13.03 after the IBM spinoff posted first-quarter fiscal 2027 results that fell short on both the top and bottom lines — the second consecutive quarterly miss for a company that is asking Wall Street to trust a costly transformation.

  • A $152 Million Restructuring Bill Crushed the Bottom Line. Revenue came in at $3.618 billion, down 3% year over year, while diluted EPS swung to a $0.25 loss from a $0.23 profit a year earlier, as $152 million of workforce-rebalancing charges weighed on both reported and adjusted results.

Those charges are expected to total roughly $200 million for the full fiscal year, but management says they will unlock $400–$500 million in annual cost savings starting in fiscal 2028. The problem: investors are paying today's price for next year's savings, and the gap between promise and proof keeps widening.

  • New Deals Are Growing, but Old Revenue Is Shrinking Faster. First-quarter signings rose roughly 22% to $3.9 billion.

Kyndryl's consulting arm grew 10% in Q1, with trailing-twelve-month consulting revenue up 14%.

Cloud-related revenue from hyperscalers exceeded $530 million, up 34% year over year. Yet that growth did not offset broader revenue and margin pressure.

A shift in how customers buy IBM hardware and software directly — bypassing Kyndryl — shaved roughly 3 percentage points off constant-currency revenue.

  • Cash Flow Went Deeper Into the Red. Free cash flow was negative $401 million, compared with negative $222 million a year earlier.

Management blamed the wider outflow on working-capital timing, including higher software-related payments and lower customer collections. For a company guiding to $400–$500 million of positive free cash flow for the full year, that is a steep first-quarter hole to climb out of.

  • Management Reaffirmed Guidance — But the Track Record Invites Skepticism. Kyndryl stood by its fiscal 2027 outlook of $600–$700 million in adjusted pretax income, with revenue flat to down 2% in constant currency.

Fiscal 2028 targets include over $1.2 billion in adjusted pretax income and $1 billion in free cash flow.

However, last quarter's fiscal 2026 close also featured an earnings miss that sent the stock down nearly 14%. Consecutive misses make it harder for shareholders to treat the long-range plan as credible without cleaner near-term execution.