Shares sank another 6.3% to $11.54 in pre-market trading Tuesday, extending a punishing decline that has now erased more than 70% of the stock's value over the past twelve months. Kyndryl reported Q4 fiscal 2026 earnings of just $0.18 per share against a Wall Street forecast of $0.49, while revenue came in at $3.77 billion versus the $3.98 billion expected — a double miss that has deepened a crisis of confidence in the world's largest IT infrastructure services provider.
The Earnings Gap Is Too Wide to Explain Away. Kyndryl missed Q4 EPS estimates by 58.1% , a staggering shortfall. The company operates on razor-thin profit margins, where even modest disruptions — in this case, higher income taxes and a small rise in overhead spending — can wreck the bottom line.
A non-recurring, non-cash tax charge from revised tax positions recorded in Q4 inflated the tax bill to $215 million from $184 million a year earlier. But one-time excuses don't change the fact that full-year net income fell to $198 million, or $0.85 per share, down from $252 million, or $1.05 per share, in fiscal 2025.
Customers Are Slowing Down, and Revenue Shows It. Full-year revenue was $15.1 billion, flat year-over-year on a reported basis and down 3% in constant currency — meaning once you strip out favorable exchange rates, the business actually shrank. Management blamed "longer sales cycles" and changes in how customers buy IBM-related technology , and guided fiscal 2027 revenue flat to down 2% in constant currency, with IBM headwinds persisting. For a company trading at a forward P/E of roughly 5.8x — a steep discount to the IT services industry average of 16.5x — the market is clearly pricing in structural decline, not a turnaround.
A Turbulent Year Has Shattered Credibility. Earlier in 2026, the stock crashed 55% in a single session after Kyndryl disclosed its CFO's departure, delayed filings, and lowered guidance.
The company later admitted its financial statements were materially misstated, had inadequate internal controls, and received a voluntary document request from the SEC's enforcement division. New C-suite hires are incoming, but trust takes far longer to rebuild than to lose.
Cash Flow Is the One Bright Spot — But Is It Enough? Kyndryl generated $406 million in free cash flow in fiscal 2026, down only 3% from the prior year , and expects $400 million to $500 million in fiscal 2027.
Hyperscaler-related revenue — work tied to cloud giants like Amazon and Microsoft — hit $1.9 billion, up 59% year-over-year. These pockets of growth are real, but they remain overshadowed by a legacy business in retreat and a governance cloud that won't lift quickly.