Kyndryl Holdings Inc (NYSE:KD), the global infrastructure services provider spun off from IBM, reported financial results for its third quarter of fiscal year 2026, which ended December 31, 2025. The company’s performance fell significantly short of Wall Street’s expectations, triggering a severe negative reaction in the stock during pre-market trading.
Earnings and Revenue Miss
The core figures from the quarterly report reveal a substantial deviation from analyst forecasts. Kyndryl reported revenue of $3.86 billion and non-GAAP earnings per share (EPS) of $0.52.
- Revenue: Came in at $3.86 billion, missing the consensus estimate of $4.01 billion. This represents a year-over-year increase of 3.1%, but the growth was not enough to meet expectations.
- Earnings Per Share (Non-GAAP): Reported at $0.52, which is 13.7% below the analyst estimate of $0.66.
This dual miss on both the top and bottom lines forms the fundamental basis for the market’s negative response. The earnings shortfall is particularly notable, suggesting potential pressures on profitability or operational efficiency despite modest revenue growth.
Market Reaction and Recent Performance
The market’s verdict was swift and severe following the earnings release. In pre-market trading, Kyndryl’s stock plummeted approximately 38.7%. This dramatic drop erases gains and compounds existing weakness, reflecting deep investor disappointment with the quarterly results and potentially raising concerns about the company’s near-term trajectory.
This sharp decline contrasts with the stock’s more muted performance leading up to the report:
- Performance over the last week was essentially flat.
- The stock was down 3.0% over the last two weeks and 13.8% over the last month, indicating some negative sentiment or anticipation building prior to the earnings announcement.
Looking Ahead: Estimates vs. Outlook
While the press release confirms the reported figures, it does not provide a formal financial outlook or guidance for the upcoming quarter or full year. The absence of forward-looking commentary from management leaves investors to rely solely on existing analyst projections, which may now be subject to significant revision.
Current analyst estimates for the company’s future periods are as follows:
- Q4 Fiscal 2026: Revenue is estimated at $4.32 billion, with earnings per share projected at $0.96.
- Full Year Fiscal 2026: Revenue is estimated at $16.02 billion, with earnings per share projected at $2.39.
The lack of company-provided guidance in the press release means there is no official benchmark against which to compare these estimates. This uncertainty, following a major earnings miss, likely contributes to the heightened investor anxiety visible in the pre-market sell-off.
Summary of the Earnings Release
The primary takeaway from Kyndryl’s press release is the straightforward reporting of its Q3 FY2026 financial results, which fell short of market expectations. The announcement positions Kyndryl as a “leading provider of mission-critical enterprise technology services” but the financial details underscore the challenges it faces in meeting profitability targets in a competitive IT services landscape. The report did not highlight specific drivers behind the miss or detail strategic initiatives to address the performance gap.
For a detailed history of Kyndryl’s earnings, consensus estimates, and future projections, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
