Free cash flow remains highly inconsistent, oscillating between -7.3% and 10.1% margins, further complicated by significant working capital outflows such as the $879 million recorded in 2026Q1.
| Cash from Operations | 948M | 942M | 454M | 454M | -119M | 628M | 1.13B |
| Operating CF Margin % | 6.28% | 6.26% | 2.83% | 2.67% | -0.64% | 3.37% | 5.59% |
| Operating CF Growth % | 0.64% | 107.49% | 0% | 481.51% | -118.95% | -44.62% | - |
| Net Income | 198M | 252M | -340M | -340M | -2.3B | -2.01B | -943M |
| Depreciation & Amortization | 2.77B | 1.02B | 1.18B | 1.18B | 1.66B | 3.96B | 4.04B |
| Stock-Based Compensation | 0 | 100M | 95M | 95M | 71M | 64M | 0 |
| Deferred Taxes | -24M | -1M | -13M | -13M | -401M | 0 | -33M |
| Other Non-Cash Items | 179M | 1.55B | 1.83B | 1.83B | 2.32B | 318M | 52M |
| Working Capital Changes | -2.18B | -1.97B | -2.3B | -2.3B | -1.47B | -1.71B | -1.98B |
| Change in Receivables | -128M | 289M | 11M | 11M | -1.08B | 387M | 23M |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Change in Payables | -93M | -89M | -305M | -305M | 125M | 0 | 33M |
| Cash from Investing | -561M | -404M | -553M | -553M | -572M | -953M | -1.13B |
| Capital Expenditures | -608M | -605M | -651M | -651M | -752M | -1.04B | -1.19B |
| CapEx % of Revenue | 4.03% | 4.02% | 4.06% | 3.82% | 4.03% | 5.55% | 5.87% |
| Acquisitions | 66M | 139M | 0 | 0 | 0 | 0 | 63M |
| Investments | - | - | - | - | - | - | - |
| Other Investing | -19M | 62M | 98M | 98M | 180M | 83M | -1M |
| Cash from Financing | 457M | -286M | -170M | -170M | 2.92B | 312M | 0 |
| Debt Issued (Net) | 854M | -148M | -150M | -150M | 2.95B | -66M | -18M |
| Equity Issued (Net) | -398M | -138M | -22M | -22M | -1M | 0 | 18M |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -398M | -138M | -22M | -22M | -1M | 0 | 0 |
| Other Financing | 1M | 0 | 2M | 2M | -31M | 378M | 0 |
| Net Change in Cash | 834M | 235M | -306M | -306M | 2.2B | -12M | 4M |
| Free Cash Flow | 340M | 337M | -197M | -197M | -871M | -408M | -56M |
| FCF Margin % | 2.25% | 2.24% | -1.23% | -1.16% | -4.67% | -2.19% | -0.28% |
| FCF Growth % | 0.89% | 271.07% | 0% | 77.38% | -113.48% | -628.57% | - |
| FCF per Share | 1.45 | 1.41 | -0.86 | -0.87 | -3.89 | -1.82 | -0.25 |
| FCF Conversion (FCF/Net Income) | 4.79x | 3.74x | -1.34x | -0.33x | 0.05x | -0.27x | -1.20x |
| Interest Paid | 0 | 119M | 118M | 98M | 2M | 0 | 0 |
| Taxes Paid | 0 | 149M | 191M | 167M | 12M | 0 | 0 |
Working capital volatility
As reported in recent financial statements, Kyndryl's operating cash flow to net income ratio has fluctuated wildly, reaching a peak of 29.29 in 2026Q4, which suggests that reported net income is a poor proxy for the actual cash-generating capacity of the underlying business operations.
The extreme divergence between net income and operating cash flow indicates that non-cash charges and significant working capital swings are masking the true economic performance of the firm. Investors should monitor this disconnect, as it implies that the company's profitability is currently driven more by accounting adjustments than by sustainable operational cash generation.
Based on Kyndryl's reported figures, free cash flow margins have oscillated between -7.3% and 10.1% over the last ten quarters, highlighting the difficulty the company faces in maintaining a consistent cash surplus while navigating its ongoing portfolio transformation and legacy contract runoff.
The erratic nature of free cash flow suggests that the business model is still highly sensitive to the timing of large-scale contract exits and restructuring-related cash outflows. Until the company can demonstrate a sustained positive trajectory in FCF margins, the market may continue to view the firm's cash generation as unreliable.
According to quarterly filings, Kyndryl has experienced persistent and significant negative working capital changes, including an $879 million outflow in 2026Q1, which indicates that the company is struggling to efficiently manage its cash conversion cycle during this period of structural transition.
These recurring outflows suggest that the company may be facing challenges in either collecting receivables or managing payables effectively as it sheds legacy business. This persistent drain on liquidity warrants further investigation, as it directly offsets the cash benefits expected from the company's operational efficiency initiatives.
As evidenced by the company's financial data, capital expenditures have remained a consistent burden, with CapEx-to-revenue ratios peaking at 6.5% in 2024Q3, reflecting the ongoing necessity of maintaining the complex, legacy infrastructure that underpins the firm's core service offerings.
The level of capital intensity appears to be a structural requirement rather than a discretionary growth investment, given the firm's reliance on mainframe and private cloud environments. This suggests that Kyndryl will likely remain capital-constrained for the foreseeable future as it balances maintenance needs with the required investments in newer, higher-margin service capabilities.
Quick answers to the most common questions about buying KD stock.
Kyndryl Holdings, Inc. (KD) generated $948.0M in net cash from operating activities in 2026. This reflects the cash generated directly from core business operations.
Kyndryl Holdings, Inc. (KD) generated $340.0M in free cash flow in 2026. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Kyndryl Holdings, Inc. (KD) spent $608.0M on capital expenditures in 2026. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2026, Kyndryl Holdings, Inc. (KD) spent $398.0M on share repurchases. This shows the company's commitment to returning capital to its equity investors.