Revenue growth remains stagnant, fluctuating between -1.4% and 3.1% over the last four quarters, while gross margins remain constrained near 22% due to reliance on legacy infrastructure services.
| Sales/Revenue | 15.09B | 15.06B | 16.05B | 17.03B | 18.66B | 18.66B | 20.28B |
| Revenue Growth % | 0.23% | -6.2% | -5.72% | -8.74% | 0% | -8% | - |
| Cost of Goods Sold | 11.8B | 11.91B | 13.19B | 14.5B | 16.55B | 16.55B | 17.68B |
| COGS % of Revenue | 78.21% | 79.13% | 82.16% | 85.15% | 88.71% | 88.71% | 87.19% |
| Gross Profit | 3.29B | 3.14B | 2.86B | 2.53B | 2.11B | 2.11B | 2.6B |
| Gross Margin % | 21.79% | 20.87% | 17.84% | 14.85% | 11.29% | 11.29% | 12.81% |
| Gross Profit Growth % | 4.65% | 9.78% | 13.25% | 19.98% | 0% | -18.87% | - |
| Operating Expenses | 2.65B | 2.59B | 2.77B | 2.91B | 2.78B | 2.78B | 3.23B |
| OpEx % of Revenue | 17.59% | 17.21% | 17.28% | 17.11% | 14.88% | 14.88% | 15.92% |
| Selling, General & Admin | 2.65B | 2.59B | 2.77B | 2.91B | 2.78B | 2.78B | 3.15B |
| SG&A % of Revenue | 17.59% | 17.21% | 17.28% | 17.11% | 14.88% | 14.88% | 15.51% |
| Research & Development | 0 | 49M | 58M | 79M | 23M | 0 | 83M |
| R&D % of Revenue | - | 0.33% | 0.36% | 0.46% | 0.12% | - | 0.41% |
| Other Operating Expenses | 0 | -49M | -58M | -79M | -23M | 0 | 0 |
| Operating Income | 635M | 552M | 90M | -386M | -669M | -669M | -631M |
| Operating Margin % | 4.21% | 3.67% | 0.56% | -2.27% | -3.59% | -3.59% | -3.11% |
| Operating Income Growth % | 15.04% | 513.33% | 123.32% | 42.3% | 0% | -6.02% | - |
| EBITDA | 3.41B | 1.57B | 1.27B | 988M | 995M | 995M | 867M |
| EBITDA Margin % | 22.59% | 10.42% | 7.93% | 5.8% | 5.33% | 5.33% | 4.28% |
| EBITDA Growth % | 117.34% | 23.25% | 28.85% | -0.7% | 0% | 14.76% | - |
| D&A (Non-Cash Add-back) | 2.77B | 1.02B | 1.18B | 1.37B | 1.66B | 1.66B | 1.5B |
| EBIT | 635M | 535M | -46M | -757M | -1.84B | -1.84B | -523M |
| Net Interest Income | -89M | -100M | -122M | -94M | -64M | -64M | -76M |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 89M | 100M | 122M | 94M | 64M | 64M | 76M |
| Other Income/Expense | -221M | -117M | -258M | -465M | -1.23B | -1.23B | 52M |
| Pretax Income | 414M | 435M | -168M | -851M | -1.9B | -1.9B | -579M |
| Pretax Margin % | 2.74% | 2.89% | -1.05% | -5% | -10.2% | -10.2% | -2.86% |
| Income Tax | 215M | 184M | 172M | 524M | 402M | 402M | 364M |
| Effective Tax Rate % | 51.93% | 42.3% | -102.38% | -61.57% | -21.12% | -21.12% | -62.87% |
| Net Income | 198M | 252M | -340M | -1.37B | -2.3B | -2.3B | -943M |
| Net Margin % | 1.31% | 1.67% | -2.12% | -8.07% | -12.35% | -12.35% | -4.65% |
| Net Income Growth % | -21.43% | 174.12% | 75.25% | 40.36% | 0% | -144.33% | - |
| Net Income (Continuing) | 199M | 251M | -340M | -1.38B | -2.31B | -2.31B | -943M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 113M | 107M | 97M | 3M | 3M | 56M |
| EPS (Diluted) | 0.85 | 1.05 | -1.48 | -6.06 | -10.28 | -8.99 | -4.21 |
| EPS Growth % | -19.05% | 170.95% | 75.58% | 41.05% | -14.35% | -113.54% | - |
| EPS (Basic) | 0.87 | 1.09 | -1.48 | -6.06 | -10.28 | -8.99 | -4.21 |
| Diluted Shares Outstanding | 233.8M | 239.1M | 229.2M | 226.7M | 224.1M | 223.92M | 223.92M |
| Basic Shares Outstanding | 228.3M | 231.5M | 229.2M | 226.7M | 224.1M | 223.92M | 223.92M |
| Dividend Payout Ratio | - | - | - | - | - | - | - |
Legacy contract runoff volatility
As reported in recent financial filings, Kyndryl's revenue growth remains inconsistent, fluctuating between -1.4% and 3.1% over the last four quarters, reflecting a deliberate strategy to shed low-margin legacy contracts while attempting to scale higher-value advisory services within the competitive IT infrastructure services landscape.
The top-line performance suggests a company in a state of managed contraction rather than organic expansion. Investors should monitor whether the growth in Kyndryl Consult signings can eventually offset the structural decline inherent in the legacy 'focus account' runoff.
Based on the company's reported figures, gross margins have hovered near 22% over the past year, indicating that the firm's reliance on labor-intensive legacy infrastructure management continues to limit its ability to achieve the higher margin profiles seen in more modern IT service providers.
The persistence of these margins suggests that the transition to automated delivery platforms is not yet yielding significant operating leverage. The company appears tethered to a cost-heavy delivery model that requires substantial scale to overcome the pricing pressures of its inherited IBM-era contracts.
According to quarterly income statements, operating income has remained compressed at approximately 4.5% of revenue, suggesting that SG&A expenses are not scaling efficiently enough to drive meaningful bottom-line expansion despite the company's ongoing efforts to streamline its global workforce and operational footprint.
The lack of significant operating leverage implies that the cost of maintaining legacy systems is largely fixed and difficult to reduce in the short term. This warrants further investigation into whether management can decouple revenue growth from headcount-related expenses as they pivot toward cloud-adjacent consulting.
As evidenced by the erratic net income swings, ranging from a $43 million loss in 2025Q2 to a $215 million profit in 2025Q3, the quality of reported earnings appears heavily influenced by non-operating items and periodic restructuring charges that obscure the firm's true operational profitability.
Investors should be cautious of relying on GAAP net income as a proxy for cash-generating ability, given the impact of separation-related costs. The inconsistency in EPS suggests that the company's path to sustainable profitability remains sensitive to one-time adjustments rather than core operational improvements.
While management emphasizes the pivot to higher-margin advisory work, the persistent GAAP net losses and the reliance on adjusted metrics suggest that the 'cleansing' of the legacy portfolio may be more capital-intensive and time-consuming than the current market valuation implies for the firm.
Short-term margin improvements may be vulnerable to macro-driven slowdowns in discretionary consulting spend, which could stall the company's transition. The market's skepticism appears rooted in the risk that the legacy business may decline faster than the new advisory segments can scale to replace the lost revenue.
Quick answers to the most common questions about buying KD stock.
For fiscal year 2026, Kyndryl Holdings, Inc. (KD) reported total revenue of $15.09B. This represents a 25.6% decline compared to $20.28B in 2020.
Kyndryl Holdings, Inc. (KD) is profitable, generating $198.0M in net income for the fiscal year ending 2026 with a net profit margin of 1.3%.
Kyndryl Holdings, Inc. (KD) reported an operating income of $635.0M, resulting in an operating profit margin of 4.2%. This margin reflects the operational efficiency of the business before interest and taxes.
Kyndryl Holdings, Inc. (KD) generated $3.29B in gross profit for the year, representing a gross profit margin of 21.8%. This demonstrates the company's core pricing power and production efficiency.