Shares of Kyndryl declined about 3.6% in mid-day trading after the company reported first-quarter results for fiscal 2027 that missed market expectations on several headline metrics.
Revenue for the quarter came in at $3.62 billion, down 3% from the year-ago period. The company reported an adjusted loss per share of $0.12, missing the consensus view of breakeven adjusted EPS. Results were weighed by $152 million of workforce-rebalancing charges, which were accounted for in both reported and adjusted figures.
Adjusted EBITDA fell to $512 million, representing roughly a 21% decline from the comparable quarter a year earlier. The adjusted EBITDA margin compressed to 14.2% from 17.3% in the prior-year period. Free cash flow worsened markedly, swinging to -$459 million compared with -$252 million in the same quarter a year ago.
There were, however, areas of relative strength. Revenue from Kyndryl Consult rose 10% for the quarter, and hyperscaler-related revenue jumped 34% to top $530 million. Management also reiterated its full-year fiscal 2027 outlook for revenue, earnings, and free cash flow.
Despite those pockets of growth and the reaffirmed guidance, investors focused on the revenue shortfall, the move to an adjusted net loss, the sizable workforce-rebalancing costs, and the deteriorating free cash flow. These factors combined to pressure the stock through mid-day trading, on top of an earlier roughly 3% drop in premarket trading.
Market sentiment was already cautious heading into the report. Analysts held a consensus "Reduce" rating on the shares, and multiple insider Form 4 filings in the days immediately before the earnings release added to the uncertain backdrop.
Broader U.S. equities provided little cushioning for Kyndryl's shares. The S&P 500 was essentially flat while the Nasdaq slipped modestly, leaving sector-specific selling with limited macro support. Over the past year the stock has shown pronounced volatility, trading in a 52-week range of $10.10 to $33.90.
Investor confidence has remained fragile through each quarterly report following a steep decline earlier in 2026 that was linked to governance concerns, a CFO departure, and delayed regulatory filings. Those earlier episodes have continued to shape sentiment as the company releases results.
What moved the stock
- Revenue miss and adjusted EPS of -$0.12 versus a consensus breakeven expectation.
- $152 million in workforce-rebalancing charges included in both reported and adjusted results.
- Adjusted EBITDA of $512 million, down about 21% year-over-year; adjusted EBITDA margin fell to 14.2% from 17.3%.
- Free cash flow deteriorated to -$459 million from -$252 million a year earlier.
Taken together, the combination of the headline misses, increased charges, and the deep negative cash flow figure outweighed the stronger growth in higher-value service lines and the reaffirmed full-year guidance, prompting the mid-day share decline.