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what it is
Kyndryl keeps big companies’ core tech running, then charges them to modernize the mess.
how it gets paid
Last year Kyndryl made $15.1B in revenue. core enterprise & zCloud services was the main engine at $4.8B, or 32% of sales.
growth snapshot
Revenue was roughly flat last year at $15.1B. The 25% consult growth mattered more than the headline revenue pressure because it shows where the future margin mix is coming from.
what just happened
Kyndryl posted $0.52 EPS versus $0.25 expected, but the bigger story was consult growth offsetting weak revenue mix.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
11.0x trailing p/e — the market's not buying it — or you found a deal
22.5% return on capital — every dollar works hard here
xvary composite: 62/100 — average
$3.25 fy2026 eps est
What they do
Kyndryl keeps big companies’ core tech running, then charges them to modernize the mess.
Kyndryl serves thousands of enterprise customers in more than 60 countries. Switching costs (replacing a mission-critical vendor) → ripping out the plumbing → so what: once your core systems run on Kyndryl, changing providers risks downtime your business cannot absorb. That is why a company with just a 5.1% net margin can still earn 22.5% on capital.
How they make money
$15.1B
annual revenue · their business grew +0.0% last year
core enterprise & zCloud services
$4.8B
4.0%
cloud services
$3.3B
+2.0%
applications, data & AI services
$2.5B
+3.0%
digital workplace services
$1.9B
1.0%
security, resiliency, network & edge
$2.6B
+4.0%
The products that matter
runs and modernizes enterprise it
IT Infrastructure Services
$15.1B revenue · the whole company
it's the entire $15.1B revenue base, and it was flat last year. that tells you the bet is not on hidden assets. it's on improving what already exists.
100% of revenue
Key numbers
11.0x
trailing p/e
P/E (price to earnings) → what you pay for each dollar of profit → so what: KD is priced like a low-expectation stock.
22.5%
return on capital
Return on capital → profit from money invested in the business → so what: the turnaround is producing better economics than the stock price implies.
6.8%
operating margin
Operating margin → profit before interest and taxes → so what: still a thin, services-heavy business—check the latest filing for the exact print versus this ~mid-single-digit anchor.
$3.0B
long-term debt
Debt is 34% of capital, which is manageable but leaves less room for a bad quarter.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 20 / 100
- long-term debt $3.0B (34% of capital)
- net profit margin 5.1% — keeps 5 cents of every dollar in revenue
- return on equity 61% — $0.61 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
Return history isn't available for KD right now.
source: institutional data · return history unavailable
What just happened
beat estimates
Kyndryl posted $0.52 EPS versus $0.25 expected, but the bigger story was consult growth offsetting weak revenue mix.
Revenue was pressured by longer sales cycles on larger renewals and by the intentional removal of low-margin hardware and software. Consult still grew 25% vs. prior year, which is the quiet part said out loud: Kyndryl is trading low-quality revenue for better revenue.
~$3.8B
revenue (q)
$0.52
eps (Q)
108.0%
surprise
the number that mattered
The 25% consult growth mattered more than the headline revenue pressure because it shows where the future margin mix is coming from.
-
kyndryl holdings reported middling fiscal 2025 second-quarter financial results.
-
quarterly revenues were pressured by longer sales cycles from expanded-scope renewals.
-
the deliberate removal of low-margin hardware and software content caused a 4% drag on the top-line tally.
-
these headwinds were offset by contributions from the consult segment, which soared 25% from the year-prior tally to $3.4 billion.this shift in revenue contributions, alongside a reduction in headcount, has supported the bottom line.
-
note that we started presenting non-gaap earnings in fiscal 2025.
source: company earnings report, 2026
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What could go wrong
the #1 risk is renewal delays in large enterprise infrastructure contracts.
med
renewal timing is the business
Kyndryl already said longer sales cycles on expanded-scope renewals pressured quarterly revenue. When your company produces $15.1B in revenue from enterprise infrastructure work, delays are not a side issue. They are the issue.
Impact: this pressure touches essentially the full revenue base, because the snapshot shows one core business rather than diversified segments.
med
mix improvement can look like shrinkage
Management said removing low-margin hardware and software content created a 4% drag on the top-line. That may improve quality, but if the replacement growth does not arrive fast enough, investors are left with less revenue and a story.
Impact: a better mix helps margins, but another quarter of similar drag would keep reported revenue under pressure even if execution is improving underneath.
med
consult has to keep doing the heavy lifting
Consult revenue rose 25% to $3.4B. That is the cleanest growth engine in the snapshot. If that slows while the legacy cleanup continues, the market will stop paying for the transition and go back to pricing flat revenue at face value.
Impact: the upside case depends on consult growth offsetting weakness elsewhere. If it stops, the $34 target starts looking optimistic.
med
reporting changes reduce clarity
The company started presenting non-GAAP earnings in fiscal 2025. That is not automatically bad, but it does make trend reading harder. Turnaround stories need cleaner evidence than stable businesses do.
Impact: if investors cannot reconcile earnings quality across reporting changes, the stock can stay cheap even if profits improve.
The combined risk picture is straightforward: all $15.1B of revenue sits in a contract-heavy infrastructure business, and management already disclosed a 4% top-line drag from its mix cleanup. If renewals stay slow and consult loses momentum, this stops looking like a turnaround and starts looking like a stall.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
the next renewal commentary
Management already pointed to longer sales cycles on expanded-scope renewals. You want to see that language get less prominent, not more.
trend
consult growth versus the 25% mark
Consult reached $3.4B after growing 25%. If that engine cools while the legacy cleanup continues, the story gets much harder to defend.
metric
fy2026 eps estimate at $3.25
This is the clearest scorecard for the turnaround. If the estimate rises, the market probably gives KD more credit. If it falls, the cheap multiple may be telling the truth.
risk
another quarter of revenue drag from mix cleanup
A 4% drag from removing low-margin work is manageable once. Repeating it without stronger replacement growth would mean the pivot is taking longer than investors want.
Analyst rankings
short-term outlook
top 20%
Momentum score 2. In human-speak, analysts think KD has a better-than-average shot at outperforming over the next 12 months.
risk profile
average
Stability score 3. Translation: this is a normal risk bucket on paper, even if the 20/100 price stability score says the stock itself can still move around a lot.
chart momentum
average
Technical score 3. The chart is not giving you a dramatic signal either way. The thesis has to come from fundamentals.
source: institutional data
Institutional activity
274 buyers vs. 281 sellers in 3q2025. total institutional holdings: 0.2B shares.
source: institutional data
Price targets
3-5 year target range
$18
$50
$25
current price
$34
target midpoint · +35% from current · 3-5yr high: $55 (+120% · 22% ann'l return)
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