MW Why Kyndryl's stock is sinking after earnings

By Emily Bary

Shares could lose more than a third of their value Monday following the disclosure of an accounting investigation and a big reset of the company's financial guidance

Kyndryl expects to report "material weaknesses" around its financial controls.

Kyndryl just cut its outlook, suddenly changed its chief financial officer and announced an accounting investigation - factors all driving the stock sharply lower in Monday's premarket action.

The company, which handles information-technology infrastructure and was spun out of International Business Machines in 2021, expects revenue to decline 2% to 3% on a constant-currency basis for the fiscal year ending in March. The company previously had been predicting 1% growth.

Kyndryl (KD) also lowered other elements of its forecast. The company currently projects $575 million to $600 million in adjusted pretax income for the full fiscal year; its prior forecast was for at least $725 million. And Kyndryl's new free-cash-flow guidance calls for $325 million to $375 million, well below the approximately $550 million that it had been modeling previously.

Shares of Kyndryl were off 37% in premarket trading on Monday.

See also: Software stocks have been crushed. Here's how to play the sector as the dust settles.

Kyndryl also announced an accounting investigation. The company is "reviewing its cash-management practices," financial controls and disclosures. This comes after Kyndryl received voluntary document requests from the Division of Enforcement of the Securities and Exchange Commission, the company said in a filing.

The company is delaying the filing of its 10-Q as it conducts its review. Kyndryl also noted that it "anticipates reporting material weaknesses" in its financial-reporting controls, not just for the latest quarter but also going back to the fiscal year that ended in March 2025.

Meanwhile, David Wyshner is out as CFO. Harsh Chugh, who's held corporate-development and operational roles at Kyndryl, was named interim CFO.

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-Emily Bary

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February 09, 2026 08:23 ET (13:23 GMT)

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