Kyndryl (NYSE: KD) shares surged 5.76% in after-hours trading on Tuesday following the release of its second-quarter fiscal 2026 results, which exceeded analyst expectations in key areas and showcased strong growth in strategic segments.

The IT infrastructure services provider reported adjusted earnings per share of $0.38, surpassing the consensus estimate of $0.36. While quarterly revenues of $3.721 billion fell slightly short of the $3.840 billion forecast, the company demonstrated robust performance in high-growth areas. Notably, Kyndryl's hyperscaler cloud revenue soared 65% to $440 million, putting the company on track to meet its $1.8 billion target for fiscal 2026. Additionally, Kyndryl Consult revenues grew an impressive 28% year-over-year.

Investors were particularly encouraged by the company's improved profitability and cash flow management. Adjusted EBITDA reached $641 million, marking a 15% increase compared to the previous year. Furthermore, Kyndryl's board of directors authorized a $400 million increase in its share repurchase program, signaling confidence in the company's financial position and commitment to delivering shareholder value. The company also reaffirmed its fiscal 2026 outlook, projecting constant-currency revenue growth of 1% and an adjusted EBITDA margin of approximately 18%, representing a year-over-year increase of about 130 basis points.