Kyndryl (KD) shares are experiencing a significant pre-market plunge of 12.40% on Tuesday, extending the previous day's losses after the IT infrastructure services provider reported mixed first-quarter results for fiscal 2026. The continued downward pressure on the stock reflects growing investor concerns about the company's top-line growth in a challenging economic environment.

On Monday, Kyndryl's stock already tumbled 13.57% during regular trading hours as the market digested the company's financial performance. The Q1 results revealed a revenue shortfall despite better-than-expected earnings. Kyndryl reported revenue of $3.743 billion, falling short of the analyst consensus estimate of $3.799 billion and representing only a marginal increase of 0.11% compared to the same period last year. However, the company's adjusted earnings per share (EPS) came in at $0.37, surpassing the expected $0.34 and showing a significant improvement from $0.13 in the year-ago quarter. Additionally, Kyndryl's adjusted EBITDA of $647 million beat the estimated $628 million.

Despite the earnings beat and improved profitability metrics, investors appear to be prioritizing revenue growth concerns over profitability gains. Kyndryl has reaffirmed its fiscal 2026 outlook, but this reassurance seems insufficient to allay investor worries in the face of the revenue shortfall. The stark contrast between the company's financial performance and the stock's movement highlights the market's current emphasis on top-line growth for technology services companies. As Kyndryl continues to navigate a challenging economic landscape, investors will likely keep a close eye on its ability to drive revenue growth while maintaining profitability improvements in the coming quarters.