By Elias Schisgall

Kyndryl Holdings slashed its outlook for the full fiscal year, projecting a revenue decline, as the company reported a lower profit and missed Wall Street estimates for its fiscal third quarter.

The lowered view came as the information-technology services provider said its chief financial officer and general counsel were both leaving and launched a review of its financial reporting practices following a request for information from the Securities and Exchange Commission.

The company said Monday that it now expects constant currency revenue to decline between 2% and 3%. Kyndryl had previously forecast a 1% increase in constant currency revenue for the year.

It projected adjusted pretax income between $575 million and $600 million and free cash flow between $325 million and $375 million. The company had previously said pretax income was expected to be at least $725 million and free cash flow would be about $550 million.

Shares of Kyndryl sank 40% to $14.20 in pre-market trading Monday.

Kyndryl posted a fiscal third-quarter profit of $57 million, or 25 cents a share, compared with a profit of $215 million, or 89 cents a share, a year earlier.

Stripping out certain one-time items, the company reported earnings of 52 cents a share. Analysts polled by FactSet were expecting 60 cents a share.

Revenue rose to $3.86 billion, up from $3.74 billion a year prior. Analysts were expecting $3.89 billion, according to FactSet.

Kyndryl said $500 million of its revenue for the quarter came from cloud hyperscaler alliances, representing a 58% year-over-year increase. It said it is on track to exceed its initial target of $1.8 billion in hyperscaler revenue for the fiscal year.

It said revenue from its Kyndryl Consult business grew 24% year-over-year.

Kyndryl said its 10-Q form would be delayed as its board of directors reviews the company's cash management practices, disclosures around the drivers of its adjusted free cash flow metric, and its broader financial reporting practices, according to a Monday SEC filing.

It said it expects to report "material weakness in the company's internal control over financial reporting" for both the third quarter and the full fiscal year ended in March 2025, as well as the quarterly filings for the first and second quarters.

The assessment of internal control over its financial reporting contained in the most recent annual report, as well as the outside assessment of PricewaterhouseCoopers, were not reliable, Kyndryl said.

"The company is developing a remediation plan that will be described further in the Quarterly Report," it said in the filing. It said the review isn't expected to result in a restatement or to impact its financial statements.

The admission came as Kyndryl appointed a slew of new top executives. The company said that Harsh Chugh had been named interim chief financial officer, effective immediately, succeeding David Wyshner. It also appointed Bhanva Doegar as interim corporate controller, succeeding Vineet Khurana, who stepped down to assume a different role at the company.

Kyndryl also named Mark Ringes to take over as the company's general counsel, succeeding Edward Sebold.

It did not specify the reason for Sebold and Wyshner's departures or which new position Khurana had assumed.

Write to Elias Schisgall at elias.schisgall@wsj.com

(END) Dow Jones Newswires

February 09, 2026 07:49 ET (12:49 GMT)

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