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Kyndryl: From IBM Dependency To Hyperscaler Growth — Is This Transformation Finally Paying Off?

Kyndryl reported third-quarter fiscal 2026 revenue of $3.9 billion, reflecting a 3% increase year-over-year on a reported basis but flat in constant currency. The company achieved margin expansion, higher earnings, and positive free cash flow during the quarter. Its 12-month book-to-bill ratio remained above 1.0, supported by $15.4 billion in signings over the past year, with 11 contracts exceeding $50 million each in the quarter, highlighting continued demand for its modernization services. Kyndryl Consult, a strategic growth driver, grew 20% year-over-year in constant currency and now represents 25% of total revenue, although its performance fell short of expectations due to lengthening sales cycles and evolving customer requirements influenced by rapid AI adoption and regulatory challenges such as data sovereignty.