Synopsis
Software firm Kyndryl announced job cuts and a new cost-saving plan. The company expects annual pretax profit to be lower than Wall Street predictions. This move aims to reduce operating costs significantly by fiscal 2028. Kyndryl's shares saw a notable drop following the announcement. Despite challenges, resilient demand for IT services continues to support the company.Shares of the company fell over 12% in early trading.
The company, which was spun off from IBM in 2021, has been restructuring a number of low- or no-margin contracts it inherited from the tech giant to improve profitability.
The company said the plan would help reduce annual operating costs by about $400 million to $500 million in fiscal 2028.
It expects to record about $200 million in related charges, mostly for severance and employee benefits.
The cuts come after the software provider delayed the filing of its October-December report, made several management changes, and launched an accounting review over "potential weaknesses" found in its internal controls.
The company had about 73,000 employees as of March 31, 2025. Kyndryl did not disclose how many jobs would be affected by the move.
Kyndryl expects adjusted pretax income between $600 and $700 million in fiscal 2027, including workforce rebalancing charges. The midpoint of this range came in below analysts' average estimate of $672.7 million, according to data compiled by LSEG.
Despite the challenges, the company has benefited from a resilient demand environment. Businesses have prioritized spending on essential software and IT services amid macroeconomic uncertainty driven by U.S. President Donald Trump's ongoing global trade negotiations.
That trend has helped shield companies such as Kyndryl, whose services support day‑to‑day business operations and enable the integration of artificial intelligence technologies across enterprise systems.
Fourth-quarter revenue came in at $3.77 billion, beating estimates of $3.75 billion. Adjusted profit plunged to 18 cents per share, compared with estimates of 45 cents.
