Kyndryl’s first quarter results were met with a negative market reaction, as the company posted flat year-on-year revenue while its non-GAAP profit per share fell significantly below Wall Street’s expectations. Management attributed the quarter’s performance to prolonged sales cycles and evolving customer purchasing behaviors, particularly in relation to IBM partnerships. CEO Martin Schroeter noted that customers are increasingly deliberate in IT decision-making as they balance modernization and operational stability, impacting both signings and revenue growth.

Is now the time to buy KD? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Kyndryl’s Q1 Earnings Call

• Kevin Krishnaratne (Scotiabank) asked about geographic trends and the likelihood of reaching flat revenue versus a decline. CEO Martin Schroeter explained that longer sales cycles, particularly in Europe due to data sovereignty concerns, are weighing on growth, but emphasized renewed momentum in the U.S. market.
• James Faucette (Morgan Stanley) questioned where customers are prioritizing IT spend, especially regarding cloud versus on-premise deployments. CFO Harsh Chugh highlighted that data sovereignty and evolving regulatory requirements are leading to increased interest in private cloud and mainframe modernization, with Kyndryl positioned to advise on these choices.
• Jamie Friedman (Susquehanna) sought clarification on the impact of IBM relationship changes on long-term revenue targets. Schroeter acknowledged that the shift is materially different from earlier expectations and is negatively impacting revenue, but stressed that profit margins are insulated from this effect.
• Tien-Tsin Huang (JPMorgan) asked what could catalyze a normalization of sales cycles. Schroeter responded that increasing complexity and regulatory requirements make a return to shorter cycles unlikely, and emphasized the company’s focus on expanding its customer base and content within deals.
• Jonathan Lee (Guggenheim Partners) probed the path to fiscal 2028 growth targets given sub-1x book-to-bill this year. Management pointed to the quality of signings, growth in higher-margin consult work, and a robust pipeline as key factors supporting long-term objectives despite near-term topline headwinds.

Catalysts in Upcoming Quarters

Looking ahead, our team will be closely monitoring (1) the pace of large deal signings and conversion of consult engagements into revenue, (2) progress in driving operational efficiencies and realizing savings from workforce rebalancing, and (3) the ongoing impact of direct IBM procurement on reported revenue. We will also track whether investments in agentic AI and alliance partnerships translate into sustained margin expansion.

Kyndryl currently trades at $11.48, down from $14.70 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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