Kyndryl Stock Drops After 10-Q Delay And CFO Exit

Kyndryl Holdings (KD) stock fell after the company said on Feb. 9, 2026, it would delay filing its fiscal third-quarter 10‑Q while reviewing cash-management controls, disclosed anticipated material weaknesses, and announced the departure of its chief financial officer as it cut FY2026 guidance.

Quarterly Results and Outlook

For the fiscal third quarter ended Dec. 31, 2025, Kyndryl reported revenue of $3.86 billion, up 3% on a reported basis and flat in constant currency. Hyperscaler-related services revenue exceeded $500 million, a 58% year-over-year increase. Adjusted earnings per share were $0.52, below the $0.60 expected.

The company lowered its FY2026 guidance, now forecasting a constant-currency revenue decline of 2%–3%, adjusted pretax income between $575 million and $600 million, and free cash flow of $325 million to $375 million. The outlook reflects customer consumption patterns, deal slippages, and investments in its Consult business. Previous targets had anticipated roughly 1% revenue growth, adjusted pretax income near $725 million, and free cash flow around $550 million.

Internal Controls Review, 10‑Q Delay, and Leadership Changes

Kyndryl filed a Form 12b-25 to delay its 10‑Q for the quarter ended Dec. 31, 2025, citing a review of cash-management practices and internal controls. The company expects to report material weaknesses covering the fiscal year ended March 2025 and the first three quarters of FY2026. The review was prompted by an SEC inquiry. Kyndryl is developing a remediation plan to be detailed in the delayed filing and does not expect to restate previously issued financial statements. It also said investors should no longer rely on management’s prior assessment of internal controls or on auditor PricewaterhouseCoopers’ prior opinion for fiscal 2025.

The delay and anticipated internal controls weaknesses contributed to the decision to lower full-year guidance and accelerate internal reviews.

Separately, CFO David Wyshner and General Counsel Edward Sebold left immediately. Global Controller Vineet Khurana moved to a different role. Harsh Chugh, formerly global head of practices, corporate development, and administration, became interim CFO effective Feb. 5, 2026. Mark Ringes was named interim general counsel, and Bhavna Doegar interim corporate controller. Chief Human Resources Officer Maryjo Charbonnier will retire March 31, 2026, transition to an advisory role through Aug. 31, 2026, and be succeeded by Mark Paulek on April 1, 2026.

These developments—the filing delay, expected controls weaknesses, leadership turnover, and guidance cut—explain the sharp investor reaction and raise questions about near-term cash generation and earnings stability. Management’s remediation plan in the delayed 10‑Q and its ability to meet the revised free cash flow targets will be key to restoring confidence. Management discussed results and the review on an earnings call on Feb. 9, 2026.