Kyndryl’s Q2 results were marked by flat year-over-year revenue, with management attributing performance to ongoing efforts to shift its business mix toward higher-margin contracts and away from legacy accounts. CEO Martin Schroeter highlighted that all of the quarter’s revenue decline was driven by actions to address eight focus accounts, where Kyndryl intentionally reduced revenue to improve profitability. The company also cited deal timing issues, noting that some expected contract signings slipped beyond the quarter’s end, impacting reported sales. Despite these challenges, Kyndryl pointed to continued growth in its consulting business and strong customer satisfaction scores as positive offsets.

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

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 Q2 Earnings Call

• Tien-Tsin Huang (JPMorgan) asked about the cadence of revenue growth for the remainder of the year. CEO Martin Schroeter responded that growth is expected to accelerate in the second half, supported by a larger and more diversified deal pipeline.
• Ian Zaffino (Oppenheimer) questioned the timing of signings in focus accounts and the reliability of closing delayed deals. Schroeter acknowledged the complexity and unpredictability but pointed to a recent deal that closed immediately after quarter-end as evidence of underlying momentum.
• Divya Goyal (Scotiabank) inquired about additional catalysts for margin expansion beyond contract renegotiation and consulting growth. Schroeter cited the increasing influence of post-spin contracts and a reduction in inherited software cost headwinds as key contributors.
• Jamie Friedman (Susquehanna) asked about the opportunity and visibility for AI-driven services and the company’s “triple-double-single” margin and growth targets. Schroeter emphasized Kyndryl’s dual benefit from AI—cost savings through automation and revenue from consulting—and confidence in achieving profitability goals.
• Zaffino (Oppenheimer) also asked about the company’s approach to share buybacks. CFO David Wyshner stated that buybacks will be considered based on cash flow, market conditions, and available repurchase capacity.

Catalysts in Upcoming Quarters

As we look ahead, the StockStory team will be monitoring (1) the pace and consistency of new contract signings, especially within consulting and cloud partnerships, (2) how quickly Kyndryl’s revenue mix shifts to post-spin, higher-margin contracts, and (3) the tangible impact of operational efficiency efforts on margin expansion and free cash flow. Execution against these priorities will be critical for validating management’s long-term growth and profitability targets.

Kyndryl currently trades at $29.59, down from $36.70 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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