According to CRN, Kyndryl’s fiscal 2026 second quarter showed revenue down 1.4% to $3.72 billion, but CEO Martin Schroeter sees plenty of positive momentum. The company’s adjusted pretax income grew more than two-and-a-half times compared to last year, and they’ve now authorized their second stock buyback this year totaling $400 million. Kyndryl Consult business is accelerating in the second half, driven by strong signings and added capacity. The company also reported its fifth consecutive quarter with book-to-bill ratio above one, indicating strong future growth. Schroeter remains confident about hitting full-year revenue growth targets despite the first-half dip.
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The consulting acceleration story
Here’s the thing about that revenue dip – Schroeter basically says it’s temporary and the real story is what’s coming. The Kyndryl Consult business isn’t just growing, it’s actually accelerating. They’ve added capacity and the demand is there, which means they can actually deliver on those strong signings they’ve been racking up. And when you combine that with their work around hyperscaler alliances – which they expect to grow from $1.2 billion to $1.8 billion this year – you’ve got multiple growth engines firing simultaneously.
The VMware advantage
While other partners are freaking out about Broadcom’s VMware changes, Kyndryl is actually benefiting. Schroeter says they’ve become “one of the most appealing partners for VMware” because they’re what he calls “non-denominational” – they don’t have their own cloud to push. They can run VMware workloads on private clouds without trying to migrate them elsewhere, which makes them a trusted partner at global scale. In an environment where everyone’s worried about vendor lock-in, Kyndryl’s neutrality is turning into a competitive advantage.
Trade complexity as tailwind
This is interesting – all the trade policy uncertainty and tariff discussions that are causing headaches for many businesses? Schroeter says it’s actually creating tailwinds for Kyndryl. Why? Because when companies rethink their supply chains and where they place workloads, that creates more complexity. And Kyndryl is in the “managed complexity business.” They’re seeing increased interest from customers wanting to make sure their cloud work lands in the right geographic spots. So while physical trade faces challenges, digital trade and infrastructure management remain essential services.
What the buyback tells us
That $400 million additional buyback authorization isn’t just a nice gesture for shareholders – it’s a strong signal about management’s confidence in their cash flow generation and their ability to hit those fiscal 2028 targets. When a company that was spun out from IBM just four years ago is already doing substantial buybacks, it suggests they’re generating more cash than they need for operations and growth investments. The fact that they’ve now put $700 million into buybacks in about a year shows they’re serious about returning value to shareholders while still funding their growth initiatives.
