Kyndryl CEO: AI Modernization Means Transforming IT Without Disruption

Kyndryl is advancing AI-powered IT modernization with Kyndryl Bridge and through partnerships with key partners like ServiceNow and Broadcom as CEO Martin Schroeter outlines sovereignty solutions, consulting growth expectations and fiscal 2028 financial objectives following its fiscal second-quarter 2027 earnings report.

Kyndryl is expanding its AI capabilities and partner relationships to help customers modernize mission-critical IT infrastructure without disrupting operations, Chairman and CEO Martin Schroeter told financial analysts Wednesday during prepared remarks for the company’s fiscal second-quarter 2027 conference call.

Modernization demand is creating opportunities across consulting, public and private cloud, and agentic AI, Schroeter said, as customers balance transformation with stability.

“Customers trust Kyndryl to run and modernize their essential technology environments at scale,” he said. “They rely on us to lead complex migrations, modernize applications and data, and deploy AI securely across their enterprises.”

Kyndryl, ranked No. 13 on CRN’s 2026 Solution Provider 500, is focused on combining its experience operating complex IT environments with engineering expertise and operational data. That, Schroeter said, helps customers introduce new capabilities while keeping essential systems running.

“We combine deep experience in running and modernizing mission-critical technology environments with the operational knowledge, the technology platforms, and the engineering expertise needed to help customers run and transform at the same time,” he said.

The company this year expanded its AI innovation lab network to include locations in Dallas and Luxembourg, joining its previous facility in Liverpool, England. The labs bring together designers, forward-deployed engineers, and industry specialists to test use cases, validate business outcomes, and develop roadmaps for scaling AI in existing environments, Schroeter said.

Kyndryl Pushes AI-Led IT Modernization With Kyndryl Bridge

Schroeter said Kyndryl Bridge connects much of the company’s work by bringing data insights, AI governance and orchestration into a single platform.

"[Kyndryl Bridge gives] our people, and increasingly agents, the context to understand what is happening and determine the appropriate next action,” he said.

Kyndryl next week plans to unveil a co-developed solution with ServiceNow that will combine AI-powered workflows with Kyndryl Bridge data, operational intelligence, and agents, Schroeter said. He also previewed an AI sovereignty offering addressing customers’ need to retain platform choice and data control.

“All of our capabilities are designed to deliver the outcomes our customers are increasingly seeking: faster return on investment, transformed business workflows, greater visibility into costs and opportunities to optimize them, and advanced cybersecurity and resiliency,” he said.

Kyndryl’s expanded Broadcom relationship adds end-to-end VMware Cloud Foundation consulting for private-cloud modernization, Schroeter said. He also said that Kyndryl Consult signings exceeded revenue over the past 12 months, reflecting demand for AI, modernization, and cyber preparedness.

“As we move into the second half of our fiscal year, our strategic priorities remain clear,” he said. “We are reaffirming our full-year outlook and progressing toward our fiscal 2028 financial objectives.”

Kyndryl CEO On Consult Growth And Data Sovereignty

During the question-and-answer portion of the conference call, when Schroeter was asked about his thoughts on the growth of the Kyndryl Consult business given an appearance that it slowed down a bit during the quarter, he replied that it is true there was a deceleration of growth between the first and second fiscal quarters of the year.

However, he said, the revenue does have a tendency to move up and down, and that he expects this second fiscal quarter’s revenue to be the low point of the year in terms of constant currency growth for Kyndryl Consult.

When asked about potential softness in Kyndryl’s European business, Schroeter said issues around data sovereignty, while important everywhere, are especially important in Europe.

“Those discussions are challenging for our customers to make sure that they know how they can deal with the nature of the mission-critical systems we run in an ever-changing geopolitical world,” he said.

On the solution side, Kyndryl plans to unveil a sovereignty approach the company thinks will help dramatically address this issue, Schroeter said.

“Our experience, I would say that when you bring innovation, when you bring expertise, customers are willing to make a move,” he said. “We'll continue, as I said, to address the sovereignty issue with another announcement next week. You put all that together, and I'd say that while Europe has been a little bit slower, I do think we're starting to come back a bit in Europe in signings and, quite frankly, in revenue performance as well.”

Kyndryl Q2 2027 Earnings: Revenue Falls 1.9 Percent

For its fiscal second quarter 2027, which ended September 30, Kyndryl reported total revenue of $3.65 billion, down 1.9 percent over the $3.72 billion the company reported for its second fiscal quarter 2026.

That included U.S. revenue of $980 million, up from last year’s $899 million; Japan revenue of $555 million, down from $581 million; revenue from Canada, the U.K., France, Germany, Italy, Spain, and Portugal of $1.18 billion, down from $1.25 billion; and revenue from the rest of the world of $939 million, down from $987 million.

Total revenue beat analyst expectations by $80 million, according to Seeking Alpha.

Kyndryl also reported GAAP net earnings of $59 million or 27 cents per share, down from last year’s $68 million or 29 cents per share. On a non-GAAP basis, Kyndryl reported net income of $92 million or 42 cents per share, up from last year’s $89 million or 38 cents per share.

Non-GAAP net income beat analyst expectations by 4 cents per share, according to Seeking Alpha.