Kyndryl Stock Falls 55 Percent Following SEC Document Request, CFO And General Counsel Exits

The SEC’s request for Kyndryl documents related to its cash management, financial reporting, and other matters, and the departure of its CFO and general counsel, overshadow the company’s slowing revenue growth and significant drop in income for this third fiscal quarter 2026.

Global enterprise technology services provider Kyndryl Monday said it is launching an accounting review in response to a U.S. Securities and Exchange Commission request, but that it expects no impact on the company’s balance sheets or financial statements.

Kyndryl in a Monday regulatory filing said it received voluntary document requests from the SEC’s Division of Enforcement related to the New York-based company’s cash management practices, related disclosures, its internal control over financial reporting, and certain other matters.

Kyndryl, ranked No. 11 on CRN’s 2025 Solution Provider 500, also reported two major changes in its executive team:

Harsh Chugh was named Kyndryl’s interim chief financial officer after the sudden departure of CFO David Wyshner. Wyshner joined Kyndryl in September of 2021 and CFO.
Mark Ringes was named interim general counsel after its former general counsel and corporate secretary Edward Sebold suddenly departed.
Bhavna Doegar was named as interim corporate controller after Vineet Khurana, the company’s former senior vice president and global controller stepped down to assume a different unspecified role.

The executive changes come one month after Kyndryl said Maryjo Charbonnier plans to retire as the company’s chief human resources officer.

Kyndryl also said it is delaying the filing of its Form 10-Q quarterly report with the SEC.

The executive changes, while announced Monday as part of the company’s fiscal third quarter 2026 financial report, were actually disclosed to investors on Feb. 5 via an SEC filing.

News of the SEC document request and the C-suite changes did not sit well with investors. Kyndryl shares plummeted by 55 percent Monday from $23.60 per share before the start of the trading day to close at $10.59 at the end of the day.

Kyndryl Chairman and CEO Martin Schroeter, during his prepared remarks to financial analysts during his company’s second fiscal quarter 2026 quarterly financial conference call, said that following the receipt of voluntary document requests from the SEC, Kyndryl, through the audit committee of its board of directors, is reviewing its cash management practices, related disclosures, the effectiveness of internal control over financial reporting, and certain other matters.

“We are cooperating with the SEC,” Schroeter said. “We do not expect a restatement or other impact to our financial statements. Due to the ongoing nature of these matters, we will not be able to comment further at this time.”

A Kyndryl spokesperson in response to a CRN request for more information said via email that the filing of the company’s 10-Q will be delayed and the company, via the audit committee of its board of directors, is reviewing its cash management practices related to disclosures and internal controls.

“We do not expect a restatement of Kyndryl’s financial statements. We are proactively addressing this matter and are developing a remediation plan that will be described in our 10-Q once it’s filed. … We remain committed to executing our business strategy in accordance with Kyndryl’s core values of integrity and trust. We remain focused on delivering our business objectives, driving profitable growth and providing innovative, world class services for our customers.”

Neither Wyshner nor Sebold responded to CRN requests via LinkedIn for additional information.

Multiple law offices have opened investigations into whether Kyndryl misled investors about its accounting rules and disclosures.

For its third fiscal quarter, Kyndryl said revenue did not meet expectations.

Schroeter, in his prepared remarks, said that the accelerating pace of new AI capabilities combined with regulatory uncertainty around data sovereignty have made long-term agreements more complex resulting in increasingly longer sales cycles longer. Additionally, he said, longer sales cycles also stem from an extension of the timelines for large enterprise ERP transitions to cloud solutions

“These dynamics were particularly noticeable in Kyndryl Consult’s third-quarter performance, which remained strong and delivered double-digit revenue growth but came in below our expectations. … We’ve made investments to support our growth in Consult,” he said. “These investments have taken longer than expected to contribute to the top line due to the lengthening of the sales cycles that I just described.”

That said, Schroeter said Kyndryl has had positive momentum in key aspects of its business, including consult and alliances, and has a strong foothold in the areas where market disruption is occurring.

“[This] gives us a running start as more customers are ready to scale AI and implement sovereign solutions,” he said. “Therefore, we’re driving towards our key fiscal 2028 targets, and we remain confident in our growth strategy.”

Kyndryl’s business is also continuing to change as it has addressed many of the issues it inherited from former parent company IBM, in particular the large amount of low-margin contracts IBM left on Kyndryl when it was spun out of IBM, Schroeter said.

“To give you a sense of the magnitude of this, when we were spun off, the annualized run rate of our spend with IBM was nearly $4 billion, and now it is approximately $2 billion, so it’s essentially cut in half,” he said. “This matters because our customers will decide how to best consume our high-value services and IBM’s own innovation. We continue to evolve the joint Kyndryl and IBM value proposition as the pace of modernization in mission-critical environments accelerates.”

Kyndryl’s hyperscaler business was slated at the start of the fiscal year to deliver $1.8 billion in hyperscaler-related revenue, but the company now expects to realize nearly $2 billion in revenue by the end of fiscal 2026, Schroeter said.

“The transformation that this business has undergone, starting with nearly $4 billion in IBM spend, which is now approximately $2 billion, while at the same time going from essentially zero in hyperscaler-related revenue to nearly $2 billion and growing, is profound, and it demonstrates how we’ve transformed Kyndryl’s underlying capabilities and positioned us to grow profitably and be part of our customers’ future with all of our partners,” he said.

Kyndryl is also addressing the factors that have impacted its revenue and earnings, Schroeter said.

“We’re leveraging our Kyndryl Bridge operating platform and building even more agentic AI into how we deliver services to our customers to drive quality enhancements and enterprise efficiency,” he said. “We’re consistently expanding our capabilities with a focus on AI, and our Agentic AI Framework is resonating powerfully with our customers. We’ll continue investing in AI innovation labs and in related capabilities and skills to deliver emerging technologies to customers at increasing scale.”

Kyndryl is further expanding its presence in private cloud where the company is seeing renewed demand driven by AI, data sovereignty, and security requirements, Schroeter said.

“We’re operating with a clear strategic mindset, providing innovative and world-class services that are fully aligned with our longer-term goals,” he said. “We are confident in our strategic direction. We’re in a business with trusted customer relationships and long-term contracts that evolve all the time to meet changing market dynamics.”

When asked by a financial analyst during the question-and-answer portion of the conference call about what gives Schroeter confidence Kyndryl can meet its fiscal 2028 targets given its fiscal 2026 shortfall, Schroeter said the company’s cash flow has grown faster than expected and faster than its profits. He also said the company’s backlog has been consistently high, which has helped drive profits.

“Our hyperscaler business is already up to nearly $2 billion,” he said. “Our consult business continues to grow. So the growth metrics, the growth drivers that we’ve had, will just continue to punch bigger and bigger and bigger in the overall mix.”

Kyndryl is making the changes it needs to profitably grow its business, Schroeter said.

“We’re focused on expanding Kyndryl Bridge and its footprint and its capabilities and continuing to integrate more and more of our agentic AI capabilities into our services as well as into our own operations and the way we run,” he said. “We will continue to leverage the momentum that we have in consult and the hyperscaler-related services as well as our other partners. We will further expand into the private cloud space where there is a pretty substantial renewed demand due to all the things that are happening in the industry: AI, data sovereignty, security, etc. And at the same time, as we said, we will address our cost base as fast as we can, and we’ll make sure we get that right.”

Kyndryl By The Numbers

For its third fiscal quarter 2026, which ended December 31, Kyndryl reported total revenue of $3.86 billion, up 3 percent from the $3.74 billion the company reported for its third fiscal quarter 2025.

This included revenue from the U.S. of $958 million, down slightly from last year’s $961 million.

Included in the total was hyperscaler-related revenue of $500 million, up 58 percent over that of last year, and Kyndryl Consult revenue of $3.6 billion, up 24 percent over last year.

Total revenue for the quarter missed analyst expectations by $30 million, according to Seeking Alpha.

Kyndryl also reported GAAP net income for the quarter of $57 million or 25 cents per share, down significantly from last year’s $215 million or 89 cents per share. On a non-GAAP basis, Kyndryl reported net income of $122 million or 52 cents per share, up slightly from last year’s $124 million or 51 cents per share.

Non-GAAP net income missed analyst expectations by 8 cents per share, according to Seeking Alpha.

Looking ahead, Kyndryl said it expects fiscal 2026 revenue to decline by 2 percent to 3 percent.