May 6 (Reuters) – Software provider Kyndryl said it would cut jobs as part of a new cost-saving plan and forecast annual pretax profit below Wall Street estimates on Wednesday.
Shares of the company fell over 12% in early trading.
The company, which was spun off from IBM in 2021, has been restructuring a number of low- or no-margin contracts it inherited from the tech giant to improve profitability.
• The company said the plan would help reduce annual operating costs by about $400 million to $500 million in fiscal 2028.
• It expects to record about $200 million in related charges, mostly for severance and employee benefits.
• The cuts come after the software provider delayed the filing of its October-December report, made several management changes, and launched an accounting review over “potential weaknesses” found in its internal controls.
• The company had about 73,000 employees as of March 31, 2025. Kyndryl did not disclose how many jobs would be affected by the move.
• Kyndryl expects adjusted pretax income between $600 and $700 million in fiscal 2027, including workforce rebalancing charges. The midpoint of this range came in below analysts’ average estimate of $672.7 million, according to data compiled by LSEG.
• Despite the challenges, the company has benefited from a resilient demand environment. Businesses have prioritized spending on essential software and IT services amid macroeconomic uncertainty driven by U.S. President Donald Trump’s ongoing global trade negotiations.
• That trend has helped shield companies such as Kyndryl, whose services support day‑to‑day business operations and enable the integration of artificial intelligence technologies across enterprise systems.
• Fourth-quarter revenue came in at $3.77 billion, beating estimates of $3.75 billion. Adjusted profit plunged to 18 cents per share, compared with estimates of 45 cents.
(Reporting by Kritika Lamba and Anhata Rooprai in Bengaluru; Editing by Maju Samuel)
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