Kyndryl beats quarterly revenue estimates on AI push

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(Reuters) -IT services provider Kyndryl beat Wall Street estimates for fourth-quarter revenue on Wednesday, helped by robust demand from businesses adopting artificial intelligence technology.

The company, formerly IBM’s infrastructure services business, recognized $1.2 billion in revenue tied to customers using services from large-scale cloud providers in its fiscal year 2025, exceeding its “hyperscaler” revenue target of nearly $1 billion.

Companies enhancing their IT systems to incorporate the extensive data and processing needs of AI technology have benefited Kyndryl, which helps businesses manage key data architecture.

“We expanded our capabilities in cloud, modernization, applications, AI and security,” Kyndryl CEO Martin Schroeter said in a statement.

Kyndryl’s fourth-quarter revenue fell about 1% to $3.80 billion. The average estimate of five analysts polled by LSEG was $3.77 billion.

The company inherited multiple no-margin contracts from IBM and has been looking to restructure them to generate higher profits, a move that has led to a decline in its revenue.

Net income in the three months ended March 31 stood at $68 million, compared to a net loss of $45 million in the year-ago period.

For fiscal 2026, the company expects adjusted pretax income of at least $725 million, representing a year-over-year increase of at least $243 million.

After rising more than 66% last year, Kyndryl’s stock is down more than 3% this year, pressured by macroeconomic uncertainty stemming from U.S. President Donald Trump’s trade policy.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Alan Barona)