Kyndryl CEO Martin Schroeter shared insights following the company’s strong Q1 fiscal 2026 results, which showed a 39% year-over-year increase in adjusted pretax income to $128 million, despite only marginal revenue growth ($3.74B, up $4M YoY).
The company, spun out of IBM in late 2021, inherited several long-term, low-margin IBM contracts that had weighed on profitability. Schroeter explained that Kyndryl’s “3As” strategy—focusing on more alliances, more advanced delivery capabilities, and targeted accounts—is central to overcoming these challenges.
By deliberately reducing revenue from legacy IBM contracts, Kyndryl is improving its margin profile, which rose by 100 basis points year-over-year despite flat revenue. This careful reshaping positions Kyndryl for sustainable revenue and profit growth moving forward.
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