Dive Brief:
- Enterprise technology provider Kyndryl announced Monday that its CFO, David Wyshner, and general counsel, Edward Sebold, have stepped down from their roles effective immediately. The company appointed Harsh Chugh as interim finance chief, Bhavna Doegar as interim corporate controller, and Mark Ringes as interim general counsel, according to a filing with the Securities and Exchange Commission.
- The New York-based company separately announced that its 10-Q filing for the quarter ended Dec. 31 will be delayed as its audit committee undertakes a review of its cash management practices.
- The company is unable to file its report for the third quarter of its fiscal 2026 as it requires additional time for its audit committee to complete its review, it said in its notice of delayed filing. That review includes examining disclosures related to the drivers of its adjusted free cash flow metric and “the efficacy of the Company’s internal control over financial reporting, and certain other matters following the Company’s receipt of voluntary document requests from the Division of Enforcement of the Securities and Exchange Commission (‘SEC’) relating to such matters,” the company said in the filing.
Dive Insight:
Kyndryl’s stock dropped by about 55% at the close of market trading following its earnings report and CFO departure.
Kyndryl expects to report material weaknesses in its internal control over finance reporting for the period included in its 10-Q filing once made, as well as for its full fiscal year ended March 31, 2025 and the first two quarters of its fiscal 2026, according to the filing.
The weaknesses “are expected to include, but may not be limited to, the effectiveness and strength of certain functions at the Company, including with respect to controls related to information and communication and tone at the top,” Kyndryl said.
Kyndryl, a provider of IT infrastructure solutions which spun off from Internal Business Machines (IBM) in 2021, announced the review of its accounting practices as part of the release of its earnings results for its Q3 of fiscal 2026.
The company is cooperating with the SEC and does not expect a restatement of its financial statements, CEO and Chairman Martin Schroeter said during the call, according to a transcript. The business is also developing a “remediation plan” which will be outlined in its 10-Q once filed, it said in a statement emailed to CFO Dive.
Schroeter declined to comment further on the accounting review in response to analyst questions, but noted the businesses’ goals for 2028 remain unchanged. The company, which continues to see a “strong conversion of earnings to free cash flow,” is well-positioned to deliver more than $1.2 billion in adjusted pretax income for its fiscal 2028 and to convert such earnings to over $1 billion in adjusted free cash flow, he said.
Generating free cash flow remains a top priority for the business, Chugh said Monday during the earnings call. The company is expecting free cash flow for its fiscal 2026 in a range between $325 million to $375 million, it said.
Chugh joined the business in September 2021 as chief operating officer, before being appointed to his current role as global head of practices, corporate development, and administration last month. Before joining Kyndryl, Chugh served as CFO for Plansource, and held numerous executive and financial positions during a 17-year span at IBM.
No changes to Chugh or Doegar’s existing compensation agreements were made in association with the appointments as of the date of its filing, the company said in its Monday 8-K filing.
Wyshner began his tenure at Kyndryl in September 2021, shortly before the infrastructure provider completed its spin-off from IBM and began trading as an independent entity in November of that year, according to a press release at the time. Before Kyndryl, he served as CFO for XPO Logistics and held numerous roles at Wyndham Hotels & Resorts as well as Avis Budget Group.
