Shares in Kyndryl, an IBM spinoff and IT infrastructure services provider, crashed on Monday after the company warned investors that it is reviewing certain accounting practices amid an inquiry from the Securities and Exchange Commission. The company also posted third-quarter results that missed Bloomberg Consensus estimates and disclosed what JPMorgan analysts described as a "surprise" departure of its CFO.

Kyndryl stock crashed as much as 57%, its biggest one-day drop on record. Shares traded at their lowest level since November 2022 after the company disclosed an SEC inquiry into certain accounting practices.

In a filing, Kyndryl said it "anticipates reporting material weaknesses in the Company's internal control over financial reporting for the period covered in the Quarterly Report, as well as for the full fiscal year ended March 31, 2025, and the first two fiscal quarters of fiscal year 2026."

This is "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," the filing noted.

The information technology services provider that works with hyperscalers also announced that CFO David Wysher and general counsel Edward Sebold had left the company.

On top of that, third-quarter results missed Bloomberg consensus estimates, and the company lowered its full-year outlook for both adjusted EBITDA margin and adjusted pretax profit.

Here's a snapshot of the third-quarter (courtesy of Bloomberg):

Adjusted EPS 52c vs. 51c y/y, estimate 61c (Bloomberg Consensus)

Revenue $3.86 billion, +3.1% y/y, estimate $3.89 billion

• US revenue $958 million, estimate $982.3 million
• Japan revenue $568 million, estimate $588.8 million

Adjusted Ebitda $696 million, -1.1% y/y, estimate $701.2 million

Adjusted Ebitda margin 18%, estimate 18%

Adjusted pretax profit $168 million, estimate $192.4 million

Full-Year Forecast:

• Sees adjusted Ebitda margin 17.5%, saw about 18%

• Sees adjusted pretax profit $575 million to $600 million, saw at least $725 million

Kyndryl CEO Martin Schroeter declined to comment during the earnings call:

"The fact is we just can't comment until the examination is complete. The teams are working expeditiously so we can share a remediation plan."

Kyndryl said it needs additional time to finalize its fiscal third-quarter report and noted that it is preparing a remediation plan, which will be detailed in the upcoming filing.

Analysts at JPMorgan downgraded Kyndryl to Underweight from Overweight and slashed their price target to $16 from $40. They told clients the downgrade was due to cuts to sales and profit guidance, the CFO's surprise departure, and the delayed quarterly filing.

Bloomberg Intelligence analysts said, "Kyndryl faces secular pressure in infrastructure services and new guidance is for a revenue decline in fiscal 2026, raising doubts about the durability of its turnaround."

"KD was a disaster, with a miss-and-cut report, several mgmt. changes, and a delayed 10Q filing," Vital Knowledge analysts wrote in a note.