Sparks

Kainos reported FY25 revenue of £367.2m (-4% y-o-y), adjusted EBIT of £59.5m (-19%), adjusted PBT of £65.6m (-15% y-o-y) and adjusted EPS of 38.3p (-18% y-o-y), in line with consensus. As reported in its year-end trading update in mid-April, weaker demand for both Digital Services and Workday Services outweighed strong growth in Workday Products, although group revenue returned to low single-digit year-on-year growth in Q425. In terms of outlook, the company expects a continued uncertain trading environment, although the UK Government Comprehensive Spending Review should bring some clarity to public sector spending budgets in Digital Services. The company is soon to launch its fifth Workday product and expects continued positive momentum in Workday Products ARR towards its 2026 £100m target. The recent restructuring that saw the departure of 190 employees is expected to generate cost savings of c £19m, of which two-thirds will be reinvested in R&D, targeted recruitment and international expansion with the remainder used to fund staff-related cost increases.

The company closed the year with net cash of £133.7m after completing £22.6m of the £30m share buyback programme launched in November 2024. This programme completed on 9 May with the full £30m purchased and a new £30m programme was announced today. Consensus forecasts call for revenue growth of 5.8% in FY26 and 10.3% in FY27 and EPS growth of 6.5% and 16.0% respectively, putting the company on a P/E of 20.0x FY26e and 17.2x FY27e.