Sparks - Kainos Group

Kainos’ H127 (6 months to 30 September) results reflected strong revenue growth across all divisions, in line with the trading update issued in August. Group revenue was £268.8m (+37% y-o-y, +36% organic), adjusted PBT £41.7m (+30% y-o-y), and adj EPS 27.4p (+45% y-o-y).  Group bookings were 27% higher at £402.3m resulting in a contracted backlog of £853.0m (+26% y-o-y, +19% h-o-h). The company proposed an interim dividend of 10.4p (+6% y-o-y). Net cash at end H127 was £86.5m, down 18% y-o-y, after share buybacks worth £12.5m and capex relating to the Belfast office of £7.1m during H1.

Digital Services revenue was 57% higher at £162.5m, benefiting from strong demand from public sector and healthcare customers.  The company noted that the increased use of contractors and supply partners had suppressed margins, but expects margins to normalise as third parties are replaced with employed staff. Workday Services revenue was 9% higher at £58.3m. Workday Product revenue was £48.0m (+22% y-o-y). ARR was  up 24% y-o-y at £96m,  well on track to meet the company’s end CY26 £100m target.

Outlook: the company expects further growth in revenue and adjusted PBT in H227, in line with current market expectations. Consensus forecasts are for revenue growth of 23% to £531.5m in FY27, adjusted PBT growth of 23% to £82.85m and adjusted EPS of 51.24p (+25%).