LONDON - Kainos Group plc (LSE:LON:KNOS), a leading IT services provider, announced today an update on its trading performance since early September and revised its guidance for the fiscal year ending March 31, 2025. The company, known for its Digital Services, Workday (NASDAQ:WDAY) Services, and Workday Products divisions, has experienced strong growth in its Workday Products business but faces headwinds in its other divisions due to the current macro-economic environment.
Shares of Kainos last traded down 10.4%.
The Board has revised its revenue expectations to be moderately below the current market consensus, with this adjustment primarily impacting adjusted profit before tax (PBT). The market had anticipated revenues between £375.5 million and £392.0 million and an adjusted PBT of £75.0 million to £79.7 million. For reference, the fiscal year 2024 reported revenue was £382.4 million with an adjusted PBT of £77.2 million.
In the Workday Products division, Kainos recorded a very strong first half, bolstered by an expanded partnership with Workday announced in July, setting an increased Annual Recurring Revenue (ARR) target of £200 million by 2030. However, the Digital Services division has been impacted by delayed client decision-making as public sector clients await clarity on the government's budgetary direction. Despite new contracts in the Workday Services division, both the number and value of these contracts have declined, leading to reduced revenue over the past six months.
In response to these challenges, Kainos is implementing prudent cost control measures, such as reducing discretionary spending and contractor use, while reallocating staff to high-growth areas like Workday Products and Healthcare Sector services in Digital Services.
Additionally, Kainos has announced its intention to initiate a share buyback program, reflecting the company's strong balance sheet. Details of this program will be shared with the interim results for the six months ending September 30, 2024, scheduled to be released on November 11, 2024.
Despite the moderated outlook for FY2025, the Board remains confident in Kainos's positioning in its core markets, emphasizing the potential for growth, international expansion, and balanced profitability. This announcement is based on a press release statement from Kainos Group plc.
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