Kainos Delivers Trading Update in Line with Expectations
Why we think this is neutral
The trading update from Kainos Group plc indicates a mixed performance, with some positive areas offset by weaker commercial activity and subdued demand in the Workday Services division. While the company expects to deliver revenues and adjusted PBT in line with consensus forecasts, the RNS highlights several potential headwinds and challenges, including a volatile macro-economic environment and moderating market-related pressures. Without more detailed financial information, it's difficult to assess the full valuation, but the share price appears to be below the 52-week high, suggesting the valuation may not be overly stretched. Overall, the trading update paints a NEUTRAL picture, with no clear indications of significant outperformance or underperformance.
Key Points
- Expects to deliver revenues and adjusted PBT in line with consensus forecasts
- Workday Products division achieved strong ARR growth
- Digital Services saw public sector and healthcare revenues grow, while commercial activity remained below prior-year levels
- Workday Services demand remained subdued, though signs of recovery emerging
- Confident in long-term structural drivers and strategy
Summary
Kainos Group plc, a UK-headquartered IT provider, has issued a trading update for the year ended 31 March 2025. The company expects to deliver revenues and adjusted PBT in line with consensus forecasts. Key highlights include:
- Workday Products division delivered strong financial performance, achieving Annual Recurring Revenue (ARR) in excess of £72m.
- Digital Services saw public sector revenues return to growth in H2, while healthcare revenues continued to grow strongly.
- Workday Services demand remained subdued, leading to further reductions in H2, though the company is cautiously encouraged by signs of recovery.
- The company operates in markets with clear long-term structural drivers and remains confident in its strategy.