Kainos Group plc (KNOS), a UK-headquartered IT provider with expertise across three divisions – Digital Services, Workday Services, and Workday Products, has announced its results for the year ended 31 March 2023.
Financial highlights
| 2023 | 2022 | Change | |
| Revenue | £374.8m | £302.6m | +24% |
| Statutory profit before tax | £54.3m | £46.0m | +18% |
| Adjusted pre-tax profit | £67.6m | £58.8m | +15% |
| Cash | £108.3m | £76.6m | +41% |
| Bookings | £427.8m | £349.8m | +22% |
| Product Annual Recurring Revenue (ARR) | £47.9m | £34.3m | +40% |
| Contracted backlog | £322.9m | £259.7m | +24% |
| Diluted earnings per share | 33.1p | 28.5p | +16% |
| Adjusted diluted earnings per share | 42.5p | 38.1p | +12% |
| Total dividend per share | 23.9p | 22.2p | +8% |
Operational highlights
We have recorded our 13th consecutive year of growth across a wide range of key metrics. Our very strong business performance reflects robust underlying market demand, high levels of customer engagement and the ongoing commitment of our colleagues.
• Revenue growth of 24% (22% organic) to £374.8 million (2022: £302.6 million).
• Adjusted pre-tax profit increased by 15% to £67.6 million (2022: £58.8 million) reflecting strong underlying performance and increased investment in Workday Products, where product development and sales & marketing expenditure increased by £9.3 million.
• Workday Products revenues ARR increased by 40% to £47.9 million (2022: £34.3 million) representing significant progress towards our 2026 target of £100 million ARR.
• Bookings up 22% to £427.8 million (2022: £349.8 million).
• Contracted backlog growth of 24% to £322.9 million (2022: £259.7 million).
• Cash at 31 March 2023 was £108.3 million (2022: £76.6 million), with cash conversion at 104% (2022: 83%).
We continue to grow as a global business with over one-third of revenues generated internationally.
· Very strong international growth, up 52% to £132.0 million (2022: £87.0 million), and now representing 35% of total revenue.
Commercial sector customers now generate half our revenues.
· Commercial revenues are up 51% to £186.4 million (2022: £123.8 million), representing 50% of total revenue.
· Public sector revenues up 24% to £138.0 million (2022: £111.0 million) or 37% of revenue.
· Healthcare revenues, as anticipated, have reduced by 26% to £50.4 million (2022: £67.9 million), which is 13% of total revenue.
We continue to grow a global, talented and engaged team.
• We now have 2,990 people (2022: 2,692) based across 22 countries.
• Our employee retention has increased to 88% (2022: 86%), and engagement levels remain high, measuring 81% on our internal surveys, and we were again awarded ’50 Best Places To Work in the UK’ by Glassdoor.
Excellent customer service drives customer satisfaction and retention, underpinning revenue growth.
• Customer approval rating ([1]) remains high at 99% (2022: 98%).
• Existing customer revenue increased by 26% to £337.6 million (2022: £267.7 million), which represents a Net Revenue Retention of 126%.
• Customer numbers increased to 821 (2022: 731), an increase of 12%.
We continue with our ambition to be a responsible organisation.
• We retained our carbon neutral status in 2023 and remain on track to achieve carbon net zero by 2025.
• Our gender balance improved, with the proportion of women in Kainos increasing to 34% (2022: 33%), well above the industry average of 22%([2]) and we remain committed to further improvement.
• We hosted over 1,800 young people on our outreach programmes, including targeted programmes aimed at improving gender diversity, supporting social mobility and for those students with special educational needs.
In Digital Services, we continue to deliver significant digital transformation programmes across the public sector, commercial sector and healthcare.
• This extensive project portfolio has driven strong revenue growth of 12%, with Digital Services revenues increasing to £224.4 million (2022: £199.8 million).
• Customer demand remains strong as digital transformation continues to be a business and political priority.
We continue to be the leading pan-European Workday specialist and during the year we were appointed Workday Phase 1 Prime partner in the US market.
• Workday Services recorded very strong revenue growth of 49% (41% organic) to £105.7 million (2022: £70.9 million).
• Our international expansion continues with North America now representing over half of Workday Services revenues at £55.9 million (2022: £30.4 million) an increase of 84%.
(1) Data from all completed customer surveys in the year. There are five possible designations: ‘Poor’, ‘Satisfactory’, ‘Good’, ‘Very Good’ or ‘Excellent’; the rating reflects the percentage of customers that rate our performance ‘Good’ or better.
(2) BCS diversity report 2022: Women in IT.
Our Workday-related products, Smart Test, Smart Audit and Smart Shield delivered very strong growth, and we remain on track to achieve our target of £100 million ARR by 2026.
• Workday Products revenues grew 40% to £44.7 million (2022: £31.9 million) and ARR increased by 40% to £47.9 million (2022: £34.3 million).
• We continued to invest in our Workday Products, increasing research & development expenditure by 52%, to £9.1 million (2022: £6.0 million) and sales & marketing spend increased 135% to £10.8 million (2022: £4.6 million).
Commenting on the results, CEO Brendan Mooney said:
“Our latest results, the eighth as a public company, outline another excellent performance as we once again achieved strong growth in terms of people, customers, revenue and profitability.
Our performance as a business is influenced by many factors, but it is our relationships with our customers and the talents of our colleagues that are the key drivers. The strength and depth of both have continued to grow this year and we are grateful for the trust and confidence that our customers continue to place in Kainos and the expertise, experience, and energy of our colleagues, who have been the driving force behind all that we have achieved.
These results describe our performance over the past twelve months. While we draw a sense of satisfaction from the consistency of our performance, representing the thirteenth consecutive year of growth, our attention is firmly fixed on the future.
The digital transformation market continues to grow in importance for organisations operating in government, in healthcare and in the commercial sector.
This importance is translating into continued demand for the work we do for our customers. Despite the economic uncertainty, there is an urgency for our customers about extending existing projects and starting new projects, as they change the ways they deliver essential services to citizens, patients, customers and employees.
In addition to responding to the needs of our customers we have also been focused on building solid foundations for our business – across the services we offer, the sectors within which we operate and in the regions where we are based.
As a result, our business is becoming increasingly resilient. We work with over 800 organisations, many of whom are international in scale and who operate across a range of industries including healthcare, public sector, banking, insurance, pharmaceuticals and education. From our UK base we have expanded globally, with over one-third of our revenues now generated internationally.
It is all these factors combined – our customers, our people, our consistent performance, the opportunity and the scale and resilience of our business – that underpin the confidence that we have about the future.
Alongside our confidence, we also have a sense of excitement – technology continues to develop at pace and the positive impact it can have on people’s lives increases. It is energising to be at the forefront of these developments.”
