Kainos Group (LON:KNOS) Releases Earnings Results

Key Points

• Kainos reported earnings per share of 27.70p and quarterly revenue of £268.8 million. Conference-call highlights included revenue growth of 37% and adjusted profit growth of 30%, led by 57% growth in Digital Services.
• Contracted backlog rose 26% to £853 million; two expected Digital Services contracts worth £196 million could push it above £1 billion.
• Adjusted PBT margin fell 0.8 percentage points as lower-margin Digital Services and greater contractor use weighed on profitability. Workday Products ARR grew 24%, while management said customer AI activity is mostly still at the pilot stage.

Kainos Group (LON:KNOS - Get Free Report) announced its earnings results on Monday. The company reported GBX 27.70 earnings per share (EPS) for the quarter, Digital Look Earnings reports. Kainos Group had a net margin of 9.86% and a return on equity of 41.45%. The company had revenue of £268.80 million during the quarter.

Here are the key takeaways from Kainos Group's conference call:

• Strong growth across the business: Revenue rose 37% and adjusted profit increased 30%, with Digital Services revenue up 57% and Workday Services up 9%.
• Backlog supports near-term visibility: Contracted backlog reached £853 million, up 26%; two large Digital Services contracts worth £196 million are expected to be signed in the coming weeks and could take group backlog above £1 billion.
• Margins were held back by rapid growth: Adjusted PBT margin declined 0.8 percentage points, as a greater mix of lower-margin Digital Services and increased contractor and partner use weighed on gross margin. Management said replacing contractors with employees as growth moderates could support future margin expansion.
• Products and AI offer growth opportunities, with adoption still developing: Workday Products ARR grew 24%, and the company expects to pass £100 million of ARR soon; AI-related revenue rose 40% to £29 million. Management noted that most customer AI activity remains at the pilot stage and described its new Actonomy business as early-stage.

Kainos Group Stock Performance

Shares of LON:KNOS traded down GBX 153 during trading on Monday, reaching GBX 1,077. 909,223 shares of the stock were exchanged, compared to its average volume of 2,543,336. Kainos Group has a 12 month low of GBX 686 and a 12 month high of GBX 1,360. The firm has a market cap of £1.24 billion, a PE ratio of 30.68, a PEG ratio of 2.15 and a beta of 0.87. The stock has a 50-day moving average price of GBX 1,243.77 and a 200-day moving average price of GBX 938.98. The company has a current ratio of 1.17, a quick ratio of 1.59 and a debt-to-equity ratio of 6.11.

Wall Street Analysts Forecast Growth

KNOS has been the subject of several recent research reports. Berenberg Bank increased their price target on Kainos Group from GBX 1,185 to GBX 1,330 and gave the company a "buy" rating in a research report on Wednesday, August 19th. Deutsche Bank Aktiengesellschaft boosted their price target on Kainos Group from GBX 920 to GBX 1,260 and gave the stock a "hold" rating in a research report on Tuesday, August 18th. Finally, Canaccord Genuity Group upped their price objective on Kainos Group from GBX 1,200 to GBX 1,315 and gave the stock a "buy" rating in a research note on Wednesday, August 19th. Five analysts have rated the stock with a Buy rating and one has issued a Hold rating to the stock. According to MarketBeat.com, the company presently has a consensus rating of "Moderate Buy" and a consensus target price of GBX 1,231.17.

Kainos Group Company Profile

Kainos Group plc engages in the provision of digital technology services in the United Kingdom, Ireland, North America, Central Europe, and internationally. It operates through three segments: Digital Services, Workday Services, and Workday Products. The Digital Services segment develops and supports custom digital service platforms for transforming service delivery in public, commercial, and healthcare sectors. The Workday Services segment provides consulting, project management, integration, and post deployment services for Workday's software suite, which includes cloud-based software for human capital management, and financial management, and adaptive planning.

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