Kainos Group (LON:KNOS) Announces Earnings Results

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

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 Down 12.4%

Shares of KNOS traded down GBX 153 on Monday, hitting GBX 1,077. The company’s stock had a trading volume of 909,223 shares, compared to its average volume of 2,543,336. The firm’s fifty day moving average price is GBX 1,243.77 and its 200-day moving average price is GBX 938.98. Kainos Group has a fifty-two week low of GBX 686 and a fifty-two week high of GBX 1,360. The company has a quick ratio of 1.59, a current ratio of 1.17 and a debt-to-equity ratio of 6.11. The firm has a market capitalization of £1.24 billion, a price-to-earnings ratio of 30.68, a P/E/G ratio of 2.15 and a beta of 0.87.

Analyst Upgrades and Downgrades

KNOS has been the subject of several research analyst reports. Berenberg Bank boosted their price target on shares of Kainos Group from GBX 1,185 to GBX 1,330 and gave the company a “buy” rating in a report on Wednesday, August 19th. Deutsche Bank Aktiengesellschaft raised their price objective on Kainos Group from GBX 920 to GBX 1,260 and gave the stock a “hold” rating in a research note on Tuesday, August 18th. Finally, Canaccord Genuity Group raised 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 research analysts have rated the stock with a Buy rating and one has assigned a Hold rating to the stock. According to MarketBeat, Kainos Group has an average rating of “Moderate Buy” and a consensus price target of GBX 1,231.17.

About Kainos Group

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.