# Kainos Group record 13th consecutive year of growth

- Link: https://www.directorstalkinterviews.com/kainos-group-record-13th-consecutive-year-of-growth/4121119735
- Published: 2023-05-22T08:07:35+01:00
- Author: Jacob Brown

**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.”

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