Belfast IT group Kainos has said its revenues will likely fall below market forecasts in the current trading year due to what it called “the tougher trading environment”.
In a market update on Monday morning, the London-listed software group said while its board expect adjusted pre-tax profit to be within the current market consensus forecasts, overall revenues will see only a small increase in the year ending March 31 2025, falling below current market expectations.
Kainos Group’s share price fell by around 15% after trading opened on Monday morning.
The Belfast business reported a revenue of £382.4 million in the last financial year.
The market consensus forecast for this year had anticipated around £415.5m in overall revenue, with an adjusted pre-tax profit of around £79.1m, up from £76.6m last year.
Kainos said its digital services division experienced “a subdued start to the year”, but it expects to see revenue growth over the remainder of the trading period.
The group reported sustained demand from public sector clients, despite some projects being delayed due to the UK General Election in early July.
Revenues from the healthcare sector continue to grow, but the IT group said demand from commercial clients remains weak.
Kainos is also heavily involved in delivering products and services around Workday, a suite of financial management and HR software.
The group said while the “win rate” within the Workday Services division “remained robust”, contract wins have been lower than in previous periods.
The company said it also faced “more aggressive pricing amongst partners”.
It said: “Cumulatively, this has impacted our divisional performance in the short-term although we expect a return to growth in the second half of the year.”
The outlook for the Workday Products division was much more upbeat on the back of an enhanced strategic partnership it announced in July with Workday to co-sell products.
Kainos said its annual recurring revenue (ARR) target for the division had increased from £100m to £200m as a result.
“We look forward with confidence to the remainder of the year, supported by a healthy pipeline, a strong balance sheet and significant contracted backlog,” added the company.
“Looking further ahead we are well positioned in our core markets which offer substantial growth opportunities in all our divisions.
“Our performance continues to be underpinned by our long-term customer relationships, and the calibre of our people, who continue to excel in delivering high-impact solutions for our customers.
“As always, we are grateful for the ongoing trust of our customers and the efforts of our colleagues across the world.”
The IT group, which employs around 3,000 people worldwide, recently started work on its new Belfast headquarters on the Dublin Road.
