Kainos Group PLC on Monday warned full-year revenue will be below current market expectations reflecting a short-term impact from the UK general election in Digital Services and pricing pressures in Workday Services.
In response, shares in the London-based IT service company fell 12% to 971.00 pence in London early Monday.
In Digital Services, Kainos said sustained demand from public sector clients had been offset by some delays as a result of the short-term impact of the UK general election in July.
Healthcare revenue continues to grow, Kainos said, but demand within commercial clients remained weak reflecting delays to project expenditure decision making.
In Workday Services, Kainos said its win rate remained ‘robust’, but contract wins and values have been lower than in previous periods, and there has been more aggressive pricing amongst partners.
This has hurt divisional performance in the short-term, although Kainos expects a return to growth in the second half of the year.
Workday Products division continues to deliver very strong growth, Kainos stated.
Overall, Kainos now expects only a small increase in revenue in the financial year to March 31, 2025, below current market expectations.
The firm put the current market consensus for revenue at £415.5 million. In financial 2024, the firm posted revenue of £382.4 million.
Adjusted pretax profit is expected to be in line with current market consensus forecasts for £79.1 million. This will compare to £77.2 million in financial 2024.
Kainos said it is maintaining the ‘appropriate’ balance between profitability, investment for future growth and international expansion.
‘We look forward with confidence to the remainder of the year, supported by a healthy pipeline, a strong balance sheet and significant contracted backlog. Looking further ahead we are well positioned in our core markets which offer substantial growth opportunities in all our divisions,’ the company added.
Results for the six months ending September 30 will be released on November 11, Kainos said.
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