23rd May 2022 18:03
(Alliance News) - Shore Capital reiterated its 'buy' rating on Kainos Group PLC after the software company posted robust annual results and issued a confident outlook statement.
The Belfast-based company provides digital services to the public sector, healthcare market and commercial customers. In addition, it is a partner of Pleasanton, California-based enterprise software provider Workday Inc.
Kainos Group reported strong annual results on Monday, with its shares surging after it recorded its twelfth consecutive year of growth.
The FTSE 250-listed firm said revenue in the year that ended March 31 climbed 29% to GBP302.6 million from GBP234.7 million. The figure topped a GBP297 million forecast from Shore Capital Markets.
Bookings were up 35% to GBP349.8 million from GBP258.8 million.
Product annual recurring revenue jumped 45% to GBP34.3 million from GBP23.6 million. Its contracted backlog ended the period at GBP259.7 million, rising from GBP206.2 million at the same point the year prior.
Pretax profit declined 8.6% to GBP46.0 million from GBP50.3 million. Adjusted pretax profit inched up 3.0% to GBP58.8 million from GBP57.1 million. Operating expenses rose 37% to GBP93.6 million.
Kainos lowered its payout following the drop in profit, falling 21% to 22.2 pence from 28.2p. The firm noted the payout last year included a 6.7p special dividend.
Looking ahead, Chief Executive Officer Brendan Mooney said: "The digital transformation market has been growing strongly for over a decade, with the pandemic accelerating the need for organisations to invest in their digital capabilities. Our leading position within our core markets allows us to look confidently to the future.
"Our confidence is strengthened with the success of our additional growth initiatives. Within Digital Services, international expansion, our Data and AI practice, and our Intelligent Automation practice provide a platform for further growth."
Shore Capital's Martin O'Sullivan noted that the company's assessment of its outlook was largely unchanged from its April trading update.
Kainos confirmed a robust pipeline and significant contracted backlog and citing significant programmes in partnership with the UK government and with leading commercial and healthcare clients.
"Such comments reflect the very positive trading environment Kainos finds itself in at the start of FY23, despite well documented challenges around inflation and recruiting IT talent, which Kainos believes represent a lower risk than a global pandemic. In our view, Kainos remains an exceptionally resilient and well-managed company with strong fundamentals and excellent growth prospects," O'Sullivan said.
The stock closed up 21% at 1,249.59 pence on Monday, the best performer in the FTSE 250.
By Arvind Bhunjun; [email protected]
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