Kainos delivers strong full year results with revenue up 17% and ARR growth accelerating

Kainos full year results 2026: strong revenue growth, rising ARR and a healthier order book

Kainos has delivered a strong set of full year results for the year ended 31 March 2026. Revenue rose 17% to £431.1 million, bookings jumped 32% to £505.3 million, and contracted backlog – future revenue already signed – climbed 18% to £433.9 million.

That is a good combination. It says demand is strong now, and it also gives investors better visibility for the year ahead.

Key metric	FY26	FY25	Change
Revenue	£431.1 million	£367.2 million	+17%
Statutory profit before tax	£58.1 million	£48.6 million	+19%
Adjusted pre-tax profit	£67.1 million	£65.6 million	+2%
Diluted EPS	35.1p	28.2p	+24%
Adjusted diluted EPS	41.1p	38.3p	+7%
Product ARR	£89.0 million	£72.6 million	+23%
Contracted backlog	£433.9 million	£368.2 million	+18%
Cash	£89.1 million	£133.7 million	-33%

Why the Kainos FY26 numbers matter for retail investors

The headline story is simple: Kainos is still growing well, and that growth is broad-based. All three divisions increased revenue, which makes this look more robust than a one-trick performance.

I also like the quality of the revenue. Existing customers generated £370.0 million, up 24%, and made up 86% of Group revenue. That suggests Kainos is not constantly having to chase fresh business just to stand still.

Another positive is diversification. International markets generated 41% of revenue, unchanged year-on-year, while public sector, healthcare and commercial exposure gives Kainos several routes to grow.

Workday Products is still the standout growth engine at Kainos

If you are trying to work out what makes Kainos interesting, it is Workday Products. This division sells software that complements Workday, and software revenue tends to be stickier and higher quality than project revenue.

Revenue in Workday Products rose 15% to £81.7 million, while annual recurring revenue, or ARR, increased 23% to £89.0 million. ARR matters because it shows the annualised value of contracted subscription income, so it is a strong indicator of future sales.

Kainos says it is on track to hit £100 million of ARR by the end of 2026 and £200 million by the end of 2030. That looks credible from here, especially with nearly 700 customers now using its products and around 41% taking two or more.

The exclusive arrangement with Workday to resell the new Pay Transparency product is a big strategic plus. It gives Kainos access to Workday’s customer base without having to build all the sales muscle itself, and more than 30 customers had signed up by the year end.

There is also continued investment here. R&D spend rose 11% to £18.7 million and sales and marketing rose 21% to £18.7 million. That dents short-term profit a bit, but for a software business still scaling, it looks sensible rather than reckless.

Kainos margin pressure: strong sales, but profit growth lagged badly

This is the main negative in the results. Adjusted pre-tax profit only rose 2% to £67.1 million, and the adjusted profit margin fell to 16% from 18%.

Why the squeeze? Kainos had to use more contractors and third-party suppliers to support large contract wins. Contractor costs surged to £18.5 million from £4.5 million, while third-party supplier costs jumped to £30.1 million from £14.7 million.

On top of that, the business absorbed higher employer National Insurance costs of £3.0 million, bonus costs rose by £11.5 million, and there was a first full year of investment in the Workday partnership. So the business is growing, but it became more expensive to deliver that growth.

Management’s answer is that this should improve as temporary contractors are replaced with permanent staff during FY27. That sounds reasonable, but investors will want proof. Margin recovery now matters almost as much as revenue growth.

One extra nuance: statutory profit before tax rose 19%, much faster than adjusted profit. That is partly because FY25 included restructuring costs of £8.4 million, which did not repeat this year.

Digital Services and Workday Services both returned to growth

Digital Services had an excellent year. Revenue increased 23% to £241.7 million, helped by major wins in healthcare and the public sector.

Healthcare revenue surged 55% to £74.9 million, while public sector revenue rose 11% to £136.0 million. Contracts with the Home Office, Department for Transport, Driver and Vehicle Standards Agency and NHS England show Kainos is still winning meaningful work in areas where it has real credibility.

The weak spot was commercial Digital Services, where revenue fell 41% to £10.7 million. That was deliberate rather than accidental, with management saying it chose to focus resources elsewhere. Fair enough, but it does show that not every market is firing.

North America was another bright spot. Digital Services revenue there rose 127% to £20.2 million, including a six-month contribution from Davis Pier. Organic growth was still a very healthy 75%, so this was not just acquisition window dressing.

Workday Services also looks to be back on track. Revenue rose 9% to £107.6 million, bookings jumped 44% to £121.8 million and backlog increased to £74.9 million from £59.3 million. EMEA revenue was down 1%, but the company says the trend improved in each half since H2 2025.

Cash, dividend and share buybacks: still strong, but the cash pile is lower

Kainos ended the year with £89.1 million of cash, down from £133.7 million. That drop looks large, but it is not a red flag on its own.

The business remained highly cash generative, with cash conversion of 99%. The lower year-end cash balance mainly reflects £55.7 million returned through share buybacks, £7.9 million spent on acquiring Davis Pier, £5.9 million on the new Belfast HQ and restructuring cash costs provided for in FY25.

Importantly, Kainos still has no debt. That gives it flexibility, and it supports the view that the balance sheet remains strong despite the lower cash number.

The total dividend for the year was lifted 4% to 29.6p per share, including a proposed final dividend of 19.8p. The current share buyback programme also completed on 15 May 2026, with 3,729,068 shares bought back for £30.0 million.

One thing to note: the board says it has no current plans for another buyback. So investors should not assume that tailwind continues.

Kainos outlook for FY27: positive momentum, but execution now matters

The outlook statement is upbeat, if not especially precise. Kainos expects continued momentum in Workday Products, further growth in Digital Services and another positive year in Workday Services.

That sounds believable given the £433.9 million backlog, strong bookings and good demand in public sector, healthcare and Workday-related markets. AI is also becoming a bigger theme, with AI- and data-related revenue up 11% to £45.8 million.

My view is that this is a good set of results, not a perfect one. The sales engine is clearly working, Workday Products is becoming more valuable, and the company is building nicely in North America. The catch is margins – they took a hit, and management now needs to show that FY27 brings the promised improvement.

For retail investors, that is the key takeaway. Kainos still looks like a quality growth business, but the next step is proving it can turn strong demand into stronger profit growth again.