Kainos edges guidance higher and clears the $100m ARR mark
Kainos has kicked off the new financial year with momentum. Off the back of a solid Q4 2025, management says revenue for the year ending 31 March 2026 should land at the upper end of consensus forecasts, while Adjusted PBT is expected to be in line with consensus. That combination points to stronger sales but a measured stance on margins as the company leans into growth.
Alongside the upgrade, the Workday Products division has crossed a landmark $100m in Annual Recurring Revenue (ARR) in July. That is a meaningful scale milestone for a software suite that complements Workday implementations and increasingly anchors Kainos’s recurring revenue base.
Headline numbers and guidance at a glance
| Metric | Guidance / Update |
|---|---|
| FY26 Revenue | Upper end of £378.0m – £393.4m range |
| FY26 Adjusted PBT | In line with consensus £66.4m (within £65.1m – £74.7m range) |
| Workday Products ARR | $100m milestone passed in July |
| H1 results date | 10 November 2025 |
Definitions: ARR is annualised subscription revenue. Adjusted PBT is profit before tax excluding certain items like share-based payments or acquisition-related costs. Consensus reflects the range and average of sell-side analyst estimates which Kainos has compiled.
Workday Products – $100m ARR and a new compliance product
The Workday Products division continues to be the growth engine. Hitting $100m ARR signals scale, stickiness and cross-sell potential across its suite, which includes Smart Test, Smart Audit and Smart Shield. Over 450 global customers now use one or more Kainos products.
Next up is a new product, Pay Transparency, developed with design partners including Diageo and Linklaters. It is slated to launch in Q3 to help customers respond to the EU Pay Transparency Directive, which takes effect in June 2026. That is a timely entry into a regulatory-driven demand cycle where compliance budgets tend to be non-discretionary.
Why it matters: recurring software revenues typically carry higher margins and visibility than services. A $100m ARR base gives Kainos more predictability and creates optionality to invest in product innovation without betting the farm.
Digital Services – public sector programmes ramping in H2
Digital Services has secured several significant programmes in healthcare and the public sector, with contracts in the Home Office, NHS England, and the Driver and Vehicle Standards Agency. Management expects these to drive meaningful revenue increases in the second half of the year.
North America remains a bright spot for growth, but the broader commercial sector is still muted and running below prior-year levels. The mix here matters: public sector demand is proving resilient, while commercial clients remain cautious.
Why it matters: delivery-heavy work can scale quickly once mobilised, but it also pulls in people and contractor costs up front. The H2 skew suggests an improving exit rate, albeit with near-term investment in capacity.
Workday Services – sales strength and a return to growth
After a tougher spell across the sector last year, Kainos reports a strong sales performance that should see Workday Services return to growth this year. Improvements are coming through in core European and North American markets, with additional progress in Australia, New Zealand and Mexico.
Why it matters: services revenue is a feeder for products. Healthy services pipelines not only generate billings but also seed future product cross-sell and long-term client relationships.
Hiring to support the pipeline – margin trade-offs in view
New projects are mobilising across all three divisions. Kainos is recruiting additional staff and boosting short-term use of contractors to support growth and its strong pipeline. That is sensible capacity planning but it explains why Adjusted PBT is guided merely in line with consensus despite stronger revenue expectations.
Translation: top line is nudging up, but some operating leverage is being deliberately reinvested to capture demand. If utilisation and delivery remain tight, margins should stabilise into H2 as projects ramp.
Macro, AI tailwinds and what to watch next
Management notes that while the macro backdrop has improved, volatility persists. Against that, Kainos highlights long-term structural drivers in its markets, including opportunities from wider AI adoption. The company points to a robust backlog, a healthy pipeline, a solid balance sheet, disciplined capital allocation, and strong cash flow as supports for long-term value creation.
Key near-term watchpoints and catalysts:
- H1 results on 10 November 2025 – detail on divisional growth, margins and cash conversion.
- Pay Transparency product launch in Q3 – early customer uptake and pricing will be telling.
- Delivery of public sector programmes – confirmation that H2 revenue ramps as expected.
- Commercial sector demand – any sign of improvement from the muted prior-year levels.
- Hiring and contractor mix – indications on utilisation and margin trajectory.
My take – a clear positive on growth, with prudent margin guidance
This is a constructive update. Revenue steers to the upper end of the £378.0m – £393.4m range, Workday Products has crossed the $100m ARR milestone, and Workday Services is set to return to growth. The Digital Services wins in the Home Office, NHS England and DVSA underpin a stronger H2.
The trade-off is margin. Guiding Adjusted PBT to be in line with £66.4m consensus while hiring and using more contractors signals investment first, optimisation later. Given the backlog and pipeline, that looks like the right call, but it does put more weight on execution and H2 delivery.
Net-net, momentum is improving across all three divisions, the product portfolio is scaling, and a regulatory-driven launch in Pay Transparency lands at an opportune time ahead of June 2026. If Kainos converts its pipeline and maintains discipline, there is a credible path to both growth and margin rebuild into the back half.
Quick refresher on Kainos
Kainos is a UK-headquartered IT provider operating across three divisions: Digital Services, Workday Services and Workday Products. It serves public sector, commercial and healthcare customers, with more than 2,800 people in 20 countries across Europe, Asia and the Americas. The company is listed on the London Stock Exchange (LSE: KNOS).
Workday Services focuses on deploying Workday’s Finance, HR and Planning products across Europe and North America, with growing presence in Australia, New Zealand and Mexico. Workday Products includes Smart Test, Smart Audit and Smart Shield, plus Employee Document Management launched in October 2023. Over 450 global customers use one or more products.
