THE INFORMATION WITHIN
THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONTAIN INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE
REGULATION (EU) NO 596/2014 AS IT FORMS PART OF UK
DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018,
AS AMENDED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT
VIA REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED
TO BE IN THE PUBLIC DOMAIN.
25
July 2024
Kainos Group
plc
("Kainos" or "the
Company")
Workday Partnership &
Co-Sell drives £200m Target
Kainos Group plc (KNOS), a
UK-headquartered IT provider with expertise across three divisions
- Digital Services, Workday Services, and Workday Products, today
announces an increase to the Annual Recurring Revenue (ARR) target
for its Workday Products business, from £100m to £200m, following
the signing of an enhanced strategic partnership with Workday,
Inc.
Increased ARR Target
As a result of this agreement and the
underlying momentum in the Workday Products division, Kainos is
increasing the ARR target for the division from £100m (by 2026) to
£200m (by 2030). In its most recent results, to 31 March 2024, the
exit ARR associated with the Kainos Workday Products was £61m, an
increase of 26% on the prior year. With over 450 global
customers using its products, existing Kainos customers include
JLL, Capital One and Match Group.
Enhanced Strategic Partnership
Announced by Workday in June 2024,
Built on Workday enables partners to create purpose-built apps that
address customers' business and industry challenges and to
accelerate the distribution of those apps to Workday's 10,500+
enterprise customers through the Workday Marketplace.
Kainos' enhanced strategic
partnership will see Workday's sales teams across North America,
Europe and Asia Pacific incentivised to introduce and co-sell
Kainos Products. The agreement covers the existing Kainos products,
Smart Audit, Smart Test and Kainos Employee Document Management as
well as future products that Kainos will develop on Built on
Workday. It is a multi-year agreement with payments to Workday of
approximately £7.8m per year.
Increased Investment
To maximise the opportunity presented
by this enhanced agreement, there are costs that are expected to be
incurred. These costs include Kainos sales costs to support the
wider Workday sales organisation and on-going development in Smart
Test, Smart Audit and Kainos Employee Document Management to
utilise the full power of Built on Workday. These costs are in
addition to the annual Built on Workday licence fees.
In total, these costs are expected to
be approximately £7m during the current financial year which will
therefore reduce the Adjusted PBT by the same amount. This
represents an 8% reduction on current market consensus forecasts*.
There is a mobilisation phase for this enhanced partnership, which
will result in revenue building from FY26, underpinning the £200m
ARR target and starting to offset the annual investment. As a
result, there will be negligible revenue uplift in the current
financial year.
Comments
Malachy Smith, Workday Global
Practice Leader at Kainos, commented:
"Over the past ten years we have developed and launched
fantastic products that, alongside Workday, help our customers
overcome their industry and business challenges. We are
delighted to sign this transformative innovation agreement allowing
us to co-sell our products with Workday. We believe this will more
than triple our ARR over the next six years."
Doug Robinson, Co-President of
Workday, commented:
"This strategic expansion is an exciting step in our
partnership with Kainos, and underscores our companies' mutual
dedication to customers, co-innovation, and the Built on Workday
program. By collaborating to accelerate app development and
distribution, we can help our joint customers recognise even
greater value from their Workday investment, helping them keep pace
in a changing world of work."
*
Note: Company compiled range is based on known sell side analyst
estimates. The ranges are: Revenue £408.9m - £459.0m and
Adjusted PBT £81.2m - £91.0m. The respective consensus
figures are £425.8m and £86.0m.
The person responsible for arranging
the release of this announcement on behalf of Kainos is Grainne
Burns, Company Secretary.
ENDS
For further information, please
contact:
Kainos
via FTI Consulting LLP
Russell Sloan, Chief Executive
Officer
Richard McCann, Chief Financial
Officer
Investec Bank plc
+44 20 7597 5970
Patrick Robb / Ben Griffiths / Nick
Prowting
FTI Consulting LLP
+44 20 3727 1000
Dwight Burden / Kwaku Aning / Usama
Ali
About Kainos Group plc
Kainos Group plc is a
UK-headquartered provider of sophisticated IT services to major
public sector, commercial and healthcare customers. Our expertise
spans three divisions: Digital Services, Workday Services, and
Workday Products.
Digital Services: We develop and
support custom digital service platforms that transform service
delivery in public, commercial, and healthcare sectors. Our
solutions ensure security, accessibility, cost-effectiveness, and
improved user outcomes.
Workday Services: Specialising in
deploying Workday, Inc.'s Finance, HR, and Planning products, we
are a respected partner in Europe and North America. Experienced in
complex deployments, we are trusted to launch, test, expand, and
support Workday systems.
Workday Products: Our established
product suite, incorporating Smart Test, Smart Audit, and Smart
Shield, complements Workday by enhancing system security and
compliance. Our Employee Document Management product, launched in
October 2023, improves document generation and storage within
Workday while supporting an organisation's global compliance
requirements. Over 450 global customers use one or more of our
products.
Our people are central to our
success. We have more than 2,900 people in 23 countries across
Europe, Asia, and the Americas.
We are listed on the London Stock
Exchange (LSE: KNOS) and you can discover more about us at
www.kainos.com.