ii view: NHS and AI boost tech firm Kainos
Ending its latest financial year with a record contracted customer backlog and offering an attractive dividend yield. Buy, sell, or hold?
18th May 2026 12:39
by Keith Bowman from interactive investor
Full-year results to 31 March
- Revenue up 17% to £431 million
- Adjusted pre-tax profit up 2% to £67.1 million
- Final dividend of 19.8p per share
- Total dividend for the year up 4% to 29.6p per share
- Cash held down 33% to £89 million
Chief executive Brendan Mooney said:
"This was a positive year for Kainos, with excellent revenue growth. Our strong customer relationships and significant contracted backlog position us well for further progress in the year ahead.”
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ii round-up:
IT help for government bodies in the UK and overseas plus broader assistance for AI projects, has helped UK tech company Kainos Group deliver profit ahead of management forecasts.
Work for NHS England and over 150 AI projects for both public and private sector organisations helped drive annual adjusted profit up 2% to £67.1 million. Kainos had predicted profit of nearer £66.4 million.
Shares in the FTSE 250 company fell 1% in UK trading having come into this latest news down by close to a fifth so far in 2026. That’s similar to accounting software provider Sage Group (The), although hardware seller Computacenter is up by close to two-fifths. The FTSE 250 index has risen by less than 1% year-to-date.
Kainos offers services to deploy the efficiency enhancing software of US company Workday as well as providing its own complimentary software products. The group also provides other services such as digitalising written records for healthcare and public bodies like the NHS and UK Home Office.
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Digital services revenue, including work for Canadian consultancy Davis Pier which assists its government, climbed 23% to £242 million. Sales at the Workday services division rose 25% to £107 million, while Workday products, the group’s own complimentary software products to Workday items, improved 19% to £82 million.
The Workday partnership was strengthened this year, with Workday now selling its newly developed Pay Transparency product to its customers.
Kainos flagged a record contracted customer backlog of £434 million as of late March in supporting the outlook, up almost a fifth year-over-year.
A half-year trading update is likely late August or early September.
ii view:
Headquartered in Belfast, Kainos is a provider of IT services as well as being a developer of its own software products. Active customers rose 15% year-over-year to 1,253, with commercial or corporate customers accounting for most revenues at 47%, followed by public sector bodies at 35% and healthcare customers the balance of 18%.
For investors, the full impact of AI on software providers in the future remains tough to predict. Already volatile corporate and government IT spending now sees a war in the Middle East and US trade tariffs adds extra caution to the outlook. Kaino’s partnership with US company Workday remains of high importance, while government pressures in the UK and overseas to cut national debt could see spending on areas such as IT reduced in future.
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To the upside, Kainos' own ability to improve other organisation’s efficiency within a tough economic environment remains of importance. A diversity of underlying customer types and geographical locations exists, with around two-fifths of all sales generated overseas. Sales of its own and higher profit margin software products continues to grow, while a prospective dividend yield of around 3.6% is not to be ignored.
On balance, and while risks remain, a consensus analyst fair value estimate above £11.25 per share for this UK headquartered tech company offers grounds optimism over the longer term.
Positives:
- Business and customer diversity
- Assisting organisations with AI
Negatives:
- Uncertain economic outlook
- Currency moves can impact
The average rating of stock market analysts:
Buy
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