ii view: UK tech firm Kainos swells workforce to cope with demand
Helping companies and governments enhance efficiency and offering a reasonably attractive dividend yield. Buy, sell, or hold?
20th April 2026 13:01
by Keith Bowman from interactive investor
Full-year trading update to 31 March
- Expects full year (FY) revenues ahead of current City forecasts of around £406.5 million
- Continues to expect FY adjusted pre-tax profits to match current City forecasts of around £66.4 million versus £65.6 million last year
ii round-up:
Kainos Group (LSE:KNOS) today highlighted a one-fifth increase in its workforce to 3,475 people, with a record customer backlog now expected to help drive annual revenue ahead of current City forecasts.
Corporate and government demand for efficiency enhancing IT products fuelled double-digit growth in second-half sales, with full-year revenue now expected to exceed City estimates of around £406.5 million. Costs to increase the workforce affected profit margins, meaning management’s estimate of a £66.4 million annual adjusted profit unchanged, though it's better than last year's £65.6 million.
Shares in the FTSE 250 company rose 1% in UK trading having come into this latest news down by just over a tenth so far in 2026. That’s similar to fellow UK headquartered IT company Bytes Technology Group Ordinary Shares (LSE:BYIT). The FTSE 250 index is up 2% year-to-date.
- Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA
Kainos helps deploy efficiency enhancing software by 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.
Annual recurring revenues for its own software to compliment Workday software via its Products division exceeded £89 million, with targets of £100 million and £200 million for 2026 and 2030 respectively.
Sales at the group’s Workday Services division, installing and servicing Workday software products, returned to growth in the second half, driven by demand across the Americas and Asia-Pacific regions.
Demand for Digital Services rose strongly, enhanced by new contract wins for NHS England and the Driver and Vehicle Standards Agency, as well as ongoing demand in North America.
Full-year results are scheduled for 18 May.
ii view:
Started in 1986 and headquartered in Belfast, Kainos today employs its staff across 18 countries in Europe, the Americas and Asia. Kainos' own software products to compliment Workday software and sold via the Workday Products division are now used by over 600 customers globally.
Digital Services that help customers such as the NHS generated most sales over its last financial year at 54%, followed by Workday Services at 27% and Workday Products the balance of 19%. Geographically, the UK & Ireland led at 59%, with the Americas at 31%, Central Europe 9%, and the rest of the world the balance of 1%.
For investors, volatile corporate and government IT spending is compounded by conflict in the Middle East and US tariffs, adding to the cautious outlook. Kainos' partnership with US company Workday is of high importance. Government pressure to cut borrowing, both here in the UK and overseas, could dampen demand for digital services, while the full impact of AI on software providers in the future remains difficult to predict.
- ISA investing: nine ii experts reveal their ISA tips for 2026-27
- Week Ahead: AB Foods, Relx, Rio Tinto, Sainsbury’s, WH Smith
- Nvidia breaks records as Wall Street makes ‘astonishing’ recovery
On the upside, Kainos' own ability to improve corporate efficiency within the tough economic environment likely remains of importance. A diversity of underlying customer types and geographical locations exists, with a push to expand overseas sales ongoing. Sales of its own and likely higher margin software products continue to grow, while a forecast dividend yield of around 3.4% is not to be ignored.
In all, and despite ongoing risks, a consensus analyst fair value estimate above £11.20 per share appears to point to continued longer-term optimism in the City.
Positives:
- Business and customer diversity
- Looking to grow sales overseas
Negatives:
- Uncertain economic outlook
- Currency moves can impact
The average rating of stock market analysts:
Buy
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.