Kainos’s shares rally on £30m share buyback despite sales alerts

Kainos Group’s shares rallied on Monday after the Belfast-based information technology provider unveiled plans to buy back £30 million (€36.2m) of its shares, saying it has a “healthy pipeline” of work even after issuing two sales alert in the past 10 weeks.
The company, which has a partnership with US human resources and finance software giant Workday and is a key supplier to the UK National Health Service (NHS), first warned in early September that its revenues for the year to March 2025 would only rise slightly – compared to the consensus view of analysts at the time for an 8.7 per cent increase to £415.5 million.
It attributed the warning to a delay in UK public sector contract decisions following on from the general election there in July – as well as a weak macroeconomic backdrop affecting commercial customers.
Kainos delivered another negative surprise at the end of October when it said it expected its full-year revenues to be “moderately below” by-then lowered market expectations and that most of the reduction would flow through to its adjusted pretax profit.
The company reported on Monday that its revenues for the first half of its financial year dipped 5 per cent to £183.1 million, while its adjusted pretax profit increased by 1 per cent to £38.2 million.
However, Kainos’s board decided to launch a £30 million share buyback in light of the company’s sharp share price drop this year and as it continues to generate significant operating cash flow, with cash on its balance sheet amounting to £151.6 million.
Shares in the company were up 7.4 per cent in midday trading, though they remain down 22 per cent so far this year.
“Our services businesses faced a tougher environment in the first half of the year in a generally soft market, and we remain cautious about our prospects for the remainder of the year. However, we continue to generate robust levels of profitability and looking to the medium term and beyond we continue to see substantial growth opportunities across all our core markets,” said chief executive officer (CEO) Russel Sloan.
The CEO added that while the company’s “is confident” of the opportunities ahead for its digital services unit it remains “cautious about the timing of future growth as [it awaits] the government moving out of the delayed decision-making phase”.
Still, the company’s Workday products division “is going from strength to strength”, he said.
Kainos’s growing partnership with Workday should see the group’s product annual recurring revenue rising to £100 million in the year to March 2026 from £60.5 million last year – and reaching £200 million by the end of the decade, according to the company.