Kainos Group PLC Reports 37% Revenue Surge in First Half

Kainos Group PLC delivered a strong first half of its fiscal year, with revenue increasing by 37% to £268.8 million, driven primarily by exceptional growth in its Digital Services division. The results, reported for the six months ending September 30, 2026, demonstrate continued momentum from the company’s strong performance in FY26, with adjusted pre-tax profit rising by 30% to £41.7 million.

The surge in revenue was particularly pronounced in Digital Services, which saw a 57% increase, fueled by contract wins in the public and healthcare sectors. These gains were supported by significant contract awards, including a £150 million agreement with Defra and anticipated contracts with the Home Office and Foreign, Commonwealth & Development Office. The Group’s revised methodology for calculating bookings and contracted backlog, aligning with industry practice, contributed to a substantial increase in the latter, reaching £853.0 million – a significant improvement over both the prior year and the previous six-month period.

Workday Products also contributed to the positive results, with Annual Recurring Revenue (ARR) increasing by 24% to £96.0 million and revenue growing by 22% to £48.0 million. The division now serves over 750 customers, with approximately 40% utilizing two or more products. The company remains on track to achieve its ARR target of £100 million by the end of 2026 and £200 million by 2030. Increased investment in research and development, rising 33% to £11.4 million, signals a commitment to future product innovation.

Despite the strong top-line growth, gross margin declined by 3.9% to 31.9%, largely attributed to the temporary use of contractors and supply partners to support rapid expansion. Management anticipates margins will normalize as the company transitions to employing more staff. Overall, Kainos’s strong financial performance, coupled with a robust backlog, positions it favorably for continued growth, supported by a healthy cash balance of £86.5 million. The company’s strong performance in the UK government sector, being a top-performing supplier since April 2026, underscores its position in the market.