Sell drives £200m Target
25/07/2024 14:30
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RNS Number : 8904X Kainos Group plc 25 July 2024
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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 (http://www.kainos.com) www.kainos.com
(http://www.kainos.com) .
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