Kainos reaps the rewards of digital government

Beyond the public sector, Kainos also works with private organisations. Moreover, its customer base is increasingly diversified geographically. International revenues comprised 26 per cent of the group’s top line for the six months to 30 September 2017, up from 19 per cent a year earlier. While overall sales grew by just 2 per cent to £41.4m in the first half, the company reported a very encouraging 94 per cent increase in sales orders to £63.4m, with accompanying growth in the backlog of contracted revenue yet to be recognised of 43 per cent to £97.1m.

Kainos’s largest business area is digital services, which accounted for two-fifths of first-half sales. While revenue growth in the period was muted, order growth mirrored that achieved by the group as a whole, up a whopping 94 per cent to £54.9m. Within digital services, Kainos’s ‘digital transformation’ segment works with a broad range of central government departments, including the Land Registry, Home Office and the Cabinet Office, among others. 

Digital services also includes Workday implementation. Workday provides cloud-based software for human resources and financial management. As Workday’s only UK-headquartered "boutique" partner, Kainos signed 16 new Workday clients in the first half, against just five a year earlier. Most Kainos/Workday customers are commercial, but Kainos also recently signed Workday’s first ever UK public sector deals – three at the half-year stage. For Kainos, this represents a “first-mover advantage”.

Kainos’s other core business area is digital platforms, offering three separate products. Smart, a proprietary software tool, allows Workday customers to verify their Workday configurations. This platform has 103 global customers, against just 64 in the first half of 2017.

Meanwhile, Evolve EMR has had a tougher ride. Evolve digitises NHS patient records, but has struggled due to NHS funding limitations. First-half revenues (excluding third parties) fell by 38 per cent to £3.4m. Even so, Kainos highlights a significant addressable market: 98 health trusts, representing around £200m, have not yet dealt with their considerable paper challenge.