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Kainos Group PLC, a player in the Technology sector, saw its shares fall by 13% to 959p on Monday morning. The decline followed the company's warning that its revenue for the year is likely to be lower than previously anticipated.
The company indicated that, while profits are expected to align with current market forecasts, revenue growth will be modest. This outlook is attributed to a challenging trading environment for its services segment, which is expected to fall short of previous forecasts. City analysts had projected revenue of £415.5 million for the year, up from £382.4 million last year, with an underlying profit of £79.1 million.
Challenges in Digital Services and Workday Services
Kainos (LSE:KNOS) 's three primary divisions are facing varying degrees of difficulty. The Digital Services division has experienced a slowdown in the first five months of the financial year. Although there has been sustained demand from public sector clients, this has been counterbalanced by delays related to the UK general election and weakened demand from commercial clients, resulting in postponed project expenditure decisions.
Similarly, the Workday Services division has seen a decline in revenue. Despite a strong win rate, contract wins and values have been lower compared to previous periods. This downturn is partly due to more competitive pricing from partners.
Positive Outlook in Workday Products
On a more positive note, the Workday Products division has demonstrated significant growth, leading to an increase in the annual recurring revenue target from £100 million to £200 million. The company anticipates a return to growth in the second half of the year.
