Kainos Group Plc · LSE:KNOS
Kainos — H1 FY2020 Earnings Presentation
30 slides from Kainos's earnings presentation, Nov 11, 2019
Slide 1: Interim Results
Interim Results 6 months ended 30th September 2019 Brendan Mooney (CEO) and Richard McCann (CFO) 11 November 2019
Slide 2: Highlights
Highlights Performance in-line with market expectation. £86.9m Performance in-line with market expectations, with ongoing momentum. • Revenue, profit and sales orders all showing double digit growth. REVENUE UP 29% Revenue diversification continues. • International revenues up 86% to £17.9m. • Comme
Slide 3: Group Overview
Group Overview Long-term, strong revenue growth trends in both digital services and platforms. DIGITAL SERVICES DIGITAL PLATFORMS(1) £132.6m £16.9m £15.3m £15.9m £14.0m £78.6m £64.5m £7.8m £50.8m £55.1m FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 • Digital Transformation: Delivery of digital s
Slide 4: Financial Summary
Financial Summary An established track record of high growth, high margin performance. Remain on track to deliver our tenth consecutive year of revenue and adjusted REVENUE pre-tax profit growth. £160m H1 Revenue H2 Revenue Growth has been entirely organic, delivering five-year (FY15-FY19) revenue £
Slide 5: People
People We continue to build an exceptionally talented and engaged workforce. Building a talented team is key to our long-term success. 1,562 PEOPLE, UP 18% We continue to attract strong interest in key recruitment markets, with an 18% increase in staff numbers. • 232 people joined, 79 from education
Slide 6: Customers
Customers We build long-term customer relationships, over 94% of our revenue is from existing clients. Existing customers underpin revenue growth, generating 94% of revenue. REVENUE BY SECTOR • Existing client revenue up 29% to £81.9m, (H1 19: £63.7m). Healthcare There has also been strong customer
Slide 7: Revenue Progression
Revenue Progression We have made excellent progress in building balance into our revenue streams. COMMERCIAL REVENUES INTERNATIONAL REVENUES (1) REVENUE BY CUSTOMER TYPE Recurring Customers Repeat Customers £18m New Customers £14m £8m £108m £40m £29m £8m £29m £29m £7m £20m £63m £24m £17m £18m £60m £
Slide 8: Digital Services
Digital Services
Slide 9: Digital Services Overview
Digital Services Overview A very strong revenue performance and confident outlook. Very strong revenue performance, up 29%. REVENUE £73.7m • Digital Transformation revenue up 21% to £56.8m (H1 19: £47.0m). • Workday Services revenue increased 64% to £16.9m (H1 19: £10.3m). UP 29% • Growth in Commerc
Slide 10: Digital Transformation
Digital Transformation Stable demand from UK Public Sector and continued progress in Commercial Sector. Very strong revenue growth, up 21% to £56.7m (H1 19: £47.0m). MARKET SIZE Public Sector revenue increased 23% to £43.7m (H1 19: £35.6m). £1,290m UK PUBLIC SECTOR FY19 SPEND Revenue diversification
Slide 11: Digital Transformation
Digital Transformation We have established a clear reputation for delivering value, at scale and at pace. 11
Slide 12: Workday at-a-glance
Workday at-a-glance Workday continues to execute strongly, extending reach and product set. $88BN TOTAL ADDRESSABLE CURRENT WORKDAY MODULES AND NEW PRODUCTS ONGOING MARKET, 8.7% CAGR PRODUCT ATTACH RATE ANNOUNCED Q3 MOMENTUM Workday continues to Planning $5bn Planning Answers gain market share in Wo
Slide 13: Our Workday Opportunity
Our Workday Opportunity The opportunity is growing locally, internationally and at pace. WORKDAY INC REVENUES KAINOS REVENUES KAINOS EXPANSION 2010 • UK & Ireland. 2015 $2.8bn £34.4m • Benelux. $2.1bn £21.7m $1.2bn $1.6bn £14.7m 2017 $0.8bn £8.2m £9.0m • Germany, Austria, Switzerland. FY15 FY16 FY17
Slide 14: Workday Services
Workday Services We are one of the most experienced participants in the Workday partner ecosystem. Strengthened our position as leading European partner. COMPETITIVE LANDSCAPE • A total of 56 clients in mainland Europe (H1 19: 34). (NORDICS) Continued regional expansion. • Significant projects secur
Slide 15: Adaptive Insights
Adaptive Insights Workday integration of Adaptive Insights remains on schedule. Adaptive Insights provides business planning software to assist in Financial Planning and Analysis to over 4,500 customers globally. WORKFORCE: 16 PEOPLE Adaptive Insights was acquired by Workday Inc in June 2018 for $1.
Slide 16: Workday Services
Workday Services Our customer success has resulted in excellent local and international references. 16
Slide 17: Customer Stories
Customer Stories Significant projects for leading Commercial and Public Sector organisations. Lombard Odier Defra 3,000 employees. Approximately 3,500 staff. Swiss banking group spanning across wealth Annual budget of approximately £2.2bn. and asset management. Presence in 19 countries. 80% of Defra
Slide 18: Customer Stories
Customer Stories Commercial clients in the UK and in Germany. Merian Global Investors Concardis 250 employees. Founded in 2003. 116,000 customers in Austria Germany and Headquartered in London. Switzerland. Formed from buy-out from Old Mutual. Process €42bn transactions annually. • Workday Services
Slide 19: Digital Platforms
Digital Platforms
Slide 20: Digital Platforms Overview
Digital Platforms Overview Implementing our specialised products in automated testing and digital healthcare. Very strong performance across all key financial metrics. REVENUE • Revenues increased 34% to £13.2m (H1 19: £9.9m). £14m Evolve Smart • Sales orders increased 198% to £23.3m (H1 19: £7.8m).
Slide 21: Smart for Workday
Smart for Workday Smart is the only automated testing platform designed specifically for Workday. Strong sales execution with over 38 new clients signed (H1 19: 28). REVENUE • New clients signed included AIA, Bowdoin and Zillow. £10m SaaS Subscriptions Consulting Financial performance underlines str
Slide 22: Smart for Workday
Smart for Workday Customers across the world use Smart to reduce their manual testing by 90%. 22
Slide 23: Customer Stories
Customer Stories Customers across the world use Smart to reduce their manual testing by 90%. Keurig Dr Pepper Saint Luke’s Health System 25,000 employees. 12,000 employees. Hospitals are used as teaching centres for $11bn in Revenues. 3500+ nurses. 7th largest food and beverage company in 300 Locati
Slide 24: Financial Performance
Financial Performance
Slide 25: Income Statement
Income Statement Digital Services: INCOME STATEMENT • Very strong revenue growth in both segments. HY • Digital Transformation: 21%. £m H1 20 H1 19 FY 19 Change • Workday Services: 64%. Digital Services 73.7 57.3 132.6 29% • Gross Margin increased by 1%. Digital Platforms 13.2 9.9 18.7 34% • Improve
Slide 26: Balance Sheet and Cashflow
Balance Sheet and Cashflow Balance Sheet: BALANCE SHEET • Fixed assets As at 30 September (£m) H1 20 H1 19 • IT, office equipment etc. £2.7m (H1 19: £2.6m). Fixed assets and investments 16.0 3.6 • IFRS16 leases capitalised £4.9m (H1 19: N/A). • Land for office £7.4m (H1 19: N/A). Receivables and WIP
Slide 27: Potential Segmental Reporting Change
Potential Segmental Reporting Change Published Segmental Reporting Potential Segmental Reporting Digital Digital Transformations Workday Total Transformations Workday Total 6 Months to 30th September 2019 £m £m £m £m £m £m Revenue 73.7 13.2 86.9 61.5 25.4 86.9 Cost of Sales (41.1) (5.4) (46.5) (37.1
Slide 28: Looking Ahead
Looking Ahead
Slide 29: Growth Drivers
Growth Drivers With positive end markets, our next phase of growth is all about execution. DIGITAL UK PUBLIC UK COMMERCIAL INTERNATIONAL TRANSFORMATION SECTOR SECTOR WORKDAY WORKDAY INC SMART CLIENT GEOGRAPHIC US PRESENCE SERVICES GROWTH CONVERSION EXPANSION WORKDAY INC MARKET ADDITIONAL SMART CLIEN
Slide 30: Legal and Confidentiality Statement
Legal and Confidentiality Statement This document contains statements about Kainos Group plc that are or may be forward-looking statements. Forward-looking statements include statements relating to (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebt