Kainos Group Plc · LSE:KNOS
Kainos — FY2020 Earnings Presentation
36 slides from Kainos's earnings presentation, May 26, 2020
Slide 1: Full Year Results
Full Year Results 12 months ended 31st March 2020 Brendan Mooney (CEO) and Richard McCann (CFO) 26 May 2020
Slide 2: Highlights
Highlights. A strong performance in-line with market expectations. £178.8m A strong performance in-line with market expectations. • Revenue, profit and sales orders all showing progress. REVENUE UP 18% (1) Revenue diversification continues. • International revenues up 72% to £39.9m. • Commercial rev
Slide 3: Covid-19 Response
Covid-19 Response. Ensuring the wellbeing of our colleagues and supporting our customers. Invoked response plan on 5 March, placing our people in the safest environment. • Implemented home working for 1,700 people in seamless fashion. Thank you for your hard work delivering the new isolation note •
Slide 4: Covid-19 Response
Covid-19 Response. Supporting the NHS and the UK Public Sector as it fights the pandemic. ISOLATION NOTE HOME TESTING WELSH GOVERNMENT Isolation notes provide employees National scale service allowing people The Welsh Government with the evidence for their employer to book an appointment at a testin
Slide 5: Group Overview
Group Overview. Long-term, strong revenue growth trends in both Digital Services and Workday Practice. DIGITAL SERVICES WORKDAY PRACTICE £56m £117m £123m £34m £68m £69m £75m £22m £15m £9m FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 • The full lifecycle development and support of • We are one o
Slide 6: Financial Summary
Financial Summary. An established track record of high growth, high margin performance. A strong performance, representing the tenth consecutive year of revenue and REVENUE adjusted pre-tax profit growth. £180m H1 Revenue H2 Revenue Five-year (2016-2020) revenue CAGR of 24%. £92m £120m £84m R&D acti
Slide 7: Our People
Our People. We continue to build an exceptionally talented and engaged workforce. Building a talented team is key to our long-term success. 1,715 PEOPLE, UP 17% We continue to attract strong interest in key recruitment markets, with a 17% increase in headcount. • 579 people joined, 92 from education
Slide 8: Our Customers
Our Customers. Delivering value to our clients drives long-term relationships. REVENUE BY CUSTOMER TYPE Best-in-class customer service CUSTOMER RETENTION Recurring Customers £24m drives high levels of ongoing New client acquisition drives Repeat Customers New Customers £18m revenue. multi-year reven
Slide 9: Revenue Progression
Revenue Progression. We have made excellent progress in building balance into our revenue streams. GROUP REVENUES BY SECTOR GROUP INTERNATIONAL REVENUES (1) Public Sector £23m Rest of World Commercial Sector Central Europe Healthcare sector North America £21m £18m £63m £40m £15m £14m £11m £19m £28m
Slide 10: Digital Services
Digital Services
Slide 11: Digital Services Overview
Digital Services Overview. Solid revenue growth, exceptional sales execution building a strong backlog. SECTOR REVENUE Solid performance in face of uncertain DIVISION REVENUE £122.5m Public Sector £13m £15m UK political landscape. Healthcare Sector Commercial Sector £19m £21m £10m • Revenue up 4% to
Slide 12: Digital Services Sectors
Digital Services Sectors. Stable demand from UK Public Sector and continued progress in Commercial Sector. Public Sector revenue increased 2% to £86.4m (2019: £84.6m). MARKET SIZE £1,431m • Good performance with the backdrop dominated by the leadership contest, the general election and the uncertain
Slide 13: Digital Services Customers
Digital Services Customers. We have established a clear reputation for delivering value, at scale and at pace. 13
Slide 14: Customer Stories
Customer Stories. Significant projects for leading Commercial and Public Sector organisations. INTELLIGENT GROWTH SOLUTIONS COMPANIES HOUSE Founded in 2013. Approximately 1,000 staff. Headquartered in Edinburgh. 2.2bn company searches per year. 4 year digital transformation programme KPMG's Best Bri
Slide 15: Workday Practice
Workday Practice
Slide 16: Our Workday Opportunity
Our Workday Opportunity. The opportunity is growing locally, internationally and at pace. THE OPPORTUNITY WORKDAY INC REVENUES KAINOS REVENUES Workday is an innovative cloud- based finance, HR and planning software platform. $3.6bn £56m Kainos first engaged with Workday $2.8bn £34m in 2010 and is on
Slide 17: Workday at-a-glance
Workday at-a-glance. Workday continues to execute strongly, extending its reach and product set. $88BN TOTAL ADDRESSABLE CURRENT WORKDAY NEW PRODUCTS ONGOING MARKET, 8.7% CAGR MODULES ANNOUNCED Q3 MOMENTUM Workday continues to Planning $5bn Adaptive Planning Answers gain market share in key segments
Slide 18: Workday Practice Overview
Workday Practice Overview. Exceptional revenue, sales and backlog growth mark another remarkable year. SEGMENT REVENUE Exceptional sales performance has DIVISION REVENUE £56.3m Smart created a very strong backlog. Workday Services £37m Workday Services UP 66% £23m • Sales increased 52% to £43.9m £14
Slide 19: Workday Services
Workday Services. We are one of the most experienced participants in the Workday partner ecosystem. SERVICES REVENUE Continue to develop our people: 380 ADDRESSABLE MARKET £385m accredited consultants (2019: 251). • Now have a local presence in Sweden, Austria, Finland, SERVICES MARKET £37m Switzerl
Slide 20: Workday Services
Workday Services. Global customers trust us to launch, test, expand and safeguard their Workday systems. 20
Slide 21: Customer Stories
Customer Stories. Implementing Workday for local and international clients. AUTISM PLUS INTERAC Canada’s leading payment 450 employees. services provider. Leading Yorkshire charity. 350 employees. £12.8m in revenue. 15.2m active users per month. • Workday Services project, deployment for HCM and • F
Slide 22: Adaptive Insights
Adaptive Insights. Successful integration of Adaptive Insights acquisitions. Adaptive Insights provides business planning software to assist in Financial Planning and Analysis to over 4,700 customers globally. WORKFORCE: 16 PEOPLE Adaptive Insights was acquired by Workday Inc in June 2018 for $1.6bn
Slide 23: Customer Stories
Customer Stories. Kainos’ successful Adaptive Insights implementation. KAINOS GROUP PLC PROJECT DETAILS Implementation in 7 weeks. 1,700 staff. • Replaced 20+ budgeting and forecasting spreadsheets. • Profiles utilisation and revenue of all staff/contractors. Leading provider of digital solutions to
Slide 24: Smart for Workday
Smart for Workday. Smart is the only automated testing platform designed specifically for Workday. SEGMENT REVENUE Performance underlines strength of MARKET SIZE £338m SAAS Subscriptions £4m product and market opportunity. SAAS Services • Sales Orders: up 50% to £30.4m (2019: £20.2m). £2m SERVICES M
Slide 25: Smart for Workday
Smart for Workday Over 200 global customers use Smart to reduce their manual testing by 90%. 25
Slide 26: Customer Stories
Customer Stories Customers across the world use Smart to reduce their manual testing by 90%. Match Group Humana Inc. 1,400 employees. 46,000 employees. Leader in dating products. $64.9bn in revenues. Tinder - the highest grossing app globally. Presence in 190 countries. Headquartered in Louisville,
Slide 27: Financial Performance
Financial Performance
Slide 28: Income Statement
Income Statement Digital Services: • Mixed revenue growth depending on sector. INCOME STATEMENT • Public: 2% (impacted by Brexit). 2019 2020 Change £m • Commercial: 15%. Digital Services 117.3 122.5 4% • Healthcare: 7%. • Gross Margin decreased by 2%. Workday Practice 34.0 56.3 66% • Utilisation fel
Slide 29: Balance Sheet and Cashflow
Balance Sheet and Cashflow Balance Sheet: BALANCE SHEET • Fixed assets and investments As at 31 March (£m) 2019 2020 • IT, office equipment, investments etc. £3.4m (2019: £4.0m). Fixed assets and investments 4.0 15.3 • IFRS16 leases capitalised £4.5m (2019: N/A). Goodwill and Intangible assets - 7.2
Slide 30: Segmental Reporting Change
Segmental Reporting Change The following is an analysis of the Group's revenue and results by reportable segment: Digital Workday Digital Workday 2020 Services Practice Consolidated 2019 Services Practice Consolidated 12 Months to 31 March £’000s £’000s £’000s 12 Months to 31 March £’000s £’000s £’0
Slide 31: Acquisition Accounting
Acquisition Accounting. Successful integration of Adaptive Insights acquisitions. Two acquisitions completed during FY20. • Formulate (UK) in November 2019 and IntuitiveTEK (USA) in March 2020. WORKFORCE: 16 PEOPLE • Initial consideration - £6.6m (cash £4.6m during FY20, shares £1.6m). HQ: WORCESTER
Slide 32: Looking Ahead
Looking Ahead
Slide 33: Growth Drivers
Growth Drivers With positive end markets, our next phase of growth is all about execution. UK UK PUBLIC DIGITAL SERVICES SECTOR COMMERCIAL INTERNATIONAL SECTOR WORKDAY INC SMART CLIENT GEOGRAPHIC WORKDAY SERVICE GROWTH CONVERSION EXPANSION US PRESENCE WORKDAY INC MARKET ADDITIONAL SMART CLIENT GROWT
Slide 34: Appendix
Appendix Full reconciliation between the previous and current segmental reporting
Slide 35: Divisional Reporting Change
Divisional Reporting Change Impact of change on financial years Previous Segmental New Segmental Digital Workday Digital Digital Digital Digital Workday Workday 2020 Transformation Implementation Services Smart Evolve Platforms Consolidated Transformation Evolve Services Implementation Smart Practic
Slide 36: 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