Highlights – LSE:KNOS

• Kainos lifted first-half Revenue 37% to £268.8m, while adjusted pre-tax profit climbed 30% to £41.7m.

• The board raised the Interim Dividend 6% to 10.4p as adjusted Diluted Earnings per Share reached 27.4p.

• Workday Products annual Recurring Revenue grew 24% to £96.0m, and Kainos expects it to pass £100m by year-end.

• Group gross Margin narrowed to 43.1% as Digital Services leaned more heavily on contractors and partners.

Digital services and software group Kainos (LSE: KNOS) has delivered the numbers behind the upbeat tone of its August trading update. Interim results released at 07:00 on 9 November 2026 showed revenue for the first half of its 2027 financial year rising 37% to £268.8 million, alongside higher profit, a larger dividend and a fresh run of public sector contract awards.

Headline numbers from the half

The six months to 30 September 2026 produced adjusted profit before tax of £41.7 million, up 30%, and statutory profit before tax of £35.8 million, up 26%. Adjusted diluted earnings per share rose 45% to 27.4p. The board declared an interim dividend of 10.4p, an increase of 6%.

Order activity remained strong. Kainos reported bookings of £402.3 million in the period and a contracted Backlog of £853.0 million, giving the group a sizeable pipeline of work already signed.

Workday Products edges towards a milestone

Annual recurring revenue (ARR) in the Workday Products division rose 24% to £96.0 million. The company said it expects ARR to exceed £100 million by the end of the financial year. Hitting £100 million has been a stated target for the division, with a longer-term ambition of £200 million also set out at the prior year's interim stage.

Public sector wins power Digital Services

Several large government awards featured in the half. Kainos highlighted contracts worth up to £150 million with the Department for Environment, Food and Rural Affairs, up to £111 million with the Home Office and up to £84 million with the Foreign, Commonwealth and Development Office. These awards fit the picture painted in August, when the company pointed to significant contract wins and record backlog levels as it guided full-year revenue and adjusted profit "comfortably ahead" of market expectations.

Margin and cash pressure points

Growth came at a cost to margins. Group gross margin slipped to 43.1% from 48.0% a year earlier, which the company attributed mainly to a fall in Digital Services gross margin to 31.9% as it used more contractors and partners to deliver work. Cash at the period end stood at £86.5 million, down 18%, and cash conversion was 62%.

Because the company tied the margin decline directly to its delivery model, the balance between in-house staff and external resources is a Factor shareholders may follow. Heavy exposure to government customers also means that public sector spending decisions and the timing of contract starts can influence revenue phasing.

How the half compares

Calculation based on the prior-year interim figures: revenue of £196 million in the first half of FY26 rose by roughly £73 million to reach £268.8 million, while the interim dividend moved from 9.8p to 10.4p. Workday Products ARR stood at £78 million a year earlier.

On the same calculated basis, adjusted profit before tax of £41.7 million equates to an adjusted pre-tax margin of about 15.5%, compared with 16% reported for the first half of FY26, when adjusted profit was £32 million. Cash conversion of 62% also compares with 48% in that earlier period, although period-end cash of £86.5 million sits below the £105.5 million held a year before. On these figures, adjusted profit growth of 30% trailed the 37% rise in revenue during the half. On 18 August 2026, the day of the trading update, Kainos shares were up 21% at 1,176.70p by 08:45 BST.

Points on the radar

Among UK tech shares listed on the London Stock Exchange, Kainos now enters its second half with a record backlog and a clear ARR marker to aim for. Investors may watch whether Workday Products crosses the £100 million ARR mark by March, how quickly Digital Services margins recover from contractor-heavy delivery, and whether cash conversion improves as new government programmes bed in.