Kainos Group PLC (LSE:KNOS) was the biggest faller in the FTSE 250 on Monday morning, falling 13% to 959p after it warned that revenues this year are likely to be lower than expected.
The IT products and services provider said profits are on track to be in line with current market forecasts, but that revenues are heading for only a "small increase" due to a tougher trading environment for services, which will be below current forecasts.
City analysts on average expect £415.5 million of revenue for the year, up from £382.4 million last time, with an underlying profit of £79.1 million.
Of its three main divisions, Digital Services has been subdued in the first five months of the financial year, as sustained demand from public sector clients has been offset by short-term delays stemming from the UK general election and continued weakness in demand from commercial clients as "project related expenditure decision making is delayed".
Overall, revenue growth is expected over the remainder of this year.
There was a fall in revenue from Workday Services, where Kainos is a consulting partner for US HR and student software firm, as despite a "robust" win rate, contract wins and values have been lower than in previous periods, with more aggressive pricing from partners.
A return to growth is expected in the second half of the year.
In the Workday Products division, growth was "very strong" with the annual recurring revenue target upped from £100 million to £200 million.