Kainos Group PLC (LSE:KNOS) shares fell 14% after the IT products and services provider warned on profits amidst very mixed trading, with its Workday products business growing very strongly but other parts of the group hit by client delays.
The FTSE 250-listed company now expects revenues to be moderately below current market consensus but a larger hit to adjusted profit before tax.
In digital services, it pointed to sustained demand from public sector clients, but delays around decision-making as clients awaited clarity from the new UK government on its spending priorities, which became more pronounced in the weeks leading up to the Budget.
"Although we anticipate heightened levels of activity in the weeks ahead, we are dependent on decisions being made before the main mobilisation phases for these contracts," Kainos said.
As for the Workday services division, while it has continued to win new contracts, the number and value of these new contracts have been lower than in previous periods, resulting in revenue falling in the past six months.
"We continue to anticipate increased activity in the second half of the year but are being more cautious around the timing which will impact recovery."
Analysts have been forecasting revenue in a range of £375.5-392 million and adjusted profit £75-79.7 million.
Broker Panmure Liberum said the company expect a new consensus to form around £365 million for revenue and PBT around £65 million, 18% below current average expectation.