What does the company do?
Kainos is a high quality services and software company providing software design, implementation and support services in high growth markets. It has established leadership positions in three markets; Public Sector Digitisation, Health Care Digitisation and Workday. Markets undergoing disruptive change and structural shifts typically offer growth prospects for well positioned firms, with legacy players suffering. Kainos’ leadership positions in such markets support sales and profit growth ahead of the industry.
Why do we like the investment?
In Public Sector Digitisation, Kainos is one of a few providers of bespoke IT systems to government. It has enjoyed increasing deal sizes and follow-on orders as its reputation and relationship has strengthened over the years. In Health Care Digitisation, its Evolve digital platform enables clinicians to use digital patient records. It is the leading player in this space and there is much to go for within the UK and potentially overseas as hospitals move to digital. In Workday (a US-based leading provider of human resources software), Kainos is one of a small group of accredited partners that configure Workday on client sites or remotely. It has grown to be Workdays largest European partner, placing it in a very compelling position. Kainos has also benefitted from the accelerated digitisation agenda brought on by the Covid-19 pandemic.
The characteristics of the business are aligned with our investment process. Kainos is well positioned in large growing markets with high barriers to entry. The revenue it generates is repeat and recurring in nature, offering visibility due to the nature of the contracts. The business has demonstrated steady organic growth since its listing, the model is cash generative and high margin and the balance sheet is strong.
Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.
In which year did we first invest?
Where is their head office?