Kin and Carta PLC Trading Update (7371A)

TIDMKCT

RNS Number : 7371A

Kin and Carta PLC

26 May 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

For immediate release

26 May 2023

Kin and Carta plc

Trading Update

Kin and Carta plc ("Kin + Carta" or the "Company"), the global digital transformation ("DX") consultancy, provides a trading update covering the year ending 31 July 2023 ("FY23").

Current trading

Following our interim results on 15 March 2023, a number of external factors have combined to reduce our expectations for the year. The market is even more cautious than we expected. As widely reported throughout our industry, there remains hesitance among enterprise clients to commit to large programmes of work in this environment, which has slowed new business growth. Furthermore, several contracts have commenced later than we forecast.

As a result, FY23 net revenue growth is expected to be flat to +2% over FY22 (like-for-like growth c. -11%). The revised FY23 net revenue guidance also reflects r ecent currency movements which results in net revenue headwinds in H2 of c. GBP3 million vs the previous market forecast.

H2 adjusted operating margin is expected to improve over H1 as a result of prior operating cost reductions and FY23 adjusted operating margin is expected to be c.8-9% with adjusted EBITDA margin c. 10-11%.

Despite the persistent macroeconomic challenges and currency headwinds, the Company has returned to sequential quarterly growth on steady backlog conversion. Net revenue stabilised in Q3 with continued sequential growth expected in Q4, albeit at a slower rate than we had previously forecast.

 
               Q2 FY23   Q3 FY23   Q4 FY23 forecast 
 Net Revenue   GBP44m    GBP46m     c. GBP47 - 49m 
              --------  --------  ----------------- 
 

The Company has continued to win significant new contracts in the past 90 days which are expected to ramp up materially in FY24. The resulting backlog for FY24 continues to build and is now GBP133 million, compared to GBP105 million a year ago. Some of the new wins include:

   --    UK Public Sector contract wins in Q3: 
   --    GBP16 million, 2-year contract with the UK Department for Education 
   --    GBP12.5 million, 5-year contract with the BBC 

-- Demand remains strong totalling c.GBP50 million of contract wins year to date, with less than 25% being recognised in this financial year

-- Financial Services continues to grow with existing clients in US and UK markets signing extensions totalling c.GBP9 million

The Company continues to execute on its global data and AI strategy including:

-- The 9 May 2023 acquisition of Forecast Data, deepening global data and AI capabilities and adding a strong portfolio of financial services clients

-- Close collaboration with technology partners securing early access to Microsoft and Google's generative AI platforms and enabling Kin + Carta to launch generative AI assessments for our clients

   --    Commencement of data and AI focused 'FWD' live event series in America and Europe 

Kin + Carta's Chief Executive Officer, Kelly Manthey, commented:

"Although we're maintaining a pattern of quarter by quarter net revenue growth, it isn't as strong as we'd expected. The market is more difficult with clients cautious about committing to large programme spends. Normally we see a significant acceleration in our second half revenue growth, but this has not materialised. Nonetheless, we have recorded some major contract wins, the majority of which will commence in our new financial year. These, combined with a backlog that is as strong as ever, gives me confidence that once our market normalises, Kin + Carta can get back to its previous rates of growth. We remain focussed on the right business-critical disciplines and we retain a tight control on costs. The company is well positioned to take advantage of a return of confidence in our market."

- Ends -

Enquiries:

 
Kin + Carta 
 Kelly Manthey CEO 
 Chris Kutsor CFO & COO           [phone] 
Powerscourt 
 Elly Williamson / Jane Glover    [phone] 
Numis Securities Limited          [phone] 
 Nick Westlake / Tejas Padalkar 
 
 Peel Hunt LLP                       [phone] 
 John Welch / Paul Gillam                 8900 
 

About Kin + Carta

Kin + Carta is a London Stock Exchange listed global digital transformation consultancy committed to working alongside clients to build a world that works better for everyone.

Kin + Carta's 2,000 consultants, engineers and data scientists around the world bring the connective power of technology, data and experience to the world's most influential companies - helping them to accelerate their digital roadmap, rapidly innovate, modernise their systems, enable their teams and optimise for continued growth. Headquartered in London and Chicago with offices across three continents, the borderless model of service allows for the best minds to be connected to collaborate on client challenges.

With purpose at its core, Kin + Carta became the first company listed on the London Stock Exchange to achieve B Corp certification. It meets high standards of verified social and environmental performance, public transparency and accountability to balance the triple bottom line of people, planet and profit.

For more information, please visit https://www.kinandcarta.com.

Important notices

This announcement contains inside information and is issued on behalf of the Company by Daniel Fattal, Company Secretary.

Cautionary statement regarding forward-looking statements

This Announcement may contain "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they are based on numerous assumptions regarding the Company's present and future business strategies, relate to future events and depend on circumstances which are or may be beyond the control of the Company which could cause actual results or trends to differ materially from those made in or suggested by the forward-looking statements in this Announcement, including, but not limited to, domestic and global economic business conditions; market-related risks such as fluctuations in interest rates; the policies and actions of governmental and regulatory authorities; the effect of competition, inflation and deflation; the effect of legislative, fiscal, tax and regulatory developments in the jurisdictions in which the Company and its respective affiliates operate; the effect of volatility in the equity, capital and credit markets on profitability and ability to access capital and credit; a decline in credit ratings of the Company; the effect of operational and integration risks; an unexpected decline in sales for the Company; inability to realise anticipated synergies; any limitations of internal financial reporting controls; and the loss of key personnel. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Save as required by the Market Abuse Regulation, the Disclosure Guidance and Transparency Rules, the Listing Rules or by law, the Company undertakes no obligation to update these forward-looking statements and will not publicly release any revisions it may make to these forward-looking statements that may occur due to any change in its expectations or to reflect events or circumstances after the date of this Announcement.

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May 26, 2023 02:00 ET (06:00 GMT)