Good afternoon, everyone. For those joining online from North America, good morning. Thank you very much for making the time to join us here for our Capital Markets event. The last time we did one was back in June 2018. A very changed world, a very changed business for us in that intervening period of time. We have, as always, gone with a very ambitious agenda. If you could perhaps move me to the next slide, please, that would be great. Thank you. We want to cover as much as possible in terms of having you give up your time. We want to make the most use of it as possible. We've set out, I guess, three areas we really want to spend our time talking about. We want to keep telling you about the Workday product story.
It's been one that's been developing over a long number of years, and we think it's even more interesting today than it was on our last update. We want to dive into our business in Canada. Richard and I have been talking about Canada for the last couple of years. Obviously, we had the announcement of Davis Pier back in September. A great time for us to jump in and understand the opportunity that's there in Canada some more. In health care, some of you will have picked up the announcements about the contract wins over the last six months. We want to talk not just about the progress we've had so far in health care, but to think about the opportunity that lies ahead as well. Of course, you'll get a chance to hear from Richard and I through the course of the session as well.
We're going to create lots of time for Q&A. At the end of the presentations on Workday products, on Canada, on health care, and at the end, we're going to create some time for Q&A. Having done a few sessions with this audience, I know that you like to ask not one question at a time, but several questions at a time. I'm going to enforce a very strict one-question quota. If you choose to ignore the quota, I'm going to pick the easiest question that you ask out of the bunch. The hard ones, I'll be handing over to my friend and colleague, Richard McCann, through that. In terms of logistics, we are live streaming this session for people who are joining remotely.
We are recording it as well, and the presentations will be uploaded to our Investor Relations website over the course of the next few days, as will these presentations as well. In terms of the perhaps the next slide, please, the presenters. Thank you to our internal graphics team for putting up my photograph from the year we did the IPO. That's back in 2015. I wish I were that person again. Obviously, Richard will be here as well. We are joined by Malachy and Damien on the Workday Products side. Neil and Mike will be joining us remotely from Toronto and Halifax. Jack will be here to talk through health care as well. We will, subject to timing, have Rob Enslin, who is the President and Chief Commercial Officer for Workday, joining us remotely as well.
I don't know if he's on West Coast or East Coast, but wherever he is, he'll be dialing in about 2:35 P.M., 2:40 P.M., depending on travel plans. In terms of the next slide, please. Thank you. We have no new news to share today in terms of our trailing. We look forward to sharing much more information whenever our interim results are published on the 10th of November. We're out on the road once more. While it's been quite a while since we did our last Capital Markets event, I would probably kind of summarize my experience of that is that while there were lots of questions and conversations about what we did talk about during the session, there were quite a few questions about things we didn't talk about as well.
That was often framed as being a degree of concern that perhaps things weren't going well in the parts of the business we didn't talk about. In terms of the agenda today, we've set it out on high-growth parts of our business. I want to be really clear that across our business, both Digital Services and Workday Services, they're performing well. Hopefully, the update we published at the start of September will give a real sense about that. I've used this slide to pull out a couple of those comments there and really just to underpin our view about the core performance across our business. The public sector is performing really well. So too is health care.
For those of you who look at contract award notices, you'll know that over the last six months, on the contracts that are in the public domain, we've signed over GBP 200 million for the contracts across health care and Digital Services since the start of this financial year. One of the themes that we would talk about internally, and we have mentioned externally as well, is this idea of simplifying our business, focusing in on things we do really well at the expense of perhaps removing things that we do less well. If we think about that, that's really what we're doing around the commercial sector inside Digital Services. We've moved from trying to build business around our commercial sector opportunities to really supporting the existing customers that we have. We do recognize there is a significant opportunity in the commercial sector.
Right now, we're focusing really on the areas of our business that are performing really well and how we support those and their expansion. Workday Services, we've seen a really strong sales performance. That's turning it into revenue growth over the course of this year. If I was to pick out a theme, really, it's about larger deals in the market and our conversion rate on those larger deals as well, both in the Americas and in EMEA. We're seeing really good traction around that. We're also seeing continued progress in both LATAM and in Asia Pacific, where we have expanded regionally as well. It's a good performance by the team. We'll get into some more of that detail during our interim results. For Workday Products, we are delighted to have passed that $100 million ARR milestone.
Malachy reminds me regularly that only 1% of all the SaaS companies in the world have ever achieved that particular milestone. It is a super achievement by the team. We're going to use this afternoon not to talk about that achievement, but really to talk about that journey ahead and the excitement we feel about how we'll build towards that GBP 200 million milestone. Lots of really positive things in the training update. That's certainly how we view the business right now. It's great to see these contracts being signed, those contracts turning into projects, those projects turning into revenue. We are at the inefficient phase of the growth cycle. We are hiring very strongly. We're using contractors. We're using third-party organizations to provide talent. We have hired less aggressively on the graduate front this year versus last year. We're well down in that.
It's going to take us some time to build up the capacity to displace some of these higher costs. In our view, it'll be into fiscal 2027, before you see our revenue growth drop through to the bottom line. One of the questions I've been asked quite a lot over the last few weeks and the last few months is what has changed. I think our business, like every other business, our performance is dictated by the environment and by our execution. In terms of the environment, it has improved or is, I guess, less challenging than it used to be. It has eased somewhat, and we're pleased with that. If I was to look at the real reason for our improving performance, it's very much around the execution by the team. I'd say lots of excellent work over the last few months, a great performance.
That's reflected, hopefully, in the training update and in some of these comments. I'm going to pass over to Richard, who's going to take us back, for those who are not familiar with our business, about our business fundamentals.
I'm going to click on that work. Thanks, Brendan. Maybe we can get another clicker at some point. This is a slide that you'll all have seen before, many of you will have seen before. It's from our last full-year results back in May. I see lots of familiar faces in the room who will be aware of the three different parts of our business: the Digital Services business, Workday Services business, and Workday Products business. As Brendan said, our half-year results are on the 10th of May. I'm not going to get into detailed numbers, obviously, at this point. What I did want to do was take a step back and try to think about some of the broader themes within our business.
I particularly want to talk about some of the structural trends within our business, about what influences the long-term play within each of the three different parts of the business. I want to talk about three themes: diversification, profitability, and growth. We've talked about growth an awful lot. On the next slide, you'll see group performance over the last few years. Within that, within Digital Services, I'm going to talk about, within public sector, within health care, some of the structural growth drivers. The big one is just an insatiable demand for public spending and unlimited funds to be able to fulfill that. That's led to a need to automate lots of back-office functions. We see typically payback on automating a back-office function of about 12 to 18 months. There's limited funds to do that, but the payback that we see continually is around that sort of time.
Legislative changes, virtually every legislative change now requires a digital solution. Increasingly, we're seeing public sector, and particularly health care, moving towards the creation of value-added services as well as just cost saving. You'll hear more about that, particularly within health care, later on. Finally, these structural changes are international. It's not just a U.K. thing. We'll talk about that in the context of Canada later on, seeing the same pressures. As well as the structural changes, there's a lot of noise. My definition of noise is within the last two years, we've had a change of government. We've had a kind of messed-up spending review. Over the 10 years since IPO, we've seen Brexit. We've seen COVID. We've seen the Scottish independence referendum. We've seen Gregzit, if anybody can remember that. We've seen six prime ministers.
I'm guessing probably the same sort of thing has been happening in Canada, but it can't be quite that bad. The other thing on top of that is we are inherently a project-based business in this part of our business, and that means we sometimes get a run of wins, we sometimes get a run of losses. It's the nature of our business. Within that noise, the underlying structural drivers don't change. It's always frequently the noise that we're getting asked about, understandably so. Those are the things that people have their attention drawn to, but the structural drivers within this business haven't changed. If I look at Workday Services and products to some extent, the same thing applies. Structural drivers, Workday is ranked the best ERP product on the market.
That changes depending on who has paid them to do what survey, but broadly, Workday is seen as the best ERP software product you can buy. If you can afford the best product, you're probably going to buy Workday. If you've invested in Workday, you're going to want to get full value out of it. That's something that we see from virtually every customer. It's a high-cost product with high opportunity to grow your business based on implementing it and continuing to implement it. Workday has a structural driver to support their growth through agile partners. It's the same sort of thing that Microsoft and Salesforce have been doing for years. It is part of that top-tier software package provider. Finally, we have a trusted relationship with Workday. We'll also talk about that relationship later on. There's noise here too.
The sort of noise we see here is economic cycles, tariffs. We also have project wins and project losses. It's part of having a services business. A key aspect of our business is the table to the right, and that's about the long-term relationships that we build. It's also about the net promoter score that we get, and that allows us to take a long-term view of those relationships and hence the repeat business that we have got for a long period of time. If we move on to the next slide, as well as growth, I said I wanted to talk about diversification. I've been really fortunate in my time in the 10 years since IPO to talk a lot about graphs that have gone up and to the right. Now, I want to talk about a couple of graphs that are going down and to the right.
Looking first at our sector revenue, when we listed 10 years ago, about 90% of our business was public sector and health care. Even five years ago, that was 64% of our business. Last year, public sector and health care was a minority of our business. Some people think of us still as very much a public sector business and seen as being very at risk because of public sector trends. That's still a large part of our business, but over that 10 years, that has changed quite dramatically. The other one that has changed significantly over that period of time is geography. At IPO, U.K. and Ireland was over 90% of our business. Even five years ago, it was 79% of our business. Now, it's about 59% of our business last year.
As you can see from the red line, North American revenue is now over 30% of our business. Finally, client concentration. At IPO, our top 10 customers were 62% of revenue. Even five years ago, it was 60%. Now, it's about 45%. We have a much more diverse client base, and we are much less reliant on any one or two customers. If I move on to the big one of profitability and go to the thank you. As well as graphs that go up and down, a key graph for us is this one, which is broadly flat. One piece of noise that was genuinely impactful was COVID. You'll see a spike in gross margin and EBITDA percentage in FY 2021 and FY 2022. There were key trends there. Utilization increased dramatically. People had nothing else to do, frankly, and overheads fell as travel reduced and training reduced.
That was never a structural trend. That was always a one-off piece of noise, albeit a heck of a big bit of noise. Other than COVID, our margins have remained broadly steady over that period of time. The last couple of areas of the business that I want to cover are the actual business model. If we move on to the next slide, I wanted to talk about gross margin and I wanted to talk about contribution. For our Digital Services business, it is largely a time and material-based services business. Not entirely, but mainly time and material. The key drivers are those of a traditional services business. The key things that you're going to see in any services business are the effective rate, the utilization, staff costs, contractor mix.
But increasingly, we're beginning to see, as we've become a bigger organization, we're now being asked by customers, particularly in health care and defense, if we will lead entire project teams and that they will have other organizations subbing in underneath us. That's going to change the dynamic of the gross margin quite significantly over the next period of time, simply because we're being more successful on those large bids. In terms of contribution, the sort of costs that you would expect to see in direct expenses, particularly sales cost, it's a key cost for us to grow in the business. Workday Services has a similar dynamic in terms of being a services business. As well as a significant proportion of time and material work, you'll see more fixed-price work within this business. This is a more repeatable business.
We are, therefore, able to fix costs more easily in this part of the business because projects are somewhat more repeatable. You'll also notice that we've begun occasionally to try to move customers to a subscription model. That's very early days, but it's something we believe may have some ability to do in this part of the business, not in the Digital Services part of the business. Finally, the Workday Products part of the business, which is a completely different business model. It's a pure SaaS business. It's a subscription-based model. There's a tiny amount of services revenue in this part of the business, but very small. The gross margin has a completely different dynamic as well. Hosting costs are a major part of this part of the business.
Staff costs do have an element here, but obviously a much, much higher gross margin than in the services part of the business. A key factor within the gross margin is the introduction of new products. Every time we introduce a new product, it has a negative impact on gross margin. That's a good thing. It's the nature of introducing new products. New products, hopefully, over time will improve gross margin. They always have to date. The first couple of years of any new product, almost by definition, is going to be something that is always going to be improved on a regular basis. That will feed through to gross margin over a period of time. You see that with the increased pace of product introduction. We saw that with Employee Document Management. I'm sure we'll see that with Pay Transparency Analyzer. It will depress gross margins.
Over time, we're confident that we will be able to see the sort of gross margin improvements that we've seen in test and we've seen in audit. Direct expense is obviously a much bigger part of the model here. Within our sales costs, we have a fixed cost for our built-on Workday. We think that's a great investment over time. We're very clear that that is an investment with a break-even over about three or four years. Product development costs, I never get tired of saying, are all expensed. That does have an impact negatively on our contribution compared to companies that are fully capitalizing and then depreciating their product development costs. In terms of operations, as you would expect, there are costs associated with running the business. If I then move on to a couple of final slides and talk about capital allocation.
The structural driver here for me is that we convert the vast majority of our profits into cash. Our profits turn into cash. Now, it says 101%. That's one of those calculations that's absolutely accurate and somewhat misleading. We would suggest somewhere north of 90% now is a reasonable cash conversion for us over the long time. There's noise here too. You're going to find noise when there's capital wherein capital spikes. We have a year-end which is co-terminus with U.K. public sector. Weird things happen at the 31st of March when it comes to the U.K. public sector, both positive and negative. We've been paid for contracts that we haven't signed. We've had very good payers that just don't pay for three or four months. That happens. Again, it's noise. Finally, in terms of the capital allocation, what do we intend to do with cash?
The first thing we're going to do is be really careful with it. We're not going to be indisciplined in our acquisition strategy. We've always tried to follow a disciplined acquisition strategy. That's not to say we've got them all right. We've always tried to focus on relatively small acquisitions, areas where we can't see how we can grow organically. We'll talk about Davis Pier later on. We think that falls exactly into that sort of category where it's the right size. It's culturally aligned. It gives us an opportunity to build for the future. Since IPO, we've maintained a progressive dividend policy. The only exception to that has been during COVID when we suspended and then reinstated the dividend. Again, that's part of the noise. In general, we have grown dividends year after year. Finally, we believe in returning cash to shareholders. We're shareholders too.
We have done two buybacks so far. We always review that on a regular basis in terms of how it aligns with our capital allocation policy and get the best returns for shareholders. As I said, ultimately, excess cash belongs in shareholders' pockets. Brendan.
Thank you very much. Malachy, you're up next.
OK.
Oh, she's in the running order?
Yeah, that's how it rolls.
OK, you have the questions right here.
I was sitting there quite relaxed thinking the Workday President was going to come on now. Obviously, we're a little bit ahead of schedule. Brendan said to me, "Don't worry, Richard will overrun." He always overruns. "Oh, there's Rob now." Rob, how are you doing?
Good morning. Good afternoon. I'm doing great, thank you. Thanks for having me.
Brendan's going to ask you a few questions. I'm going to sit back down again.
OK, no problem.
Rob.
Hi, Brandon.
Good morning to you, and thanks very much for taking time out of your schedule to join us. We were chatting a couple of weeks ago, and you were dressed in a T-shirt, which is very befitting of kind of a West Coast software company. You promised to be here in a shirt and jacket, so thank you for doing that as well.
Yeah, thanks. You're most welcome. It still fits. I'm pretty happy.
I think there's quite a few of us here in London who are experiencing the same sensation as well, Rob. Rob, listen, we know you really well. Could you take just a brief period of time to introduce yourself and then maybe move on to talk about the excitement you feel about how Workday is moving at the moment?
Thank you. I've been in the ERP industry for quite some time. I spent 27 years at SAP. I ran all of sales, and I was responsible for the cloud business for a large part of that as well. I went on to Google Cloud to be the President of Google Cloud and built up Google Cloud through the pandemic. I was the CEO of UiPath and eventually ended up at Workday almost a year ago. I'm super excited to be at Workday. I think we have a unique opportunity in the market. Workday has been very successful for 20 years, leading in the HCM space and in the finance space, and has over 11,500 customers worldwide today, operating in more than 170 countries. Revenue is close to $10 billion at Workday. We're super excited about the change in the market.
Workday is now, I would say, very focused on how we bring an agentic AI platform to the market really fast. The world's moving really quickly, and we believe that we will be the future ERP platform for AI in the market. We'll be very transformative. We've been very busy over the last year, focused on expanding the Workday platform in order to meet what our customers require, which is the ability to connect agents to agents, the ability to get to data very easily, the ability to open up APIs, and to deliver these agents in a way that customers can manage them. We announced something called Agent System of Record, which you can think about as humans and digital workers working together to move productivity along. This is where Workday's focus is. We've announced three acquisitions in the last three months, all focused around AI.
Our plan is to transform how an agentic user interface will transform our applications or engage with in the future. This will be super transformative. We've been very focused on delivering a platform so that our partners can build their products and their services on our marketplace and give our customers access to those services.
Rob, you talk about partners. We obviously have been delighted to be a Workday partner since 2011. Workday are on a charge. We share the excitement you've described, not just today, but to us over a long period of time. What role do partners play in Workday achieving their growth ambitions?
Yeah, so since 2005, partners have always been important. Their primary role was around implementation and services and extending the Workday Services platform, implementing the solutions, bringing our customers live, making them successful. In the last three to four or five years, we've actually extended the partnership to include building products on top of Workday so that you can extend the Workday solution. As we see AI coming to the fore in a meaningful way and the speed at which change is happening, partners are going to play an even more important role with Workday. Think about the ability to deliver agents in flight, the ability to deliver solutions in short periods of time. With AI, products will be built by an ecosystem of partners that are able to deliver the value to these customers in very short periods of time.
We don't think Workday can deliver everything to everyone all the time. In the world of AI, even less so. The fundamental benefits of Workday is the foundation data model, which is super pure, the opening up of the platform and giving access to partners to actually add more value to their customers and bring their brand value to the market as well. This is going to become more and more important in the future. That will be a global community that will require this from our partners. Kainos in many ways is all of these things. It provides world-class services and it delivers world-class products to our customers. My view is that'll happen even more in the future.
Whatever we think about kind of built on Workday, Rob, we think about kind of the marketplace that's there as well. If you were giving us guidance in this public forum, what's your guidance to us, Kainos, about the product opportunity in terms of the future?
I think first of all, you start with the success you've had at Kainos in the last couple of years with the product side. I think you're just over $100 million of ARR, which is absolutely incredible. I think you are leading in that space, and I think we're only getting started. I think you'll see a world where the combination of the digital and human worker opens up more opportunities to deliver more products and services faster and faster into that market. In order to deliver it through a channel, you can do it in multiple ways. The direct sales model, you could go through the Workday model, or you can use the marketplace model. We feel like all of these channels need to be open. Kainos, in many ways, services all of these channels.
I think these channels, especially the marketplace, where customers will have access to these solutions at their fingertips, is going to become really, really important. It's important as well for us at Workday to be very clear about where we are going to focus and the open field that our partners—we call this clear skies. That clear skies policy is what's made these partnerships successful. The big thing about a partnership is trust between both companies. I spend a lot of time, Brendan, with you and your team and feel there's an incredible amount of transparency and trust that allows us to deliver products that add value to our customers much, much faster than ever before. In the world of AI and agentic AI, agents are going to be connected, and they're going to be working side by side with humans. This is something that's happening in real time today.
The opportunity will be even greater for Kainos in the future with these partnerships.
Rob, just Malachy will be talking in a moment about Clear Skies. For the audience here, this is areas that Workday have clearly defined are not going to be areas of investment for them over a three-year period and therefore are looking for partners to build products into that space. Your team, Rob, were over with us last week talking about the detail behind Clear Skies and those kind of products. I'm hearing you encouraging us to be bold about our ambition in filling that gap that Workday have identified clearly in the marketplace.
Absolutely. I mean, I think we all have to be bold in the world that we're moving into with applications. Applications are changing rapidly. They're becoming more composable. Customers need results in the short term. They can't wait one or two years for these results. A composable agentic platform of the future is where this is headed. The more we have partnerships, the more we have an ecosystem of partners delivering value to our customers in that short-term frame, the better Workday is going to benefit, the better our customers are going to benefit, and the better our partners are going to benefit. That's the success of this model. All three have to find value in this. All three will need to get value at a speed that we've never delivered in the past.
Rob, I'm very conscious that you have a tight schedule today. I just want to take the opportunity on behalf of myself and Malachy and the team here, thank you very much for finding time to join us here today. I wish you safe travels. I know you're in London next week. I look forward to catching up then. Thanks very much, Rob.
Thank you. You're most welcome. All the best.
Thank you.
Thank you.
Hello everyone. I think most of you know me, but just in case those who don't, I'm Malachy Smith. I head up our Workday Products division in Kainos. I've been at Kainos man and boy. Prior to Workday Products, I founded the Workday practice in the company as well. I'm joined by Damien today as well. Damien, do you want to say a quick hello?
Yeah, hey, folks. My name is Damien Taylor. I'm the CTO of the Workday Products business. I've been in Kainos for 25 years, in the product business for 10 of those. Later on, I'll talk through some of the things we're doing around products, technology, AI, and Clear Skies.
Thank you, Damien. This is the agenda for today, quite a simple agenda. We're going to talk through briefly a little bit of our journey to date. Damien is going to jump in to talk about two of our more recent products, Employee Document Management and Pay Transparency Analyzer. I'll come back at the end. We've given you a view of our look ahead and how we're going to hit that $200 million milestone that we've set ourselves. If we could move forward. In terms of our mission, it's very, very simple within the Workday Products division. Our mission is to help organizations maximize the ROI in Workday. Rob sort of touched on it there. Workday is a phenomenal product. It can't cover every single use case for every geography and every vertical. Our mission is to help fill in those gaps and to help customers get more from Workday.
If we could move on again, please. Just in terms of the journey so far, I will go fast because I'm not going to go back to every quarter from 2013. We did kick off in 2013. We saw a gap in the market for an automated testing solution, specifically for Workday. Workday moves at pace. There's a lot of changes to be tested. We set about building a product in 2013. Our actual practice, the Workday practice, was set up in 2011. We had a couple of years head start there in terms of the practice. In those early days, it was very much an auxiliary business. Our primary focus was growing the services business. Exactly as Rob outlined there, it was to help customers get live with Workday. This Smart Test product was a niche product that we built. We didn't have dedicated people working on it.
The primary focus was services. This was something that we spent time on in those early days, but it wasn't a clear focus. It really wasn't until 2019, whenever we hit the $10 million ARR, that we actually considered the product business as a business in its own right. Up until then, it was always talking about the Workday practice. We would talk about our results and we would sort of say, oh, we've done $30 million of services and we've done $4 million of Workday product. Once we hit the $10 million ARR, we then decided that's a pretty good milestone to hit. As Brendan mentioned earlier, only 1% of all SaaS companies get to $100 million. There are still under 10% that get to $10 million. We were delighted with that milestone.
At that point, we made the decision to really invest much more in the product business and to treat it as a separate business unit. We set about building a number of other products. The ideas came from a number of different sources. The Smart Audit product came from our Smart Test customers who were saying, this testing is fantastic. What about monitoring our production system? Can you help us with that as well? The Smart Shield product is a data masking product. That was an idea that came from the product team themselves. The Employee Document Management came from our services colleagues. They were inundated with requests from their clients to say, have you anything that can help with document management, document creation, and document purging inside Workday?
Finally, the Pay Transparency Analyzer, which Damien will go into a lot more detail later, is an idea that came from Workday as part of the Clear Skies program that Rob talked about earlier. Just to give a sense of scale of some of the products, our average ACV for Smart Test is GBP 110,000. Audit would be about 50% of that. Shield would be about 33% of that. Employee Document Management would be of similar scale to Smart Test. As we started building the products out and building up our experience, we started to get quite good at it and our efficiency improved. Whilst it took us six years to hit $10 million of ARR for Smart Test, we actually achieved the same feat for Audit inside three years and EDM a little over two. You'll notice that I use the dollar whenever I'm talking about milestones.
This is for two reasons. One is 75% of our customers are U.S.-based. More importantly, it's an easier milestone to hit than the sterling equivalent. I also want to touch on the Built on Workday deal we signed last year. This deal involves a multi-year commitment from Kainos. It's a fixed-price investment of $10 million a year, which we pay to Workday for the ability to sell products, all of our existing products on their marketplace and any new products we build during the duration of the contract. A key aspect of this deal is access to Workday's product team and the Clear Skies program. When you consider the size that Workday are at now, they're at $8 billion of subscription revenue.
When Workday are thinking about new products that they're going to build themselves, they are setting a very, very high bar in terms of what's going to make an impact to that $8 billion figure. That gives us a brilliant threshold for us to work under and the other partners in terms of products that have a total addressable market of a couple of hundred million that we can work under and make plenty of money at. Workday are sort of saying, yeah, we want these products in the Workday Marketplace, but we just are not going to get to them. Just looking at the graph then, our ARR has grown very well since 2019. Since we put that focus, we've grown ARR from GBP 11 million- GBP 73 million at the end of last fiscal year, which is 37% year-on-year growth. The growth has come from two aspects.
One, we've obviously tripled the number of customers. So 200 customers back then, over 600 customers now. The other thing that's very pleasing is that back then, when we only had one product, obviously they were all using Smart Test. Now, we have 40% of our clients who have two or more products from Kainos. Progress this year continues to be very strong, and we're on course to hit the GBP 100 million sterling milestone next year. I'm now going to hand over to Damien to jump into some of the products in detail. I'll come back later on, but I look ahead.
Thank you, Rob. Next slide, please. I'm going to pick up from where Rob left off, where Workday are evolving into a platform company. What does that mean for Kainos? As a technology company, as a Workday partner, it creates a really exciting opportunity because we can now, and we'll see this later, build products inside Workday that will be used by everybody within an organization. It allows us to deliver innovation faster. It allows us to deliver value to our customers faster as well. For us, being able to build on that Workday platform is a game changer in how we innovate in the Workday ecosystem. Next slide, please. Our Employee Document Management product is a perfect example of that, where, as Mal mentioned earlier, this came up from conversations with our customers.
The key thread that was coming through in every conversation we had with our customers is their HR documents were scattered everywhere, different file shares, third-party systems, and in paper filing cabinets. For customers, that was inefficiency. It was, I guess, increasing cost. It was making it very, very, very difficult to be compliant. What Workday customers wanted was a central place to manage all of their HR documents. When the choice came to us to decide how we were going to take a product to market on that, building it on the Workday platform was the obvious choice. It allowed us to embed functionality directly inside Workday. Workday talked about this concept of the platform and building products on the platform as built on Workday. Built on Workday is more of a partner-facing term.
In terms of customers, they would think more about this as being the marketplace where they can go in and browse and understand what products or apps other partners are taking to market. For us, and as Workday were beginning to launch that built on Workday concept, Employee Document Management was seen as the flagship product. It was a product that showed the power of the platform. It was a product that showed how partners could begin to deliver value quickly to Workday customers in a way that was common in terms of experience with everything else that Workday was delivering. Next slide, please. When Workday announced built on Workday around September last year at Workday's user conference in the U.S., Workday invited Kainos to present at their innovation keynote. It was the first time Workday had ever invited a partner to that innovation keynote.
Workday wanted Kainos there to tell the story about how the platform can encourage innovation, how the platform can deliver value, and more importantly, using our EDM product as an example as to how customers and partners could get value from building applications like this. The photo on the screen is me presenting with Workday's CTO . The presentation was 10,000 people in the room, 25,000 people live streaming. I think you guys are a little bit more scary. For us, to be put on that stage with Workday shows exactly where Workday thinks of us in terms of relationship. It shows where Workday wants all our partners to go in terms of innovation as well. Next slide, please. To try and visualize what this looks like, for some of you in the audience, you may be Workday customers. This will be familiar to you.
This is standard core Workday. Building a product in the Workday platform is essentially building alongside this. If we look at the next screen, it will show our product sitting inside Workday. To the end user, they're unaware that this is functionality that's built by a different partner. To them, it looks and feels like Workday. One of our customers, Lego, went live with Kainos EDM about a year ago. When they were going live, they said to Kainos, "We hope you don't mind. We're not going to tell our employees that this is a Kainos product. We're going to let them assume that this is Workday." For us, that was kind of justification on choosing the Workday platform. We want this to be so seamless that it just fits in with the rest of Workday.
For Lego, more importantly, the change management they had as they went live was significantly less. They didn't need to introduce a new system. They didn't need new ways of authenticating. Reporting was all inside the platform security. Most importantly, that user experience was inside the platform. For Kainos to be able to bring line-of-business applications to Workday customers seamless inside that Workday experience and getting that feedback from customers like Lego is exactly why we want to build more products inside that Workday ecosystem on that Workday platform. Next slide, please. Kainos EDM has been our fastest growing product to date. When we did our last investor day, which I think was about 18 months ago in Belfast, we only had 15 customers. We had just launched the product. Today, we have got 76 customers, and that continues to grow.
We've got some flagship customers we've listed here. I'm going to talk a little bit about Sabre in the middle. If we go to the next slide, please. Sabre recently went live with Kainos EDM. They described Workday as the Ferrari in the garage, and that Kainos EDM was the fuel that helped them drive maximum value from that Ferrari. For them, their HR journey, or HR transformation journey, was not complete until they were managing their HR documents alongside their HR records. For us to help Sabre deliver that or complete that transformation journey and deliver that ultimate value that they wanted from Workday is exactly what we expected. For those who don't know Sabre, Sabre is a technology company headquartered in the U.S. with a global footprint of employees, and their technology focuses on the travel industry.
For Sabre to speak at Workday's last user conference and talk about our product in this way is exactly what we want our customers to be saying. This is an example of where we want to go. We want to build more products, and that takes us to where Workday are around what they talk about in terms of Clear Skies. If we go to the next slide, or next two slides, actually. Rob's already talked about this. Clear Skies is an initiative where Workday knows that they can't build everything that customers want. It's a sign of Workday maturing in terms of their platform journey. What it means to us is that Workday are now defining clear fly zones in terms of what their roadmap is. They've got a clearly demarcated no-fly zone.
This is the area where Workday is currently innovating, and they don't want partners to be in and around innovating in that same space. They've got the sort of fly-at-risk zone, which is the blue one there, where Workday is happy if partners innovate, but you sort of innovate at risk because Workday themselves are also innovating in that space. What we've got is this big white area, the clear skies, where partners are free to fly. We can build, we can innovate in that space. More importantly, this is the area where Workday are going to help curate what partners like Kainos will build in this space. We sat down with Workday's Chief Product Officer for the Office of the CHRO last week, and as part of that, she presented us a list of 10 ideas of things that Workday knows their customers need.
It's things that Workday knows will help them sell more Workday, but it's things that they do not have capacity to build. Typically, when Workday takes something to market, it's something that serves the entire Workday customer base. It's not really geography-specific or industry-specific. The things that we're talking about here will be niche to certain industries or certain regions. Workday presented us with a list of 10 options. We've looked through those options in detail with Workday. We've identified a short list of those. We're now in the process of prioritizing which ones of those we will take to market first. We have another session getting scheduled with the equivalent for the Office of the CFO. We're going to meet with their Chief Product Officer for the Office of the CFO. We'll go through a similar list.
They will then give us guidance as to what they think we should build. The winners in this are Kainos. The winners in this are Workday because we're plugging those gaps in Workday, which will help them sell more Workday. I think the ultimate winner is the customers, where the customers are now getting that value they want, those solutions they want, embedded inside Workday the same way as we saw earlier from Kainos Employee Document Management. For us, it's about obviously building solutions, but it's innovating with Workday as well. Rob talked a lot about AI and Workday's agent system of record. Workday wants to be the system that manages people, money, and agents. Kainos was invited into Workday's design partner group for the agent system of record in June. As Workday begins to evolve into this space, we expect Kainos to be close behind.
Workday will inevitably begin to open up Clear Skies into that agentic space as well. As Workday begins to do that, we will be fast followers of that, as we are pretty much on every other technology advancement that Workday does. For us, the future here looks like we will build apps. We'll build products. We will use the Workday platform to build AI agents. The fact that Workday are curating this and telling us what to build means we're building this in full openness and transparency with Workday without the risk that Workday will bring something to market that does something the same as what we're building. A really good example of this, if we go to the next slide, and Mal's already talked about this a little bit, is pay transparency.
Workday came to us 12 months ago and said, our customers are starting to talk about this new EU pay transparency directive. Right now, Workday did not have capacity to build that. They said to Kainos, would you consider taking a built on Workday product to market that would help our customers become compliant with this new EU pay transparency directive? We took it away, evaluated it, and went back to Workday and said, yes, we will build this. What's the directive?
It took us about an hour.
Say it again?
It took us about an hour to come back to them.
Oh, yeah, it took us. I think it was less than that. Yeah. What's the directive? The directive was published by the EU in 2023 with a view of closing the gender pay gap. Every member state in the EU has to write this into their own legislation by June 2026. You'll see different tranches of this dropping into legislation over the next year to 18 months. The first tranche of legislation will require every employer in the EU to be fully transparent about what their employees are getting paid. As an employee, I'll be able to see how I'm getting paid in comparison to my colleagues doing work of equal value. As part of that, I'll see my total reward, the average pay for people doing similar work, the average pay for men, and the average pay for women. Going forward, there's no hiding behind this.
This is the transparency part of the directive. Every employee going forward from June next year will have a right to see that. For organizations to do that, they now need to collect the data, analyze the data, and present that data to the employees. The second tranche of this kicks in in June 2027, where every organization now needs to report on their gender pay gap in a way that they've never needed to do before in any of the legislation across Europe. Not only that, but they have to close that gender pay gap to 5%. This isn't just a gender pay gap in a country. This is a gender pay gap within every equal work group.
From June 2027, organizations have to publish the gap, close the gap, and if they can't close the gap, that's where non-compliance kicks in with fines, potential for legal claims, and reputational damage. Over the last 12 months, we have been building the product. It's in behind the scenes. It's paired with AI to help organizations analyze all of this data, help organizations identify the gap, help organizations explain the gap, and then plan the budget around closing those gaps. As we get closer to the legislation deadline, more and more Workday customers are starting to ask about this. If we go to the next slide, please. Earlier this month, Kainos and Workday signed an agreement where Workday will now be the sole reseller of this product. The product will be called Workday Pay Transparency Analyzer, powered by Kainos.
What it means for customers is that they can now go directly to buy this product. What it means for Workday is that they can directly offer a solution to this legislation to their customers. What it means for Kainos is we have now got Workday's full sales team selling this product across Europe right now. I think that sums up exactly what Rob said around partners will be used to drive Workday's growth going forward. Workday needed a solution. We built a solution. They're now taking it to market for us. If we go to the next slide, we'll see exactly how this looks inside Workday. If we just do one more click, this application is now listed as a Workday module inside Workday's website. If a customer wants to solve for this, they'll go to Workday. They'll see it.
Workday are acknowledging that we're the innovation partner behind this. To everybody going forward, this is now a Workday module where Kainos and Workday have a revenue share model to take this to market. That kind of sums up where we want to go. Clear Skies brought us this opportunity. As Mal said, we thought about it for about one hour and decided we were going to build it. With Clear Skies and the work we're doing with Workday's product team right now, we expect to see more ideas where we will get support from Workday. We will collaborate with Workday. We will take products together to market going forward on those things that Workday wants us to build, those things that customers need, and those things that we know will help Workday sell more, but more importantly, will sell for Kainos as well.
That's pretty much all I wanted to cover. I'm going to hand back to Mal to look forward.
Thanks, Damien.
Thank you.
Yeah, just a couple of slides to finish here. If we could just move on one slide, please. I wanted just to take a moment to talk about our sales evolution over that time. Damien has explained there how we've evolved as a product company. We've also matured massively, I believe, as a sales organization. Back in 2013, we had no dedicated sales team. In fact, the only real seller of the products at that stage was me. Being a little bit honest here, I wasn't very good at it.
I can vouch for that.
Damien can vouch for that. Yeah, yeah. Quite a few other people at Kainos could vouch for that as well. In terms of those early years, if you go right up to 2018, we had a combined sales team. We had a team that was made up of sellers who were used to selling Workday Services, and they sold our testing product as an auxiliary product. These people had no product experience. They were used to selling services. That's where the career that came from Kainos or indeed a more traditional services sales background. We didn't have any dedicated sellers in the team right through those first six years until we hit the $10 million ARR. As you can imagine, this resulted in quite disjointed results. We did OK. We were delighted to get to the $10 million, but we had no consistency or predictability.
We had one really good quarter, then we had a bad quarter and another good quarter. We thought, oh, maybe two good quarters, we've got it, then a bad quarter. We just couldn't get that predictability. It was 2021 whenever we really made that first big pivot in terms of our sales and marketing organization, where we really, because of the success that we'd had and the fact that we're building out multiple products, made a real big investment in sales and marketing. We brought in a dedicated product sales team with real genuine sales leadership and product experience. I should also mention at that time, we also introduced proper product sales governance. The blueprint for that, don't tell Rob, but it was actually sort of taken from Workday. We're following the sales methodology that Workday had used successfully for many years, and we're still using that today.
In the years since then, we've actually built out that team internationally. Now we have a playbook that we use religiously across all of the organization, and we've now got that consistency of demand generation, sales conversion turning into sales, quarter on quarter growth. It's been quite the transformation since those early days when, as I said, it was all left to me. The next big change in the go-to-market strategy came last year with the signing of the built on Workday deal. If you could just flick on just one second. In terms of this deal last year, I talked about the part of the deal that gave us access to the product ideas. The other big part of the deal was that now the Workday sellers were getting compensated for selling our products. This was all of our success up until 2024.
All of our success was done directly. 96% was direct, 4% channel. There was very minimal channel involvement. Now, for the first time, we were able to get access to that Workday sales team who are talking to these, an 80% team versus 2,000. Just the extra scope that that gave us. This has been really game changing for us and has really, really helped our sales. Every deal that we've done this year has involved a Workday seller. Our sales playbook has now changed. We now involve Workday as part of that process. As a result of this, we've had our best ever H1. Delighted with that. Just bringing this right up to date, and Damien's already stole my thunder here. Three weeks ago, we signed the reseller agreement with Workday for pay transparency. That's a new channel for us as well.
Not just co-sell, but the Workday sales team taking full control of the sale and selling our product on our behalf, which is fantastic. We're three weeks in. I don't have many KPIs to go off. I think it's fair to say we're very confident that we've got another fantastic product to add to the portfolio. Moving on one more last slide. As we look ahead, we're in a very, very strong position to achieve this milestone that we've set, of hitting GBP 200 million ARR. I had it as dollars, but Brendan changed it to sterling on me, by 2030. The reason I say that is I believe we've got a winning recipe with a number of key ingredients. First of all, we've got a portfolio of excellent products with a proven market fit. As Rob alluded earlier on, we are operating in a growing market with an ever-increasing TAM.
We now have a high-performance sales and marketing team. We have a deep and wide relationship with Workday, which I feel is getting stronger every year. Lastly, we've established a cadence for building and launching new products. We've launched four new products in the last five years. Our current plan is to bring a new product out to market next year and two new products in FY 2028. The key challenge that we're setting ourselves as a leadership team is, can we accelerate on this plan? Being honest, right now, and as Rob alluded to, we see a wealth of opportunity in front of us. Our opportunity is far outstripping supply at the moment. Brendan and Richard, as we move towards budget season, I will be raising this topic with you guys very, very soon.
I'm sure this won't come as a shock to Brendan because after that meeting with the Chief Product Officer for HR, Brendan asked me how it went. I texted him back and said, Brendan, we're going to need a bigger boat. With that, I'll hand back to Brendan for questions.
Thank you. We'll start off with questions in the room. I have access to this for those online as well. If we start off with the question in the room, Tintin.
One.
One question.
There's a really big thing here.
You heard the rule, Tintin.
If you look at Clear Skies, obviously, presumably, there are other partners that Workday works with as well. How does it work with Kainos products, ideas? Just in terms of the Clear Skies program of Workday, when they are speaking to development partners about what's available, presumably, you're not the only party that's on that table with them. How does it work in terms of they say, OK, these are 10 ideas? When they present it to you, is it very clear that if you say you would want to develop it with them, that there's no other partner or no other third party is potentially open to that opportunity?
Yeah, Tintin. I'll get Mal again to speak to this in a bit more detail. For me, whenever we think about Workday's partner ecosystem in the software space, we are so far ahead of all other organizations. That doesn't guarantee that the conversation is defaulted into Kainos. We are, like I said, just $100 million ARR, and the next nearest competitor is sub $10 million. It makes sense to do that. Malachy, you've been having the conversations?
Yeah, no, absolutely. I'm just conscious that our competitors could be listening to this call when it's up on our website. In terms of, we had that meeting with Workday last week. They asked us. Tintin
For a quick response in terms of which of these ideas we want to do because they want them all built, we asked them had they had that conversation with any other partner, and they said they had no conversation with any other partner. They were giving us first refusal on those ideas. In terms of the Pay Transparency Analyzer as an example, in some of the early meetings, Workday would have 20 people on the call helping us. In terms of all of the Clear Skies initiatives, they are not going to provide that level of support to every single company, but there are companies, and I think, as Brendan said, we are top of that queue. We have made that long-term commitment to Workday, where I think Workday will provide that special partnership and sort of say, "We trust you. You've been very successful with this.
We need this built. Can you make a commitment? And then we'll work together to get it to market.
Thank you.
Yes.
Just use the mic.
Hi, it's Peter from C4. I don't think you're going to answer this question, but I'm going to ask it anyway. You're paying $10 million a year to be on the built on Workday platform, and you have a revenue share with the products going forward. Can you give us an idea of the economics?
I think you answered your own question, Peter. We'll give you the hardware for free.
The $10 million that you're paying, that's going to be, it's not going to go up over time. That's the cost of the driver's license to be included in the program going forward.
Yeah, my memory is that you're dealing with the potential to extend for a further two years. The fee is fixed for the eight years.
OK, thanks.
I think I can answer the weave that Brendan put there. In terms of, there's basically two choices with the program because everyone's entitled to, not everyone, but in terms of if you're a Workday partner, you can join and you can add apps to the Workday Marketplace. In terms of the way that most companies will work, they will put their app on the Workday Marketplace, and it'll work very much like Salesforce or the App Store, where Workday will take a revenue share off that. I don't want to disclose what the revenue share is, but there's a percentage that Workday will take. We made the decision to remove that revenue share. We will get all of the money, but we've made the $10 million commitment. It's a bulk buy. We are backing our success. We will not have to pay any more.
If we sell, our revenue share we had to give Workday was $5 million, then we're $5 million down. If it's a case that we'd have to give Workday $20 million, then $10 million is a good deal. Given that we're at $100 million ARR and heading towards $200 million, the maths work.
OK, that's helpful. Thanks.
Julian here from Investec. 600 customers, Workday's got 10,000. You're scratching the surface. When you look to your $200 million ARR, do you see Workday taking in your Smart Test, your Smart Shield, your Smart Audit products to get to that $200 million? Or is it all about new products that we've not yet seen and Pay Transparency coming down the line to get to that $200 million? I guess the answer is a bit of both, but it'll be good to get a bit of color in your thinking.
Do you want me to go? In terms of the $200 million, it's aligned with the plan that I said there about our current products and then one new product a year, maybe two new products in FY 2028. We're now looking more ambitious than that, based on what Rob was saying, the fact that Workday are actively coming to us with multiple ideas. We're being encouraged by Workday to accelerate. As I said, I'll be talking to Richard and Brendan about accelerating as well.
Thanks. Patrick O'Donnell, Goodbody. Just one, you mentioned on the Clear Skies piece, in terms of where Workday themselves will cut off and give the opportunity to Kainos. What kind of mark are we talking about here in terms of ARR potential for Workday not to do it, sort of sub a certain ARR level?
I don't know if Workday have ever declared a certain figure, but Malachy, you've had a number of informal conversations with them.
Yeah, I mean, in terms of, I don't want to give the exact figure, but yes, they do have a threshold in terms of, as I said, the fact that they're at $8 billion now. They're looking in the low hundreds of millions. Anything that doesn't have the potential to be low hundreds of millions, they're going to pass on.
Gautam Pillai from Peel Hunt. when Rob Enslin spoke, he focused a lot on agentic AI as a platform for Workday going forward. Is it fair to assume that your products, the Clear Skies products, will be a lot of AI-focused and agentic AI-focused going forward? If that's the case, how should we think about pricing for these products? Is it going to be price-reducing going forward, given the AI angle on it or otherwise?
Yeah, sorry. As Rob mentioned earlier, this is absolutely a key focus for Workday. In terms of Kainos's approach here, it will be to be a fast follower. Workday announced stuff in their North American Rising. Maybe you can explain a bit more about this price credits, where clients will get, as part of their annual subscription, a certain number of free credits for using agents. After they go over that, they're able then to buy, purchase more credits. I think they call it flex credits, is the model that they're doing. In terms of this, it was just announced. Very little information was shared about it in terms of how much that would actually mean to the client. Basically, our model would follow whatever Workday does. Whatever Workday do in this space, we will follow with that. That was their plan.
I don't know if you have anything more, Damien, to add?
Essentially, it moves towards a usage-based model. Certainly, in the products we're looking to build going forward, we will have agentic AI built in there. We'll look to layer that into our existing products as well. I've had lots of conversations with Workday. They're not ready to disclose how they would do the pricing model or encourage partners to price yet. We expect it's going to be aligned to that flex credit model. They haven't fully disclosed what that's going to look like.
Hi, other table there, Boo from Bank of America. You clearly said there's a wealth of opportunities in that Workday Products space. Could you talk about the investments required to realize that, both in terms of the tech product team and also the sales side, and how that might change with the partnership with Workday now?
Yeah, I think it's fair to say that the biggest constraint that we have on investment is people. Historically, what Mal didn't say was that this business was largely bootstrapped within the Kainos business. There was an initial investment, but really, for the last few years, it has been profitable. The biggest constraint is finding the right people. Mal showed you the growth in sales staff over that period of time. There was a period of time where we did make an investment there. Basically, it grows with the rest of the business. The issue for us has been turning ourselves into a product company with skills like product management that we didn't have as a services business. Mal, Damien, and the team have built those skills, but we now have to replicate them. That is the single biggest issue for us. It's not a cash issue.
If I thought we could get sufficient staff sufficiently quickly, I would be very happy to make the investment and whatever implication that would have for profit, wait for the SaaS model to take care of that. The bigger issue for us here is just finding the people.
I'm going to pick a couple of the questions here from online. Malachy, a quick one for you. You mentioned that Workday Products would reach GBP 100 million by next year. Is that next calendar year or next financial year? That's from Christoph at Aito Capital.
Both. Yeah, so 2026, which will be the next fiscal year as well.
Yeah, thank you, Malachy. I want to hear for you, Richard, from George O'Connor. Are we seeing any interest in outcomes-based pricing as a move from T&M?
If T&M is talking about the services side of the business, yes, there has been. Obviously, no one in the services industry has completely figured out how we will see AI impact on the pricing models. There's lots of discussion in the industry. No one has an absolute knowledge of how that's going to go. On the product side of the business, it's a completely different model. The question is, is it an annual subscription model or a pay-per-use model? Our expectation is it'll be the latter. Again, that's something that will develop over a period of time.
OK. Malachy, Martin at Shore Capital is asking about the roadmap for the new Workday Products. Are there plans to move beyond HR and compliance into areas like ESG reporting, workforce planning, or other emerging enterprise needs where agentic AI could drive outsized value?
Yeah, in terms of the ones we're looking at right now, we're looking at HR and finance. In terms of our products, they are typically complementary to what Workday has. We'll let Workday open out the new areas, and then, as Damien mentioned earlier, we will be a fast follower. The products we've all built to date have been around the HR space. We will be expanding that to finance. No plans as yet, Brendan, to look into those other areas.
One more question online. Are there any other questions in the room? The final question is from Stephen at Epic IP. I have a question for Brendan Mooney. Are you able to give a commitment as to how long you plan to continue leading the firm? Whenever the board had a conversation with me in December of last year, the request to come back was for the long term. I was happy to make that commitment at that time. I continue to be happy with that long-term commitment as well. Thank you for that question, Stephen. Excuse my colleagues from the Q&A. We will dial in Neil and Mike from Toronto and from Halifax. Thanks, guys.
Thank you, Mike. Neil, good morning. Neil is joining from Toronto. Mike is joining from Halifax in Nova Scotia. Gentlemen, you're very welcome. Thank you for the early start. I know you're East Coast time, so it's not quite as early if you're on the West Coast. I very much appreciate you joining today to tell the story about Canada. I'm going to hand straight over to you guys and let you take us through the presentation. Thank you.
Thank you, Brendan. Hello, everybody. Hopefully, you can hear me. No problem. Very excited to be here to tell you about our journey and what we've been doing for Digital Services to take us into an exciting new market over here in Canada. Very pleased to be joined by my colleague, Mike, to help tell that story. Next slide, please. Before we get into the detail, we'll do some quick introductions and then run through what we plan to cover today. I'll go first. First thing to say is the graphic design team has done a great job with my photo too. Well done to them for finding one of me with hair. Kudos to them later.
I'm the Regional Director for Digital Services in Americas, being based in Toronto for the last four years, but being with Kainos for 14 years overall, most of that time back in London in the U.K. Over to you, Mike.
Thanks. Afternoon, folks. As Neil said, my name is Mike Davis. I am the Co-Founder and CEO of Davis Pier. We'll talk a little bit about our journey in a few slides. Davis Pier is about an 11-year-old company, and as a Co-Founder, I've been here since the beginning.
Thanks, Mike. We're very much going to tag team the update today. We're going to start by giving a quick summary of our journey to date. I will cover off the Digital Services journey and then hand over to Mike to talk through the Davis Pier story. We're then going to talk about some of the opportunity that we see ahead in Canada and some of the challenges that we'll face. We're going to cover off why Kainos and Davis Pier, why that makes sense. We're going to talk through three of the case studies that we're most proud of from our work so far in Canada. We'll end with a quick look at what we will do next. Onto the next slide, please.
Before we get into the detail, I thought it would be good to start with a statement of our ambition and why I'm here, why we're here as a team in Canada. That is very much to replicate the growth that we had back in the U.K. over the last 14 years that I've been with the company in public sector and health care. There's a great opportunity to do the same in Canada. From the outset of our journey here, we've had the medium-term goal to get to CAD 100 million in annual revenue. I'm pleased to say that we're very much on track towards hitting that goal. In bringing Davis Pier into the Kainos Group of companies, we're now almost halfway towards this overall goal. Next slide, please. I'll cover off, as I said already, the Digital Services side of things and then hand on to Mike.
I'm going to try and tell our story by talking through my own personal journey at Kainos. As I said, I started 14 years ago with the company. It's hard to remember back to that time, but it was a small business at that time. Nobody had really heard of us, including myself. We were just over 200 people and, I believe, 31 specifically working in public sector and health care in the U.K. I was based in London. You'll know very much the journey from coming to these calls over the years that we went on in the U.K. over the next 10 years. It was a phenomenal journey to be part of. I was a key member of the team making it happen back in the U.K. The thing that I'm most proud of in that time is the work that I did with His Majesty's Passport Office.
I take the credit for bringing in that particular customer to us and standing up a team to deliver and modernize the U.K. passport service. I may be slightly biased, but I do think that that is probably our best case study globally. I will check in with Brendan later to see if he agrees. There are two reasons why I believe it is that way. The first is that it is clearly a service in the U.K. that most of us have had to use, whether that's friends, colleagues, or investors. The other key thing is that everyone that uses it is generally blown away at just how easy it is to interact with government, something they're not expecting. That very much sets the standard of all of the work that we like to do with government.
The second reason why I think it's our case study that really stands out is it's globally recognized. It's certainly one that internationally everyone looks to as an example of how to do it, and they understand it. Our journey in Canada actually started with a visit from the Canadian government to the U.K. to meet with HMPO at the time. We were able to meet with the Canadian government and talk to them about some of the work we've done. We followed up then with subsequent visits to Canada to speak to the department directly and partners like AWS and Microsoft. It became very clear that Canada very much needed our help. Having been part of the growth journey in the U.K., I very much wanted to be part of taking our business international and growing the team here. Four years ago, I relocated with my family to Toronto.
You'll see that we've gone on a bit of a growth journey ever since then. I was the first person out from Digital Services. We scaled up to just over 100 people working in public sector and health care here. With the addition of Davis Pier, we're now over 200 people working on projects here, very much replicating the early years of our growth in the U.K. It all reminds me of going back in time and what it felt like back working in London. Two big accelerators to call out in this journey locally are our work with Nova Scotia government, which we'll tell you about later, and meeting our partner, Davis Pier. The combination of what we both do is what's helped accelerate our growth locally. Over to you, Mike.
Thanks, Neil. I'll talk a little bit about my personal story as well and the evolution of Davis Pier and what's brought us here today. I've been in consulting in Canada and internationally for 20 or 25 years, all in the government and health care realm. My co-founder, Daryl Peronowski, and I, just over 10 years ago, thought very frankly that we could build a consulting company that was a little bit different and a little bit more focused on outcomes and impact. The goal and the vision for Davis Pier was always to have a very small boutique company. We thought maybe we would have 5 or 10 people. Every year that went by, we grew by 20%+. The real inflection point for us as a company was COVID.
The provincial government here in Nova Scotia leaned heavily on us and asked us to get involved in a number of critical components of the COVID response, like COVID testing and helping to plan and roll out vaccination. In 2022, when we were coming out of COVID, we decided that we needed to get serious about planning growth. We went about doing that and built an intentional growth strategy. Part of that we thought might be digital government. Coincidentally, 2022 was the year that Neil and I met for the first time. It was also during that year that we had a customer come to us with a critical problem that they needed solved. They needed a digital solution built.
They knew that we didn't ourselves do that, but we had built so much trust and credibility with this customer that they relied on us and trusted us to figure out how to do that. I think it sort of speaks to—it's one data point that speaks to the journey that we've had of building those trusted relationships with our clients, that they decided instead of going through government procurement competitive mechanisms to find a way to sole source us, we began to work with Kainos. Frankly, the rest is history. Here we are today.
Thanks, Mike. Next slide. In terms of the opportunity ahead, I'm going to say a brief summary here and then hand over to Mike for some detail. The most important thing to highlight is that Canada is very much behind the U.K. when it comes to digital government and progress against that. There are two ways that we know they are. The first is that the UN publishes a rather handy report every two years that defines the status of e-government globally. The U.K., in the latest copy of that report, came in number seventh. It is consistently in the top 10, whereas Canada was down in 47th position. They are actively trying to catch up. The second way that we know they're behind is because people like me have relocated in the last four years. We've taken a number of colleagues with us.
It does very much feel like going back in time. You have to go back somewhere in our journey, I'd say, maybe 10 to 15 years in the U.K. to remember when you'd have to fill in a form online for government that was pretty complicated to fill in, I'd say, an electronic PDF-type document. Print that document out, even though you started digitally, and take it down to a service center in Canada that the government here is very much proud of. You have to stand in a queue or a line, as they like to call it over here. If you're lucky, you'll get your service request done there and then. Otherwise, you have to wait a number of months to get that process. For a number of reasons, Canada has to really catch up and make all of that better.
I'll hand over to Mike to say a bit more about it.
Thanks, Neil. How do we do that? What challenges will we face? We think that there are probably three big ones that I want to call out. I'm actually going to invoke Richard McCann in a few of the comments that he made earlier on. It seems like a smart thing to do based on how much he resonates with the crowd there. Richard talked about the disruption in the U.K. government and how much the U.K. has been through over the last number of years, and that it hopefully can't be that bad in Canada. I'm here to assure you that it might not be that bad, but it isn't far off. I had some time in London during Brexit and spent a lot of time there, so some firsthand experience. Canada is very complicated from a government perspective. There is a federal government.
We have 10 provinces and three territories, which means that we have 14 ministries of health. We have 14 agencies responsible for transportation. We have 14 ministries of justice, all that do things slightly differently and need to find ways to work together. We are a very geographically large country. We are culturally and politically diverse. We are economically complicated. There are absolutely challenges associated with how we are governed as a country. The opportunity also lies in front of us for companies that really understand those intricacies and differences. The second challenge, which is sort of the elephant in the room, is our country's relationship with the United States has been changed forever. It's rapidly evolving, which means that government priorities are also rapidly changing. Making sure that we have a good understanding of that and can cater our services to those needs will be really important.
The third is a more internally focused one in terms of challenge. It's a very competitive talent ecosystem in Canada, especially for the types of folks that our companies recruit. We also want to be very selective around talent in terms of both technical expertise and cultural fit. We will need to continue to focus on that. On the right of the slide, just trying to provide, I guess, maybe a summary of what we believe the opportunity to be. Much of our work to date together has been in the province of Nova Scotia, where I am. When you look at the size of our province, we have about a million people.
When you look at some of the other markets where we believe that we will be going, Ontario, where we have a footprint already, and Alberta, are 16 times bigger and 5 times bigger, respectively, both in terms of population and budget. We believe that with the combination of the value proposition that we have, Kainos and Davis Pier, we believe quite strongly that we'll be able to replicate what we've done in Nova Scotia in some of these larger provinces.
That brings us nicely onto the next slide, please, which is why Kainos and Davis Pier. I'll say a few words and then hand back to you, Mike. In coming over here four years ago, it's been very clear that our case studies and the work we did in the U.K. very much stands out. The Canadian government is looking to the U.K. to what has already been done. We are here now as a company that says, we've solved that problem already, and we're here to help you to do the same thing. That has been fantastic in terms of opening doors for us and getting conversations going with government, specifically Nova Scotia. The big gap for us as we want to scale out and grow bigger across Canada is that we have always been gapped in terms of our understanding of the local market.
Just what Mike has said in terms of the complexity of government, how it's structured over here compared to back in the U.K., it's very much that is what Davis Pier brings to us. It's a combination of that knowledge, the relationship that they have, combined with our ability and experience of having delivered digital solutions in the U.K. that's really standing out. It's exactly what customers need. Over to you, Mike.
Thanks, Neil. Yeah, I will expand just a little bit on that. I'm sure you all know exactly what Kainos excels at. It's a world-class digital transformation and AI company. I guess for us, I want to talk a little bit about why we are so excited about joining the Kainos family of companies. We have a long history of building credibility and trusted relationships with government stakeholders in Canada because we understand the issues that they are facing. We have spent a lot of time working with them and building relationships to help them design and implement solutions. Oftentimes, those solutions mean changes to legislation or regulation or policy. As Richard mentioned in his opening comments, these days, any change to legislation will require a change to some type of back-end system or front-facing digital service.
I think that what we can bring as a company and what we have brought as a company is an understanding not only that those legislative changes are necessary, but which ones are specifically necessary. How might you change both the non-digital and digital systems in order to get better outcomes? Why Kainos and Davis Pier? Frankly, like my very first story about being asked by a customer to take care of their digital solution, our customers asked us to get involved in digital transformation. Our customers identified a need, and we listened. We have tried to find companies similar to Kainos in the past and honestly, without much success.
Since 2022, when we began working with Kainos, not only was our technical expertise obvious, but more importantly, we felt so confident that we had a shared culture and values, which is why the partnership worked so well and why we are so excited and bullish on the acquisition and what this will mean. We had, as a company, always planned to grow across, I shouldn't say always. For the last three years, we have planned to grow. What this does now, though, is it will help expedite that growth. We're extremely excited about what's next. With that, next slide, please, we'll just talk about a couple of case studies of some of the things that we've already done together. The first one is a project that we are doing here in Nova Scotia currently around the replatforming of the Registry of Motor Vehicles solution. A really quick story.
Twenty years ago, one of the very first consulting projects I was asked to do was to build a plan to rewrite the Motor Vehicle Act, the legislation that governs transportation safety in the province. That was twenty years ago. Those legislative changes, that new act, was just passed this year, twenty years later. One of the main reasons for that was that despite a number of attempts to replatform the system, it was still in a state, as of just up to a few years ago, that it was very difficult and very costly to make changes to, which meant that we couldn't pass that legislation until now. Kainos has done this work in the U.K. with the DVSA and was able to profile that project to the customer here.
The combination of that knowledge and our knowledge of the local environment and policy environment has led to us working with them. We've been working with them now for quite some time and will into the foreseeable future as well. I'll bookend this case study with another personal story. My son, Isaac, who's recently turned sixteen, which is the age you need to be to drive, a few months ago went online and booked his driver's test, the driving test where it's sort of the make or break time for young drivers. He was able to do that online because we built that service.
When I talked to him and told him, you know we built that service, and if we hadn't done that, you would have had to phone and talk to a human being in a call center, and it would have taken sort of you would have been booking weeks out. He couldn't believe that that would have been the state of government services. Neil, it's not just newcomers to Canada that feel the frustrations of inefficiency of government services. Next slide. Thanks. The next case study I'll talk about is one around early child care and early learning. The government of Canada has invested heavily in early childhood education and development. It is one of the best investments governments can make. They know that, and they've put millions of dollars into that program.
The way that it works is that they have funded provinces, which have responsibility for regulating daycares and early childhood care. Again, ten provinces, three territories, getting funding from the federal government, all needing to figure out exactly how to improve the environment in their provinces, where for the longest time, child care has been very expensive and very inaccessible. There just hasn't been enough demand. We, for a number of years, have been working with the province of Nova Scotia to help them determine how they would work better with their service providers, the daycares, with parents, with youth, how to bring the costs down, and how to improve the services that are provided.
Of course, we knew at some point there would be a digital component to this as a result of the relationship that we have with Kainos, the work that we have done in Nova Scotia on the business consulting side, and the track record that Kainos has demonstrated in Registry of Motor Vehicles. We have solidified the next phase of technology work for Nova Scotia. Similarly, we are doing work in the province of Ontario to help them design the digital service experience between the government and agencies and parents as well. We foresee opportunities coming out of that as well. Being able to profile the work that we've done in Nova Scotia in another province to then grow our footprint. I'll pass it back to Neil to do our third case study.
Thanks, Mike. Next slide, please. We wanted to end with a case study that shows that we're starting to make inroads into Ontario government. This is our work with an organization called Ontario One Call. The clue that they need our help is potentially in their name, Ontario One Call. As Mike has said, who wants to be calling anyone in this day and age? One Call is a regulator. It's part of Ontario government. It regulates the interaction between companies and excavators that want to dig in Ontario and the businesses that own underground infrastructure, so think water pipes, electricity supply, and gas. Obviously, very inefficient at the moment, lots of phone calls.
It's also a bit of a political hot potato, this one, because a number of large infrastructure projects are delayed, things like rolling out high-speed broadband across Ontario because of how long it takes to get details of what is under the ground. This was originally an introduction from Microsoft. For us, we quickly identified that actually, this organization was quite similar to Department for Transport in the U.K. We showcased to them a service that we built in the U.K. called Street Manager that coordinates all of the roadworks in England across various different contractors. They absolutely loved that case study, and they could see the potential for what we could do to help them. They also went on a visit to London, to the U.K., to meet the customer, but also some of the team that worked on Street Manager.
Off the back of that, we've won a number of projects with One Call. The first thing we did for them was we delivered a digital strategy, very much painting a picture for how they can go from where they are now to being a fully digital business in three years' time. We modernized a number of the services and put them online to make things easier for excavators. The latest thing we're doing is we're driving out efficiencies in HR and finance back-office processes using AI. Clearly, we'll get some case studies there that will resonate rather well with our wider Workday customer base. That is quite an exciting step. The important thing to say about this case study is Microsoft absolutely loved it because we delivered so quickly on their technology stack. They are now doing the showcasing of this solution across wider Ontario government for us.
The customer in this instance is a chap called Mo. He loves to get on the stage. We're taking as much advantage of that as possible because having him tell the story is way better than us doing it. Onto the next slide, please. Just to end quickly with a look at what we want to do next. As you all know, Brendan and Richard love graphs that go up and to the right. We are very much the same, and I'm pleased to say our journey so far over the last four years has very much been up and to the right in terms of revenue growth. You'll see we went on a journey of over a 170% compound annual growth rate, and we very much see that continuing into the future to get us to our overall ambition that we stated at the outset.
To keep it brief, there are three things that we're going to keep doing and doing well. The first is we're going to keep highlighting the work that we've done in the U.K. that really resonates with government departments here. Increasingly, we're going to start to tell the stories of what we've done in Canada too. That will be a very good accelerator for us. We'll say we've done it in the U.K., we've now done it in Canada, and we'll use that to win new work in those two target provinces, Ontario and Alberta specifically.
When we win work with those provinces, we need to focus hard on doing a good job with the great people that we hire and then do the final thing, which is to scale out and diversify those accounts as we build into them, very much as we've done over the last 10 years in the U.K., and exactly what we've also now done in Nova Scotia government. It's a proven model. We know how to make it happen, and we're going to diligently execute against that. Thank you very much. I'll hand back to Brendan for any questions.
Neil, Mike, thank you very much. Questions in the room? Peter.
I don't know if this is a fair question or not. Given the fact that Davis Pier has just been acquired and a lot of their relationships with the Canadian government sit with Mike, how is he properly incented going forward? Is he going to disappear? What should we expect?
You're possibly asking the wrong person. I can't see Mike behind me on the screen because his face changed at all. Mike, do you feel properly incented? Are you around for the long term?
Yeah, I'm happy to answer that question. Kainos was the ninth company that expressed some interest in acquiring Davis Pier. We didn't ever have a desire to sell the company. We didn't start it and grow it to sell it. We grew it to have an impact in Canada, in the public sector and in health care. Despite how I might look, I'm still relatively young. This is my baby and my lifeblood. I feel very fairly compensated. I have no plans to go anywhere. I am very, very excited to continue to be on the growth journey in Canada for the long term and foreseeable future.
Thanks, Mike.
Thank you, Julian from Investec. Would you be able to comment a little bit on the billable rates between the two businesses? It feels like Davis Pier is more obviously advisory, Kainos is delivery. Are there any material differences in billable rates, and also with that plan to your growth ambitions, staff dynamics in the market? Is it more difficult to get staff in one area than the other area in terms of getting towards that $100 million of revenue growth? Where do you expect the staff additions to come through?
Do you want to talk about the rates?
Yeah, in terms of rates, it's very early days. That's the first thing to say. This is very, very early in the journey. I wouldn't want to say that we know exactly what rates are going to be. Halifax, to me, has some of the characteristics of Belfast in the sense that it's a regional city, large enough for us as a business to have a profile within that city. It's nowhere near as expensive as Toronto as a city. We would like to see a similar model. We have a Toronto office. Obviously, that is partially a Workday office, partially a Digital Services office. We would like to be able to build out in Nova Scotia in the same way as we've built out in Belfast. It shares a lot of the characteristics in terms of the quality of the people, longevity of staff, and so on.
The sort of rates that we're seeing are good. I was surprised at how quickly we were able to break even as a business. We would have been happy to invest in this business for a considerable period of time. Fortunately, we haven't had to. I'm sure we will have to in the future as we scale as a business. In terms of the rates, we're relatively happy with that. In terms of the Davis Pier rates, we're not as close to that, to be quite honest with you. Mike is the person who is in complete charge of that. What we do see is that the average digital transformation project is significantly larger than the work Davis Pier's teams will do in the actual speccing of the digital transformation project. For us, there is that sort of 5x, 10x time opportunity.
If we can take something from Mike's team through into Neil's team, we believe there's an opportunity to get larger projects. Rates we're happy with so far.
Hi. My knowledge of Canadian geography is not good at all. When you're looking at the three provinces that you are focusing on, what was the metric for choosing them? Is it because the governments there have already expressed their desire for digital transformation, and there's already a building pipeline?
Yeah, I mean, Ontario is an easy one in that it's both the largest market and we have a significant presence there already, both on our Workday Services side as well. Nova Scotia is driven very much by those early conversations back in 2022 between Mike and Neil and the customer looking for someone to deal with their Digital Services. I'll let Mike talk to the reason that we're targeting Alberta.
Thanks, Brendan. A very, very brief geography overview. When you go west from Ontario, which is sort of in the middle of the province, you get Manitoba, Saskatchewan, Alberta, and then British Columbia to the west coast. Alberta has a number of national companies that service the prairies and the west coast from Alberta because of its geography and ease of travel in and out. That's one main reason to focus there, that we think that we can service multiple provinces. The other one is that we've seen a pretty significant shift nationally as far as our economic strategy is concerned as a country to start to focus more on resource-based economy, resource extraction. That is where Alberta is the province where we see a lot of that. We suspect that there will be significant provincial revenues growing in Alberta, which is another reason to go there.
Questions in the room? There's a couple online.
Can I just ask? Obviously, you've had great experience in the U.K. public sector, and you've noted, for example, with the NHS app, moving that to Wales and obviously building some efficiencies there. I'm wondering if you can apply those in different geographies and therefore grow quicker through the experience you've had in the U.K. and just replicating that work in a new context, I guess. Any information that would be helpful.
Yeah, so I think Neil would turn around and say that a 170% growth over the last three years, he's doing quite rapid growth already. One of the reasons for us to bring both the team in Davis Pier and the team in Kainos together is I think that it allows us to really be super aligned around those opportunities. That's certainly the excitement that Neil, Mike, and we feel around that opportunity. The traits are very similar. This is about efficiency. We use the word efficiency. It's really about cost saving. Let's be very clear about that. That's a driving force behind what government's trying to do in the U.K. and what the government is trying to do in Canada. I guess it's only in the last year or so that I've spent time to understand the government model in Canada. Mike's right.
You have 11 different ministries of justices across the country. He speaks to a government structure that is inefficient inherently. If each of those departments are inefficient, then we can make a big difference around that. We certainly have a significant ambition to grow as quickly as we think it's safe to do so. I think it's important that we don't forget that in our ambition to grow and scale, the customer has to be the heart of this journey. If we can't deliver well to them, and that means we have to have good people on the ground delivering these services, then it'll always hold back our growth.
Hey, guys. You outlined, I think, very persuasively why Canada is a very attractive market for you guys. Obviously, any attractive market is going to attract a lot of competition. Has that started already? Are we still a little bit too early in the journey of digitizing Canadian government for that to be the case? Where it is the case, can you talk a little bit about maybe the competitive dynamics, i.e., why governments have chosen you guys to provide services for them rather than anybody else? Are there any very large and serious competitors that you worry about or you have to price aggressively against? Maybe a bit of color on those factors, please.
OK, Neil, it sounds like a question for you.
Yeah, thanks, Brendan. Great question. In terms of the competitive landscape, it feels like the U.K. was 10 years ago as well. In terms of over here in Canada, it's generally all of the big soft SI companies, the ones we all know well. I would say there isn't really a Kainos equivalent. From that perspective, it's good. We stand out. The reason we've won work so far is really because we've actually got a combination here locally of people we've relocated and combined with new hires. Very much people that have worked on some of the U.K. transformation, bringing that skills and experience and applying it to the government here. That's seen as a big accelerator. We'll continue to do that. Very much the opportunity is to repeat like we did NHS England into Wales.
It's to do the same thing over here, province by province, once we start to get those local examples done.
And Brendan. No doubt competitors will start to see what we're doing. We're seeing a bit of that in Nova Scotia already, just to answer that other bit of the question. As we sort of set a new standard and show what we do, I think the government is only right to say we would like everybody to do the same. That happened in the U.K. as well. It will no doubt go on that same journey. We can continue to differentiate based on our people and successful delivery.
Yeah. Neil, Mike, in terms of you mentioned earlier on the call about a kind of changing relationship with the U.S., and often, some of the competition in Canada will be U.S.-headquartered companies. Is that playing as a factor at all?
Definitely. There's been a recent move away from buying products in stores that are U.S.-based, but also the same in terms of suppliers. The Canada-first story has gone down quite well. Mike can probably add a bit more to that.
In addition to that, government procurement agencies have been directed to provide more points in the procurement process for Canadian companies. That's one thing. Additionally, I was in Ottawa last week and the week before and got a lot of feedback from prospective customers in Ottawa about making sure that we stress the fact that we are Canadian and not American. Maybe in editorial, I would say those are some of the formal things. The informal emotional things is that there's a lot of decision makers in Canada that have pretty raw feelings and emotions right now about what we see to the south of us.
Thanks, Mike.
Good. Take any more questions in the room. Otherwise, we'll break for coffee. OK, thank you. Mike, Neil, thank you very much for joining us today.
Thank you very much.
Enjoy the rest of your day.