Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kinaxis Inc (KXSCF, Financial) reported a 16% growth in SaaS revenue, reaching $78.6 million, and a total revenue growth of 12%, amounting to $121.5 million.
- The company achieved over $30 million in adjusted EBITDA, representing a 32% growth and a 25% margin, allowing them to raise profitability guidance for the third consecutive quarter.
- Kinaxis Inc (KXSCF) won an impressive number of new customers across various sectors, including Life Sciences, Industrial, Consumer Products, and Automotive, reflecting strong demand for their supply chain solutions.
- The company continues to innovate with AI-based products, with over 100 customers actively using the Maestro AI chat agent and significant improvements in demand forecasts through Demand.ai.
- Kinaxis Inc (KXSCF) received exceptional validation from third-party industry observers, being named a 2024 Gartner Peer Insights Customer Choice for supply chain planning solutions and recognized by Newsweek as one of Canada's most responsible companies for 2025.
Negative Points
- Despite the positive growth, the company faces elongated contractual negotiations and proof of concept requirements, which are extending sales cycles.
- There is a high level of scrutiny in buying decisions, particularly for large enterprise businesses, which could impact future growth.
- The company is experiencing slower deal approvals, partly due to the S/4HANA migration, which, while beneficial, can extend sales cycles.
- The adjusted EBITDA margin guidance remains at 20% to 22%, indicating that while profitability is improving, it has not yet reached the mid-term target of 25%.
- The company is facing execution risks due to leadership changes, although no significant impacts have been reported yet.
Q & A Highlights
Q: Given the recent ARR growth, is it fair to expect a deceleration in SaaS revenue growth next year?
A: Blaine Fitzgerald, CFO, explained that while there is a correlation between SaaS growth and ARR growth, it's too early to make definitive predictions for 2025. He noted positive macroeconomic factors, such as increased IT spending, and a strong pipeline for 2025, which could offset any potential deceleration.
Q: Is the Board open to engaging with interested parties regarding potential strategic opportunities?
A: Robert Courteau, Independent Director, stated that the Board is following a process to create value for the company and has not closed the door to any path, implying openness to engaging with interested parties if appropriate.
Q: Has there been any impact on bookings due to recent corporate events?
A: Blaine Fitzgerald, CFO, mentioned that while leadership changes can pose execution risks, there has been no negative impact on bookings. The company has maintained strong customer relationships, and John Sicard's continued involvement has been reassuring to clients.
Q: What areas have been identified as having the greatest opportunity in the strategic review?
A: Robert Courteau, Independent Director, highlighted the focus on monetizing product leadership, enhancing go-to-market strategies, and strengthening partnerships with system integrators. The company aims to leverage its competitive advantages and customer satisfaction to drive growth.
Q: How is the company progressing with its Generative AI roadmap and revenue model?
A: John Sicard, CEO, shared that the company has made rapid progress with its AI initiatives, including the Maestro Gen AI chat agent. Future phases will involve AI interactions with data and content generation, which will be monetized. Blaine Fitzgerald, CFO, added that the timeline for these developments is ahead of schedule.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
