After profitable 2016, Ottawa-based Kinaxis sets sights higher in 2017

Ottawa-based Kinaxis Inc. (TSX:KXS) increased both quarterly revenues and profits to close out 2016 and is projecting to keep the momentum going in 2017.

The supply chain management software provider  reported total revenues of $30.3 million for its fourth quarter, the three months ending Dec. 31. That’s an increase of 25 per cent from the same period in 2015. (All figures in U.S. dollars)

Subscription-based revenue represented a majority of those figures, coming in at $22.7 million in the quarter, a 34 per cent increase year-over-year. The breakdown is significant for many observers, as subscriptions provide a greater opportunity for recurring revenue than one-time sales.

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On the year, total revenue rose 27 per cent to $116 million, and subscription revenue rose 26 per cent to $81.8 million. These results align with Kinaxis’ 2016 guidance of more than $100 million in total revenues, which it recently raised after a successful third quarter.

A press release announcing Tuesday’s quarterly results said that the positive results were driven by new customer acquisitions and expansions to existing customer subscriptions, an area of growth for Kinaxis throughout the year.

“2016 was another year of strong revenue and new customer growth. We delivered solid bottom line results as we continued to make strategic investments to scale our business,” said Kinaxis CEO John Sicard in a statement.

Gross profit was also up on the year, coming in at $80.2 million in fiscal 2016, an increase of 22 per cent. As a percentage of revenue, gross profit stood at 69 per cent, a slightly decrease from 72 per cent in 2015. The press release stated changes in gross profit were due to additional hiring, use of third party providers and an increase in global datacenter capabilities.

While total profits increased slightly in Q4 2016, coming in at $1.7 million compared to $1.3 million a year previous, annual profits decreased to $10.7 million compared to $12.7 million in fiscal 2015. Kinaxis chalked these reductions to investments in sales and marketing and in research and development, as well as increases in share-based payments.

The firm set financial targets for the coming year as high as $144 million in total revenue, including an increase in subscription revenue of 25-27 per cent.

“With a strong platform in place, we enter 2017 in a great position to leverage our technology, customer relationships and strategic partners to continue to produce solid results,” Mr. Sicard stated.

Among its strong 2016 results, Kinaxis also signed a deal with electronics manufacturer Samsung to manage its supply chain process.

Kinaxis shareholders did not initially appear as keen on the company as is its CEO, as the stock price fell by as much as five per cent in early morning trading. However, shares regained much of that lost ground and stood at $72.20, down 0.25 per cent, as of 11:15 a.m.


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