Kinaxis (TSX:KXS) executives struck a confident tone during the Ottawa firm’s third quarter conference call on Friday, but a drop in the firm’s full-year guidance saw its share price take a significant hit.
The Ottawa-based provider of supply chain management software reported revenues of $36.6 million for the three months ending Sept. 30. Kinaxis recently adopted new accounting standards – making apples-to-apples comparisons of quarters difficult – but revenues would have been $39.6 million before the new measures took effect, an increase of 18 per cent from the same quarter last year.
Subscription revenue accounted for 75 per cent of the firm’s earnings.
Kinaxis turned a profit of $2.7 million in the third quarter. Net income would have been $5.2 million under the old accounting standards, but that’s still down from a profit of $6 million a year ago.
Kinaxis lowered its full-year revenue guidance to between $152 million and $153 million, down from a range of $152 million to $156 million. The firm said in a release that certain sales that it expected to close this quarter have stretched on, resulting in the drop in guidance.
Shares of Kinaxis dropped 16 per cent in trading on the Toronto Stock Exchange Friday. The company’s stock sat around $74.60 in the afternoon.
The company added that lower profit margins were a result of hiring and the establishment of new data centres in Europe and Japan, but leadership had a positive spin on that. Chief executive John Sicard told analysts on the Q3 earnings call that it’s these international inroads and a large pipeline of sales that assure him Kinaxis will continue to hit its growth targets in 2019.
“I have every confidence in our long-term growth,” he said.
Sicard took a brief aside during the call to talk about the firm’s annual user conference, Kinexions. He noted that more than $2 trillion worth of revenue was represented at the event, and that attendees shared stories of how the firm’s flagship supply chain management tool has helped their operations run smoothly.
This, again, boosted his confidence.
“I am more confident than ever that we are the only company truly transforming supply chains via concurrent planning. The benefits of our highly differentiated technique are undeniably real.”