Brexit, coronavirus, trade wars: Kinaxis seeks to ease global supply chain disruptions

Kanata software company buys Indian firm; stock soars after firm beats guidance
sicard

Shares of Kanata-based Kinaxis (TSX:KXS) surged Wednesday as the company announced record annual earnings alongside an overseas acquisition.

Kinaxis, which develops software to help large enterprise customers manage their supply chains, surpassed its financial guidance for fiscal 2019. The company had already increased its guidance to as high as $190 million following a strong third quarter, but ended up pulling in $191.6 million in revenues over the full year ending Dec. 31, 2019. (All figures in USD.)

The past year’s revenues were up 27 per cent year-over-year, with software-as-a-service revenues up 22 per cent, accounting for $118 million. Kinaxis also posted a profit of $23.3 million for 2019, up from $14.4 million a year previous.

Kinaxis expects full-year revenues of between $211 million and $215 million in 2020, with revenue growth of up to 25 per cent in its key recurring revenues segment.

Shares of Kinaxis soared Wednesday morning, up 15 per cent from the previous day’s closing price to C$115.56 on the TSX.

Chief executive John Sicard told analysts on the company’s fourth-quarter earnings call Wednesday morning that Kinaxis is confident in the demand for its supply chain management solution given the uncertainty of the global business landscape. Complex world events – he mentioned international tariffs, Brexit and the recent coronavirus outbreaks as examples – are throwing a wrench into manufacturers’ supply chains and creating opportunity for Kinaxis.

Sicard said Kinaxis is well-positioned to help its client roster of tier-one manufacturers – Nissan, Ford, Nikon and more – manage the rising uncertainty of global waters.

“We have seen opportunities emerge from some of these disruptions,” he said. “The need for planning in real-time has never been more evident.”

Sicard also noted that an increasing focus on the sustainability of operations has companies turning to Kinaxis for insights on reducing waste throughout their supply chains.

Kinaxis also announced Wednesday it has acquired an India-based consultancy intimately familiar with the Kanata company’s RapidResponse solution.

Prana Consulting has been a partner of Kinaxis for the past 15 years, according to a release. Sicard said on Wednesday’s call that the 70-person company, which also has an office in California, will act as a new hub for Kinaxis to serve its growing customer bases in Europe and Asia.

Financial terms of the deal were not disclosed.

Elsewhere in the company’s busy week, Kinaxis announced it had added a new director to its board in Betsy Rafael, a 30-year veteran of the tech sector. Rafael’s experience includes five-year stints as a vice-president with Apple and, before that, Cisco Systems. She has also served on the boards of Autodesk, GoDaddy, Shutterfly and Echelon.