Ottawa’s Kinaxis raises guidance, posts 29% jump in Q3 revenues

Sicard
Kinaxis CEO John Sicard. File photo

Shares in Kinaxis got a healthy bump on Friday after the rapidly growing Kanata-based software firm announced it was raising its full-year guidance following a strong third quarter.

Kinaxis (TSE:KXS) reported revenues of $47.1 million for the three-month period ending Sept. 30, up 29 per cent year-over-year. Subscription revenues from the firm’s software accounted for about two-thirds of that total.

The company, which makes cloud-based software that helps customers manage their supply chains, posted a profit of $4.5 million in the third quarter, up 70 per cent from $2.7 million a year ago. The firm’s adjusted EBITDA grew 29 per cent to $12.1 million, or 26 per cent of revenue.

Trumpeting a number of recent big-name customer wins and new products in the company’s pipeline, Kinaxis officials said Friday the firm is raising its full-year guidance. The firm now predicts it will book revenues of between $188 million and $190 million in fiscal 2019, up from earlier projections of between $183 million and $188 million.

Markets responded favourably to the news. By midday on Friday, Kinaxis shares had jumped nearly 15 per cent to $96.94 on the Toronto Stock Exchange.

During a conference call with analysts on Friday morning, chief executive John Sicard said the firm’s aggressive push into Asia and Europe continues to pay dividends. In recent months, Kinaxis has landed a high-profile slate of new customers from those regions that includes British American Tobacco, Honda and Yamaha Motors as well as Israel-based generic drug-maker Teva Pharmaceuticals.

Buoyed by those wins, Kinaxis generated about 35 per cent of its revenues from Asian and European customers in the third quarter, up from roughly 30 per cent in 2018.

“We’re investing heavily in those regions,” Sicard told analysts. “We’re seeing the fruits of that labour as a result.”

Sicard also touted the company’s continued R&D efforts, which are resulting in new products such as a plug-in platform that will allow Kinaxis’s customers to more easily tailor its RapidResponse software to their individual needs. 

The firm is also set to launch a new tool that presents supply chain data in easier-to-read visual form. Unveiled at the company’s annual user conference, Kinexions, the product aims to shrink the time it takes to crunch supply chain information from “hours to seconds,” according to Sicard.

“We’re really excited with what we’ve launched,” he said. 

The CEO also told analysts the firm now has 25 partnerships with resellers and customers that act as sales evangelists to promote Kinaxis software to their own suppliers. Sicard said Kinaxis is still in “chapter one, book one” with such arrangements, adding he expects the additional partnerships and products to help the company expand into new market verticals.

Now at more than 400 employees in Ottawa with an additional 200 in other parts of the world, Kinaxis appears to be on a roll. Earlier this year, the company announced plans to build a new head office in Kanata West that will be more than double the size of its current 64,000-square-foot headquarters on Silver Seven Road. Kinaxis also has the option to add a second building of 100,000 square feet to provide space for long-term future growth.

In response to an analyst’s question about whether he fears a slowdown in momentum in the face of growing economic headwinds, Sicard said he sees no cause for concern.

“The (sales) pipeline remains very, very strong,” he said.