Kinaxis’s share price fell more than 13 per cent Wednesday after the Kanata-based software firm announced CEO John Sicard and chief sales officer Claire Rychlewski are leaving the company later this year.
Sicard, 61, will retire at the end of 2024 after a three-decade career at Kinaxis, the company said Tuesday. The board has launched a search for his successor, and Sicard will continue as a consultant with the firm until the end of 2025.
After starting as a software developer with the organization then known as Enterprise Planning Systems in 1994, Sicard gradually worked his way up the firm’s command chain. He served in various C-suite roles before taking over as chief executive in 2016.
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Since then, Kinaxis’s annual revenues have quadrupled to more than US$400 million, while the company’s headcount has grown more than 400 per cent and its market valuation has tripled as demand for its supply-chain management software has skyrocketed.
But the firm’s share price has stagnated over the past year amid economic headwinds that have slowed sales cycles.
In May, Kinaxis announced it was laying off six per cent of its workforce in a restructuring aimed at funnelling more money into R&D, marketing and other areas.
Earlier this month, the company said its revenues for fiscal 2024 would likely come in at the lower end of its projections. In a news release Tuesday night, Kinaxis reaffirmed its most recent revenue predictions and said it is “shifting its focus from building to scaling.”
The firm’s shares were down nearly $22 to $135 on the Toronto Stock Exchange Wednesday afternoon after news of Sicard’s pending retirement broke.
“As we accelerate towards our ambitious goal of becoming a ($1-billion)-revenue company, we agreed that now is the right time for a CEO transition, and John will play an important role in that process,” board chair Robert Courteau said in a statement, adding the company “wouldn’t be in this position without the foundation that (Sicard) has created over the years.”
Sicard, who was named Ottawa’s CEO of the Year by OBJ and the Ottawa Board of Trade in 2020, said he was “extraordinarily proud” of what Kinaxis has accomplished.
“We’ve built a globally respected leader in supply chain orchestration with unlimited potential, a loyal customer base that represents the best of supply chain excellence, and an incredible global team,” Sicard said in a statement.
“It’s the right time to pass the baton to the next leader who will accelerate this momentum, and I’m looking forward to witnessing the inevitable successes ahead for Kinaxis.”
Meanwhile, Rychlewski, who joined the company more than five years ago and was promoted to her current role in April, is departing at the end of November “to take advantage of an opportunity that better suits her current goals,” Kinaxis said.
The company said Rychlewski, who is based in France, was “instrumental” in growing its presence in Europe, Asia and North America and “in preparing the global sales team for scale.”
In a note to clients on Tuesday, BMO Capital Markets analyst Thanos Moschopoulos said both executive moves were “unexpected,” adding they may create “some incremental execution risk” for Kinaxis.
Moschopoulos said while Sicard’s retirement “is perhaps unsurprising given the length of his tenure,” the decision “hadn’t been previously telegraphed.”
The veteran tech analyst said he would have preferred that Sicard remained at the helm given the company’s “sustained competitive momentum” during his tenure. He said he believes the recent slowdown in Kinaxis’s growth “has primarily stemmed from a tougher enterprise software spending environment, rather than execution issues.”
National Bank of Canada Financial Markets analyst Richard Tse said in a research note that Rychlewski’s departure was “perhaps more troubling” for investors than Sicard’s.
“Without question – the optics are bad,” he wrote, adding the veteran sales executive’s decision to leave the firm likely points to “some material challenges” within Kinaxis’s sales organization.
“Our read of the departure is that not only do those challenges remain, but they are likely not easy fixes” given Rychlewski’s short stay in the position, Tse added.
Meanwhile, Tse said that while the optics of Sicard’s pending exit are also bad, the reasons for his departure “are less clear at this point.” He noted the decision comes just a couple of months after Courteau replaced John Giffen as chair of the Kinaxis board of directors.
“In our view, (Sicard’s departure) likely has something to do with a heavier focus on improving sales and marketing performance which we believe to be disconnected from the quality of the product portfolio,” Tse added.
