Kinaxis’s shares rose Thursday as the company reported higher profits in its latest quarter and 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. The Kanata-based supply chain management software company, which keeps its books in U.S. dollars, recorded […]
Kinaxis’s shares rose Thursday as the company reported higher profits in its latest quarter and 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.
The Kanata-based supply chain management software company, which keeps its books in U.S. dollars, recorded a profit of $6.2 million for the quarter ended March 31, or 21 cents per diluted share.
That compared with a profit of $1.2 million, or four cents per diluted share, in the first quarter last year.
Revenue for the quarter totalled $119.4 million, up 18 per cent from $101.1 million in the same period in 2023. The company’s share price was up $5.73, or nearly four per cent, at the close of trading Thursday on the Toronto Stock Exchange.
At the same time, however, Kinaxis acknowledged that sales cycles have slowed over the past year amid ongoing economic headwinds.
In what CEO John Sicard called a “slight course correction,” he said the company is reducing its headcount by six per cent – or about 105 jobs – as it looks to redeploy some of its cash into areas with bigger growth potential, boost spending on its go-to-market strategies, and invest more heavily in artificial intelligence and other emerging technologies.
Kinaxis said the job cuts, which are expected to affect all business segments and geographic areas in which it operates, will likely be completed by the end of the second quarter.
'A responsible decision'
“This was an opportunity for us to reshape the organization based on the state of the business,” Sicard told analysts on a conference call Thursday morning.
“I see this as, in the grand scheme of things, a responsible decision to look at the organization and take this opportunity to rebalance the talent density and ensure that we have all the right people in the right spots at the right time.”
Kinaxis’s longtime CEO said that while the pipeline of new business is still “quite healthy,” contracts with enterprise customers are not as easy to get to the finish line as they were a year ago as companies tighten their belts.
As a result, several deals Kinaxis expected to complete in the first quarter are still in the works, he explained.
“Hopefully, we’ll be in a position to name those in the not-too-distant future,” Sicard said. “I think momentum is there, but the macro conditions are just making these negotiations take significantly more time than in the past.”
Kinaxis said it still expects its full-year revenues to fall in the range of $483 million to $495 million, in line with earlier predictions.
The firm also raised its 2024 adjusted EBITDA margin guidance to 18-20 per cent, up from its previous forecast of 16-18 per cent, citing projected cost savings from the restructuring and gains from “anticipated reinvestment” over the next eight months.
Sicard said he remains optimistic the company will hit its financial targets, noting he’s recently seen an uptick in inbound inquiries from potential new customers.
“Especially the last two weeks, momentum has been striking,” he said. “Just the last seven days, I’ve had at least three conversions with large enterprises. It’s been quite remarkable.”
Chief financial officer Blaine Fitzgerald said Kinaxis is following market conditions closely.
“We obviously are very confident in the (guidance), but Q2 is an important quarter for us,” Fitzgerald said.
“The more large enterprise deals that we get throughout the year will help us to continue to confirm that guidance that we have in place. I think there are a lot of great opportunities that are sitting there.”
Sicard said Kinaxis still sees plenty of room for growth by adding new customers in retail and other verticals and expanding its capabilities in areas such as financial planning and analysis as well as logistics and warehousing, whether that’s through acquisitions or in-house innovations.
“We have reshaped our team to better focus on the best opportunities we have ahead of us,” he said.
Kinaxis also announced a couple of personnel changes on Thursday.
Claire Rychlewski, who previously served as the company’s global executive vice-president, has been promoted to chief sales officer.
Meanwhile, Ian Giffen, who has chaired Kinaxis’s board of directors since 2018, is vacating his seat after the firm’s upcoming annual meeting. He will be replaced by former Altus Group CEO Robert Courteau, who has served on Kinaxis’s board since 2016. 
