With rising Q1 revenues, Ottawa-based Kinaxis points to partnerships as path forward

John Sicard
John Sicard

Kinaxis Inc. (TSX:KXS) executives struck a confident tone during the firm’s quarterly earnings call on Thursday morning as revenue growth and successful channel partnerships bolstered its first-quarter results.

The Ottawa-based firm’s total revenue for the quarter ending March 31, 2017 was $32.5 million, a 20 per cent increase from a year ago. (All figures in USD.)

Kinaxis’ business is based entirely on its Rapid Response product, a software solution for supply chain management.

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CEO John Sicard told investors and analysts on the call that the company’s “land and expand” approach – a focus on both acquiring new customers and signing bigger deals with existing ones – was showing results.

The “expand” portion of this strategy, represented primarily by subscription revenue, was $23.9 million, an increase of 29 per cent year-over-year.

Despite just two per cent growth in the firm’s professional services revenue (the “land” side of the approach), Mr. Sicard says Kinaxis is well-positioned for growth thanks largely to the successes of the firm’s channel partners program. For example, Deloitte, a partner that signed with Kinaxis roughly a year ago, was instrumental in signing a major new customer in the Asia-Pacific region.

“The majority of our booked-customer business in Q1 is from our partners. That’s new … That’s a sign we’re on the right track,” Mr. Sicard told the call. Kinaxis takes a disciplined approach, he added, and ensures the success of its partnerships by making sure interested partners are committed to investing in delivering Rapid Response.

“We have more people ringing our doorbell than we can let into the house,” Mr. Sicard said.

“It’s not just a matter of racing to add logos. It’s building a solid foundational partnership to execute on.”

Kinaxis’ profits dropped slightly in the quarter, coming in at $3.2 million as compared with $3.4 million a year ago. Executives cited investments in new data centre capacities and increased share-based payments as reasons for the drop.

In light of the encouraging first-quarter results, the firm raised its 2017 guidance and now expects as much as $144 million in revenue.

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