Kinaxis Inc.
(KXS-T) C$144.35
Q3/22 First Take: Strong KPIs
Event
Kinaxis released Q3/22 results last night. Conference Call: 8:30 a.m ET; Registration link. Impact: SLIGHTLY POSITIVE
In line results, despite FX. Total revenue of $89.5mm was in-line with us at $91.5mm (TD) and consensus at $90.3mm. SaaS revenue of $54.0mm was up 21% y/y, or a strong 28% y/y in constant currency (cc). Professional Services of $25.6mm was above our expectation of $24.3mm likely reflecting strong implementations volume. Subscription term licenses revenue came in at $5.8mm, below our $8.2mm estimate. This could be due to timing since sub term RPO for 2022 grew to $8.6mm and full year sub term revenue guidance was increased. EBITDA of $14.8mm was in line with expectations of $14.4mm (TD)/$13.2mm (consensus).
KPIs point to continued momentum. Kinaxis delivered strong ARR of $259mm, or $269mm in cc up 30% y/y, an acceleration from the mid-20% in H1/22 and suggesting that recurring revenue growth could be breaking the elusive 30% mark. SaaS book- to-bill was strong at 1.54x, suggesting Kinaxis' sales motions are working despite some software peers seeing pockets of elongated sales cycles. 2023 SaaS backlog also grew to ~$191mm, or 12.9% q/q.
Subscription term license and Professional Services revenue guidance increased. 2022 total revenue guidance of $365mm-$370mm was increased from $355mm-$365mm. Part of the revenue guidance increase is from higher expectations for sub term license revenue. Prior guidance of $34mm-$36mm was increased to $38mm-$40mm. Considering that SaaS revenue guidance remains unchanged, we believe the balance is made up of higher expectations for Professional Services supporting our view that the market for supply chain software remains strong. EBITDA margin was raised to 18%-20%, from 16%-19%, likely from the higher expected mix of sub term license revenue and operating leverage.