Kinaxis Inc.
(KXS-T) C$147.42
Q1/21 Results: Bookings Remain Strong
Event
Kinaxis reported Q1/21 results and held its conference call.
Impact: SLIGHTLY POSITIVE
Bookings momentum continues with a doubling of new customer additions y/y. SaaS bookings grew by 40% y/y to generate a book/bill of 118%. This is a strong number for Q1, given that Q1 tends to be a seasonally slow bookings quarter. For context, Q1/20 SaaS book/bill was 101% and Q1/19 SaaS book/bill was 65%. The strong bookings this quarter suggests that the spending environment is improving and could continue to improve as markets reopen. Management noted that this was a record first quarter result for new customer wins and incremental subscription bookings. A large part of this is due to the success of their RapidStart program, where Kinaxis can get a customer up and running in 12 weeks. These engagements tend to be smaller in scope to start off with, but expand more quickly than a typical engagement. We believe this helps Kinaxis win new customers. The pipeline continues to build and the company saw a significant increase of inbound requests following the Gartner report, where Kinaxis was one of the most highly- ranked vendors. With 2022 SaaS backlog at $119mm at the end of Q1, we believe the company is on track to return to mid-20% SaaS growth in 2022. This momentum has continued into Q2.
Margins beat this quarter, but full-year guidance reiterated. The EBITDA beat this quarter was due to lower-than-expected S&M expenses. The lower q/q S&M was due to normal seasonality and is expected to ramp up throughout the year. Full-year guidance was reiterated, including EBITDA margin, but we've adjusted our estimates slightly and now come in above the midpoint of guidance.
Blue Yonder disruptions could be an opportunity. It sounds like Kinaxis had been winning business against Blue Yonder in the previous and most recent quarter. Management believes this momentum could continue as Panasonic's acquisition of Blue Yonder could be a distraction for the competitor.
TD Investment Conclusion
Increasing target price to C$175. Another good quarter of bookings, which suggests that growth could reaccelerate.