TD's Preview Event
Q2/21 Results: Thursday, August 5, 2021, after the markets close.
Conference Call: Friday, August 6, 8:30 a.m. ET. Registration link.
Impact: NEUTRAL
We forecast total revenue of $60.7mm, flat y/y and up 5% q/q. We estimate SaaS
revenue of $43.1mm, up 21% y/y, which includes $1.2mm of revenue contribution
from Rubikloud. Our combined SaaS and Maintenance & Support revenue estimate
of $46.5mm, implies a 76.6% recurring revenue mix this quarter. We also forecast
Professional Services revenue of $12.9mm, up 4% y/y, or 7% q/q. We estimate
$8.9mm of EBITDA, or 14.7% EBITDA margin, down ~100bps q/q, due to continued
investments and lower subscription term licenses.
Healthy spending environment supports view for continued backlog growth.
The overall demand environment continues to pick up, evidenced by SAP's and
Accenture's recent results. Accenture, a long-standing strategic partner, recently
delivered 21% y/y top-line growth and 39% y/y bookings growth. Accenture also
raised its 2021 guidance as they remain confident that demand for digital and cloud
solutions and services will continue to pick up throughout the year. Similarly, SAP
recently saw 17% cc y/y cloud revenue growth and 20% y/y cloud backlog growth,
which were driven by increased customer activity across the Americas, EMEA, and
APAC. We believe that the healthy customer demand environment will also benefit
Kinaxis. We believe that Kinaxis' continued investments will allow Kinaxis to further
convert its robust pipeline to bookings.
Plenty of capital for growth initiatives. We forecast Kinaxis will have $234mm
of net cash, as well as generate $25mm of FCF in the NTM. As such, we believe
Kinaxis has plenty of capital to invest towards organic growth and potential tuck-in
acquisitions.
TD Investment Conclusion
We maintain our BUY rating and C$190.00 target price. As the overall spending
environment continues to pick up, we believe the demand for digital supply chain
solutions will remain high. We believe that Kinaxis will benefit from the positive
backdrop and convert its healthy pipeline into deals.