Kinaxis Inc T.KXS

Alternate Symbol(s): KXSCF

Technology Software - Application

Kinaxis Inc. is a Canada-based company engaged in modern supply chain orchestration, powering complex global supply chains and supporting the people who manage them. The Company’s AI-infused supply chain orchestration platform, Maestro, combines proprietary technologies and techniques that provide full transparency and agility across the entire supply chain from multiyear strategic planning to last-mile delivery. Its solutions include platform, app warehouse and supply chain orchestration. Its platform solution includes concurrent planning, AI, advanced analytics, user experience, developer studio and integration. Its app warehouse solution includes multi-echelon inventory optimization, production scheduling and recycling planning. Its supply chain orchestration solution includes supply chain planning, such as planning one, Demand.AI, supply planning and enterprise scheduling, and supply chain execution, such as supply chain visibility, control tower and order management.

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Kinaxis Inc

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Post by retiredcfon Nov 07, 2022 9:34am

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Post# 35078552

RBC

Their upside scenario target is also $230.00. GLTA

November 4, 2022
Kinaxis Inc.
Kinaxis 1, Macro 0

Our view: Kinaxis is seeing an inflection in demand, even though that wasn’t evident in Q3 headline revenue due to FX. Leading indicators point to continuous and strong demand for the company’s software. Moreover, demand may be resilient to macro, as supply chain resiliency and efficiency are top priorities. While Kinaxis is an expensive stock, visibility to near-term growth is high. Maintain Outperform, C$200 target.

Key points:
• FX masks Q3 strength. Revenue was $89MM (49% Y/Y CC), bracketing RBC/consensus for $87MM/$91MM. FX was a $6.4MM headwind, above RBC/consensus at $4.5MM. On lower costs, adj. EBITDA of $14.8MM was above RBC/consensus at $11.6MM/$13.2MM. Adj. EPS of $0.20 was slightly below consensus at $0.23 (RBC at $0.20) on higher tax (est. $0.08 impact).

Strong SaaS momentum. Q3 SaaS bookings rose 90% Y/Y to $83MM, accelerating from 62% in Q2. SaaS backlog (RPO) grew 37% Y/Y, up from 28% in Q2. Constant currency (CC) SaaS revenue was ahead of our estimate ($57MM vs. $55MM). CC SaaS growth improved to 28%, up from 27% Q2 and above FY22 guidance for 25-27%. ARR rose 25% Y/Y (30% CC) to $259MM Q3. Excluding MPO and on a CC basis, ARR was up 28% Y/Y, accelerating 300bps from 25% Q2. Reported SaaS revenue (at $54MM) was in line due to FX ($3.4MM headwind vs. RBC at $2.8MM).
Supply chain modernization appears resilient to macro. Kinaxis raised FY22 revenue guidance to $365-370MM revenue ($355MM-365MM previously), above consensus at $362MM. Customer wins are up 40% Y/Y YTD. Leading indicators like pipeline, unsolicited leads, professional services, and sales efficiency are extremely strong. Management believes that supply chain modernization is likely to be resilient to the macro environment, given prioritization of supply chain resiliency and environmental efficiency.
Term License cyclicality and new investments to weigh on FY23 adj. EBITDA growth. FY23 Term License (100% margin) will be one-third of FY22 levels due to a longer cycle of renewals. Additionally, Kinaxis indicated that it would continue to prioritize investments in sales & marketing to capitalize on the inflection in demand that it is seeing. As a result, we now expect FY23 adj. EBITDA to decline 19% Y/Y to $60MM (prior $77MM). However, we see operating leverage and margin expansion FY24; we expect adj. EBITDA up 43% Y/Y to $86MM FY24.
Expensive, but worth it. Kinaxis is a clear beneficiary of global supply chain transformation initiatives. While shares of Kinaxis are expensive relative to other Canadian tech stocks at 7x FTM EV/S (peers at 7x), we believe the acceleration in the company’s growth is unique in this market, demand may be resilient to macro headwinds, the company’s differentiation is strong, and the stock has a long track record of value creation. Our C$200.00 price target is unchanged and equates to 10x CY23e EV/S (unchanged).