Bullboard - Stock Discussion Forum Kinaxis Inc T.KXS

Alternate Symbol(s): KXSCF

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... see more

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TSX:KXS - Post Discussion

Kinaxis Inc > TD

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Post by retiredcf on Nov 07, 2022 8:40am

TD

Kinaxis Inc.

(KXS-T) C$142.18

Q3/22 Results: Momentum Accelerating

Event

Q3/22 results. See our previous note for a review of the results.
Impact: SLIGHTLY POSITIVE; we are lowering our target price on

reduced valuation multiple

KPIs point to continued strength. Management sees an inflection in the business, where it expects sustained heightened demand for its solutions. Management was very optimistic, given that leading indicators, such as the sales pipeline and unsolicited inbound leads pointed to strong demand. Supply-chain software remains one of the areas where we have seen sustained demand and expect it to continue. Management has not seen any change in the current macro environment. The sales cycle also continues to improve towards 12 months, from the typical 18 months. We believe ARR, ex-MPO contribution, accelerating to 28% y/y in cc and accelerating SaaS RPO q/q growth is a positive indicator of the traction the company is making in the market. Kinaxis' pipeline is growing, conversion is getting better, and win rates are improving.

Public cloud going well. Kinaxis has already launched its first live customer on the Azure cloud and has started its first deployment on Google's cloud. We continue to believe that a shift to public cloud could be beneficial for Kinaxis' financial metrics, including margins and cashflows. Management also sees an opportunity in these cloud vendors' customer bases.

Increasing our estimates. We are raising our estimates, given the continued demand strength and accelerating momentum. We are increasing our SaaS growth expectations, slightly offset by higher FX headwind expectations. We also believe the sales traction will continue to drive higher Professional Service revenue. A new Subscription Term Licenses customer drove our estimate for this segment higher. Since sub term revenues come with strong margins, we have also increased our 2022 EBITDA margin estimate.

TD Investment Conclusion

We are maintaining our BUY rating, but reducing our target price to C$200.00.

We continue to believe that Kinaxis will be a strong beneficiary of continued supply- chain modernization projects. We are impressed with the company's execution and accelerating momentum.

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