Kinaxis shares rise as Kanata software company forecasts surge in revenue in 2022
Ottawa-based Kinaxis expects its revenue to grow more than 30% in fiscal 2022 as demand for its supply chain management software continues to soar.
The company, which keeps its accounts in U.S. dollars, said Wednesday it expects revenue of between $335 million and $345 million for the 12 months ending Dec. 31. That’s an increase of nearly $100 million from its total fiscal 2021 revenue — a year that saw Kinaxis sign a record number of new customers as its sales topped the low mark for the first time. $250 million.
“The momentum in the business is at an all-time high, and we intend to take full advantage of it,” CEO John Sicard said during a conference call with analysts Wednesday morning.
“As we move on from pandemic protocols, we continue to see supply chains at the forefront of boardroom conversations and in the news. The need for supply chain resilience has never been greater. obvious.
Stock prices up
Markets appeared to react favorably to the latest earnings report. Shares of Kinaxis — which have fallen more than 25% in the past six months as tech stocks in general have been hit hard — hit $149.25 mid-afternoon on the Toronto Stock Exchange, up more than $5 on the day.
Kinaxis’ RapidResponse and RapidStart software platforms help companies like Ford and Unilever ensure they have the right amount of raw materials to manufacture their products by tracking real-time demand and inventory.
As factory shutdowns and other pandemic-related issues trigger widespread shortages of semiconductors and other key components of a slew of consumer goods, Sicard said the pandemic has made it clear to the need for companies to respond quickly to supply chain obstacles.
He said soaring inflation, global conflicts and climate change are also fueling demand for Kinaxis software. Sicard touted wins from the company’s blue-chip customers over the past quarter – including oil and gas giant BP International, High Liner Foods, Mazda Europe and Rogers Communications – as evidence of the growing global appetite for Kanata’s enterprise solutions in a range of vertical markets.
“There’s this appreciation that the only constant in the whole supply chain is disruption.”
“There’s this appreciation that the only constant in the whole supply chain is disruption,” he said. “If anything, (companies) have realized that supply chains have not proven to be as resilient as they should be.”
Sicard’s comments follow a record fourth quarter for Kinaxis. The company reported revenue of $68.5 million for the three months ending Dec. 31, up from $54.9 million a year earlier.
The company’s subscription software revenue — which accounts for the lion’s share of its revenue — rose 18% year-over-year to $46.9 million.
The company’s professional services division, which implements Kinaxis software and trains its users, reported revenue of $17 million, up from $11.3 million a year earlier. Meanwhile, revenue from subscription licenses for traditional on-premises software fell 26% to $1.4 million, a drop the company attributed to a normal decline in subscription renewal cycles typical of three years.
Net loss of $2.9 million
Additionally, Kinaxis’ annual recurring revenue – a new metric aimed at giving investors an up-to-date view of the total annual value of all recurring subscription contracts, including SaaS, term licenses, and maintenance revenue , at a specific time – rose 19% from a year earlier to $221 million.
The company recorded a net loss of $2.9 million, or 11 cents per share, compared to a loss of $1.6 million, or 6 cents per share, in the same quarter of fiscal 2020.
Kinaxis said the increase in losses was mainly due to higher labor costs as well as its decision to put more money into R&D spending – which rose nearly 20% to 16.5 millions of dollars – as it upgrades its software and builds new data centers to meet the needs. of its growing clientele.
Chief Financial Officer Blaine Fitzgerland told analysts the additional investments will generate long-term gains on the balance sheet.
“We’ve seen our 2020 and 2021 bets pay off, and we see plenty of opportunities for continued growth,” he said.