Kinaxis Inc.
Kinaxis developed a sophisticated supply chain management software solution. It helps customers get better insight into their supply chain and lower costs through better planning and execution. Recently the company has been enhancing its profile by winning larger customers which include Qualcomm, Ford (for its new F-150), Micron, Cisco, Toyota, Nissan, Volvo, and more. While on current measures, the company is very expensive (I would actually want the stock to go down so I can buy more but I bought some in case it does not go down), its future opportunity vastly exceeds their current market cap of just under $2 billion. The company has established partnerships with Accenture and Deloitte to introduce the company and its solutions to its customers. I would expect their growth over the next 10 years to be substantial.
Kinaxis reports in $U.S.
Ests: 4Q19 1Q20 FY19 FY20
Revs 54.4m 49 190 210.9
EPS .36 .31 1.31 1.33
P=100.50, f/x=1.3281, $7.82/sh in cash, 4.74sh net of def revs, TTM EPS 1.32, P/E=57X
4Q19 .40 vs .20 +100%, est.36 up from .32, TTM EPS 1.32 vs .89
Feb 25, 2020, P=100.50, TTM EPS=1.32, P/E=57, FY20 EPS est of 1.33 looks high based on guidance
Revs +47% to 56.3m, SaaS +26% to 32m, Subscription +407% to 12.1m (reflects timing of renewals), GM 74% vs 68%, adj EBITDA margin 32% vs 23%, adj EBITDA +102% to 18.1m
Strong bookings, B/B=1.7, Backlog +17% q/q, +43% y/y to 339.4m, 2020 137.8m, 2021 100.1m, Thereafter 101.6m
Top 10 customers 32% of Revs, no customer >10%
FY20 Guidance: Revs 211-215m (+10-12%, est 211m), expect SaaS +23-25%, Subscription Revs approx. half of FY19 (renewal cycle) adj EBITDA 20-23% vs 30% in FY19
Rev guidance is ok, adj EBITDA guidance is lower than FY19 due to cycle of Subscription renewals plus spending for growth.
Acquired long-time (15 years) service partner in India, Prana Consulting
Mgmt discussed how opportunities have been emerging from disruptions caused by things like tariffs, Brexit, coronavirus. Also businesses focusing on sustainability can use RapidResponse to reduce waste
3Q19 .32 vs .19 +68%, est .23
Oct 31, 2019, P=84.11, TTM EPS=1.04, P/E=61X, Market Cap $U.S. 1.7bn
Revs +29% to 47.1m, SaaS +28% to 31.2m, GM 71% vs 67%, adj EBITDA margin 31% vs 26% ex 2.5m arbitration charge (receivable w/o), adj EBITDA +56% to 14.6m
10 largest customers 33% of revs, no customer >10%
FY19 Guidance: Raised Revs to 188-190m, EBITDA 27-29%
Backlog +17% q/q, +46% y/y to 289.7m, 4Q19 46.6m, NY 111.9m, Thereafter 131.2m
Solid new customer wins drove solid bookings and increased backlog.
New partnership with Flex who will be demonstrating RapidResponse to their customers
Excellent result, nice to see strong bookings and acceleration.
2Q19 .25 vs .23, +9% est .24
Aug 1, 2019, P=83.53, TTM EPS 0.92, P/E=69X
Revs +9% to 42.4m, SaaS +18% to 28.3m, GM 69% vs 68%, EBITDA margin 27% vs 28%, adj EBITDA +4.8% to 11.6m,
YTD top 10 customers 37%, no 10% customers. Seeing increased traction in EU and Asia which is consistent with their recent investments.
Secured new customer wins in every theatre, reflecting in record backlog (accelerating? NY and beyond is +43% YTD).
Backlog +24% y/y to $247.3m, 2H19 +28% to 64m, NY +10% to 87m, Thereafter +38% to 95m
Also signed Infosys as a partner.
FY19 guidance maintained.
While results look uninspiring for a company with this valuation, backlog appears to be showing signs of acceleration as additional partner wins and investments appear to be starting to pay off.
1Q19 .37 vs .28 +31%, est .30
May 10, 2019, P=73.29, TTM EPS=.63, P/E=79X
Revs +24% to 45.8m, SaaS +17% to 27.3m, Term License +87% to 8.4m, GM 73% vs 72%, EBITDA margin 35% vs 33%, adj EBITDA +29% to 16m driven by big jump in term license subs.
One 14% customer as a Term License subscription (renewal in addition to expansion), term license are virtually 100% margins because 50% of revs or more are recognized immediately (at high margin) with the remainder pro-rated
Backlog 234.5m
Seeing some large and active deals taking longer to close, expect strong SaaS bookings in “coming quarters”
FY19 Guidance: Revs still 183-188m but slightly higher contribution from term license (22-24m vs prior expectation of 20-22m), EBITDA margin 25-27% vs previous guidance 23-25%
Regarding subscription term licenses issue I noted in 4Q18 comment, mgmt. indicated they expect subscription term license revs in 2020 to be about 50% of their FY19 expectation , 2021 to be similar to 2018 and 2022 similar to 2019 (3-year cycle).
Clearly solid results/trends however the lumpy aspect of the term license subscriptions and the accounting treatment juiced revenues a bit.
4Q18 .11 vs .28, est .21, FY18 .54 vs .99
Feb 28, 2019, P=82.73, TTM EPS 0.54, P/E=117X
Revs prior to new accounting standard +15% to 39.5m, Subscription +18% to 31.8m, adj EBITDA -22% to 8.7m, FY Revs +16%, adj EBITDA +2%
After new accounting standard, Revs 38.3m, Subscription 30.6m, and EBITDA 9m (23% of revs), FY Revs 150.7m, adj EBITDA 41.7m
EBITDA impacted by continued global expansion, new data centres in Japan, new and ongoing customer engagements
Recent customer wins include Novartis, Unilever and Dyson, added EY to partnership network.
Backlog 237.5m, 109.9 to be be recognized in FY19, 65.5m in FY20, remaining 62.1m in FY21 and beyond.
FY19 Guidance Revs 183-188m (+21-25%, est 185m), EBITDA margin 23-25% vs 28% in FY18
20-22m of revs (vs 9.9m in FY18) is “right-to-use” portion of long-term subscription which is recognized immediately rather than prorated over the term (boosts rev growth this year but possible headwind next year?) 33% of the amount in 1Q, 50% in 4Q, and rest in 2Q and 3Q.
Profitability weak as company continues to invest for growth and product innovation current engagements, FY19 estimates of $1.26 too high, guidance implies flattish to FY18.
Delayed deals from last quarter have been closed.
3Q18 .19 vs .31, before accounting change would be .30 vs .31, est .23
Nov 8, 2018, P=88.63, TTM EPS=0.88, P/E=72X, FY19 P/E=47X, FY19 est looks high.
Revs prior to new accounting standard +18% to 39.6m, subscription +19% to 30.7m, EBITDA +14% to 12.3m
After new accounting standard, Revs 36.6m, subscription revs 27.7m, EBITDA 9.5m, 26% of revs
Total backlog of subscription services is 197.8m, expect to recognize 26.3m in 4A, 86.3m in FY19, 85.1m in FY2020 and beyond
FY18 Guidance: lowered revs to 152-153m, Subscription Revs 107-108m, EBITDA 25-28% as some new deals taking longer to close, mgmt. still confident on closing them.
2Q18 .25 vs .30, w/ 30% TR vs 16%, est .23
August 2, 2018 P=89.22, TTM EPS=1.00, P/E=69X
Revs prior to new accounting standard +22% to 40m, subscription revs +24% to 30.1m, adj GM 69% vs 70%, GP +20%, EBITDA +12% to 10.7m,
After new accounting standard, Revs +19% to 39m, subscription revs +20% % to 29.1m, GM 68% vs 70%, adj EBITDA +17% to 11.2m, 29% of revs
Mgmt continues to invest in growth and innovation such as self-healing supply chain,
Booked 32.7m in new subscriptions, Minimum committed subscription $198.7m up from 192.6m in 1Q, expect recognize 50.3m in 2H, 79.7m in FY19, 68.8m FY20 and beyond.
Guidance under new accounting standards Revs 152-156m, Subscription Revs still 109-111m, EBITDA margin 25-28%
Results continue to be supportive of long-term opportunity.
1Q18 .29 vs .23, est .23 down from .28
Revs prior to new accounting standard +10% to 35.9m, subscription revs +24% to 29.5m, GM 72% vs 68%, adj EBITDA +8% to 9.2m
Revs +11.3% to 36.8m, subscription revs +27.6% to 30.5m, adj EBITDA +47% to 12.5m
Won a new European auto customer (later disclosed as Volvo).
Mgmt. discussed competitors who compete on price and that Kinaxis doesn’t compromise because of their value proposition.
Guidance reaffirmed, under new accounting standard Revs 150-154m, Subscription revs 109-11m, EBITDA margin 24-27%
Backlog of subscription service commitments 192.6m, 70.2m in rest of FY18, 71.5m in FY19, and 50.9m for FY20 and beyond.
4Q17 .28 vs .15 adjusted, est .23, FY adj EPS .99 vs .71
Reported EPS .21 vs .07
Revs +14% to 34.4m, Subscription revs +19% to 27m, GM 72% vs 69%, adj EBITDA +73% to 11.2m
Recently signed Toyota
Increased confidence to accelerate investments to expand salesforce, continue product innovation, and further build out global operations in Europe and Asia.
Guidance: FY18 Revs 158-163m (+18.5-22%, est 161.7), Subscription revs +23-26%, EBITDA 23-26% of revs due to acceleration of investments in salesforce, marketing programs, R&D, data centres. Implies EBITDA 36-42m vs 40m
3Q17 .31 vs .17, est .24
Revs +12% to 33.5m, Subscription Revs +24% to 25.8m,, GM 71% vs 68%, Adj EBITDA +59% to 10.8m
Recently signed Nissan , seeing an acceleration of deals brought by partners.
Guidance: FY17 Revs 132-134m, annual subscription revs +22-23%, EBITDA 27-29% of revs
2Q17 .30 vs .20, w/ 11% TR benefitting EPS by .04, est .23
Revs +14% to 32.9m, GM 70% vs 70%, adj EBITDA 29% vs 25%, +32% to 9.6m
Large Asia-based customer (Samsung?) has breached its contractual obligations so they have stopped recognizing revenue and pulled expected revs from guidance. Also strategic partners are increasing their role in deployment and earning the related Professional Services revs, short term impact on prof. services revs but longer term accelerating deployment and at greater scale.
Have bene talking to a number of potential new partners, expect to announce some in coming months, partners must be committed to building an internal practice for KXS.
Revised FY17 Guidance to 131-133m, annual subscription revs +21-23%, EBITDA 26-28% of revs
This will likely spook investors and the stock could have a strong negative reaction tomorrow.
1Q17 .23 vs .22
Revs +20% to 32.5m, GM 68% vs 70% (GP +17% to 22.2m), adj EBITDA 26% vs 30%, +6% to 8.5m reflecting continued investment for growth
Subscription revs +29% to 23.9m due to new contracts and expansions of existing subscriptions
CFO improved 10.3m vs 8.8m
Majority of new subscriptions from partners,
FY17 Guidance: Revs 140-144m (unchanged), annual subscription revs +26-28% (slightly higher), adj EBITDA 25-27% of revs (slightly higher)