Kinaxis continues to hire ‘aggressively’ as revenue soars amid ongoing supply chain disruptions

With Canada’s beleaguered tech sector desperate for a much-needed dose of positive news amid a recent string of layoffs and plummeting stock valuations, it was fitting that the country’s largest producer of supply chain management software delivered the goods on Wednesday.

Kanata-based Kinaxis — which helps manufacturers around the world ensure they have enough inventory on hand to get their products to market on time — again offered a glowing earnings report as it faced unprecedented demand for its platform. continues to see amid global economic turmoil.

Kinaxis, which holds its books in US dollars, posted $80.8 million in revenue in the second quarter ended June 30, up 35 percent from the same period last year. Taking into account exchange rate movements for sales in currencies such as the British pound, the euro and the Japanese yen, revenues grew 42 percent year-over-year.

CEO John Sicard said the strong results are more proof that Kinaxis is in the right space at the right time, as macroeconomic factors such as rampant inflation and pandemic-induced commodity shortages wreak havoc on the world’s supply chains.

“I’m pleased to report that momentum in the business has not held off,” Sicard said during a conference call with analysts Wednesday morning to discuss the company’s latest financial report.

The veteran CEO said the company saw a “sharp increase” in its sales pipeline and new inbound leads in the quarter, adding that both metrics are at an “all-time high” as Kinaxis continues to ride a hot streak.

The bulk of those inquiries come from enterprise-level customers, who accounted for 60 percent of the company’s customer gains in the second quarter. Sicard reiterated a point he has repeatedly driven home over the past two years – that corporate boards are demanding better solutions to manage the ups and downs of supply chain fluctuations.

“What unites all manufacturers at the moment is the belief that the methods they have used to control supply chains for the past 30 years will not survive the next three years,” he said. “They realize that it takes a new competence to survive all this turmoil.”

The result was a series of record-breaking financial results for Kinaxis.

With new customer wins in the first six months of 2022, up more than 50 percent from a year earlier, the company raised its full-year revenue forecast again on Wednesday.

Kinaxis now forecasts revenue of between $355 million and $365 million for the fiscal year ended December 31, up $10 million from its previous forecast in May — marking the second time the company has revised its projection to above has adjusted in 2022.

“Every quarter we see a pretty dramatic increase in new accounts,” Sicard said, pointing to the energy sector as a new vertical customer gaining momentum during the pandemic.

Kinaxis has indeed emerged as a shining star in what has been a less than stellar summer for the tech sector in North America.

For example, while Ottawa software darling Shopify has seen its stock value drop nearly 70 percent in the past six months amid widespread sell-offs, Kinaxis has held up.

Shares of the company rose more than $8 to $166.17 in afternoon trading on the Toronto Stock Exchange Wednesday. Since February, Kinaxis shares have risen about 3.5 percent on the TSX — in defiance of a trend that has seen tech giants from Amazon to Google mother alphabet taking significant blows.

And unlike Shopify and other big tech players who are cutting their workforces in response to market headwinds, Kinaxis says it plans to continue increasing its current workforce of 1,400.

“There isn’t a day that we don’t hire staff,” Sicard said. “We are very aggressively looking for staff to meet demand.”

As a result, in Q2 Kinaxis dramatically increased its spend across the board, increased its R&D budget by nearly 50 percent and increased its sales and marketing spend by 60 percent in an effort to convert the flow of inbound sales leads into paying customers .

The higher costs weighed on the operating results. Kinaxis posted a loss of $2.6 million in the second quarter, compared to a profit of $3.1 million a year ago.

But Chief Financial Officer Blaine Fitzgerald downplayed the turnaround, noting that the company’s earnings before taxes, interest, depreciation and amortization rose 13 percent to $10.4 million.

He said the red ink was largely the result of Kinaxis’ “targeted investment” to drive future revenue growth, adding that the company remains “very excited” about its future market outlook and believes higher spending will now pay dividends.

“We see a huge opportunity now,” Fitzgerald added. “We see our (sales) pipeline growing extremely fast. So we don’t want to take our foot off the pedal.”

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