Kinaxis Q2 2025 slides: 437% profit surge as SaaS revenue grows 17%

Kinaxis Inc . (TSX:KXS) presented its second quarter 2025 financial results on August 7, 2025, revealing substantial profit growth and consistent revenue expansion despite a 6.12% stock price decline the day before the announcement. The company, which provides supply chain management solutions, reported significant improvements across key metrics while raising its full-year guidance.

Quarterly Performance Highlights

Kinaxis delivered strong financial results for Q2 2025, marking its fourth consecutive quarter achieving the "Rule of 40" - a benchmark where the combined growth rate and profit margin exceed 40%.

"We are seeing strong demand for our AI-powered supply chain orchestration solutions, reflected in our balanced growth from both new and existing customers," said Bob Courteau, Interim CEO and Chair of Kinaxis.

The company reported total revenue of $136.4 million, representing 15% year-over-year growth (13% in constant currency). SaaS revenue, a critical growth indicator, reached $88.4 million, increasing 17% compared to the same period last year.

As shown in the following chart of quarterly highlights:

Perhaps most impressive was the company’s profit performance, which surged 437% to $18.4 million ($0.64 per diluted share). Adjusted EBITDA grew 54% to $33.7 million, representing a 25% margin - consistent with the 25% margin reported in Q1 2025 but significantly improved in absolute terms.

The detailed financial results demonstrate substantial improvements across multiple metrics:

Detailed Financial Analysis

Kinaxis continues to demonstrate improving profitability trends, with its Last Twelve Months (LTM) Free Cash Flow margin reaching 19.7% in Q2 2025. This represents a significant improvement from 6.6% in Q2 2022, reflecting the company’s enhanced operational efficiency and focus on profitability.

The following chart illustrates this positive trend:

Annual Recurring Revenue (ARR), a key metric for SaaS companies, grew 15% year-over-year (13% in constant currency) to $391 million. This represents an acceleration from the 14% growth reported in Q1 2025. The company noted that Q2 saw the second-highest gross additions to ARR ever outside of Q4, with a balanced 50/50 split between new customers and expansions with existing clients.

The ARR growth trajectory is shown in the following chart:

Remaining Performance Obligation (RPO), which represents contracted but not yet recognized revenue, reached $834 million in total, with SaaS RPO at $793.3 million. The company has achieved a three-year CAGR of 19% for total revenue and 20% for SaaS revenue, demonstrating consistent long-term growth.

As illustrated in the following RPO growth chart:

Cash flow from operating activities increased 72% to $22.6 million, further strengthening the company’s financial position. Kinaxis also remains active in its share repurchase program, having bought back 283,297 common shares in the first half of 2025 at an average price of $125.85.

Strategic Initiatives

Kinaxis highlighted its continued success in winning both new customers and expanding relationships with existing ones. The company noted that three of the four Gartner (NYSE:IT) "Masters of Supply Chain" are now Kinaxis customers, underscoring its strong competitive position.

New customer wins spanned multiple industries, including Consumer Products (Lactalis, McKee Foods), Life Sciences (Swedish Orphan Biovitrum, Shimadzu), Industrial (Gebauer & Griller Kabelwerke), and Logistics (SEKO Worldwide).

The company emphasized its AI-powered orchestration capabilities, which include:

1. Conversational UX that simplifies work and empowers teams with no-code automation

2. Always-On Intelligence Engine that fuses AI, optimization, and heuristics to solve challenges quickly

3. Supply Chain Data Fabric that transforms data into a context-aware digital twin

These innovations appear to be resonating with customers, as evidenced by the balanced growth from both new and expansion business.

Forward-Looking Statements

Based on its strong performance, Kinaxis has updated its guidance for fiscal year 2025:

The revised guidance reflects increased confidence in SaaS revenue growth, now projected at 13-15% compared to the previous guidance of 11-13% provided in Q1 2025. The company maintains its total revenue projection of $535-550 million and expects Adjusted EBITDA margins of 23-25%.

This outlook suggests that while Q2’s Adjusted EBITDA margin of 25% was at the high end of the annual guidance range, the company anticipates potential fluctuations in the coming quarters while maintaining strong overall profitability.

The search for a permanent CEO continues, as Bob Courteau remains in the interim position. This ongoing leadership transition represents a potential area of uncertainty for investors, despite the company’s strong operational performance.

With the stock trading at $194.10 before the results announcement (down 6.12% on August 6), investors will be watching closely to see if the strong financial performance and improved guidance can reverse this recent price decline and push the stock back toward its 52-week high of $212.45.

Full presentation:

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