Earnings call transcript: Kinaxis Inc beats Q2 2025 forecasts, stock up 1.74%

Kinaxis Inc, a leader in supply chain management solutions, reported its second-quarter 2025 earnings, showcasing a significant earnings beat and a positive market reaction. The company posted an earnings per share (EPS) of $0.9991, surpassing the forecast of $0.7498 by 33.25%. Revenue also exceeded expectations, reaching $136.4 million against a forecast of $133.65 million. Following the report, Kinaxis shares rose by 1.74% to $197.48. According to InvestingPro data, the company maintains strong financial health with a GOOD overall rating, though it currently trades at a premium valuation with a P/E ratio of 419x.

Key Takeaways

• Kinaxis reported a strong EPS beat of 33.25% over expectations.
• Revenue increased by 15% year-over-year, with significant growth in SaaS revenue.
• The company launched innovative AI capabilities, enhancing its market position.
• Shares increased by 1.74% following the earnings release.
• Guidance for SaaS revenue growth has been adjusted upward to 13-15%.

Company Performance

Kinaxis demonstrated robust performance in Q2 2025, with total revenue growing by 15% compared to the same period last year. The company’s SaaS revenue was a standout, increasing by 17%, reflecting strong demand for its cloud-based solutions. The launch of new AI capabilities and strategic partnerships, such as with Databricks, are expected to drive further growth.

Financial Highlights

• Revenue: $136.4 million, up 15% year-over-year.
• Earnings per share: $0.9991, up significantly from previous forecasts.
• Adjusted EBITDA: $33.7 million, with a margin of 25%.
• Profit: $18.4 million, up 437% to $0.64 per diluted share.
• Cash flow from operations: $22.6 million, up 72%.

Earnings vs. Forecast

Kinaxis exceeded both EPS and revenue forecasts with an EPS of $0.9991 against a forecast of $0.7498, and revenue of $136.4 million compared to $133.65 million. This represents a 33.25% EPS surprise, indicating strong operational performance and effective cost management.

Market Reaction

Following the earnings announcement, Kinaxis shares rose by 1.74%, closing at $197.48. This movement places the stock closer to its 52-week high of $212.45, reflecting positive investor sentiment driven by the company’s earnings beat and optimistic outlook.

Outlook & Guidance

Kinaxis has revised its SaaS revenue growth guidance upwards to 13-15%, while maintaining its total revenue guidance between CAD$535 million and CAD$550 million. The company anticipates a strong adjusted EBITDA margin of 23-25%. These projections are supported by ongoing innovations and a focus on AI-driven solutions.

Executive Commentary

Bob Perteau, Interim CEO, expressed enthusiasm about the role of AI in transforming customer value, stating, "We couldn’t be more excited about how AI will transform the amount of value we offer customers." CFO Blaine Fitzgerald emphasized prudence in guidance, saying, "We are being prudent with our guidance."

Risks and Challenges

• Supply chain disruptions could impact operational efficiency.
• Increased competition in the AI-driven supply chain solutions market.
• Economic uncertainties may affect customer spending.
• Currency fluctuations could impact international revenue.
• Ongoing CEO search may affect strategic direction.

Q&A

During the earnings call, analysts focused on the sales environment and AI monetization strategies. Kinaxis highlighted consistent sales conditions and potential for AI to enhance win rates and expansion opportunities. The company is also exploring new pricing models for its AI capabilities, reflecting its commitment to innovation and market leadership.

Full transcript - Kinaxis Inc (KXS) Q2 2025:

Conference Operator: Good morning, and welcome to the Kinaxis Inc. Fiscal twenty twenty five Second Quarter Results Conference session, and instructions will be provided at that time for you to queue up to questions. I’d like to remind everyone that this call is being recorded today, Thursday, 08/07/2025. And I will now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Kinaxis. Please go ahead, Mr.

Wadsworth.

Rick Wadsworth, Vice President of Investor Relations, Kinaxis: Thanks, operator. Good morning, and welcome to the Kinaxis earnings call. Today, we will be discussing our second quarter results, which we issued after close of markets yesterday. With me on the call are Bob Perteau, Interim CEO and Chair and Blaine Fitzgerald, our Chief Financial Officer. Of the information discussed in this call is based on information as of today, 08/07/2025, and contains forward looking statements that involve risks and uncertainties.

Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward looking statements disclosure in the earnings press release as well as in Kinax’s SEDAR Plus filings. This call, we will discuss IFRS results and non IFRS financial measures, including adjusted EBITDA. A reconciliation between adjusted EBITDA and the corresponding IFRS results is available in our earnings press release and MD and A, both of which can be found on the Investor Relations section of our website, kinaxis.com and on SEDAR plus The webcast is live and being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations section of our website.

Neither this call nor the webcast may be rerecorded or otherwise reproduced or distributed without prior written permission from Kinaxis. To begin our call, Bob will discuss the highlights of our quarter and recent business developments, followed by Blaine, who will review our financial results and outlook and open the line for questions. We have a presentation to accompany today’s call, which can be downloaded from the Investor Relations homepage of our website. We will let you know when to change slides. Over to you, Bob.

Bob Perteau, Interim CEO and Chair, Kinaxis: Thanks, Rick. Good morning, and thank you for joining us today. I’m so pleased with second quarter results and would like to highlight a few items. First, very encouraged by how much new business we won. It was the highest amount ever for Q2 and the second highest ever outside of the fourth quarter.

Our ARR grew 15% as reported and 13% in constant currency. Second, we grew SaaS revenue 17%, a strong result or 14% in constant currency. Third, thanks to strong growth and thoughtful management of the business, profit hit record levels as Blaine will explain. Our adjusted EBITDA margin was 25%, which helped us achieve our fourth consecutive quarter of Rule of 40 performance. We highly value consistency around this metric, so we’re very happy with the result.

Look, I’m thrilled with our performance in the second quarter. It’s allowed us to increase our fiscal twenty twenty five guidance for SaaS revenue growth, which is the engine that drives our business. Blaine is going to speak about all the elements of guidance shortly. As always, we added several new customers in the quarter. Enterprise class companies continue to be the highest cohort, and we’re pleased to have won a couple of large enterprise accounts.

Consumer products represented the high the biggest vertical market, and overall, we continue to be encouraged by our strong win rate. We’re fortunate to be able to name just a sample of our new customers today, representing multiple vertical markets and our widening geographic coverage in consumer products. First, Leptalis, based in France, with 2024 revenue over €30,000,000,000, is the world’s leading dairy group producing cheese, milk, yogurt, butter, cream, and much more. Lactalis is in 50 countries, has nearly 270 dairies and employs over 85,000 people. McKee Foods, America’s largest family bakery and its four and in its fourth generation of family ownership, offers brands like the famous Little Debbie, Drake’s Cakes, and Sunbelt Bakery.

P and L Development is a premier manufacturer, packager and distributor of over the counter pharmaceutical products and consumer health goods. In life science, we won Swedish Orphan BioVitram or Sobi, a global biopharma company unlocking the potential of breakthrough innovations to transform the lives of people living with rare diseases. Sobe has approximately 1,900 employees around the world. Shimatsu, founded in Japan almost a hundred and fifty years ago, it’s a global leader in developing and manufacturing precision instruments and equipment. Their products include analytical and measuring instruments, industrial machinery, aircraft equipment and products and equipment used in health care for diagnosis, treatment or measuring health and to support the development of new drugs.

In industrial manufacturing, we want Gebara and griller Kavalwerke or g g group, an Austria based global family owned business that produces technically advanced high quality wires and harnesses for automotive and industrial application. And a nice one in logistics, we won Seiko Logistics based in The US with over a 150 offices in more than 60 countries. Seiko is an end to end partner from shipper to consumer. Delivered tech driven shipping solutions that turn supply chains into a competitive differentiator. Obviously, we’re pleased to win leading innovative companies like these.

In fact, three of Gartner’s four masters of supply chain for 2025, their highest ranking are Kinaxis customers. So overall, there’s still 14,000 prospects remaining in the vertical and geographic markets we target, and we have never been in a better position to win them. While adding new customers will be a major part of the Kinaxis story for many years to come, I’m also very pleased with our ongoing momentum and expansion business. Half of gross additions to ARR came from expansions. In particular, it’s encouraging to see for the fifth quarter in a row, applications and scenarios comprised together over half of the expansion amount, a very rare achievement previously.

This reflects both the value of recent investments in new product R and D and the incredible edge that our long standing proprietary scenario analysis capabilities delivered to our customers. There is strong demand for Kinaxis products because increasingly, the best companies recognize that supply chains are a key differentiator to their success. All siloed methods are collapsing, And so they turn to Kinaxis for the market’s leading AI for AI first real time scalable agile supply chain orchestration platform. From a product perspective, we’re excited to see ongoing demand for some of our newer planning solutions like enterprise scheduling and supply.ai, which we now call supply optimization. The richness and breadth of our core planning algorithms developed through decades of industry experience and the unique proprietary data they generate will remain a massive differentiator for Kinaxis even as AI becomes more ubiquitous amongst existing players and even new entrants.

This is especially relevant in supply chain where complex logic model via tools such as heuristics, optimization, and predictive AI is critical for optimizing the design and execution of the supply chain to meet business objectives. We’ll continue to use our unmatched domain expertise to widen that moat with new planning solutions and enhancements we create or acquire. On top of that, Maestro’s new generative and agentic AI capabilities supercharge our existing product differentiation and represent a major step towards more autonomous supply chains that boost productivity, democratize access to data, and generate better customer outcomes. While automation has played a key role across the supply chain for a long time, AI agents will dramatically expand its scope and intelligence. And our AI agents will be able to monitor, predict, and take action in real time to handle use cases across the supply chain, like supply and demand disruptions, inventory management, and so many others.

To extend our value even further and to more users, we will also build connectors from Maestro to work in real time with agents from other supply chain management applications. And with the growing ecosystem of third party agentic systems such as good Google AgentSpace and others. As you know, real time concurrent orchestration with a much broader range of planning and execution partners and capabilities with data is fundamental to our growth strategy. To make our ambitious orchestration vision real and seamless, we are actively augmenting our industry leading platform by building an agentic AI framework, enabling multi agent communication, and developing our new supply chain data fabric in partnership with Databricks who have been terrific. We now have major early innovator customers working with our initial commercial generative and agentic AI capabilities, and we’ll we will be adding more very soon.

We’ll continue launching these new capabilities into the market through the rest of ’25 and into 2026, along with a new Maestro pricing model that we’ll be discussing over time. We couldn’t be more excited about how AI will transfer the amount of value we offer customers and the opportunities it represents to Kinaxis. So overall, we’re very pleased with our momentum in the 2025 and very excited about the future. The talent that we’ve added is helping to deliver quarters consistently, and we’re in full scale mode at Kinaxis. Our product is a leader in the market, and our AI enhancements will only add and build on top of that.

The board and I remain focused and patient on finding a new proven CEO with the experience and credentials to be accretive in our exciting direction and momentum. And with that, I’ll turn it over to you, Blaine.

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: Thank you, Bob, and good morning. As a reminder, unless noted otherwise, all figures reported on today’s call are in U. S. Dollars under IFRS. If you move to Slide seven, I’m very pleased that Q2 was another strong quarter for Kinaxis.

To emphasize some of what Bob mentioned, it was our best second quarter ever signing new business and the second best ever outside of a Q4. This is a great accomplishment in such an unpredictable global trade environment and testimony to a more scalable go to market organization and our ongoing product leadership. Our strong performance in the first half of the year allows us to increase our SaaS revenue guidance for fiscal twenty twenty five on both an as reported and constant currency basis. Our gross margin and profitability metrics were strong, including new records for profit, earnings per share and adjusted EBITDA. Our trailing twelve month free cash flow margin remains on a great trajectory.

Briefly for the second quarter and compared to Q2 twenty twenty four results, total revenue was $136,400,000 up 15% or 13% in constant currency. SaaS revenue was $88,400,000 up 17% or 14% in constant currency, 14.5% to be more precise. Our subscription term license revenue was $5,100,000 up 270%. Professional services revenue was $37,400,000 up 2%. While utilization across our internal team remains strong, the modest growth reflects market dynamics that are driving lower than expected billable rates, largely due to a more competitive environment and a broader shift toward partner led delivery.

The latter reflects an intentional trade off as we reshape our professional services model to enable scale and efficiency. At the center of this transformation is a clear focus on ensuring successful customer deployments, whether delivered by Kinaxis directly or through our system integration partners. Today this year, partners have led or jointly delivered more than 70% of new customer implementations won through our direct sales team. These engagements are strengthening our ecosystem, accelerating knowledge transfer and expanding capacity to serve more customers at scale with consistent quality. Looking ahead, we’re continuing to invest in high skill consulting talent, new offerings in AI and data integration and product enhancements that reduce the cost and complexity of deploying Maestro.

While we expect professional services to become a smaller percentage of total revenue over time, it remains a critical enabler of SaaS growth. We’re pleased with the role it plays in delivering strong outcomes and faster time to value for our customers. Finally, maintenance and support revenue was $5,500,000 up 10%. Our gross profit was strong, up 25 to $87,500,000 or a 64% gross margin compared to 59% in the same quarter last year. I am encouraged that for the second consecutive quarter our software margin hit 80%, up from 74% in Q2 last year.

This was due in part to higher subscription term license revenue, more efficient operations, and lower amortization. Professional services gross margin was down to 23% from 27%, consistent with my comments around current market conditions for these services. Adjusted EBITDA was extremely strong, up an impressive 54% to $33,700,000 a record level. The margin was 25% versus 19% in Q2 last year. This reflects numerous factors, including our revenue growth, higher gross margin and lower operating expenses as a percentage of revenue.

We continue to focus on profitability and getting operating leverage as we scale. Our growth and profitability resulted in Rule of 40 performance for the fourth consecutive quarter, calculated by adding SaaS revenue growth and adjusted EBITDA margin, our usual approach. We are proud of staying at this elite level and continue to target it for full year results no later than 2026. Our profit in the quarter was up 437% to $18,400,000 or $0.64 per diluted share, both record levels, and versus a profit of $3,400,000 or $0.12 per diluted share a year ago. Profit benefited largely from the same factors that supported our adjusted EBITDA performance.

Cash flow from operating activities was $22,600,000 up 72% over $13,100,000 in Q2 twenty twenty four. Cash, cash equivalents and short term investments were $329,400,000 up over $30,000,000 from $298,500,000 at the 2024 despite being active with our NCIB program. On Slide eight, our trailing twelve month free cash flow margin remained strong at 19.7% and on a positive longer term trajectory. The one time payments we made in Q1 twenty twenty five relating to tax planning and a litigation settlement reduced the result by 5.5 percentage points. The normalized result is 25.2%.

On Slide nine, our annual recurring revenue or ARR grew by 15% year over year to $391,000,000 or 13% in constant currency, an increase of $19,000,000 from last quarter, the highest amount ever. The split of gross additions to ARR was fifty-fifty between new name accounts and expansion business. We remain very pleased with this healthy mix and the recent improvements in our expansion business under our new go to market structure. As Bob pointed out, this is the fifth quarter in a row where applications and scenarios combined totaled over half of expansion orders, a positive new trend in the business. This reflects the breadth and value of Maestro’s unique capabilities and will also contribute to better margins over time.

On Slide 10, our SaaS and total RPO balances remain very strong, growing to $793,000,000 and $834,000,000 respectively, with three year CAGRs of 2019%. This metric continues to highlight growth in our subscription business and our strong growth customer retention. More details on our RPO can be found in the revenue note to our financials. On slide 11, I am pleased to update our 2025 guidance. We’re maintaining total revenue guidance of CAD535 million to CAD550 million.

We are moving the constant currency outlook to the same range due to the factors relating to professional services that I discussed earlier. We’re increasing our SaaS growth guidance in both as reported and constant currency terms. We now expect SaaS revenue growth of 13% to 15% and the same range in constant currencies. We remain confident with our pipeline for the rest of the year and are encouraged by strong competitive win rates and higher pipeline conversion rates under our new go to market structure. We’re maintaining our subscription term license revenue guidance of 16,000,000 to $18,000,000 Note that in the second half of the year, some new customers could land as term license and other existing term license customers could convert to SaaS, but this is our best estimate for now and we’ll update if necessary as we go.

The remaining amount of subscription term license revenue for the year will be weighted slightly in favor of Q3. We continue to expect a strong adjusted EBITDA margin between 2325%. On Slide 12, we have continued to be active in our normal course issuer bid. In the 2025, we repurchased 283,297 shares at average of US125.85 dollars for an investment of roughly $35,700,000 Our NCIB goes through 11/05/2025. Overall, I’m very pleased with where the business is at.

A number of key business metrics are hitting record levels and we’re just at the beginning of a go to market transition and the upcoming AI transformation. I’m excited to see where the business can go from here. As always, thank you for your ongoing interest and access and support to date. I will now turn the line over to the operator to start the Q and A session.

Conference Operator: Thank you. Our first question is from the line of Richard Tse with National Bank Financial. Your line is live.

Richard Tse, Analyst, National Bank Financial: You. Bob, I was wondering if you could maybe talk about the selling environment today. You know, it seems like things have improved a bit, but I’d like to sort of maybe get some commentary. So has has the sales cycle improved, softened, stayed the same since, you know, let’s say, the beginning of this year?

Bob Perteau, Interim CEO and Chair, Kinaxis: I think I think the demand curve is similar to what it’s been in the past couple of years. However, saying that our win rate is, you know, much improved. Our execution through the through the cycle is stronger, and we’re working with a larger pipeline overall. So so I think for us, when you put those three things together, you know, it really leads to the kind of success we’re having in the quarter. But also when we look forward, you know, into 2026, the interest, some of it driven by tariffs.

But in general, I think, people understand more and more the importance of, having a strong supply chain planning and orchestration strategy. And that’s probably the biggest change that’s occurred. Some of it, again, driven by tariffs, but because of that, we’re seeing heightened interest in the company and that’s all quite positive. For sure, our execution around deals is much improved and thus the win rate factor.

Richard Tse, Analyst, National Bank Financial: Okay. And just my sort of second question is kind of related to that. There’s no doubt you’ve made some fairly notable changes on the sales and marketing side to get to this point. Do you see the business going back to kind of, let’s say, the 20% growth rates you’ve had in the past? And under sort of what kind of conditions or variables would be required to to get to you there?

Bob Perteau, Interim CEO and Chair, Kinaxis: Yeah. Like, I think what we’ve said is that we we have a company now that should be operating at a rule of 40, performance. And as we go forward and as we deliver our AI products and the data that we, produce becomes more important to the organization, we see some interesting growth opportunities that allow us to imagine that we we could we could go faster. But we’re not gonna get over our skis here. We we absolutely as Blaine, I can’t remember exactly the words he used, he said we’re we’re we’re a company that is gonna invest in the right areas in a very conscious fashion with a view that, you know, we’re we’re we’re gonna make sure that we deliver that over 40 performance.

I think the fact that we have a company that is in the sweet spot that should be sustained around really understanding your supply chain data and what it means to things like guidance, treasury, and all parts of the organization that we have an unlock opportunity with AI that’s incremental that would allow us to imagine that we could find ways to grow the business more. And if we see those opportunities, we’re going

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: to take them.

Richard Tse, Analyst, National Bank Financial: Okay. Great. Thanks.

Conference Operator: Thank you for your questions. Our next question is from the line of Thanos Moschopoulos with BMO Capital Markets. Your line is live.

Thanos Moschopoulos, Analyst, BMO Capital Markets: Hi, good morning. Bob, maybe just circling back on the spending environment. You said the demand has been relatively consistent in given tariffs and Celebration Day, I would have thought that there’d maybe more of an impact on your business. Are there underlying themes in terms of maybe just the nature of organizations that are engaging with you that has changed post the tariff discussion or in terms of time frames or top of funnel? Is it that maybe some verticals are seeing accelerated decision making, but others are seeing delayed decision making as a result?

Just any additional color on the next layer of that would be good. Thanks.

Bob Perteau, Interim CEO and Chair, Kinaxis: Yeah. The the execution that we talked about at the back end is something that is, I think, pretty well understand. But our when you look at the mix of customers, we’re doing super well in markets like Japan, Asia. Europe has been pretty strong. But, look, our forward demand in The US looks good.

So I think the one the one story is that we’ve added, I don’t know, 40 plus people into our go to market capacity where we’ve really brought a lot of talent in the organization, and we’re winning in all markets. So that’s one thing you you have to understand. So you’re working off a bigger pipeline. Secondly, our product execution and our when when we when you are in the throes of a deal with some of the most the most important companies in the world, You’re they’re looking at it today. They’re looking at what you’ve done in terms of references for other customers, and they’re betting on the future.

And in all three areas, we deliver projects on time, customers get value, we’re differentiated on the core product with Maestro, and we have the best story on AI. And so we’re presenting that to customers. They get it, and it’s causing us to not only win in the core industries where we have the biggest and most important customers on our platform. But if you look at the quarter, the world’s largest dairy, you know, is a company that might have been in the past something that maybe one of our competitors are in. So we’re winning in chemical.

We’re winning in fluids because we have a really, really, you know, obviously a strong product. But when you start, as I said in my in my comments, when you start thinking about democratizing data, using that data in more strategic ways, using it to manage your overall plans for the company, we got a great story for the future as well. So we love our position. We’ve got a better team building on what was already a very strong team. And we’re in, you know, we’re in virtually all of the opportunities that are available in the market, and we’re winning.

Thanos Moschopoulos, Analyst, BMO Capital Markets: Great. And then just one for Blaine. Blaine, can you remind us in terms of how much runway maybe remaining on normalized software margins as you’ve, further progressed with the cloud transition?

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: Yeah. You know, the software margins last time that I think we got the report 80% subscription margin or software margins, I think, was back in q four twenty twenty two. We were helped out a little bit by term license that quarter. So, obviously, very proud. We’re getting to some of the levels we’re at a little bit earlier than we expected.

There definitely is some, some runway, and I’m excited to say that our cloud services team is hitting out of the park, not only with making sure that we have the right agreements with our our two p cloud providers being GCP, so Google and Microsoft Azure, but also, like, performing at a a high level with a a team that hasn’t been growing that at the same same rate that our customer base has been growing. I I do think that that 80%, I guess, target that we’ve had for a while is is something that we’re gonna play around with for for the the the near term. But I think we have at least a couple percentage points, if not a little bit more, on the subscription side that we’ll see as we go forward. Now the one other caveat to all of this is that or Asterix is that I think there’s there’s, one of the reasons why we’re doing so well on the the subscription margin is because of the fact that we’re we’re doing much better on the expansion part of our business. We’re obviously getting much more much higher margins on that expansion business.

So every single time that myself or Bob gets to talk about the fact that we’re we’re moving that balance from new winning new logos to winning even more expansion business, I know that it’s helping my bottom line. And and that’s that’s a testament to some strong work that the go to market team has been doing lately.

Thanos Moschopoulos, Analyst, BMO Capital Markets: Great. I’ll pass along. Thank you.

Conference Operator: Thank you for your questions. Our next question is from the line of Paul Treiber with RBC Capital Markets. Your line is live.

Paul Treiber, Analyst, RBC Capital Markets: Yes, thanks and good morning. It’s been a couple of months since you’ve announced the new AI features as part of Maestro. What’s been the feedback from customers and then the pipeline build related to AI? And then how are customers thinking about ROI on those AI features and also related to that, the potential pricing for AI?

Bob Perteau, Interim CEO and Chair, Kinaxis: Yes. I think that really the way we’re thinking about it, Paul, is that if if if you look at Maestro, in some crazy way, you can think about it as a super agent. The things that we do in creating scenarios are all based on a real investment in machine learning to really be able to do the computation and calculations that allow us to create these scenarios. What we’re doing now with products like enterprise scheduling, Supply dot ai, Demand dot ai is extending that from that Maestro platform. And that’s part of the reason that we’re seeing better win rates because we do the core better than everyone else.

We’ve extended the functionality back into your supplier networks. We’re starting to create tools that allow you to get a better handle on demand and forecasting. And with some of the most important and biggest companies in the world, they can actually calculate their improvements in on time delivery. And so that’s a huge advantage. What AgenTic AI and Gen AI provide is a road map now to democratize that data through your organization and make the company better overall.

I think that’s huge. And what we’re doing right now, the way we’ve decided to approach the market instead of, you know, a mass release of our new, AgenTeq AI products is to pick, very carefully some of the most important companies in the world with to partner with them on solving, problems that are most critical to that company. And that’s a real focus in in q three and as we go into q four, to stand those up as an extension to the Maestro capability. And and why I like all of this, if you if you decode it, is that, you know, our core business is in really good shape and growing with strong win rates and new functionality. And what we do in AI, particularly with Gen Gen AI and Agenetic AI is incremental to that opportunity.

Paul Treiber, Analyst, RBC Capital Markets: K. I hope I understand. And secondly, just on the the the CEO search, mean, obviously, no no news there. Can you provide an update and and expectations just going forward here?

Bob Perteau, Interim CEO and Chair, Kinaxis: I think with the board, we’ve been, you know, really, really happy with the performance of the company. And, you know, we you know, once we got into this and we hired Mark Morgan, you know, the game changed in terms of where we really believe that we have to take the company and set a higher bar. You know, we’ve seen, you know, super strong candidates that we you would consider traditionally, you know, good software leaders, people that can run a software company. And and as we’ve nuanced our expectations, we’re we’re definitely looking for somebody that is is gonna be able to take advantage of that second part of the story that I described around AI and creating new business models. And even about thinking about, you know, the different ways that we’re gonna set up partnerships.

So the bar got higher. We’re still seeing great candidates. We’re not holding it up. We’ll take action at a time that makes that makes sense, but we don’t wanna set a fixed timeline.

Paul Treiber, Analyst, RBC Capital Markets: Okay. Thanks thanks for those comments.

Conference Operator: Thank you for your questions. Our next question is from the line of Lachlan Brown with Rothschild. Your line is live.

Lachlan Brown, Analyst, Rothschild: Hi, Bob, Blaine, Rick. Thanks for the questions. Performance obligations for 2026 had a pretty good delivery, sorry, in the quarter. They represent a greater share of the IPO than this time last year. Could you talk to the nature and the timing of the deals that you secured in the quarter?

And I guess if you look back over the last twelve to eighteen months, we did see a more of a skew towards those out of your bookings as deals got pushed out. So are we now seeing a pivot away from that to customers moving quickly more quicker on Kinaxis rollouts?

Bob Perteau, Interim CEO and Chair, Kinaxis: Do you want to go for it? Yes.

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: Sure. So a great observation. I think we are seeing less of those, I guess, trailing deals or phase deals as we call them. We I think part of the change in the go to market structure, Mark and his team have been emphasizing trying to to limit those type of deals. I think we’re also in a different type of environment in terms of we were trying to get a

Bob Perteau, Interim CEO and Chair, Kinaxis: lot more deals over the

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: line over the last two years where it was necessary to put phase deals in place. We’re not seeing that same type of pressure at this stage, which is is nice for us and nice for the the team not have to put some gymnastics into the the contracts.

Rick Wadsworth, Vice President of Investor Relations, Kinaxis: Overall, we’re it’s part of

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: the RPO issue that we have. And as a result of having a contract that are anywhere between three and five years, we will be kind of limited in certain years when we have a low renewal cycle. This happens to be a medium renewal cycle that we have in place. So we we’ve had a a number of renewals. I was, we we had a, obviously, a board meeting yesterday, and it’s the person who’s in charge of our renewals were just saying the amount of activity they’re seeing is it’s super high numbers that that you’re seeing right now in terms of the renewal activity that the team is having to to deal with because these contracts are going through.

And that will that will kind of fluctuate how you think about RPO. So this is why sometimes we we we like to make sure that people think of the the the three year CAGR, which is getting closer and closer to adjust the EBITDA, but obviously still still above. We’re we’re proud that it’s at 20% for SaaS. The 19% for the total RPO is right in line with what our expect expectations were. And we have a loyal customer base.

We have a lot of renewals that come through. We don’t have that much churn or down sell, so we’re in a great spot. But we always have to be cognizant of the fact that renewal cycles can play a little bit of havoc with how the growth is in the short term.

Lachlan Brown, Analyst, Rothschild: That’s very clear. Thanks. And then maybe another RPO question. If we take the performance obligations for the remainder of 2025 with the SaaS revenue guide, I think it only applies you need about 6,000,000 bookings to achieve the midpoint and 9,000,000 at the top end, which based on your previous performance doesn’t seem too difficult to achieve. So I just wanna clarify that Is this just conservatism within the guide, or is there anything else that we should consider?

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: You’re, like, straight at it. You know what? We, like, we we knew we had to increase our guidance to where we’re at right now. The the company is executing extremely well, just like Bob said. I think 13 to 15%, we’re extremely confident that we’re gonna hit that.

We are also hearing some other peers and slash competitors having some issues out there. There’s just been some some announcements that work great. And just like we said last quarter, we’re being prudent with our our status guidance. I think there’s a we we we are looking at q three and q four, and there’s some nice things in front of us right now, but we don’t want to get too far in front of our SKUs. So I will say I’m very confident with the 13 to 15 that we just raised, and we’ll see in the next couple of quarters if we decide to increase it some more.

Lachlan Brown, Analyst, Rothschild: Appreciate the response. Thanks.

Conference Operator: Thanks for your questions. Our next question is from the line of Suthan Sukumar with Stifel. Your line is live.

Suthan Sukumar, Analyst, Stifel: Good morning, gents. Maybe for first question, will be over to you, Blaine. Just on the margin expansion outlook, feels like with the level of expansion business that you’re seeing and, you know, what also looks like stronger partner engagement, that that sort of suggests potential for better than expected operating leverage in the business. Any view on how you’re thinking about your medium term targets here for EBITDA margins as you start to kind of balance that with ongoing investment?

Blaine Fitzgerald, Chief Financial Officer, Kinaxis: One of the most common discussions that Bob and I have is when do we have to have a discussion about midterm targets for our bottom line. Obviously, we’re hitting 25%. We’ve been doing it for a little bit. We are also leaving it there for now just as we try and determine how we’re gonna invest in the company to make sure that we maximize our growth. Because as you heard from a previous question, there are some demands to try and get us back to the 20% on SaaS growth.

And we think there’s opportunities to do both. So we’re leave our options open, not giving you our our new midterm targets yet, but we think there’s some opportunities to keep expanding our our margins on the bottom line.

Suthan Sukumar, Analyst, Stifel: Okay. Great. That’s helpful. And and for my second question, I just wanted to touch on AI monetization. It’s good to hear from where I said that you guys have taken a very thoughtful and calculated approach on on rolling out AI and and and your agent strategy.

But but curious, how are you thinking about the the inherent pricing opportunity here as you move forward? You know, will these capabilities be sold as premium add ons, or are they more of a lever for more premium pricing on the core platform? Or, you know, is there a maybe a usage of monetizing the angle to kinda think about?

Bob Perteau, Interim CEO and Chair, Kinaxis: Yeah. First of all, as I said, it enhances win rate on the core platform. And and the the technologies that are available to enrich the experience for our customers, things like, you know, confidence in in the data, new datasets coming into Maestro, create a big differentiation from our competitors. Like and that’s part of the win rate, particularly when you start seeing, you know, as I described some of these new industries and geographies. When they understand that in Maestro, it creates, an opportunity for us to continue to grow the business against some of the questions that Blaine just asked.

So from that, the level of relevance of orchestration and planning inside the company is only gonna increase. And GenAI and GenTick AI allowed to move to a a much richer experience in terms of exploring what if analysis throughout the company. And and what’ll come with that, which is really, I think, fairly cool, is that in the AgenTek AI experience, it’s not simply canned products that produce, you know, useful information on a consistent basis from customer to customer. It’s the problems or opportunities you’re trying to develop through configured agents that really give you insight into the performance of the business. When you marry that up with concurrent data inside Maestro, this truly leads to an orchestration environment.

And we can get, you know, paid for that through win rate. We can pay through, for that through expansion in our customer base. We we get paid for that in terms of a new revenue stream. And finally, you know, we we believe that we can create an open platform that allows us to, partner and integrate with other, players, you know, software players in the marketplace to really create some opportunities. So it’s just look at it.

It just really changes the paradigm of the importance of our products and the expansion opportunities that come with it.

Paul Treiber, Analyst, RBC Capital Markets: Thank you for that feedback.

Bob Perteau, Interim CEO and Chair, Kinaxis: I’ll pass Thank the line to

Conference Operator: Our next question is from the line of Stephanie Price with CIBC. Your line is live.

Stephanie Price, Analyst, CIBC: Thank you. I just wanted to circle back on the sales team and just in terms of the go to market changes that Mark Morgan has implemented since he’s joined. Can you talk a little bit about how far along you are on those changes and how you think about these new sales reps versus the historical reps you’ve hired and maybe expectations on sales time for the remainder of the year? Thank you.

Bob Perteau, Interim CEO and Chair, Kinaxis: Yeah. We we have had a really good team here. The the we have some of the best salespeople and have had, you know, some really good maturity and experience, throughout our organization. The the big thing that we’re trying to do now is to exploit our strengths in things like high-tech, you know, the industry strengths that we have. So a lot of the, you know, different, hiring that we’re doing now is to double down on the expansion within within geography and industry in a way that even gives us a greater strength on top of our historical product strengths.

And then and then I think that the price where we’ve really, really done well is in in second level management. The regional guides are people are strong, Fabian, Philip, and Jeff, super leaders in the industry, Jeff being new to the company, probably of the three. We’ve added a great talent in markets like Japan, DACH, Germany, and and the like, Europe. We brought in a new leader out of SAP actually that is focused on the customer base. So so the the the big change has been in terms of bringing some people in additive, like incremental people in to really prosecute against, you know, the the best practices that you would see in in software.

And then it’s all hands on deck. When you’re going after some of the largest companies in the world, we’ve got our executives engaged. We’ve got product engaged. We’ve got blame engaged in in these deals. And and the level of scrutiny on these deals, which is a, you know, hallmark of great software companies is really, really, really tight.

And really understanding the competition and their gaps is a big part of that. And and I I would say that, you know, the the the work that we do in terms of understanding how to build that company to company partnership at an executive level is is really evolved. And and and that’s you know, I mean, look, you know, as the interim CEO, I think I got a lot of experience in that respect, you know, all the way back to SAP. And with Mark Morgan and the team that we put around him, we’re a tough company to beat right now.

Stephanie Price, Analyst, CIBC: Thank you very much.

Conference Operator: Thank you for your question. Our next question is from the line of Mark Schappel with Loop Capital Markets. Your line is live. Thank you for taking my question. Bob, in your prepared remarks, you mentioned your partnership with Databricks and plans to add new agentic capabilities in in into the market with them.

I was wondering if you could just provide some additional details around how you are working with Databricks in that area.

Bob Perteau, Interim CEO and Chair, Kinaxis: Yeah. Databricks is a company well, first of all, they’ve been a terrific partner, bringing a lot of talent to bear in terms of building our data fabric model. So that the place where Databricks is gonna be super important is in the, is in the category of, building, our data platform to be able to deliver data throughout an organization. But on top of that, really looking at, how we, have a platform that we can drive partners with, as we go forward. And and then as a company that is in the market, in the data marketplace, it also allows us to think about how we change our pricing model and economics around data.

And why I like it right now is that they’re they’re pushing new economic models in the market, and they’re sharing. And we are building a plan with Databricks that allow us to really go after this together. They they and then finally, if you look at the AI of evolution, I really like, we looked at the market to see what the different scenarios we could consider. We looked at Databricks as a company that could be the most innovative, not only for today, but for what we’re trying to do with our overall platform model. Because the the evolution is defend Maestro, modernize Maestro, extend Maestro, build in a platform for our customers and and our prospects that see how they can use that data inside their company with the Gentec AI and Gen AI, and then be a market a wide marketplace partner.

And when you’re a wide marketplace partner, that’s where Databricks is gonna make a difference for us as we think about the kind of partnerships that we can create as we go forward. And we’re not just doing it with Databricks. We’re talking to a few other companies about their strategy around, AI and how we could deploy and and create a better experience for our customer. But but the the neat thing about Databricks, they’re in there. They’re adding resources.

They’re giving us ideas. They’re they’re we get to learn how they’ve created their economic models. These are ones that we can bring into our company. And so, you know, we highlighted them a bit today, and we’re really, really happy about how they performed.

Conference Operator: Thank you. Thank you for your question. And ladies and gentlemen, that will close our Q and A session for today. I’d like to turn it back over to Mr. Wadsworth for any closing comments.

Rick Wadsworth, Vice President of Investor Relations, Kinaxis: Great. Thank you, everybody, for participating on today’s call. We appreciate your questions, as always, and your ongoing interest in and support of Kinaxis. We look forward to speaking with you again when we report third quarter results. Thanks, and goodbye.

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