Kinaxis (TSX:KXS) is an Ottawa-based company that provides cloud-based subscription software for supply chain operations in Canada, the United States, and around the world. Its industry-leading software has managed to lure top companies like Ford, Toyota Motors, and Unilever. Last year, I’d snatched up shares of this tech stock after it suffered a sharp dip towards the end of 2021.
Today, I want to discuss why I’m looking to add more shares of Kinaxis in the second half of March. Let’s jump in.
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Why I bought this tech stock in 2022 — and how it has performed since…
Last year, I’d sought to snatch up shares of Kinaxis on the dip. Its shares have climbed 5% year over year as of early afternoon trading on March 17. The stock has jumped 15% so far in 2023. Investors who want to see more details can play with the interactive price chart below.
Here’s why I’m excited about Kinaxis’s future
An investment in Kinaxis offers exposure to a handful of exciting sectors.
Allied Market Research recently estimated that the global supply chain management market was valued at $18.6 billion in 2020. The report projects that the market will reach $52.6 billion by 2030. That would represent a compound annual growth rate (CAGR) of 10% over the projected period.
The success of ChatGPT has put the spotlight on the development of artificial intelligence in the early part of this decade. Fortunately, Kinaxis also boasts a promising footprint in this space. Indeed, its chief product is powered by AI and machine learning that have made its supply chain and operations planning software a world leader. Fortune Business Insights recently projected that the global machine learning market would achieve a CAGR of 38% from 2022 through to 2029.
Should investors be pleased with its recent earnings?
This company released its fourth-quarter (Q4) and full year fiscal 2022 earnings on March 2, 2023. In Q4 2022, Kinaxis delivered total revenue growth of 44% to $98.4 million. Meanwhile, gross profit jumped 40% to $61.2 million. EBITDA stands for earnings before interest, taxes, depreciation, and amortization, aiming to give a more accurate picture of a company’s profitability. Kinaxis posted adjusted EBITDA growth of 87% to $21.1 million in the fourth quarter of fiscal 2022.
For the full year, total revenue climbed 46% to $366 million. Moreover, adjusted EBITDA soared 99% from fiscal 2021 to $79.4 million. Overall, Kinaxis built nice momentum in fiscal 2022 and looks poised to post another strong year in fiscal 2023. The company was able to expand its customer base by 40% for the full year.
Kinaxis also provided its fiscal year 2023 outlook in Q4 FY2022. The company forecasts total revenue between $420 million and $430 million and SaaS growth between 25% and 27%. It also expects an adjusted EBITDA margin between 13% and 15%.
Kinaxis: Why I’m buying more shares today
This tech stock is still trading in favourable value territory compared to its industry peers. Better yet, Kinaxis’s earnings are well positioned for very strong growth going forward. It is not too late to snatch up shares of this very exciting tech stock at a discount in the late winter of 2023.
