What Kinaxis (KXS) Said on Its Q3 Earnings Call

Key Points

• Kinaxis raised its 2026 outlook after third-quarter revenue grew 19% to $160.3 million and SaaS revenue climbed 22% to $112.3 million. It now expects revenue of $640 million to $650 million and an adjusted EBITDA margin of 26.5% to 27.5%.
• Annual recurring revenue increased 19% to $483.9 million, with about 40% of ARR additions coming from new customers and 60% from expansions. The company said it remains on track to exceed $500 million in ARR by year-end.
• Kinaxis is investing in AI-enabled supply chain tools and customer engineering teams, but does not expect the initiative to contribute meaningfully to 2026 revenue. It is also introducing usage-based elements to its pricing model, though it has not yet quantified potential revenue benefits.

Kinaxis TSE: KXS raised its full-year revenue and profitability outlook after reporting 19% third-quarter revenue growth, as new customers and expansions drove demand for its supply chain planning software.

The company reported revenue of $160.3 million for the quarter, while software-as-a-service revenue rose 22% to $112.3 million. It was the third consecutive quarter in which SaaS revenue grew at least 20% year over year, Chief Executive Officer Razat Gaurav said on the earnings call. All financial figures are in U.S. dollars unless otherwise noted.

Annual recurring revenue rose 19% to $483.9 million, and total remaining performance obligations, a measure of contracted future revenue, increased 21% to $1.03 billion. Gaurav said the company remains on track to exceed $500 million in annual recurring revenue by year-end.

Higher Full-Year Outlook

Kinaxis now expects 2026 revenue of $640 million to $650 million, up from its previous forecast of $625 million to $640 million. It raised its SaaS revenue growth outlook to 20% to 21% from 18% to 20%, and its adjusted EBITDA margin forecast to 26.5% to 27.5% from 25% to 26%.

Chief Financial Officer and Chief Strategy Officer Herb Yeh said the company has substantial visibility into the remainder of the year. He identified the timing of subscription term license transactions, which recognize a larger portion of contract value upfront, as the principal variable. Gaurav added that professional services revenue is typically lower in the fourth quarter because of the holiday schedule.

Yeh said higher-than-anticipated subscription term license revenue was a significant reason adjusted EBITDA margins have outperformed expectations this year, because the associated revenue is recognized earlier without an equivalent pull-forward of service costs. Kinaxis expects approximately $33 million in subscription term license revenue for the full year.

For the third quarter, adjusted EBITDA rose 24% to $42 million, while net profit increased 19% to $20.1 million. Diluted earnings per share were $0.72, up 25%.

Customer Expansion and AI Investments

Approximately 40% of additions to annual recurring revenue came from new customers and 60% from existing customer expansions, Yeh said. Gaurav said the company signed its largest incremental annual contract value expansion with an automotive customer and added customers including pharmaceutical company Biogen, personal care brand Dr. Squatch and automotive aftermarket supplier WAI Global.

Gaurav said Kinaxis is investing in its Maestro platform and an AI-enabled operational orchestration offering designed to help customers act on supply chain decisions. Agent sessions doubled over the last month, he said, with workflows averaging about 15 steps per session and some exceeding 50 steps.

The company is also building forward-deployed engineering teams in North America, Europe and India to work with customers on AI-driven supply chain projects. Yeh cautioned that the initiative is not expected to contribute meaningful revenue in 2026. Gaurav said Kinaxis plans to provide more details on customer use cases during its fourth-quarter earnings call.

Kinaxis is introducing a hybrid pricing model based partly on Maestro Activity Units. Yeh said customers receive an allocation under their subscription and can discuss moving to a larger package if usage exceeds that level. The company is still early in adopting the model and does not yet have data to share on its revenue uplift.

Margins, Buybacks and 2027

Third-quarter gross margin rose to 65% from approximately 63.7% a year earlier, helped by higher professional services margins and a more favorable revenue mix. Subscription software margin fell to 77% from 79% as hosting costs temporarily increased during a migration from private data centers to the cloud, which Kinaxis expects to complete by the end of 2027.

The company repurchased more than 244,000 shares for approximately $29.5 million during the quarter. Its board also approved a new share repurchase plan for up to 2.7 million shares over a 12-month period ending Nov. 11, 2027, subject to Toronto Stock Exchange approval.

Gaurav said the sales pipeline and win rates were improving, but the company did not provide 2027 guidance. He said Kinaxis plans to discuss its outlook for next year on its fourth-quarter call in February.

About Kinaxis (TSE:KXS)

Kinaxis is a leader in modern supply chain orchestration, powering complex global supply chains, and supporting the people who manage them. Our powerful, AI-infused supply chain orchestration platform, Maestro, combines proprietary technologies and techniques that provide full transparency and agility across the entire supply chain - from multi-year strategic planning to last-mile delivery. We are trusted by renowned global brands to provide the agility and predictability needed to navigate today's volatility and disruption.

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