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Kinaxis Inc demonstrates fast growth in fundamentals

07.03.2017 • About Kinaxis Inc ($KXS) • By InTwits

Kinaxis Inc is a growth stock in Technology industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story

Kinaxis Inc showed fast growth in the last financial year. Kinaxis Inc's revenue surged on 27.0% in FY2016. Together with revenue growth Kinaxis Inc also managed to keep EBITDA growth. EBITDA grew -20.2% for the same period.

If we look for the longer period Kinaxis Inc showed fast revenue growth of 24.0% from 2013 to 2016 annually. EBITDA surged on 13.3% from 2013 to 2016 annually.

Kinaxis Inc ($KXS) financials for the last 5 years

mln. $ 2012 2013 2014 2015 2016
Revenue growth, %30.3%15.2%30.3%27.0%
Gross margin, %71.8%70.4%70.4%71.8%69.1%
SG&A, %39.4%35.3%33.7%29.1%35.9%
EBITDA growth, %60.8%-4.2%90.2%-20.2%
EBITDA margin, %18.7%23.0%19.2%28.0%17.6%
Net Income5-10-01311
Net Income margin, % 10.6%-16.0%-0.315%13.9%9.27%
CAPEX/Revenue, %2.92%2.30%4.98%4.75%5.00%
Net Debt/EBITDA1.9x4.7x-4.2x-3.9x-6.3x
ROIC, %61.8%63.6%44.0%22.6%
ROE, %22.6%14.0%

Profitability and return on investment

Despite revenue growth EBITDA margin declined fast from 28% in FY2015 to 17.6% in FY2016. In the longer period EBITDA margin dropped on 5.40 pp from 23% in 2013 to 17.6% in 2016.

We call Kinaxis Inc an attractive growth stock as together with the growth it delivers high ROIC at 22.6%. Three years ago it was considerably higher at 61.8%. It's average ROIC for the last three years was 43.4%.

Net Income margin dropped on 4.60 pp from 13.9% to 9.30% in 2016. If we look for the longer period Kinaxis Inc's Net Income margin surged on 25.3 pp from -16% in 2013 to 9.30% in 2016.

Kinaxis Inc operates at ROE of 14.0%.

Capital expenditures (CAPEX)

In FY2016 the company had CAPEX/Revenue of 5.00%. Kinaxis Inc showed fast CAPEX/Revenue growth of 2.70 pp from 2.30% in 2013 to 5.00% in 2016. It's average CAPEX/Revenue for the last three years was 4.91%.

Leverage (Debt)

Having such a fast growth profile Kinaxis Inc keeps negative net debt at -6.3x Net Debt/EBITDA. If we look for the longer period leverage dropped on 10.95x from 4.67x in 2013 to -6.27x in 2016.

Management team

John Sicard runs Kinaxis Inc as a CEO.

Peers in Technology

Below we provide Kinaxis Inc benchmarking against other companies in Technology industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Smart Employee Benefits Inc ($SEB)97.2%151.5%
Sylogist Ltd ($SYZ)25.7%50.5%56.1%31.1%
ProntoForms Corp ($PFM)59.9%75.4%43.9%46.4%
Bluedrop Performance Learning Inc ($BPL)13.9%33.5%37.5%17.3%
iLOOKABOUT Corp ($ILA)19.6%8.9%58.8%32.3%
Median (35 companies)1.3%11.4%13.7%12.7%3.9%
Kinaxis Inc ($KXS)30.3%15.2%30.3%27.0%

Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Constellation Software Inc/Canada ($CSU)86.2%85.5%86.1%86.2%87.1%
Absolute Software Corp ($ABT)73.6%76.3%78.4%81.1%84.4%
ProntoForms Corp ($PFM)96.1%98.1%98.0%79.4%
Sandvine Corp ($SVC)67.5%74.1%76.8%77.8%75.9%
Espial Group Inc ($ESP)77.5%81.7%78.5%74.3%74.7%
Median (32 companies)52.4%46.8%47.4%50.0%60.3%
Kinaxis Inc ($KXS)71.8%70.4%70.4%71.8%69.1%

Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Wi-LAN Inc ($WIN)40.9%12.2%56.2%53.2%57.8%
Computer Modelling Group Ltd ($CMG)53.8%52.2%51.5%50.8%46.3%
Sandvine Corp ($SVC)0.9%24.0%28.2%35.1%20.3%
Open Text Corp ($OTC)26.5%29.1%30.0%31.8%33.5%
Descartes Systems Group Inc/The ($DSG)26.0%27.0%23.8%27.9%31.2%
Median (34 companies)8.0%5.2%4.7%7.7%18.2%
Kinaxis Inc ($KXS)18.7%23.0%19.2%28.0%17.6%

Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Sandvine Corp ($SVC)4.9%3.2%3.2%4.8%3.4%
Open Text Corp ($OTC)2.1%1.7%2.6%4.2%3.8%
Absolute Software Corp ($ABT)1.7%1.2%1.9%3.1%3.8%
Halogen Software Inc ($HGN)4.9%9.0%8.4%2.9%2.6%
BlackBerry Ltd ($BB)4.9%3.8%4.2%2.6%1.5%
Median (35 companies)1.4%1.4%1.2%1.2%1.5%
Kinaxis Inc ($KXS)2.9%2.3%5.0%4.7%5.0%

Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Bluedrop Performance Learning Inc ($BPL)10.0%-38.2%-29.9%66.5%83.2%
Computer Modelling Group Ltd ($CMG)74.2%68.6%62.9%63.5%57.1%
SMART Technologies Inc ($SMA)21.4%-18.9%28.1%43.8%-20.4%
Constellation Software Inc/Canada ($CSU)45.9%22.4%24.7%38.5%40.5%
Sandvine Corp ($SVC)-4.9%16.9%20.2%21.7%10.4%
Median (35 companies)2.9%-5.4%-0.0%0.1%10.1%
Kinaxis Inc ($KXS)61.8%63.6%44.0%22.6%

Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Mad Catz Interactive Inc ($MCZ)32.2x1.2x9.4x
Mitel Networks Corp ($MNW)3.7x3.8x2.6x6.2x
BlackBerry Ltd ($BB)-0.5x-2.3x1.7x0.8x
Open Text Corp ($OTC)0.1x0.2x1.8x1.5x1.4x
SMART Technologies Inc ($SMA)2.1x1.2x1.3x
Median (21 companies)-0.4x-0.6x-1.3x-1.4x-0.9x
Kinaxis Inc ($KXS)1.9x4.7x-4.2x-3.9x-6.3x