Third-quarter 2026 earnings call, November 5, 2026

Kinaxis reported a third quarter that extended its run of 20%-plus SaaS growth, and management raised full-year guidance for the third time this year. SaaS revenue rose 22% to $112.3 million, total revenue reached $160.3 million (up 19%), and adjusted EBITDA increased 24% to $42 million, a 26.2% margin. Annual recurring revenue grew 19% to $483.9 million (20% in constant currency), and total remaining performance obligations passed $1 billion for the first time, reaching $1.03 billion, up 21%. CEO Razat Gaurav said the company is on track to exceed $500 million in ARR by year-end.

A Pricing Model Built for Agents, Not Seats

The most consequential new information came in the discussion of Kinaxis's next-generation pricing, which adds Maestro Activity Units, or MAUs, to a hybrid subscription. CFO Herb Yeh described it as a usage-based model in which each customer receives an allocation of MAUs. Exceeding the allocation does not trigger a surprise bill. Instead, Yeh said, "it's a conversation with the client that says, your MAU usage is trending above what's in your allocated package, so it's an opportunity to grow into a larger MAU package." The aim is predictability for the customer and visibility for Kinaxis, while capturing the consumption that agentic AI generates.

Gaurav was explicit that this is not a seat-expansion story. "I don't look at this as a way for us to grow the number of users on our platform necessarily. If anything, supply chain planning and decisioning use cases have never had a very large user or seat-based count." The logic is that Kinaxis is the system of record for planning data, and a growing share of deployments are automated, agentic or even headless through an MCP server. Third-party agents that query Maestro data become a monetizable access point.

Investors should note the limits of the disclosure. Every new proposal now carries the MAU component, but Yeh acknowledged that "we don't have right now, sitting here, the data points to share with you that says exactly how much uplift has come or resulted from the introduction of this." Management could not quantify the revenue or margin effect, so the monetization thesis remains unproven. Several large enterprise new wins and renewals were signed under the new structure this quarter, which supports early traction but not yet the economics.

Usage metrics offered some support. Agent sessions doubled over the last month, token consumption per agent continues to rise, and sessions average about 15 steps, with some exceeding 50. Kinaxis Data Fabric, built on Databricks, handles ingestion of structured, unstructured and streaming data and feeds both Maestro and the new orchestration layer. It is not priced separately, but usage feeds into the MAU structure.

Forward Deployed Engineering: Promising, but Not a 2026 Revenue Driver

Kinaxis is now operationalizing forward deployed engineering pods in North America, Europe and India. The pods combine supply chain domain experts with data engineers, data scientists and solution developers who co-build solutions with customers and partners. Management also frames this as a learning loop, with customer-built capabilities feeding back into reusable Maestro functionality. The target is to move existing Maestro customers beyond planning into executing decisions, an area Gaurav described as "very fragmented" with "multiple systems of record."

Disclosure remains thin. Gaurav called early indications "very, very encouraging," but declined to compare contract values with those of a typical deal, deferring use cases and details to the fourth-quarter call in February. Yeh stated plainly that the FDE motion is not expected to contribute meaningful revenue in 2026. Analysts should treat this as a 2027 and beyond opportunity.

Results Driven by Expansion, Large Deals and a Broader Vertical Footprint

Net new ARR was $77 million year over year and $18 million sequentially. About 40% of ARR additions came from new customers and 60% from expansions. ACV bookings from existing-customer expansions grew more than 60% year over year, and Kinaxis signed the largest incremental ACV expansion deal in its history, with an automotive customer. New logos included Biogen, Dr. Squatch and WAI Global, and the company displaced a competitor at a global consumer health company.

Asked by TD Cowen whether the consumer health win and the Asahi Beverages go-live signal a shift in a vertical historically dominated by Blue Yonder, Gaurav said Kinaxis is seeing "a lot of traction in the consumer packaged goods, FMCG, food manufacturing space" and a growing number of opportunities to replace legacy deployments. He did not claim a structural change. Pipeline growth is also being driven by life sciences, aerospace and defense, high tech and industrial manufacturing, with win rates improving.

The partner channel is deepening. Partners were involved in about 75% of software bookings year to date, and global systems integrators such as Accenture, Deloitte, EY, PwC and Genpact are engaging earlier in the customer life cycle. This fits management's plan to shift implementation work to partners, and professional services growth is still guided to mid-single digits for the year.

Guidance Raised, With Q4 Implicitly Conservative

Kinaxis now expects 2026 total revenue of $640 million to $650 million, up from $625 million to $640 million, and SaaS growth of 20% to 21%, up from 18% to 20%. The adjusted EBITDA margin guidance moved to 26.5% to 27.5% from 25% to 26%. BMO's Thanos Moschopoulos pushed on the fourth-quarter implied outlook as looking conservative given RPO. Yeh responded that a SaaS booking signed after the call would contribute at most two months of ACV in 2026, services revenue is largely visible, and the main swing factor is subscription term license, where more value is recognized upfront. Gaurav added that services is seasonally lower in Q4. Term license revenue is guided at about $7 million for Q4 and $33 million for the year. Guidance also embeds a $3.5 million to $4 million FX headwind to total revenue.

Margin Outperformance Owes a Lot to Term License

RBC's Paul Treiber noted that the margin is now above the 25% medium-term target. Yeh was candid about the source: a higher-than-planned subscription term license number. It pulls revenue forward without a matching cost to serve, so it flows directly to gross margin and EBITDA. Efficient operating spend contributed, but the quality of the margin beat is lower than a recurring-driven improvement would be. Gross margin was 65%, up 1.3 points, helped by professional services margin of 32%, up from 24% on higher realized rates. Subscription software margin fell to 77% from 79% as hosting costs rise during the migration from private data centers to the cloud, which management expects to complete by the end of 2027. Free cash flow margin slipped 3.1 points to 21%.

Management declined to provide 2027 guidance, which will come in February. On sustaining 20% growth against tougher comparisons, Yeh pointed to customers prioritizing investment in Kinaxis amid supply chain volatility, growing pipelines and oversubscribed hackathons and boot camps, but offered no quantitative commitment.

Capital Allocation: Buybacks Continue, M&A Limited to Tuck-Ins

Kinaxis repurchased about 244,000 shares for $29.5 million in the quarter. Since the program began last November, it has bought back more than 1.4 million shares for $163 million at an average price of $11.12, cutting net share count by 3.5%. The board approved a new normal course issuer bid for up to 2.7 million shares through November 11, 2027, subject to TSX approval. Cash and short-term investments were $317.9 million. On M&A, Yeh ruled out anything transformational, saying deals would be "aqui-hire tuck-in types of transactions" aimed at accelerating the product roadmap rather than buying revenue or cost synergies.