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Understanding Kinaxis And How Does It Make Money?


Kinaxis is capitalizing on the supply chain management business. Most successful enterprises know that it is very important to efficiently manage the flow of their goods and services. An operational error can not only harm a company’s internal health but also damage its reputation. With time, businesses have realized that they need to adopt a fast, reliable, and technologically up-to-date Supply Chain Management.

Today, there are many supply chain management software available that offer variety of features and take care of the operational needs of a company in one integrated platform. 

Kinaxis is one such supply chain management software provider based in Ottawa, Canada. It was founded in 1984 by Duncan Klett and two others. The company’s clients include major multinational companies around the globe. In 2014, the company got listed on the Toronto Stock Exchange and it is also an S&P/TSX Composite Component.

Business Model

Kinaxis offers cloud-based supply chain management software solutions to many industrial giants. With an increase in digitalization, cloud-based SCM software has gained popularity in the market.

It offers solutions to companies from various sectors like automotive, consumer products, aerospace and defense, life sciences, retail, and electronics. These sectors look promising and have a strong long-term growth profile which can indirectly benefit the company.

Kinaxis RapidResponse is a software solution that helps in planning. A Softwareadvice publication says RapidResponse uses AI that offers organizations with the supply chain planning and analytics capabilities that they need to manage multiple interconnected supply chain planning processes. After using it over a period, companies get more efficient results.

This software includes a range of applications like demand planning, supply planning, inventory management, order fulfillment, capacity planning, master scheduling, S&OP, supplier collaboration, material requirements planning, and more.

Kinaxis earns revenue by offering solutions on a subscription basis, forming multiple years contracts. Motley fool says that the strengths of Kinaxis’s business model are multi-faceted. This diversification in various industries and focus on large established companies provide Kinaxis with a level of stability. It also has a recurring structure which gives the company a predictable source of revenue.

Kinaxis financial metrics

Another Motley Fool report states that from its lowest point this year to its highest, Kinaxis stock increased nearly 150%. However, since June, the stock has been rather flat, as investors have rushed toward other work-from-home focused companies.

However, by the end of September 2020, Kinaxis has reported strong Q3 2020 financial results with a 26% increase in SaaS revenue to $39.3 million and 17% growth in total revenue to $55.1 million. Also, since the company released its IPO in 2014, the stock price has increased by over 1,200%.

The company’s business model, modern and robust software solutions, and financials if taken into consideration in unison, suggests that it is here to stay.

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