Kinaxis Inc.

Good morning, and welcome to the Kinaxis Incorporated Fiscal 2024 Fourth Quarter Results Conference Call. Currently, all participants are in a listen on demand. Following the presentation, we will conduct a question and answer session. Instructions will be provided at the time for you to queue up for questions. I'd like to remind everyone that this call is being recorded today, Thursday, February 27, 2025. I will now turn the call over to Rick Woodsworth, Vice President of Investor Relations at Kinaxis Incorporated. Please go ahead, Mr. Woodsworth.

Thanks, Operator. Good morning and welcome to the Kinaxis Earnings Call. Today, we will be discussing our fourth quarter and year-end results, which we issued after close of markets yesterday. With me on the call are Bob Courteau, Interim CEO and Chair, and Blaine Fitzgerald, our Chief Financial Officer. Some of the information discussed on this call is based on information as of today, February 27, 2025, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release, as well as our CDAR filing. During this call, we will discuss IFRS results and non-IFRS financial measures, including adjusted EBITDA, a reconciliation between adjusted EBITDA, and the corresponding IFRS result is available in our earnings press release and MD&A, both of which can be found on the IR section of our website, canaxis.com, and on CDAR+. The webcast is live and being recorded for playback purposes. An archive of the webcast will be made available on the IR section of our website. Neither this call nor the webcast may be re-recorded or otherwise reproduced or distributed without prior written permission from Synactus. To begin our call, Bob will discuss the highlights of our quarter and year and recent business developments, followed by Blaine, who will review our financial results and outlook, and open the line for questions. We have a presentation to accompany today's call, which can be downloaded from the Investor Relations homepage of our website. We'll let you know when to change slides. Before I turn the call over to Bob, I want to remind you that our user event, Connections, will take place from March 31 to April 2 in Austin, Texas. The first day is for user training, but the full agendas on the first and second are open to investors. You can review the event details at connections.com, and if you're interested in joining us, please reach out to me directly at rwadsworth at connexus.com before registering as we add capacity limitations. Over to you, Bob.

Good morning and thank you for joining us today. We really appreciate it. I'm pleased with Q4 results and would highlight three key items. First, our performance will outstand all guidance elements for the year, including SAS revenue growth, total revenue, and adjusted EBITDA margin. Second, and most exciting for us by far, was the record incremental ARR added in the quarter, though foreign exchange adjustments to the ARR balance at the end of the period masked some of that performance, as Blaine will discuss. I see the strong sales performance in Q4 as one reflection of our elevated go-to-market team and approach. I'm confident that we are much better positioned to take full advantage of whatever conditions and opportunities present themselves ahead. Longer term, the ongoing uncertainties facing supply chains will also continue to shine a light on Kinaxis and the incredible value that we offer. And third, we're also very pleased with our 25% adjusted EBITDA margin in Q4 and our near 20% trailing 12 months free cash flow margin. both of which continue to reflect our rapidly improving profitability. The results also demonstrate our clear path to consistently achieve a full year normalized adjusted EBITDA margin of 25%, starting no later than 2026, as we've communicated. We matched our record for new customers in a quarter and set a new record for full year. We're thrilled to have won some large enterprise accounts in Q4. Together, large enterprise and enterprise companies were the biggest contributors of new customer wins in the quarter. As always, we're fortunate that we can identify a sample of our new customers. It's a privilege to have the strongest references in our space with some of the best supply chain companies in the world. I'll let you research some of the names on the slide, but the flexibility of Maestro to address a diverse set of supply chains is obvious from this group. For example, we're helping orchestrate the supply chains for global leaders like Bell Group. Headquartered in France, they make the iconic baby bell and lapping cow cheeses. Toso Corporation out of Japan which supplies the plastic resins and an array of the basic chemicals that support modern life. Opela, also based in France, which is partially owned by Sanofi and focuses on consumer self-care with well-known over-the-counter brands like Allegra and Docallax. Finally, we also won one of the largest life sciences companies, and we hope to be able to share their identity with you in the time ahead. For 2023, we spoke about a 60% plus win rate against our core competitors, and I'm thrilled to have repeated that strong performance in 2024. Our bar channel also continued to gain momentum by adding several smaller customers, and bookings for this year from this group grew over 100%. In addition to success winning new customers, over half of our gross additions to the AR balance in Q4 came from existing customers. We have a significant expansion opportunity ahead that remains in early days thanks to the near doubling of the customer base over the last three years and exciting new product launches. Our success remains anchored in our product leadership and we are thrilled to receive further validation from independent industry observers. Canaxis was named the leader in three IDC MarketScape reports published in the fourth quarter covering supply chain planning overall, supply chain planning for life sciences industries, and supply chain planning for discrete manufacturing industries. Together, the reports highlighted important Canaxis differentiators, including statements around how our concurrency approach supports responsiveness and agility. How Canaxis has an incredibly deep understanding of AI solutions in the supply chain space and our use of integration. In 2024, we launched the Maestro platform and we continue to build out its capabilities, including enhanced and new AI techniques. Our next phase, ready in Q2 2025, makes integrating with Maestro more standardized, faster and more capable as connections to ERP systems and our solution extension partners are handled through our new supply chain data fabric. A key part of supply chain orchestration involves connecting to as many relevant supply chain data sources as possible to improve decision making. So this, for us, is an important step. Over 200 customers have already used our GenAI enabled Maestro chat capabilities to simplify user help, which is bundled into the base functionality. In the second half of 2025, For the first time, users will be able to chat with their own data to save users significant time and, importantly, to democratize access to important supply chain information, significantly enhancing Maestro's value overall. They'll be able to ask important questions like, which components of my supply plan are more than two weeks late? And to follow up, are there any gating items creating the late supply? This and future AI enhancements will be revenue generating as they are released and will be an uplift to the 2026 opportunity. As a follow on, we'll subsequently launch our agentic AI framework, which will enable us to deliver use cases that take action either when asked by users or on behalf of them where processes can benefit from greater automation. Referring back to the example on light supply, a planner could instruct Maestro, please transfer inventory to resolve the gating component responsible for the light parts at our Ohio site. Future phases will see AI help users create critical Maestro resources at implementation or later, improving on our already best in market time to value, and see AI permeated through the platform for increasingly powerful interactions. Our existing predictive AI capabilities continue to quickly gain traction as well. For example, we have triple the count of supply.ai customers from the beginning of 2024. and we continue to see a strong pipeline ahead. We believe Maestro has a two to three year product advantage in supply chain orchestration. So overall, I'm very pleased with the progress we've made through 2024. We reorganized the company to improve profitability and we allocate resources to the highest priority areas. You've seen the impact on our results. Our adjusted EBITDA margin grew from 18% in 2023 to 22% in 2024, and the trend will continue. We did a full review on operational and strategic priorities that confirmed our opportunity, as well as key elements of our well-established plan. Based on that work, we took action to improve in certain key areas, particularly in go-to-market activities. For example, we refocused on our core manufacturing verticals and we'll press our leadership advantage on these markets. There are still thousands of new customers to be won there. Mark Morgan, our new Chief Commercial Officer, has then enhanced our go-to-market model and add key regional and country leaders to the talent in our sales teams. For example, Mark has added a strategic account tier to our team and ensured coordination across the company to make sure that the largest opportunities are getting the appropriate attention. He's also refocused the goals of our install-based team to more effectively address the sizeable expansion opportunity represented by our rapidly growing customer base and product set. Mark has also created a more established and mature methodology around opportunity qualification, account planning, and forecasting. As a company, we have significantly expanded our investment and mindshare with key go-to-market and implementation partners. such as through recent deals with Accenture, NTT Data, and soon with Infor. We'll announce details later this quarter. The result of our enhanced partnerships will be better market coverage, expanded delivery capacity, and better client outcomes. As we steadily move towards public cloud, our partnerships with Google and Microsoft enhance our delivery flexibility and increased the visibility of Maestro in the supply chain space. Look, we remain full speed ahead on our search for Kinaxis next CEO. In the meantime, we're so pleased to be executing well with a very experienced and collaborative team. The fourth quarter gave you a taste of what all these improvements combined can mean to Kinaxis The strong finish to 2024 solidifies our outlook for 2025. Looking ahead, we're focused on ARR growth, further progress towards our mid-term normalized annual adjusted even target of 25%, and the return to consistent Rule of 40 performance. We have lots of growth opportunities ahead. We're better organized. However, We also recognize the challenges that our customers face in this new era of global trade. With that said, I'll turn the call over to Blake.