Kinaxis has AI upside, this analyst says

ATB Cormark Capital Markets analyst Gavin Fairweather has assumed coverage of Kinaxis (Kinaxis Stock Quote, Chart, News, Analysts, Financials TSX:KSX) with an “Outperform” rating and C$250.00 target, arguing that accelerating software sales, improving customer retention and new artificial intelligence products could support stronger growth and profitability.

In a Nov. 10 report, Fairweather said the Ottawa-based supply chain software company is benefiting from increased demand as businesses seek to manage trade uncertainty, supply shortages and rising costs.

Kinaxis has also improved its sales performance, with record customer win rates and stronger revenue growth from existing customers. Fairweather said the company has penetrated less than 9% of its target market of approximately 5,000 large enterprises, leaving considerable room for expansion.

The company’s Maestro platform helps businesses manage inventory, production, distribution and other supply chain activities. New AI capabilities and Operational Orchestration, which connects planning decisions to automated actions, could create additional revenue opportunities.

“Kinaxis is well positioned to progressively scale and expand margins given its leading position in a large TAM with strong buyer intent, a large opportunity to upsell the base (which is growing with Agentic AI and Operational Orchestration), growing partner contribution, greenfield markets for expansion, and low churn,” Fairweather said.

The analyst notes that these newer products are not yet making a meaningful contribution to revenue, leaving potential upside to his forecasts as adoption increases.

Kinaxis reported third-quarter revenue of US$160.3-million, up 19% year-over-year, while Adjusted EBITDA increased 24% to US$42-million. Software-as-a-service (SaaS) revenue grew 22% to US$112.3-million, marking a third consecutive quarter of growth of at least 20%. Annual recurring revenue increased 19% to US$483.9-million, while remaining performance obligations exceeded US$1-billion for the first time.

Fairweather expects SaaS revenue growth to remain strong, supported by new customers, additional software modules and increased spending by existing customers.

“In terms of our estimates, we assume SaaS revenue grows at 20% in C27 and 19% in C28, which we think is largely de-risked by new logo and expansion motions from modules and usage, leaving Operational Orchestration as upside to our estimates which could drive further acceleration,” he said.

He forecasts annual recurring revenue additions of US$81-million in 2026, increasing to US$91-million in 2027 and US$100-million in 2028.

Fairweather also expects profitability to improve as costs associated with Kinaxis’ cloud migration decline and higher-margin software revenue becomes a larger portion of sales. He forecasts Adjusted EBITDA margins of 26.7% in 2027 and 28.5% in 2028, with gross margins approaching 70%.

Kinaxis is expected to generate revenue of US$648.1-million and Adjusted EBITDA of US$176.6-million in fiscal 2026. Fairweather forecasts revenue of US$716.5-million and Adjusted EBITDA of US$191.5-million in 2027, improving to US$823.7-million and US$235-million, respectively, in 2028.

He expects free cash flow to increase from US$156.6-million in 2026 to US$202.6-million in 2028.

“While we are in the early days of expanding into Agentic AI and Operational Orchestration, we see this opportunity as largely upside to our estimates,” he said.

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