Some cloud software companies are weathering the so-called “SaaS-pocalypse” better than others. Kinaxis Inc. KXS-T -0.99%decrease chief executive Razat Gaurav believes his is one of them.
The supply chain management software vendor, one of Canada’s 10 most valuable publicly traded tech companies, has seen its valuation tumble along with other SaaS (software-as-a-service) subscription software vendors. All face questions about their viability as generative artificial intelligence tools have enabled anyone to “vibe code” new programs using AI prompts to do the work of developers.
SaaS stock valuations are at the lowest in the 13-year history of the BVP Cloud Index. Even after a partial recovery since February, Kinaxis shares are down 15 per cent in the past year. Other SaaS names, including Salesforce and Constellation Software, have fared worse.
“Everyone is in the same penalty box,” the Indian-born CEO, who joined Kinaxis in January, said in an interview. “Investors haven’t yet deciphered” which SaaS companies are at risk of AI disruption and which will benefit.
“We have a strong belief that for Kinaxis, AI is a tailwind,” Mr. Gaurav said.
Wednesday’s analyst upgrades and downgrades
During its annual customer conference in Las Vegas last week, Kinaxis gave an in-depth look at how the company is deploying AI to transform its business.
Kinaxis has used predictive AI tools in its platform, called Maestro, for years. Now, it is creating an army of digital agents to help the company’s 410 customers – including many of the world’s largest companies – automate tasks. It’s also giving customers the capability to build bespoke agents themselves, and lending its own people to help them do so, in order to encourage adoption.
It has expanded Maestro’s capabilities to ingest supply chain-relevant data from a range of sources, including other enterprise software programs, weather feeds and even social media channels, to help agents make sharper decisions. “Agentic AI will be a significant expansion of our total addressable market,” Mr. Gaurav said.
His company is partnering with several global tech leaders to make this happen: Kinaxis is using large language models from giants including OpenAI. Nvidia is supplying technology enabling it to run faster optimization planning scenarios than rival options. Databricks is providing the data intelligence platform.
It’s part of an effort by the 42-year-old company to position itself as more than a supply chain planning tool provider, but rather the source of a more fulsome and flexible platform that’s suited to help companies respond to dynamic supply chain pressures that have included a pandemic, tariffs, wars and climate change-related disasters.
It’s “about connecting the dots between designing, planning, executing and delivering – and learning,” guided by an agent-driven system that “functions like an orchestra,” Mr. Gaurav said in his keynote address.
Customers in Las Vegas were “universally happy with the software and reaffirmed what we knew, that Kinaxis has continued to gain competitive momentum” against competitors SAP, Blue Yonder and o9 Solutions, said BMO Capital Markets analyst Thanos Moschopoulos, who attended.
There are reasons to share Mr. Gaurav’s optimism. Maestro is mission-critical software for giants including Ford, Lockheed Martin, Unilever, Shell and Eli Lilly, and the top-rated vendor in the field by market research firm Gartner. The sales cycle and product implementation times are lengthy.
Helping to manage a supply chain is a complex and difficult tax that can’t be replicated using generative AI tools alone, Mr. Gaurav said. For example, changing an expiry date on a single ingredient in one product for an unnamed pharmaceutical customer required 18,000 recalculations on Maestro, according to the CEO.
Clients “are not looking to vibe code their way through” making a homegrown replacement and Kinaxis has a 95 per cent customer retention rate, he said.
Mr. Gaurav, 52, arrived just over a year after predecessor John Sicard retired and after period a tepid sales growth. The new CEO, who lives in Austin but spends half his time in Ottawa, worked for most of his career in supply chain software (Kinaxis tried to hire him in 2010) before running a pair of enterprise software companies in other areas for eight years.
Mr. Gaurav said he was drawn to the opportunity to become CEO of a top company in a field he knows well as the sector is undergoing big changes. He’s worked with 70 to 80 current Kinaxis employees at other supply chain software companies, including Mark Morgan, president of commercial operations. “We brought in a leader who understands our industry, has a strong product and innovation orientation, and has a track record for scaling global businesses,” said chairman Bob Courteau, who led Kinaxis after Mr. Sicard left.
Mr. Gaurav has arrived at a time of growing momentum for Kinaxis. After expanding SaaS revenues in 2025 by 17 per cent over the previous year, to US$362.4-million (total revenue was US$548-million), Kinaxis has forecast 17 per cent to 19 per cent growth this year. SaaS revenues grew by 19 per cent in the fourth quarter and 21 per cent in the first quarter, surpassing expectations.
Kinaxis reported a better-than-expected adjusted operating earnings margin of 32 per cent of revenue in the first quarter and expects that to be in themid-20s for the year. Its average new deal size in the first quarter was twice as large as the same period a year ago, thanks in part to a recent overhaul of its sales team. Kinaxis has also changed its pricing to meter the usage of its tools, since charging by the human user alone won’t be as effective if AI agents do more of the work.
But investors still want Kinaxis to increase its SaaS revenue growth rate, said David Barr, lead manager of the Pender Small Cap Opportunities Fund.
“Look, the reason I’m here is to scale this business by three to five times” while maintaining current profit margins, Mr. Gaurav said. He thinks Kinaxis could market itself better and wants to cross-list the Toronto Stock Exchange-traded stock on a U.S. exchange once it hires a new chief financial officer (a search is underway). Acquisitions could follow, he said.
“I’m definitely here to make things exciting,” he said. If Kinaxis can keep up its performance and meet the AI moment with continued innovation, “I see no reason why we can’t be trading at a lot higher price.”
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