Kinaxis Aktie

Good morning, and welcome to the Kinaxis Inc. Fiscal 2026 First Quarter Results Conference Call. [Operator Instructions] I'd like to remind everyone that this call is being recorded today, Thursday, May 7, 2026.

I'll now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Kinaxis Inc. Please go ahead, Mr. Wadsworth.

Thanks, operator. Good morning, and welcome to the Kinaxis earnings call. Today, we will be discussing our first quarter results, which we issued after close of markets yesterday. With me on the call are Razat Gaurav, our Chief Executive Officer; and Blaine Fitzgerald, our Chief Financial Officer.

Some of the information discussed on this call is based on information as of today, May 7, 2026, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set out 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 in our SEDAR+ filings.

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 Investor Relations section of our website, kinaxis.com and on SEDAR+.

The webcast is live and being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations section of our website. Neither this call nor the webcast may be rerecorded or otherwise reproduced or distributed without prior written permission from Kinaxis. We have a presentation to accompany today's call, which can be downloaded from the Investor Relations homepage of our website. We will let you know when to change slides.

Finally, I want to remind you that our user event, Kinexions, will take place from June 1 to June 3 in Las Vegas. All sessions on the second and third are open to investors. You can review event details at kinexions.com. And if you're interested in joining us, please reach out to me directly at [email protected] before registering as we have capacity limitations.

Over to you, Razat.

Thanks, Rick, and good morning all. Turning to Slide 4. I'm extremely pleased with how the team performed in the first quarter. Momentum from our last year has continued with a record Q1 performance. Our great start to the year is evidenced by performance in our 2 key growth metrics. Our SaaS revenue grew by 21%, a significant jump compared to 16% growth a year ago. This provides us with a tremendous start towards our SaaS growth guidance for the year. Our ARR balance grew by 20%, accelerating from 14% growth in Q1 2025.

All this growth translated to significantly improved profitability in the first quarter. We achieved record quarterly profit and adjusted EBITDA, and our adjusted EBITDA margin was 32%. Blaine will speak to details soon.

Our momentum as the leader in AI-driven supply chain planning and orchestration continues to accelerate in an environment that is characterized by the following: firstly, there's heightened levels of volatility in supply and demand with ongoing levels of geopolitical and structural shifts; secondly, significant push to create new levels of productivity and working capital efficiencies while improving customer fulfillment service levels; and thirdly, a growing phase of innovation and change in underlying data architectures and agentic AI in an effort to create new levels of intelligence, efficiencies and automation.

Customers are exploring new forms of intelligent decision-making, governance, operating models and process automation, leveraging a mix of predictive, prescriptive, generative and agentic AI. Their feedback gives us confidence that Kinaxis is on the right side of an exciting opportunity to transform the ways of working across the entire supply chain and deliver unprecedented levels of value to our customers. The opportunity ahead is significant, and the latest innovations in data architectures and AI are providing us a tremendous tailwind.

Turning to Slide 5. It was a record Q1 for new business in total, business from new customers and from expansions with existing customers. Almost double the amount of total new business we signed in Q1 2025 and won 60% more than in any previous Q1, measured by average annual contract value. Our average deal size was over double what we experienced in the first quarter last year. Once again, we saw a disproportionate strength from contracts with 1 million plus in average ACV, winning several more than we did a year ago, including our largest initial customer contract ever, both by annual and total contract value. We'll provide you with specifics on the number of $1-plus million deals annually but our early success. And pipeline suggests that 2026 could be another strong year in this regard.

On to Slide 6. Just under half of the new ARR we added in Q1 came from some exciting new customers, most of which were enterprise or large enterprise class. I'll highlight a few wins. In consumer products, we were thrilled to win Pernod Ricard, the world's leader in premium international champagnes and spirits. They have over 200 iconic brands, including ABSOLUT, Beefeater, Chivas Regal, G.H. Mumm, Glenlivet, Havana Club and Jameson. Pernod Ricard is going to be deploying our Maestro platform for end-to-end planning across their global supply chain network in an effort to improve service levels and gain cost efficiencies.

In our chemicals vertical, Tesa has become a customer. Tesa develops over 7,000 innovative adhesive solutions and is active in 100 countries. Tesa is looking to leverage Maestro to help shift from regional silos to a centrally governed global supply chain model to support rapid growth, new product launches and other strategic initiatives.

We have continued our amazing run in the energy sector. Last quarter, we won Marathon Petroleum, and now we've added the largest renewable energy company in North America. The company uses a diverse mix of energy sources, including natural gas, nuclear, renewable energy and battery storage. Their expansive asset base requires better end-to-end processes to ensure the right parts are in the right place at the right time.

They're also looking to improve demand forecasting using outside-in data and machine learning techniques so they can quickly respond to new opportunities. The energy sector is undergoing massive investments to support the demands of the new AI economy and the surge in the build-out of data centers. So we expect this to remain a strong sector for us ahead.

In life sciences, we won a large vital organ therapy company, which for 70 years has driven meaningful innovations in kidney care. They're going to be deploying Maestro for end-to-end intelligent planning capabilities. We also won a couple of mid-market life sciences companies, ALK, an allergy treatment specialist headquartered in Denmark; and Laboratoires Théa, which researches, develops, manufactures and commercializes a wide variety of eye care products.

In industrial manufacturing, we won a significant contract with a global Fortune 500 company. This well-known leader is known to -- is looking to replace siloed business unit decision-making with our unified platform covering S&OP, demand planning, distribution, inventory, shop floor scheduling and more. They're also going to be deploying Maestro Agents to gain intelligence, productivity and automation.

In the mid-market tier of high tech, there are electronics [ manufacturer ] of Weidmüller exist. There are still dozen prospects in our vertical market, and we have never positioned to win. Along with success made in Q1, I think a lot of our addition came from existing customers. So the new application with the largest single expansion business and distribution [Technical Difficulty] expansion with all-time optimization and forecasting, with most of the expansions in the first quarter. The success is demonstrated via mathematics, namely algorithmics and machine learning models remain at the very heart of customer needs for powering high-impact supply chain decisions.

Our exciting new generative and agentic AI capabilities make it easier and more effective to leverage these advanced capabilities, but will not [Technical Difficulty]. Working together, all these technologies provide us with an incredible opportunity to further expand our impact into broader supply chain orchestration use cases. We have over 400 customers, a growing set of capabilities to sell a highly focused go-to-market team. So there are -- there's a massive room for expansion within the existing installed base.

On to Slide 7. While winning business with the world's biggest and best supply chains is the best validation we can receive, it is a tremendous honor to be ranked as a leader in Gartner's Magic Quadrant for the 12th consecutive time. And in such a prestigious spot. Gartner published 2 Magic Quadrants this time around, one for discrete industries and another for process industries. It is a testament to the powerful flexibility of Maestro that we placed so well in both. The reports support our long-held view that differentiation in our business is not about stand-alone planning features. It's about how well platforms enable fast, connected and automated decisions across the supply chain.

With respect to AI, the report shows that most vendors in our space leverage it, but with varying impact. The real value is seen as coming when AI is embedded directly into decision flows and execution rather than fragmented or assistive approaches. We see ourselves positioned well here. Maestro is infused with AI end-to-end and is the world's most sophisticated context and digital representation of the physics of the real-world supply chain. It enables rapid scenario planning, synchronized decision-making and continuous and concurrence planning.

Moving to Slide 8. As you will recall, we've already launched Maestro Agents, including out-of-the-box capabilities and Maestro Agent Studio, which gives supply chain teams a no-code way to compose AI Agents tailored to their unique needs. Our agents, which embed large language models, including OpenAI's ChatGPT, Google Gemini and Anthropic's Claude in training and in testing, make it easier for users of any skill level to access the full power of Maestro. They also enable automation of processes that would otherwise be impossible, difficult or inefficient for human users to undertake and create a practical foundation for more autonomous supply chain operations that deliver faster, better decisions with even greater confidence.

In Q1, we more than doubled the number of paying customers for our Maestro Agents, and we are in discussions with many more. The application of AI and agentic AI in supply chain planning, decision-making and orchestration is moving very rapidly, and there's no shortage of ideas for how to use it. One way we've been able to support customers in helping them prioritize specific high-impact use cases, we know will deliver value quickly. For example, we recently offered customers packages for up to 6 agents where deployment and knowledge transfer are supported by our forward-deployed engineers with full implementation done in as few as 4 to 8 weeks. The package includes predefined agents that target some critical decisions, ensuring data integrity, anticipating demand and supply risk, improving forecast accuracy, evaluating demand shifts and optimizing inventory and supply outcomes.

We also have launched our Maestro Agent Studio to enable composability of agents tailored to our customers' unique needs. Our start-up package, combined with forward-deployed engineers, aims to kick-start that process and quickly demonstrate value by absorbing real plan of work, standardizing analysis, creating automations and accelerating decisions. Our world-class customers move carefully and thoughtfully and they undeniably move forward. I'm certainly biased, but it's difficult to imagine any customer not using our AI agents in the coming years.

As I've described before, the next steps in our AI journey are to add the following: orchestrator agents that coordinate and sequence multiple agents across concurrent supply chain workflows; secure connections and interoperability between Maestro Agents and external agents and systems; and expanded data context and semantics through an extensible ontology layer that enables composable agents to reason consistently across larger data sets and analytical environments beyond Maestro for true supply chain orchestration. Initial versions of these initiatives will be available within 2026 and will open a much larger opportunity for Kinaxis. Stay tuned for additional announcements on this front at our Kinexions event in early June in Las Vegas.

Lastly, with respect to internal use of AI, we continue to prioritize this usage for improved efficiency, better results and increased velocity. I'll provide some examples. In R&D, we found that AI-assisted work is 25% faster on average. And over 90% of requests to move code into production now include some AI-assisted elements. Our business development team has dramatically improved efficiency and conversion by using AI for deep research on prospect accounts that could benefit most from Maestro. AI identifies the use cases, finds the right contacts, writes e-mails and follows up, all referencing the specific prospect context.

Our professional services team is using AI to increase our assurance that partner deployments are following all the rigorous standards that get quicker answers to the field to unique deployment challenges. We will continue to emphasize the use of AI for innovative ways to improve operations company-wide and transform our internal ways of working.

The search for a new CFO is going very well, and we have been working with the top-tier executive search firm to engage with over 200 potential candidates. At this time, we're in our final stretch of decision-making with a very short list of candidates. As it was when I joined Kinaxis, most of these candidates will need some transition time from their current roles. We will provide formal feedback when the process is complete. Meanwhile, Blaine is leaving us with a high functioning finance team to allow for a seamless transition. As I said on the last call, I can't thank Blaine enough for successfully steering Kinaxis through great growth opportunity and change and to leave us in such a tremendous shape today.

Over to you, Blaine.

Thank you, Razat. I couldn't be more excited than to complete my time here with such a stellar quarter. Like recent periods, Q1 was beyond expectations in several key areas and establishes even greater confidence in meeting or beating our 2026 targets.

If you look at Slide 9, turning to the numbers and compare to Q1 2025 results, total revenue was $165.6 million, up 25%, largely driven by very strong SaaS revenue growth and higher-than-expected subscription term license and professional services revenue. SaaS revenue was $102.9 million, up 21%, thanks to recent strong momentum winning new business, including record levels in Q4 2025 and our strongest Q1 ever. Subscription term license revenue was $19.1 million, up 111%. The result was a couple of million dollars higher than expected as a new customer joined us under the hybrid model. Under that model, we deliver Maestro from a hosted environment, but the customer has an option to move the deployment on-premise, which triggers term license accounting. You should adjust your annual term license estimates accordingly.

Professional services revenue was $38.7 million, up 16% and stronger than expected due to higher realized rates as we work to ensure that pricing fully reflects our premium services. We continue to successfully shift services work to systems integrator partners, and we'll continue to focus on that in 2026. The strong first quarter result doesn't currently change our view that professional services revenue will grow in low single digits for the full year.

Maintenance and support revenue was $4.9 million, down 11% due to some contract changes, including success moving a couple of large customers from a hybrid hosted model to SaaS. We mentioned in last call that there is ongoing interest in such transitions. As a result, we now expect maintenance and support revenue to decrease slightly and consecutively in the remaining quarters this year.

Our gross profit was up by 32% to $114 million for a 69% gross margin, up from 65% due to a higher software margin, higher professional services margin and a more favorable revenue mix as professional services declined as a percentage of total revenue. Our software margin was 81%, up from 80%, largely due to higher subscription term license revenue. Professional services gross margin was 27% compared to 21%, reflecting the higher realized rates in the quarter as mentioned.

Adjusted EBITDA was up 62% to $53.6 million, beating our record from last quarter and reflecting strong revenue growth, higher gross margin and efficient operations. Adjusted EBITDA margin was 32%, up from 25%, which sets us up well for our full year target. It's important to note that the positive impact from high-margin subscription term license revenue decreases substantially in future quarters this year.

Our profit in the quarter was a record $29.4 million, higher than any previous quarter and compared to $15.9 million in the first quarter last year. We are very proud of that result.

Cash flow from operating activities was $59.1 million, up 87%. Cash, cash equivalents and short-term investments were $327.6 million, up from $324.7 million at the end of last year despite $62 million deployed under our share buyback program this quarter.

Moving to Slide 10. Our trailing 12-month free cash flow margin was extremely strong at 24%. Given timing variations in individual quarters, we believe focusing on the trailing 12-month figure is most suitable. If you look at Slide 10, it illustrates our significant progress over the past 3 years. That said, it's worth highlighting that free cash flow margin in Q1 was an incredible 35%. Our organic cash generation muscle is now very well developed.

Turning to Slide 11. Annual recurring revenue grew 20% compared to the first quarter of 2025 and now sits at $447 million. We added $14 million to our ARR balance during the first quarter. This is a record for our Q1, even as our conservative approach to measuring ARR left significant committed future amounts out of the calculation. And despite foreign exchange movements in the period, reducing the balance by $2.6 million. As Razat mentioned, ongoing strength in million dollar-plus ACV contracts helped drive this great result. We also continue to convert very well on opening pipeline in the quarter, and our gross dollar retention remains very strong.

On Slide 12, SaaS and total RPO balances and growth remain very robust, with SaaS RPO at $905 million and total RPO at $949 million, highlighting the strength and visibility in our business. The balance remains slightly below $1 billion as Q1 is typically a low renewal quarter, which limits RPO growth. Over the last 3 years, SaaS RPO has a cumulative average growth rate of 20% and total RPO has a CAGR of 19%. We look at 3-year growth rates to help normalize for the impact of normal customer renewal cycles.

On Slide 13, despite total revenue, SaaS revenue and adjusted EBITDA results coming in ahead of our expectations, we are maintaining all aspects of annual guidance, which we provided only 60 days ago. The political, economic and foreign exchange environments remain extremely volatile. So we feel that the approach is prudent. It is still early in the year, and we will gather more information and review our guidance assumptions next quarter. In any case, we exit the first quarter even more confident that we will achieve or beat our goals for 2026.

Slide 14, we maximized our normal course issuer bid shortly after our last quarterly call, doubling the repurchase limit to approximately 2.8 million shares or 10% of our float at October 31, 2025. During the first quarter, we repurchased 570,204 shares for an investment of approximately $62 million. We see tremendous value in being aggressive on our share buyback program, while public markets continue to misvalue complex AI-enabled enterprise SaaS companies like ours.

As I said last call, Kinaxis' business has never been in better shape over my 6 years here. It's hard to imagine that our quarterly revenue is now approaching Kinaxis' full year revenue in the year before I joined. It's been a privilege to be part of that growth.

ARR and SaaS growth are accelerating. RPO is closing in on $1 billion, and profitability is up and has a higher ceiling in the years ahead. Kinaxis is only at the beginning of its AI journey, which I'm confident will add even more opportunities for growth.

I want to thank again the whole Kinaxis team, which is truly PFA, and all of you, our investors and analysts. I hope to see you again down the road. I will now turn the line over to the operator to start the Q&A session.

[Operator Instructions] Your first line comes from Kevin Krishnaratne.

A couple of questions on Maestro. I think, Razat, you said something about how the release is allowing your customers to do things that were really complex, sometimes impossible. So can you talk about maybe the pricing here? And how are customers thinking about the ROI on their side? Are they maybe hiring fewer demand planners? Or are they just going faster on plans?

Yes. I think it's part of an adoption journey, Kevin. And so really, right now, what we're finding is a lot of the focus with our customer base is in gaining efficiencies, productivity, but also on driving working capital efficiencies and cost efficiencies and service level improvements in their supply chain. That's the bigger value proposition in the near term. Clearly, in the midterm, there's going to be opportunities to further consolidate and scale to a much larger extent with fewer headcount and planners, but that doesn't seem to be the initial focus for our customer base.

Got you. And it certainly seems like a big opportunity, some education and handholding on your side. You talked about the FTEs. I'm just curious to how do you work with your partners and SIs to make sure that you're getting this technology properly deployed and scaled over time?

Yes. Look, we've done a few things there. Firstly, we have almost doubled our investments in training enablement for our partner ecosystem. That's a really important initiative for us this year and that's really well on track, and we're going to continue to see us make a lot of investments. That's the first part.

Second, we're working with fewer set of partner organizations, but we are going deeper in the skill development, the talent development with them. And then thirdly, when partners do lead implementations, which we are perfectly fine with, we are insisting that we have a level of engagement to ensure that we are reviewing the solution design, we are reviewing the integration architecture, we're reviewing some of the testing and things like that before they go live. And we have a package now we call that the Guardian package that we are insisting that every customer uses when they are selecting partners. And that's something that is becoming -- getting a lot of ground. And all the mature partners we have, they like our level of engagement in the implementations, even though they take the bulk of the implementation work, they like to have Kinaxis experts involved in it to make sure we are doing it properly and we're mitigating any risks going forward and ensuring the right outcomes for our customers.

Your next question comes from the line of Richard Tse at National Bank Capital Markets.

Blaine, I just wanted to say it's been a pleasure working with you and all the best with your new opportunity here. If I kind of look at the growth here, it's obviously accelerated quite a bit this year versus last year. How would you attribute that growth to sort of just an improving sort of macro for supply chain? Or is it specific more to Kinaxis and what you've done on the execution side? I'm just trying to kind of gauge where that incremental is coming from.

Yes, it's a good question. I think it's a combination of factors. Clearly, there are some structural shifts that are happening geopolitically, from a tariff perspective, just overarching demand-supply volatility that provide us some good tailwind. It builds the need and the case for the Maestro platform. So that's definitely a factor. But I think beyond that, there are, I think, 3 other factors as well.

Firstly, we're seeing a significant push for replacement cycle of old legacy supply chain planning deployments where customers are fed up of those old legacy deployments, and they're looking for a more modern solution that is usable and is on a single platform and there's really purpose-built for taking them to the agentic era, right? So there's a significant push for a replacement cycle that is underway. And at the end of last year and in Q1 this year and as well as in our pipeline, we are seeing continued increase of those replacement opportunities. So that's an important factor.

The second one I'll tell you is I think beyond just the macro tailwinds, we're seeing that the Chief Supply Chain Officers are under more and more pressure from their CFOs and their CEOs and their Boards to create the next big wave of efficiencies in terms of working capital efficiencies because supply chains account for a very large percentage of the balance sheet and inventories that they carry account for a very large part of the working capital. And also in certain industries where logistics costs are a big part of the percentage of cost of goods sold and with the increase in the fuel prices, there's a lot of pressure for reducing the cost basis as well. So all of these factors are also creating a bigger need for our platform.

And then the third thing I would say is I think we -- our execution has improved dramatically. And we've really rehauled our overall go-to-market engine. We've added capacity and we're going to continue adding capacity through the course of this year in terms of quota coverage. And we're just winning more business, including competitive business, and we're expanding within existing accounts as well.

Okay. And I just have one other quick one in terms of the expanding business. Of the wins today, like how many would you say are being kind of influenced by the fact that you've got a pretty progressive road map for AI, particularly with sort of Maestro Agents? Like is that kind of part of the decision-making you think in terms of what you're doing there? Or is it still a bit early for that?

Yes, it's a good question. I'll tell you, in all -- I mean, obviously, with our existing customers, we are very actively engaged with them and they're coming on the adoption journey with us. But in net new accounts where there are evaluations happening, the underlying platform capabilities for agentic AI, the underlying capabilities for being able to have composability for agents and the out-of-the-box agents we have is playing a bigger and bigger role in the evaluation process. And every pursuit cycle that we're engaging involves demos of these newer capabilities. And there's a growing trend where they become part of the solution set that our customers are buying even in net new logos. So it's becoming a bigger and bigger factor, I would say, in net new accounts.

Your next question comes from the line of Stephen Machielsen at BMO Capital Markets.

Blaine, it's been great working with you over these years. I want to dig into the spending environment. So on one hand, you've got global volatility in oil prices, supply chains, underscoring the need for your software. But on the other hand, enterprises will often delay decisions during these kinds of periods of uncertainty. What's the dynamic you're seeing with your prospects today? And how might that vary across the different verticals and geographies?

Yes, there's definitely some differences by industry verticals and geographies there. There are some verticals like the high-tech value chain or the energy sector that is feeding into the surge in the build-out of the AI data centers where those needs are very, very urgent and they're not waiting for the macroeconomic uncertainty to sort of settle itself. They're really moving ahead with those investments. There are other industries like aerospace and defense, where we're seeing similar trends.

And then in industries where there are more chronic disruptions and sort of inflationary cost pressures, our solution and what we at Kinaxis and what Maestro [Technical Difficulty] builds a bigger business case for our sponsors and our champions in these organizations to get additional funding to move ahead with these initiatives, right? So we're frankly not seeing any delays or inertia in decision-making.

Now I would call out that to be the case, especially in North America. Our North America business had a fantastic Q4. They've had a fantastic Q1, and the pipeline has tremendous momentum for us in North America. Slightly different dynamic in Europe. Europe, we are seeing -- we had a very strong Q4 in Europe. And we are seeing good pipeline momentum there, but the pace of decision-making doesn't seem to have the same sense of urgency as in North America. And then in Asia Pacific, it's a different dynamic based on which country you're talking about between Japan, Taiwan and India, which is where we operate. In India, we're seeing a lot of deal flow and a lot of momentum in organizations that are looking to scale up and looking to become more competitive, continue to invest in our solutions. And so it varies by industry and vertical. In general, we have not seen the slowdown with any of the macro issues. In fact, if anything, it's been a little bit of a tailwind.

Okay. That's some really helpful color. So I know you've been calling out some of your larger deals, especially this quarter. Did you say that you signed your largest initial deal ever?

That's correct, both in terms of ACV, average annual contract value and in terms of total contract value, that's right.

All right. I'm going to go in a different direction. I just was wondering if you could comment on how you're ramping up your reseller channel? Like how has the progress been there? I guess, going to the smaller deal size?

Yes. That's an important area for us because, of course, we are adding direct quota-carrying capacity in our go-to-market engine. But resellers play a really important role, particularly in segments of the market where we don't have our own direct coverage. So that includes many countries and regions around the world as well as certain segments of the market that are more down market. So we have a pretty good, robust global reseller program. We are actively evaluating and recruiting and developing partner relationships where appropriate with them. We do want to make -- continue making investments in training and enabling them and making them more proficient.

And then we also have an offering, a sort of a rapid quick start offering where it's still our Maestro platform, but we've really simplified the template and usage for it because a lot of these resellers are selling to customers that are at a different phase of maturity as organizations, and they want something that can be implemented very quickly, have lower total cost of ownership and can lead to more rapid time to value. And so a combination of the product packaging as well as the training enablement and then our global reseller program is important. We had a pretty good year last year with this program. This year, we're looking to continue that growth momentum with the reseller program as well.

Your next question comes from the line of Lachlan Brown at Rothschild & Co Redburn.

Blaine, wishing you all the best on your next opportunity. You added $5.7 million of SaaS revenue in the first quarter, which I believe was your last quarter of SaaS revenue dollars added sequentially. And I believe this did come ahead of your initial expectations. So could you just run us through the core drivers behind this? Was it on pricing, cross-selling, commencement of large new contracts or anything else to call out within that number?

Yes, great question. So we had a pretty healthy balance of new name accounts as well as expansion that obviously contribute to that. It was almost like 50-50 for where we ended up. At the end of the day, it comes down to like execution of that go-to-market team that is doing extremely well. They're converting at a very, very high clip to a point where when Razat joined, he said I've never seen conversion at this. These are levels that are extremely high, which we're obviously very, very proud on.

Obviously, the strength of Q4 really helped us out and put us in a great position. So it was just compounding at this stage. A great Q4 and then a great Q1 is helping us hit those high numbers. It's a situation where CFO is pretty exhilarating to be in a position where you get to go out and have these amazing numbers that you get to brag about. And we gave our guidance in a, I think, fairly prudent way. I'd say we are very, very, very confident, more confident probably than we've ever been before that we're going to at least hit those numbers. And I hope that my successor is going to be very happy with me giving them a reward to be in a position to potentially give you some, I guess, increases in those guidance in the future. But we've been in a very fortunate position to have some great execution on the go-to-market side.

The other piece I would just kind of end with is like you asked a question about expansion and AI, and an earlier question came from that. And we called out ADF and agentic AI, both of those products are our fastest-growing products right now, and there's a lot of high demand. So we're in a fortunate position that what we've been innovating for has led to where we're at right now. And maybe one of the unsung kind of metrics that usually a CFO wouldn't want to brag about right now is just the R&D increase. We are investing for the future right now. The innovation that we're doing is what's getting us the wins against all of our competitors and the future competitors because they're seeing that we're investing in our product and making this product top right of any Gartner MQ that's out there. So we're in a great, great position.

And the comment on agents ties nicely into my next question. So with the new paying customers on Maestro Agents, how has their usage been? Has that come in above, below expectations? And has this changed your thinking around how you're bundling MAU usage within subscription?

Yes. No, we're really happy with the traction we're getting with the early adopters of our Maestro Agents. It's been a lot of fun. And actually, they'll be presenting and discussing some of those early wins at our Kinexions event. And it's always exhilarating to hear our planners who our users talk really about how they can do things in minutes or seconds, what would take them hours or days. So I think that's really on a really good, strong trajectory. Of course, as we are landing new customers with our agentic capabilities, we want to make sure we're also working with our partners and our forward-deployed engineers to make sure we can think through the outcomes and the use cases and get them the value. So that continues to be a really, really important focus area for us.

In terms of the MAU pricing, as you know, we launched that last quarter in Q1. And all new proposals going out to customers and to prospects involve that Maestro activity unit structure, which is a consumption and value and outcome-based pricing structure. We've continued to get good feedback from customers and prospects. And we're continuing to refine the details and the minutia details of the metrics. But all the telemetry is in our platform as well, both for ourselves as well as for our customers to track it.

And then just to remind you later this year, in July this year, all renewals we're going to be doing with our customers is also going to involve the MAU pricing structure. So it's just -- it's a great sort of trajectory for us to tie the movement and the emphasis we have around our AI-oriented use cases and road map and the agentic capabilities with this MAU-based pricing structure.

Your next question comes from the line of Paul Treiber at RBC Capital Markets.

Just in terms of -- you mentioned pricing, you also mentioned that you're seeing larger deal sizes. The -- could you dig into further on the deal sizes, that reflect more so momentum of larger customers? Or are you also seeing an increase in the economics per customer? And then with the changes in your pricing structure with AI and other aspects of your road map, how do you think about the average economics per customer going forward?

Yes. Look, I think -- well, firstly, it's a very good question. And what I'll say is between sort of winning business with large organizations,and sort of the deal sizes, what I'll say is that both are important factors, right? I mean, I think we are selling to large enterprise organizations that was a big contributor of our bookings in Q1. Some of the large wins were with some of the largest companies in the world. But also, I think the scope of the capabilities we are taking to market has broadened, right, as we've innovated and brought new capabilities to market.

Blaine talked about ADF, which is our machine learning-based forecasting capabilities that is using outside-in data and using sophisticated machine learning techniques that we feature engineer for improving our customers' approaches to how they think about demand of the organization or another capability that we introduced, which is our enterprise scheduling capabilities, right, which is using sophisticated scheduling, genetic algorithms and optimization capabilities to bring efficiencies to the shop floor of these manufacturing organizations and bring an integrated approach to supply planning with production scheduling.

All these expansion capabilities, and of course, now we have these agentic capabilities that we are also adding on to our footprint. So all of these capabilities are adding -- are creating fantastic opportunities for us to both cross-sell to existing customers, but also when we land net new logos, they're becoming a broader footprint. And a lot of times, customers are working with us because we were able to bring that end-to-end solution with a platform that understands the complexity and the physics of the supply chain, and then we are adding these intelligent algorithms, these intelligent agents on top of them to really be able to create the next wave of value. So it's, I think, a combination of larger organizations, but also a broader set of capabilities.

That's helpful, and great to hear. The second question, just on -- there's obviously a lot of interest for customers to use AI to develop more software internally. Based on the feedback that you've seen or heard from customers, where are they delineating between software for supply chain or within the enterprise that they're looking to build themselves versus what they would use a partner like Kinaxis to provide?

Yes. Look, this is a good question. And I think most of our customers are still calibrating where they work with Kinaxis versus where they do in-house development. What I can tell you is, as we are making investments in our underlying platform, we are providing capabilities more and more where customers can both use out-of-the-box capabilities that we embed in our products and our capabilities, but also we are able to provide extensibility and composability in the underlying platform we have. So when there are unique capabilities that our customers need or use cases where we need to extend what we are able to do, we are being able to facilitate that in a very supportable, maintainable and sustainable way, right?

And going forward, I think the ability of our platform to provide for that composability and provide for all the extensibility will allow both our customers and our partners to develop capabilities on our platform. And -- but when they develop capabilities on the platform, it's not to write custom applications or custom solutions like in the traditional or legacy approach to it. It's really going to be allowing them to compose solutions, compose agents, compose micro apps while taking into account all the different pieces of the LEGO blocks that are part of our platform.

And so that's an important trend that we're seeing. Supply chains, the extended supply chains deal with the minutiae of operational details. There's a lot of variance in the needs by industry, by vertical, by geography, by country, by operational function. And so being able to have a platform that is flexible, extensible and composable gives them that ability to leverage all the knowledge we've been able to accumulate over the years and all the reflections we have of -- the digital representation of that physical supply chain and the intelligent library of algorithms we have together with our semantic and ontology layer to really be able to compose applications when needed as well. So our vision is to not only play in out-of-the-box packaged applications, but to also play a growing role in organizations that do want to innovate and in the DIY space as well.

Your next question comes from the line of Stephanie Price at CIBC.

Hoping you could talk a little bit about where you are in the partnership strategy. How should we think about partnerships with companies like Databricks and NVIDIA contributing to growth? And also, how do you think about growth with the traditional SI partners here?

Yes. It's a good question. So look, I mean, obviously, we've been working with our SI partners for several years, and we're going to continue working with them. They are playing a bigger and bigger role as we scale up the business. And like as I mentioned earlier in the call, we're really doubling down and investing in the training and enablement and ensuring that we still have an active involvement in those implementations through the Guardian package that we now have with these SI partners.

In terms of the rest of the ecosystem, beyond the SIs, there's some important ecosystems that we are becoming a part of in a more and more active and strategic way. Of course, we work with 2 hyperscalers, Google and Azure. And we're actively working with them. You'll be hearing some announcements coming up at Kinexions along these lines and some of the more innovative work we're doing with some of these hyperscalers.

In addition to the hyperscalers, Google and Azure, we're also working actively with NVIDIA. We had made that announcement in our partnership to innovate our optimization engines and our MIP solvers using NVIDIA's cuOpt, which is an innovative capability that they've just launched recently and it runs on their GPUs. And we're getting deeper and deeper into that NVIDIA ecosystem.

And then with Databricks, that's an important relationship because we're building out our extensible data fabric. That's a relationship we entered last year. We are continuing to leverage their machine learning pipelines as we enable capabilities for forecasting and machine learning-based forecasting for our customers. So that component that we are OEM-ing from Databricks is also very important. But I envision that the ecosystems like NVIDIA and Google and Azure will become more and more important for us.

And then there's another element, which is we have -- we OEM and we leverage the LLMs as well, right? So OpenAI, Google Gemini as well as Anthropic Claude. So there's different ecosystems emerging. We want to, of course, play appropriately in those ecosystems. With the hyperscalers, with the SIs and in some situations with some of these other folks, we are engaging and partnering in certain accounts as we engage with customers, as we engage with prospects as well. And you're going to see us continue to double down and focus on developing these ecosystem relationships even further going forward.

Maybe for my next question. Obviously, Kinaxis has been doing well in multiple areas and definitely results this quarter were very good. Is there anything worrying you, Razat, as you now have kind of been in the seat for the few months here? And how are you thinking about the business and the evolving landscape here?

Well, I worry about everything. But look, it's -- the business clearly has a lot of momentum right now. And -- but we're not being complacent about it, right? If I look at it with all the new wins and the growth we have, we have to stay anchored and focused on ensuring our customers are getting value. We are doing that with a lot of investments we've made in our delivery organization, in our customer success organization,and with our partner ecosystem, right? So I mean, we only retain the right to continue growing as long as we can keep making our customers successful and ensuring that they're getting value from our solutions. That's a really important focus for us.

Of course, beyond that, we are accelerating our innovation cycles. We've increased our investments significantly in R&D, as Blaine mentioned earlier. And the investments in R&D are not from the point of -- or a vantage point that there's a great white shark that is coming to eat us. It's really to really focus on the fundamentals of what are the needs of our customers, what are they trying to achieve and then map that to all the new and exciting technologies, whether they are new data architectures or new generative and agentic AI capabilities, how can we marry those together to create the next wave of value for them.

And so that's a very big focus area is our innovation road map, and you're seeing us continue to innovate so we can leverage our fantastic core we have, which is Maestro and the end-to-end planning capabilities and that representation of the concurrent supply chain, but also extend beyond that with an extended platform to get into agentic orchestration across the end-to-end supply chain, right? And that's where we are investing in the data fabric and the semantic and ontology layer and the knowledge graph and the agentic studio.

So a lot of things to get done, but all exciting. And all of that only happens as long as we can retain and attract the best talent and our people, right? The company has a fantastic culture. We are not taking that for granted. We're making sure that we continue to retain the innovation culture, the collaboration culture, the product-centric and customer-centric culture, but we also need to make sure we attract the right talent as we aspire to bigger dreams and bigger goals. So those are the things that I'm working on is making sure we continue delivering on customers, making sure we continue to execute on our innovation road map and continue to make sure we retain and attract the best talent possible.

[Operator Instructions] Your next question comes from the line of John Shao at TD Cowen.

I just want to ask about token costs, which seems a concern for some software investors. I know your pricing model is hybrid and consumption based. But could you still remind us the guardrails you have there to make sure it's not going to be a gross margin headwind?

Yes, that's a great question. And we've heard in a lot of different companies having to worry that tokenized costs and the change in tokenized costs will elevate the amount of cost of goods sold as you go forward. We're in -- I think just like everyone else, we're still in early days. We're not seeing that impact at this stage. It will be something we'll have to figure out. And at the same time, we're having some almost tokenized pricing that we are bringing to our customers. So we're trying to offset that cost with our own pricing strategy as we go forward. But it's still too early to determine how that's going to play out.

Just like any other new change, we expect that there's going to be a price elevation in the short term, and then it will start to work its way out and be a little bit more efficient as we go forward. But today, it doesn't have any impact on any of our numbers, including in our short-term forecast.

Yes. And just to add a little bit to that, right? So I mean, tokens come into play on 2 fronts. One on the internal usage of AI and code assist and other LLM capabilities. And there, now we are allocating a token budget to all our engineering teams and we have seen situations where some of the most productive engineers are blowing through that. And actually, frankly, we're celebrating that to some extent because the numbers are not something we can't manage within our budgetary guidelines and our forecasts. But what we're seeing in terms of outcomes, in terms of velocity and productivity improvements and speed is just fantastic. So that's on the internal side.

With our customers, we have put in place a telemetry like I mentioned. So the MAU construct factors in tokens, like Blaine said, and we monitor that telemetry. Our customers can monitor that telemetry. And when customers reach at the top end of that, we do engage our commercial teams to engage with the customers to see if they need to top up on that, right? So we are well protected from that regard. Of course, we're also watching closely what are the pricing trends for unit costs from LLM providers. Obviously, we've been beneficiaries of those unit costs coming down in the last 2 years pretty dramatically, but we are watching that pretty closely as we go forward.

Your next question comes from the line of Mark Schappel at Loop Capital.

Razat, there's been considerable recent discussion about kind of the software power center kind of shifting from traditional applications to these orchestration layers. That seems to be a trend that you guys are embracing. I was wondering if you could just elaborate maybe on how real that shift is you're seeing? And then also maybe just elaborate on your orchestration capabilities.

Yes. Look, I think the underlying data architectures are shifting. And I'll talk about ourselves a little bit. The key sort of capability we have, orchestration is -- it means different things to different people. For us, really, what it means is to leverage our underlying platform and our sort of understanding of the physics of the supply chain and to really help our customers plan, make decisions, take actions and to really be able to achieve the outcomes and then to go through the learning cycles as they go through that. That's the orchestration loop as we think of it, right? So planning, decision-making, actioning, execution, achieving the outcomes and the results and then going through the learning cycles.

And I think what's most important and, frankly, the big effort to achieve this vision is not so much on the underlying technical architectures or the product capabilities or the agentic capabilities. It's more importantly in working with organizations on how they need to rethink their ways of working. And these organizations are Fortune 1000 companies that we're working in, in the 7 verticals we work in, right? And it requires -- I mean, there are some use cases that can have a quick hit with creating productivity and automation and repetitive tasks and things. Those are the low-hanging fruit and easy things to facilitate through agentic workflows.

But to really truly get into orchestration across functions, across planning horizons of strategic decision-making versus tactical decision-making versus execution, it requires organizations to rethink their fundamental operating models, their underlying processes, how they're organized, how they think about their metrics. And that takes time, right? And that's why as we -- I think in my humble opinion, I think most people are over-expecting what impact these orchestration capabilities will have in the enterprise in the near term. But I think they're also underestimating the impact in the mid- to long term. But it's not just a technology-driven approach you've got to also make fundamental changes to your organization structure, operating models, processes, metrics and things like that to really transform your ways of working, right? And that's why the work we do together with our partners is very critical in achieving the true outcomes from this vision.

Your next question comes from the line of Suthan Sukumar at Stifel.

Congrats on a very impressive quarter. With respect to my question, I just had a -- I wanted to chat on the competitive landscape with AI. How are you guys positioning Maestro Agents versus the agentic frameworks that are offered by some of the incumbent underlying platforms like SAP that your customers already use? I'm just wondering, is this more of a share of wallet discussion at the orchestration layer? Or is there a coexistence and interoperability here that can be leveraged?

Yes, I think you were cutting out a bit, but I think I got the gist of the question. Look, I think what I'll say is most organizations are early in the journey to really leverage these agentic orchestration capabilities, right? Customers have done pilots with agents, they have put many agents in production, including with ourselves, and they're seeing good results when it comes to getting productivity and automation improvements. But to really truly do orchestration, I fully expect that companies will have to have orchestrator agents work across a very heterogenous systems landscape, right? And in that regard, our philosophy and our approach is to be interoperable, right? We're not trying to be everything to everyone. But as we have sort of architected our platform and as we are making investments in the go-forward road maps in our platform, we're really architecting in a way that we can be interoperable, right?

In the end-to-end world of supply chain, any supply -- any Fortune 1000 company may have anywhere from 10 to 100 applications that power that end-to-end supply chain, right? And so we had to really have the ability to really be able to integrate to those systems and work across those systems. And the orchestration use cases that agents can facilitate will also need to traverse a pretty diverse systems landscape. That's where this semantic and ontology layer is very important because it provides the context for what these orchestrators do. It provides a common taxonomy. And then these agents have a chance of traversing that heterogenous landscape.

And of course, as companies are doing that, they're always looking for opportunities to consolidate that heterogeneous landscape and to simplify them, but they continue to be fairly heterogenous in that end-to-end supply chain world. So our design principle is really around interoperability and coexistence. And at the same time, we expect that we'll have our own agents that will play the orchestration role. And at the same time, I expect that there'll be orchestrator agents from third parties where they leverage the Maestro platform for making decisions and for doing computations that we are very good at doing for supply planning, for demand planning, for inventory optimization, for production scheduling and things like that. So I think it will work in both ways, and that's how we're architecting our platform.

We've reached the end of the Q&A session. I'll now pass the call back to Rick for closing remarks.

Thank you, everyone, for participating on today's call. We appreciate your questions and your ongoing interest in Kinaxis. We look forward to speaking with you again next time when we report second quarter results. Bye for now.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, and welcome to the Kinaxis Inc. Fiscal 2025 Fourth Quarter and Year-end Results Conference Call. [Operator Instructions] I'd like to remind everyone that this call is being recorded today, Thursday, March 5, 2026.

I will now turn the call over to Rick Wadsworth, Vice President, Investor Relations at Kinaxis Inc. Please go ahead, Mr. Wadsworth.

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 Razat Gaurav, our Chief Executive Officer; and Blaine Fitzgerald, Chief Financial Officer.

Some of the information discussed on this call is based on information as of today, March 5, 2026, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set out 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 in our SEDAR filings.

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, kinaxis.com and on SEDAR+.

The webcast is live and being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations section of our website. Neither this call nor the webcast may be rerecorded or otherwise reproduced or distributed without prior written permission from Kinaxis. We have a presentation to accompany today's call, which can be downloaded from the IR homepage of our website. We'll let you know when it change slides.

Over to you, Razat.

Thanks, Rick. Turning to Slide 4. I'd like to start by saying how thrilled I am to be a part of the Kinaxis team. It's a company I've admired and competed against for several years. Here are my top 3 reasons for joining Kinaxis. One, getting back to my roots in supply chain software, where I've spent over 20 years in my career, particularly at this time when organizations are experiencing unprecedented levels of demand and supply volatility; two, to build and scale a company that is already a market leader in AI-powered supply chain planning and orchestration; and three, the tremendous talent and culture in the organization that is rooted in innovation and customer success. I am truly excited to build and scale the business while delivering unprecedented value to our customers.

Turning to Slide 5. I couldn't have joined Kinaxis at a better time. The team performed really well, and we had a record-setting fourth quarter and year with ongoing momentum in 2 key growth metrics. Our SaaS revenue grew by a healthy 19% in Q4 and 17% for the year, significantly higher than our initial guidance range of 11% to 13%. Perhaps more importantly, our ARR balance grew by 20%, accelerating from 12% growth at the end of 2024. Incremental bookings hit record levels in the quarter and year. This momentum sets us up really well to target higher SaaS revenue growth in 2026, as Blaine will explain and speak soon.

This growth momentum combined with operating efficiency also translated to significantly improved profitability. Full year adjusted EBITDA was at a record level and grew by 30%. The margin in Q4 was 26% and was 25% for the year, at the high end of our initial guidance range and a year early at our midterm target. We see room for ongoing improvements in coming years.

Moving on to Slide 6. The new business we won in the quarter and year demonstrates excellent execution on important go-to-market strategies. Let me give you some color. In Q4 and in fiscal 2025, we won roughly 1/3 more new business than in any previous quarter and year in our history, measured by the total average annual contract value in the period or ACV. The number of contracts with $1-plus million in average ACV was at record levels in Q4 and the year. We won 21 deals over $1 million in the year versus 6 in 2024 and over 30% higher than the closest result.

When looking at total contract value or TCV over the committed term, we won over 100 deals above $1 million. Our pipeline suggests that 2026 could be another strong year in this regard. Together, these metrics reflect the growing market need for companies to develop agility and adaptability as they navigate unprecedented levels of supply and demand volatility. We continue to be the market providers, the go-to-market providers for AI supply -- for AI-powered supply chain planning, decision-making and orchestration for the world's largest and most complex supply chains.

Going to Slide 7. We won some world-class companies in Q4, which are distinguished not just by their size, but also by the role they play in the global AI transformation. As investments increase in the build-out of data centers and related AI infrastructure, Kinaxis Maestro is becoming the default choice for supply chain planning and orchestration across the value chain.

During Q4, we won a top 5 global semiconductor foundry, which manufactures highly advanced GPUs for the world's AI infrastructure leaders, mobile device leaders, massive players in the digital economy and others. You'll recall that in the first quarter of 2025, we also won another global leader in the semiconductor ecosystem. In Q4, we also won a major player in the global storage business, serving the world's largest cloud providers, consumer electronics companies and other device makers. Last quarter, we talked about winning a material science company that is also a key part of the global data center infrastructure.

We have continued our amazing run in the oil and gas sector by earning the business of Marathon Petroleum Corporation, a leading integrated downstream and midstream energy company headquartered in the U.S. and operating the nation's largest refining system. The AI economy is energy hungry, so our success in oil and gas continues to position us really well. We're also seeing increasing demand from energy utility companies that are expanding their operations to service the surge in data center needs.

We're performing very well in other growing markets like aerospace and defense. Companies in the sector are seeing significant growth in demand while leading with complex bill of materials, engineer-to-order operating models and capacity constraints. In the fourth quarter, we won one of the world's largest aerospace engine makers, which powers defense, civil and business aircraft worldwide. We already support Honeywell, Lockheed Martin, Raytheon, L3Harris and several other leaders in the aerospace and defense space.

In consumer goods, we won the Magnum Ice Cream Company with revenues of roughly EUR 8 billion in 2025, the Magnum Ice Cream Company is present in 80 markets around the world and is home to icons like Magnum, Ben & Jerry's, Cornetto and the Heartbrand. If that wasn't enough, we also won a top 5 global chocolate company in Q4.

At the end of 2025, roughly 85% of our ARR is split between our top 4 vertical markets: life sciences, high-tech, consumer products and industrial manufacturing, including aerospace and defense. Maestro's ability to offer comprehensive AI-powered supply chain planning and orchestration for such a diverse set of major manufacturing markets, all without custom coding is unparalleled. There are still 14,000 prospects remaining in our markets, and we have never been in a better position to win them.

Moving on to Slide 8. Despite outsized success winning major new accounts in Q4, 55% of gross additions to ARR came from expansion business with existing customers. For the year, that number was 53% compared to 45% in 2024. It was our biggest year ever for expansion business. We revamped the structure and goals of our installed account teams at the end of 2024. The impact has been meaningful, immediate and lasting. The contribution of expansion business from applications hit an all-time high with newer products like enterprise scheduling, machine learning-based forecasting and supply optimization making notable progress. We have over 400 customers and a growing set of capabilities to take to market to them. There is still massive room for growth within the installed base.

Going on to Slide 9. I'm excited to tell you more about our ongoing journey with AI, the commercial launch of Maestro Agent Studio. This is a next-generation capability that gives supply chain teams a no-code way to compose AI agents grounded in their real operating context to reimagine the ways of working and delivering the next level of value outcomes. The agents are proprietary -- use proprietary data, workflows, resources and tools in our Maestro platform and can leverage the context of the most comprehensive digital representation of the complex and interconnected physical supply chain.

Working within Maestro's trusted supply chain planning environment, the agents help teams concurrently evaluate trade-offs and coordinate decisions and actions as business conditions change, and the business conditions are changing at unprecedented levels as we speak. Maestro Agent Studio embeds leading large language models, including OpenAI, ChatGPT and Google Gemini with others like Anthropic's Claude in testing and keeps agent behavior anchored in Maestro's trusted data intelligence and governance.

The agents call on and complement our existing decision automation capabilities that are anchored in decades of deep domain expertise and sophisticated mathematical models that LLMs aren't designed to replace. This includes advanced machine learning capabilities, deep optimization algorithms and heuristics algorithms. Together, these capabilities create a practical foundation for more autonomous supply chain operations that deliver faster, better decisions with confidence and trust.

To date, early innovator customers are using Maestro Agent Studio for exciting use cases. For example, a major global electronics manufacturing services company is autonomously analyzing forecast quality and outside-in demand signals across business units to recommend improved forecast quality. A prominent consumer fashion company is analyzing demand changes to help planners understand the impacts on production and distribution and determine mitigation strategies. A global life sciences company is eliminating steps in inventory risk assessment to surface insights in seconds instead of hours. And several early adopter customers are streamlining reporting processes to reduce manual effort and tons of hours per month.

Our progress is exciting, but the best is yet to come. So far, Maestro Agents are focused on working with data within our own platform. As we continue our AI journey going forward, we are expanding Maestro's reach to the broader ecosystem with an expanded data fabric and an abstracted semantic layer to enable composable agentic orchestration right across the supply chain.

In 2026, our plans are the following: orchestrator agents that coordinate and sequence multiple agents across concurrent supply chain workflows, securing connections between Maestro Agents and external agents and systems through emerging protocols like MCP and A2A, expanded data context and semantics with an extensible ontology layer, enabling agents to reason consistently across larger data sets and analytical environments beyond Maestro. Through agentic connections to other systems that can provide relevant data and insights, we can leverage our context-sensitive real-time concurrent planning engine to help customers make better, more informed decisions and achieve unprecedented positive outcomes.

Moving on to Slide 10. Maestro Agent Studio and our prebuilt Maestro Agents are fully available today. Monetization will happen through our next-generation pricing structure, an evolution that we've launched with customers and which introduces the Maestro activity units. Our new pricing structure remains subscription-based and still reflects a platform fee based on customer size and fees for individual functional modules like supply and demand planning, inventory optimization, production planning, enterprise scheduling and so on.

However, now a subscription also includes bundles for Maestro activity units or MAUs, which expand the basis for usage-based pricing in our structure. Customers will commit for the full term of the contract to a quantity of MAUs bundles that reflect anticipated usage. The size of MAU commitment grows with a number of scenarios, AI tasks and automations and plan calculations and data exports a customer expects to engage through our MCP server. This more fulsome notion of usage achieves some very important goals.

First, over time, we anticipate a bigger share of Maestro work to be conducted by AI agents. So our pricing needs to reflect that important value. If efficiencies result in fewer users, we are compensated by the growth in AI tasks and automations. Second, since we expect Maestro to interact more with a broader network of interoperable agents, we need to capture the value of the intelligence and analysis we share at. The data export aspects of MAU compensates us for that. Finally, embedding plan calculations in the MAU better reflects the value that customers receive and the costs we incur through normal plan iterations. Maestro now has the instrumentation to track MAU usage and persistent overages require additional MAU subscriptions.

We will learn a lot more about MAU usage and our next-generation pricing model over the next few quarters and fully expect some tweaking along the way. I am confident that it better aligns pricing with the value we create for customers in an even more AI-forward world.

The new pricing model is getting thoughtfully rolled out in a phased approach. I see AI as meaningfully expanding our TAM in the long run. As with all meaningful innovation, we encourage you to both avoid overestimating its impact in the short term and underestimating it in the long term. Our customers run the world's most important, complex and innovative supply chains. By necessity, they move carefully and thoughtfully, but they undeniably move forward.

I'll pass the call to Blaine to discuss Q4 and 2025 results and our 2026 outlook.

Thank you, Razat, and good morning. Q4 was a great record-breaking quarter for Kinaxis, and 2025 was also beyond expectations in key areas. We are positioned well for even more progress in 2026. I'll start with Slide 11.

As we look at the numbers for the fourth quarter and compared to Q4 2024 results, total revenue was $144.2 million, up 16% or 14% in constant currency, driven largely by very strong SaaS revenue growth. SaaS revenue was $97.2 million, up 19% or 16% in constant currency, thanks to strong momentum winning new business throughout 2025, including record levels in Q4. Subscription term license revenue was $1.7 million, up 8% and consistent with expected renewal cycles for on-premise customers. Professional services revenue was $40 million, up 14% and stronger than expected due to higher realized rates as we work to ensure that pricing fully reflects our premium services. We continue to successfully ship work to system integrator partners, and we'll continue to focus on that in 2026.

In 2025, partners participate in almost 70% of new customer implementations won by our direct sales team. Maintenance and support revenue was $5.4 million level with comparative period. Our gross profit was up by 26% to $94.3 million or a 65% gross margin, greatly improved from 61%. Our software margin was 78%, up substantially from 73%, largely due to more efficient delivery of our software. We see room for ongoing improvement as we complete our migration to the public cloud. Professional services gross margin was 32% compared to 29%, reflecting the higher realized rates in the quarter, as mentioned.

Adjusted EBITDA was up 19% to $37.6 million, a record level. This reflects strong revenue growth, a higher gross margin and strong control over operating expenses. Adjusted EBITDA margin was 26%, up from 25%. Our profit in the quarter was a record $19.5 million compared to a loss of $16.3 million in the fourth quarter last year, which, as you remember, reflected some onetime items. Cash flow from operating activities was $29.9 million, up 24%. Cash, cash equivalents and short-term investments were $324.7 million, up $26.2 million from last year despite a very active share buyback program.

Moving to Slide 12. Key aspects of full year results were beyond our expectations. SaaS revenue, our most critical GAAP measure, grew 17% compared to the initial guidance of 11% to 13% and came in at the top end of our most recent guidance range. Constant currency SaaS revenue grew 16% versus initial guidance of 12% to 14% and at the top end of our most recent guidance range. Total revenue was $548 million, up 13% and at the top end of our guidance range despite shifts from subscription term licenses to future SaaS revenue as well as lower professional services than expected as we shifted more work to partners and faced a challenging pricing environment earlier in the year.

In constant currency, total revenue was $540 million, in line with recent guidance. Adjusted EBITDA grew an impressive 30% from 2024 to a record $138.4 million. The 25% margin is the highest since 2019 and a big step from 22% in 2024. Our adjusted EBITDA margin was at the top end of guidance and hit our midterm profitability goal of full year ahead of target. We're pleased with the progress.

On Slide 13, our trailing 12-month free cash flow margin remains strong -- onetime payments we made in the first quarter relating to tax planning and litigation settlement reduced the results by 5.1 percentage points. So the normalized result is 25.6%, similar to our adjusted EBITDA margin for the year and trending positively.

If you flip to Slide 14, annual recurring revenue growth in 2025 was impressive, growing by 20% year-over-year compared to 12% in 2024. In constant currency, ARR growth was 18% compared to 14% in 2024. We added $73 million to our ARR balance in 2025 with $26 million of that coming in the fourth quarter, both records. This dramatic progress reflects improvements in go-to-market strategies and personnel over the last year as well as the benefits of an increasingly differentiated and AI-centric product. As Razat already mentioned, some drivers of growth included many more deals above $1 million ACV, more large enterprise accounts wins and more focus and execution on expansion business.

On Slide 15, SaaS and total RPO balances and growth remain very robust. Both measures show a healthy 3-year CAGR of 18%, and our total RPO is rapidly approaching $1 billion. This metric continues to highlight robust growth in our subscription business. Loyal customers driving gross revenue retention over 95% and is also influenced by normal renewal cycles.

Looking at Slide 16, I am very pleased to introduce 2026 guidance. Given our strong momentum, we expect SaaS revenue growth of 17% to 19% in 2025, which at the midpoint is consistent with our constant currency ARR growth rate exiting 2025. We expect total revenue of $620 million to $635 million. Underlying this guidance, we assume that professional services revenue will grow in low single digits as we expect success enabling partners to handle more work, which is a key strategy to achieve scale in the business overall. Maintenance and support revenue should be flat to slightly down from 2024, given the recent conversions on-premise contracts to SaaS. The remainder of total revenue will be made up by subscription term license revenue, which should see growth in the 60% range versus 2025 and then decreasing to 2027 by roughly 25%.

For 2026, approximately 60% of subscription term license revenue will be recognized in Q1, roughly 1/4 in Q4 and the remainder in Q2. Ongoing demand from on-premise customers who are moving to our hosting infrastructure could change the assumptions, and we will advise if that happens. We view 25% adjusted EBITDA margin as a new floor for the foreseeable future and are guiding to an adjusted EBITDA margin of 25% to 26% for 2026 as we make strategic investments in the year, primarily to drive exciting growth initiatives in AI and go-to-market activities that Razat will speak to shortly. Our business model and strategy allows for even higher margins in the coming years. I'll add some other color to help you with your models.

We expect our total gross margin rate to continue its steady growth in 2026, driven by a more favorable revenue mix and a slightly improved professional services margin. We expect our subscription revenue margin in 2026 to be similar to 2025 as the benefits of moving North American customers to public cloud will be offset by onetime costs related to those transitions in the year.

With respect to operating expenses, we expect sales and marketing to grow by high single digits relative to 2025. We expect research and development to grow in the high 20 percentage range versus 2025. And excluding stock-based compensation, we expect roughly 10% growth in general and administrative expenses compared to 2025. Including stock-based comp, we expect growth to be above 25%, reflecting some senior hires. Finally, we expect CapEx will be in the $8 million to $10 million range as we make office improvements to support growth in Japan and undergo internal IT refresh.

I'll leave you with Slide 17. As we exit our quiet period, we will be maximizing the size of our normal course issuer bid by roughly doubling the repurchase limit to approximately 2.8 million shares or 10% of our float by October 31, 2025. We've already invested $54 million under the buyback and repurchased roughly 440,000 shares. At the average price paid for those shares, our new commitment put in an additional investment of up to approximately $284 million throughout the term of the buyback. We see tremendous value in maximizing our share buyback while public markets continue to misvalue complex AI-enabled software companies like ours.

Kinaxis business has never been in better shape over my 6 years here. ARR growth has reaccelerated, and we are winning more industry leaders than ever, including in markets that have huge AI and other tailwinds. We have room to improve SaaS revenue growth and adjusted EBITDA margin in the coming years. We have a revitalized go-to-market team and the market's best product that continues to lead the AI transition in our space.

All this made my personal decision to take a new opportunity extremely difficult. I'll be joining an exciting private company with a path to go public ahead, which is a really exciting place to be for a CFO. I'm sure my departure raises questions as senior management changes always do. Let me address them right now.

First, I believe Kinaxis will be a huge AI winner, and we have a great new pricing model to monetize the inevitable evolution of how Maestro will be used. Second, Razat will be a fantastic leader for Kinaxis, and I truly wish I could have partnered with him a lot longer. There is no better time to have an industry veteran CEO with such impressive qualifications on the product side of the business as well as such strong go-to-market and overall leadership job. Finally, 2026 is set up to be a great year, and overall, the future looks exceptionally bright. So I'll be cheering from the sidelines.

I want to thank the entire senior team for their support over my time here, including past leaders like John Sicard, Richard Monkman and Bob Courteau. They taught me a lot and created a truly special culture. And thanks to you, our shareholders and analysts for years of partnership as well. I've learned a great deal from you and enjoyed getting to know you all. We may meet again.

For now, I'll let Razat make some concluding remarks.

Thanks, Blaine, for your countless contributions to Kinaxis. We've strengthened our business foundation, built a great finance team and successfully steered the company through great growth, opportunity and change to leave us in tremendous shape today. I wish we could work together longer, and I hope our paths cross again soon. I'm very pleased that Blaine will be with us through our Q1 earnings call in early May. In the meantime, we're actively searching for a new CFO to fill his big shoes.

Going on to Slide 18. Kinaxis has a long history balancing rapid growth with strong profitability, and that will not change. A 25% adjusted EBITDA margin represents a solid floor and will also allow us to invest in exciting growth opportunities. We are focused on accelerating the transformation of Kinaxis from a supply chain planning solution provider to an AI-driven supply chain decision-making and orchestration platform. I'll highlight 4 key areas of investment in 2026.

First, we're going to accelerate our road map for building out our core planning capabilities and turbocharging the leverage of agentic AI, including an extensible data fabric and semantic layer to enable our fulsome supply chain orchestration vision. Second, we're going to keep our foot on the gas for even greater go-to-market success. We will add quota-carrying capacity to expand account coverage and develop the go-to-market operating model for our new and exciting agentic capabilities. Third, we'll increase the leverage of key partners to both give us bigger edge in winning new business and to scale and help deliver the customers successfully with an increasing share of the implementation services. We are expanding our investments in training and enablement of our partner ecosystem and ensuring strong collaboration with solution assurance during implementation cycles.

Finally, we are mobilizing a team of forward deployed engineers to accelerate the go-to-market usage, adoption and value realization from our agentic capabilities. This team will work across the life cycle of our relationship with customers with a mix of deep supply chain domain knowledge, data science and data engineering skill sets to compose agentic solutions architected to deliver valuable outcomes while still leveraging the core foundation of Maestro.

We've already hired a leader for this group, a highly respected executive who rejoins Kinaxis after roles leading go-to-market and customer engagement teams for supply chain at Palantir and Celonis as well as senior roles at Cooper and Llamasoft. I couldn't have asked for a better person to spearhead our agentic solutions initiative.

Internally, we have a company-wide program to identify use cases for AI to transform our ways of working in an effort to gain velocity and productivity as we scale up the business. In our product teams alone, roughly 90% of all requests, which is the way that new code goes into testing -- goes from testing into live environments, includes AI-assisted code, helping us gain speed and freeing up more time for innovation. Roughly 80% of engineers and growing are using AI in their work and half of those are power users.

I hope these priorities give you a sense of how strongly Kinaxis continues to lean into the AI transformation opportunity. Evolving from a market-leading supply chain software solution to a composable agentic supply chain orchestration platform is a unique opportunity for Kinaxis and is why I am here. As you know too well, there is a lot of confusion in the public markets about who the winners will be in a more AI-forward world. We are working hard to prove that all the innovations in AI, data and agentic architectures are a significant tailwind for Kinaxis as we build the future of supply chain decision-making and orchestration. In the meantime, we are focused on delivering quarter after quarter as we did in Q4 and throughout 2025.

Thank you for your ongoing support. I will now turn the line over to the operator to start the Q&A session.

[Operator Instructions] Your first question comes from the line of Richard Tse with National Bank Capital Markets.

Great results, guys. Just before, Blaine, congratulations and all the best in your new job. It's a pleasure working with you over the years. Razat, like really great color on AI. And against that, I've got a really sort of basic question I'll ask here because we're getting a lot of inbounds on this. And so when you think about Kinaxis, why is it that a sort of high-powered sort of small team could not come in and build an AI native platform to compete directly with Kinaxis here. I know it's a basic question, but it's certainly one that we're getting a ton of inbounds on.

Yes, Richard, thanks for asking that question. And we think about this very deeply. And I think the underlying facts are what are the types of problems we are solving for our customers. The types of problems we're solving for our customers requires a very deep understanding of the supply chain domain. And the supply chains that our customers operate are highly complex, highly interconnected. And you need to understand the physics of the supply chain before you can use AI or agents to do anything with it, right? And that's what we've built in Maestro over decades long. And that platform is the single richest representation of that complex interconnected supply chain that our customers operate.

And then on top of that, we, like everyone else in the enterprise software space, are leaning in, in leveraging generative AI to transform the user interface to a more conversational interface, which is democratizing the usage of our solution. But also we are leaning in on all the new data architectures and the semantic architectures to create a composable agentic platform, right?

So when you think about the kinds of customers we have, these are customers like Ford Motor Company and Unilever and Schneider Electric and Merck, they rely on the trust and the robustness and the industrial strength and the understanding of the physics of the supply chain on our underlying platform. And then we are layering the intelligence and the automation and the prediction layer with agents and with AI. So we feel very confident in our ability. We're clearly seeing the demand for it in our customers, and we have every intention to continue performing to prove that out.

Okay. Great. I have just one follow-up question, and I'll pass the line after that. So with respect to the new pricing model, is sort of, I think, the bias here that it will be sort of incremental to the existing growth profile here of the company because obviously, it sounds like that's kind of what is happening here. And when it comes to profitability, can you maybe just provide us a bit of color because, obviously, it's sort of transaction based and there's a lot of sort of things with tokens, like I imagine the costs won't be fixed. There'll be obviously sort of variable. So how are you thinking about sort of those two things? And then I'll pass the line.

Yes, Richard, I'll start. As we're going through this, it's somewhat exciting in terms of -- we think this is a potential to accelerate growth in revenue while keeping our costs actually at the same levels. As you know, there are some like AI modules that we have that are a little bit more costly than others. But overall, what we've done is we covered that with this actual almost variable cost that is actually committed. And that's the one thing that I think people need to realize for what we're doing here is that although it's consumption and usage based, we are obviously going forward with a committed revenue scheme.

So at the end of the day, it won't look too much different from what we have today. However, there are areas of revenue opportunities and value that we're giving to our customers that we think that we should be monetizing on. And so we think this is going to be both beneficial to overall EBITDA, but also very much the revenue side. I will say that in any of our guidance that we've given today because it's early days, we have not put any of that upside in our guidance at this stage just because it's too early to tell how that's going to play out.

Yes. Let me just add a little bit to that as well. So the biggest driver for us to really evolve to a usage-based pricing structure is to better align our offering going forward and the substance of the value we're bringing to our customers going forward to the way we price our offering, right? And so a lot of the metrics that form the basis of the MAUs, the Maestro activity units are anchored on those usage patterns.

I fully expect that the initial phase of adoption, and we're seeing this with early adopter customers right now is really around making the key personas that interface with our applications, whether it's a planner or it's an extended part of the supply chain organization or even senior executives within supply chain organizations. It makes them more productive. It makes them leverage our platform and gain insights from our platform and take actions on our platform in a far, far more efficient way in a far easier and simpler way as well. So that's the first phase of adoption.

As we keep building out our platform and we get into a more expanded agentic orchestration layer, I fully expect we'll be getting into more and more use cases that are developing digital personas, right? And so we don't want to tie our pricing to just users because I think we're going to scale across our customers' organizations in a very nonlinear way from a user perspective. And so that's the whole emphasis and the thrust behind our MAU structure.

Your next question comes from the line of Thanos Moschopoulos with BMO Capital Markets.

I'll echo the congrats to Blaine on the opportunity. Maybe starting off with a question for Blaine. When I look at your SaaS backlog at year-end relative to your SaaS revenue guidance, it's a higher coverage ratio with respect to the backlog than we've seen in prior years. Is that conservatism? Or is there some other dynamic?

Yes, it's a good observation. So we're -- our CRPO is about 80% of what our midpoint on our guidance is, which is a good thing to point out. I think we are having a healthy amount of confidence in what we're landing at 17% to 19%. I think there is always opportunities. I just mentioned one of them with NGP where we could start next on pricing, which could show that we could maybe potentially beat that. Obviously, if you look at our past and look at 2025, in particular, we did much better than that 88 percentage points. And I think that's something that we are continuing to evaluate. And I'm hoping we'll be putting some smiles on people's faces throughout the rest of the year and beating that 17% to 19%.

But right now, I'd say 10 months, I guess, 9 months to go in the year, it's a long way to go. We'll see how things play out. Hopefully, you'll be hearing some increases in that guidance over the year.

Great. And then for Razat, how would you characterize the near-term spending environment? Clearly, you had strong bookings in the quarter, but is that a function of better execution, better competitive performance on your part against the stable markets? Or has there been some improvement in the demand environment with supply chain being more topical with tariffs and the like?

Yes, I think it's a good question. Look, I think it's a few reasons. I'll put it in sort of three buckets there. First, I do think there is growing levels of supply and demand volatility, which creates a better need -- even a bigger need for our platform, right, for our customers because customers are trying to gain agility, gain adaptability and through sort of high degrees of uncertainties and volatility, they need a platform like Maestro that enables scenario planning, enables intelligent decision-making while incorporating all the physics of the supply chain. So I think the overall macro environment has been a tailwind for us.

The second is definitely our execution has improved significantly. Our go-to-market execution in the last 12 to 18 months has significantly improved. We have revamped the makeup of our go-to-market engine. The way we are engaging with customers has been significantly improved. And then we're going to continue to add capacity and coverage in the field to make sure we can continue to scale up. So that's the second big reason.

And then I think the third big reason is I think there's a deeper interest in organizations that have had legacy systems and processes and supply chain planning and decision-making to really look for the next wave of productivity improvements, right? And that's causing a significant replacement cycle of old legacy systems, right? And we are one of the preeminent providers that is replacing older legacy systems right now in an effort to really architect processes and operating models and applications that help companies get the next wave of improvement in working capital efficiencies, next wave of improvement in supply chain operating cost efficiency.

So these are the three big reasons, I would say, that is driving the growth momentum we're seeing in the company. And by the way, as we come into this year, we continue to see our pipeline growing along the same dimensions.

Your next question comes from the line of Kevin Krishnaratne with Scotiabank.

Congrats, Blaine, great working with you and good luck on the future. Question on your R&D. Did I hear that you plan to grow that line 20%? And if so, can you just comment on the moving pieces there? I noticed in your slide deck, you talked about the addition of forward deployed engineers. I'm just wondering sort of what you're seeing? Is that driven by customers? Are some of the decisions taking a bit longer on their side requiring you to kind of step up your -- the FTEs and to help drive that adoption. Just wondering if you can unpack the growth in R&D.

Yes. Great question. And so what I said is that we'll be in the high 20 percentage range for that growth year-over-year. And there's a great reason. I mean we're seeing unprecedented momentum in the business at this stage. We had -- in 2025, we had the biggest deal ever. We had the biggest day ever. Every quarter had the biggest amount that we've ever seen for the demand coming in and the wins that we had for every single region. We had adjusted EBITDA, net income, basic EPS, like everything was off the charts records for us. That demand makes us believe there's a bigger opportunity that we could actually go after at this stage. In R&D, with the innovations that we see in front of us with agentic AI, with what's happening on trying to get access to the machine learning that we have in place and the tool that we have that our product has built, we just see that there's so much more than this.

What -- a lot of the discussions we're having right now between Razat and myself and the other leaders of this team is that we're not okay with just being a supply chain planning company. What you're probably going to see is a company that may not even have supply chain in it at some point in the future and be more focused on enterprise AI. I think that is the eventual vision of where Kinaxis will do extremely well. And I think we have now this leadership team that -- which is part of the reason why this decision is so tough is that we have a leadership team that's all coming together and creating a huge opportunity.

So the R&D spend, yes, it's going up. It's going up because there's a huge, huge opportunity, and we're seeing that today from every single customer that's asking for more and more and more.

Yes. Maybe just add a little bit more color to that. So look, our R&D investments are growing in 2026, and that's a very deliberate approach to this, right? And I would say that it's in two big buckets. One, investing in our core Maestro platform. Given the new architectures, given the new performance and scale expectations of our customers, we need to continue to expand and build on the core platform that we have and build out further the broader planning footprint that we have with our customers. So that's an important area. There's a lot of investments happening there.

In addition to that, as I talked about earlier, there's a new architecture evolving with agentic AI. And we want to be leaning in and shaping what that means to the world of supply chain decision-making and orchestration, right? And so we are leaning in and building out this data fabric, abstracting the semantic layer, building out the agentic infrastructure around it and working with early adopter customers in faster cycles. So these things are important investments to really future-proof a sustained growth path for us in the coming years.

On your question about the forward deployed engineers, look, this is a really important operating model that we're putting in place because unlike taking our traditional planning footprint, where the customers had a strong understanding of the feature functions requirements, and then we would be evaluated by those customers based on the fit of our platform against those feature function requirements. In this new world of agentic AI, it takes a different shape and form where the customers are more anchored on their pain points and outcomes. And then we together formulate what is the solution set required and how to architect the feature set required with the combination of our Maestro platform and agentic architectures to create a tailored and composable solution.

That requires a very different engagement model, and that's where the forward deployed engineering skill set becomes really, really important. We're going to be investing in that. We've hired the leadership for that. We've got some internal skill sets. We're going to be hiring additional resources in this mix to really scale this business in a discovery-led consultative model so that we can really harness the power of the platform we're building out and deliver the outcomes throughout the life cycle of our customers.

Your next question comes from the line of Paul Treiber with RBC Dominion Securities.

A question for Razat. You talked about one of the reasons that you joined Kinaxis is building and scaling the company that you see as a market leader. What do you -- as you look forward in the next couple of years, what do you see as the largest challenge to scaling that you're looking to address as you grow?

Yes, it's a good question. And what I'll say is it's a unique moment in time for Kinaxis and frankly, for me to come in and to really build and scale. And I'm very bullish on the market need on the market opportunity, the market size. I'm very bullish on the domain problems that we're solving and the hard complexity and the value generation potential of those problems. I think the biggest barrier for a company like us would be to continue to scale in terms of retaining and attracting the talent that is required for us to realize the potential we have and to realize the expectations our customers have. That continues to be the biggest sort of thing to focus on is the talent.

What doesn't keep me up at night is the market potential. I'm not too worried about the competition because we really have some amazing customers, and we have a lot of momentum. It's really allows -- really about scaling the business in every dimension with the best talent because we solve hard problems. We're not solving easy problems for our customers. And so we need the top caliber talent. And so you're going to see us continue to expand the talent. We've got -- we're anchored with some amazing talent in Ottawa, Toronto, Dallas. We've got a rapidly growing team in India, in Chennai and Bangalore. You can fully expect us to create new hubs of talent as we continue to scale up the business.

And an interesting point you made that you're not worried about competition. You mentioned earlier the new hire from Palantir. The -- and I think this is one of the first times I've heard Kinaxis mentioned Palantir. Can you speak to like the competitive environment, if you're seeing these new entrants get traction in the market? Or is it still -- do you just see the traditional competitors?

It's -- the net story there is it's a very fragmented market. You've got a mix of a lot of old legacy players, including some of the ERP players, where we're actually driving replacement cycles. You've got some players that have emerged more so in the last 10, 15 years that we see in different cycles in different industries or different verticals or different geographies. And then you've got some new entrants that are coming in, right? But through all of that, our win rates have been very high throughout 2025. And maybe Blaine can talk a little bit more about the win rates there.

Yes, that's a great point. Obviously, the -- it's a common question is the competitive landscape changing? The short answer is yes, but only slightly. SAP, o9 and Blue Yonder are still the main competitors we see. We have extremely high win rates. I think we've talked about in the past over 60% against those 3, which we can say is the same. I would say one of those, they almost landed the goose egg in terms of trying to win dollars from us, which is a pretty incredible, I guess, achievement to be almost 100% against one of those big 3 competitors. But those are the big 3 that we continue to see over time. I think there's going to be more new entrants that are going to come in. But at this stage, it's a very, very small percentage of the competitors that we do see.

[Operator Instructions] Your next question comes from the line of Lachlan Brown with Rothschild & Co. Redburn.

Congrats on the strong results. And Blaine, congrats on an excellent tenure as CFO. I would like to dive into the regions. Asia was pretty successful throughout 2025. Europe was a good driver of growth, while North America was a laggard. Could you run us through why we're seeing different outcomes in the different regions? The recent bookings over the last couple of quarters tell a different story? And just any initiatives you're doing to push growth into the North American market?

Yes, sure. Well, number one, I'll just reiterate, we had records every quarter, every -- for the full year for every region. I would say though, the one that outperformed by a significant, significant amount was EMEA. It was well beyond our expectations. I won't say the percentage, but they were extremely much higher than their target they had. The APAC team also did extremely well. They had a Q1 and Q2 that was much higher than our expectations. And then North America, they set the all-time record right now. They are the ones that are the champion for us in terms of those records for the full year. So it's one of those situations where I don't -- people look for the bad news. We don't have the bad news in any region at this stage. We're very proud of those regional leaders and how they performed. If there's one that kind of stuck out as way over the targets that we had, that was EMEA. They did extremely, extremely well.

Yes. And look, North America is our largest region in terms of bookings and ARR and revenue, and we have tremendous momentum in North America right now. I think we're going to be off to a great start this year, and we ended obviously Q4 at a very, very strong level as well. So actually, I'm super excited about the momentum in our North America business.

Your next question comes from the line of Stephanie Price with CIBC World Markets.

Congratulations, Blaine and Razat, looking forward to working with you. My question is on the Maestro Agents. They've been available more broadly to your customer base. Just curious about early feedback on the consumption bundles for the agents and what customers are saying about the pricing strategy that you discussed? And maybe more generally, how customers are kind of thinking about the pace of AI uptake here?

Yes. Look, it's a good question. First, on the early adoption with customers, right? So we were very deliberate in curating a mix of customers from various industry verticals that we play in to make sure we could work with those early adopter customers in a very iterative agile way and continue to improve the underlying Agent Studio that we've developed now. And the results are exciting. Clearly, there's a lot of learning cycles on the customer side and our side as we go through that. And what we're finding is the use cases fall in sort of or 2 or 3 different buckets, right? There are use cases that are very straightforward and are easy to compose and deploy, and they add additional intelligence and insights and create a much simpler experience for the users that are already interfacing with Maestro today. That's sort of the low-hanging fruit, if you would, and provides a lot of quick hits.

The second category are use cases that are really oriented around creating a different way of working in creating automation capabilities in being able to rethink how planning gets done in the enterprise, right? And those, while our platform is an important enabler to that, they also require changes in operating models, in governance structures, in underlying processes for our customers. And that's where we're working with our customers and our partners very closely in not just enabling it through a system, but also surrounding it with the operating model shifts and the process changes that are required to truly transform how business gets done, right? So that's the second category.

And the third category, we are just about to sort of embark on, which is the broader orchestration scope, which goes well beyond just the Maestro platform and the data sets that reside in Maestro and go into the extended supply chain, the extended enterprise, right? So I'm very encouraged by the early results. We are working very closely on this. This is a big priority for us as a leadership team and for our customers. And what I'm finding is I've talked now in the last 8 weeks to roughly 25 customers, there's a big appetite for customers to really co-innovate. They're looking for the next wave of efficiencies. They're looking for use cases where AI can authentically create value as opposed to just following the hype. And we're very fortunate to work with many organizations that want to be leaning in and be on the front foot on that. So really encouraging on that.

On the pricing side, it was a very thoughtfully curated pricing structure where we leverage third-party experts. We benchmarked ourselves on what other companies are doing. We got some feedback and input from various existing customers. And that's what has resulted in the MAU structure. As we roll this out, by the way, the rollout of this just started last month, right, in February, we're getting additional feedback and input from our field teams, from our customers. And I fully expect that we'll go through those iterative learning cycles in evolving that pricing structure and refining it -- so it's something that works for our customers and for ourselves going forward.

Your next question comes from the line of John Shao with TD Cowen.

Razat, you mentioned semiconductor is a new win. So just curious if this industry is any different from a supply chain planning perspective. Any specific pain points you're helping them to address that's just unique to them? And how should we think about your expansion with this new vertical, as you mentioned, top 5 global foundry?

Yes. Look, the semiconductor industry has a very interesting supply chain. I've had the fortune of working with semiconductor companies for many years now. If you think about the high-tech value chain, the semiconductor companies are at sort of the top tail end of that in some ways, right? And so as shifts happen in demand in downstream demand for various products, right, whether it's chips required in powering data centers, which are on an upswing or in consumer electronics products like mobile phones and iPads and servers, et cetera, the shifts in demand downstream impact the semiconductor industry in very massive ways. That's the bull effect that how demand propagates upstream through that value chain.

So -- and then semiconductor companies are always trying to grapple with big swings in demand by the time it gets to them with the capacity that they have. And capacity is not easy to mobilize. They require heavy capital investment. So it's a unique supply chain problem. We're very familiar with it. We're very excited and very fortunate to work with several semiconductor companies, and we're seeing a significant need and demand for really allowing semiconductor companies to develop a more agile paradigm because as demand is shifting downstream, they're having to figure out how to service that demand with supply and capacity in a profitable and sensible way. And that's what Maestro is helping them do.

This will end the Q&A session. The Kinaxis team will reach out to those who did not have a chance to ask questions. I will now turn the call back to Rick Wadsworth, Vice President of Investor Relations at Kinaxis, Inc. for closing remarks. Please go ahead.

Thanks, operator. Thank you, everyone, for participating on today's call. We appreciate your questions and your ongoing interest and support of Kinaxis. As the operator mentioned, we've run out of time here, but I will reach out to folks who didn't get a chance to ask their question here, and we look forward to speaking with you all again when we report first quarter results. Bye for now.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, and welcome to the Kinaxis Inc. Fiscal 2025 Third Quarter Results Conference Call. [Operator Instructions] I'd like to remind everyone that this call is being recorded today, Thursday, November 6, 2025.

I will now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Kinaxis Inc. Please go ahead, Mr. Wadsworth.

Thanks, operator. Good morning, and welcome to the Kinaxis earnings call. Today, we will be discussing our third quarter 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, November 6, 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 in our SEDAR+ filings.

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 Investor Relations section of our website, kinaxis.com and on SEDAR+. The webcast is live and being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations section of our website. Neither this call nor the webcast may be rerecorded or otherwise reproduced or distributed without written prior permission from Kinaxis.

To begin our call, Bob will discuss the highlights of our quarter 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 will let you know when to changes slides. Over to you, Bob.

Good morning. Thank you, Rick, and thanks to all of you for joining us today. We had a great third quarter. Our momentum and financial performance has once again allowed us to increase key targets for 2025. We're winning important large enterprise accounts. We're striking partnerships with leading software vendors that add value to supply chain orchestration, and we're leading the supply chain AI race, having launched fully embedded Maestro agents to our customer base. These agents enable a new revenue stream for Kinaxis and allow for faster and better outcomes for our customers.

I'll start by highlighting a few key items in our financial performance. We booked the most new business for Q3, doubling the amount from a year ago. It was the second highest total ever next to the fourth quarter of 2024 when our renewed momentum began. Quite simply, we're winning the big deals in our space. As a result, our ARR growth accelerated to 17%, and we'll exit the year with a higher ARR growth rate than we did in 2024.

Second, we grew SaaS revenue 17%, a strong result and testimony to our market-leading product, better scalability in our go-to-market team and approach and enhanced focus on our very best opportunities. Third, thanks to strong growth and efficient management of the business, adjusted EBITDA hit record levels again, and the margin was 25%, which helped us achieve our fifth consecutive quarter of Rule of 40 performance. We highly value consistency around this metric.

Slide 5, we added many exciting new customers in the quarter. Enterprise class companies continue to be the biggest cohort, and we're particularly pleased to have won multiple large enterprise accounts, a sample of which demonstrates our broad reach across vertical markets and geographies.

Renault is a French multinational automotive manufacturer founded in 1899. It designs, manufactures and sells a wide range of private and commercial vehicles under brands such as Renault, Alpine and Mobilize. This was a highly competitive win and it adds to our enviable list of household name European, North American and Asian automakers.

We continue to have success in our emerging oil and gas vertical with the addition of Repsol, headquartered in Spain. Repsol is a multi-energy company employing 25,000 people in over 20 countries and serving 24 million customers. We have also had successful deployments at ExxonMobil, Castrol and others. So, we can't help but be optimistic about this market.

In our industrial manufacturing market, we won one of the world's leading innovators in material science based in the United States. Enterprise class accounts also include the well-known high-tech brand, Seiko Epson, a Japanese multinational electronics company specializing in printers, projectors, robotics and much more. FasterPak, a U.S. based manufacturer of sustainable packaging solutions.

Even with all of the success to date, there's still lots of room for growth. There are over 14,000 prospects remaining in the vertical and geographic markets we target, and we've never been in a better position to win them. I'm also pleased that half of our gross additions to ARR came from expansion business with existing customers, an area where we have made much progress.

This success reflects both the value of our recent investments in innovative new product capabilities and validation of the tremendous value and differentiation of our core capabilities that keep supply chains transparent, agile and in sync through ongoing volatility and disruption.

Our 400-plus customers are a huge asset to Kinaxis and include some of the largest companies in the world in our vertical markets. For example, in Q3, we also secured a very significant expansion with yet another global top 5 oil and gas company. Not able to name them right now, but we're very excited about this expansion.

Another way we add value for our customers is through key partnerships that enhance supply chain orchestration. Previous this year, we announced exciting relationships with Databricks, a key part of Maestro's data fabric that helps enable AI capabilities platform-wide and with Infor, where we are now tightly integrated to their Infor Cloud suite for discrete manufacturing. And in Q3, we announced an exciting new partnership that will combine Maestro and Workday Adaptive Planning to give customers a unified view of their operational finance and people data to drive faster, more informed and confident decisions.

Finance data has always been important to Kinaxis, but this is a big opportunity to also comprehensively embed workforce data in our planning processes, too, in real time. When demand spikes, leaders can weigh margin impact, workforce needs and production options to make profitable growth decisions in minutes, not weeks.

This cross-functional scenario planning will help ensure faster pivots and stronger resilience. Partnerships are an important part of our supply chain orchestration story, and we will continue to build out relationships where it can help Kinaxis and our customers the most. Now I'm thrilled that we made our initial Maestro agents generally available to our customer base, creating the opportunity for a new revenue stream for Kinaxis, enabling faster and better outcomes for our customers.

Maestro agents enhance our capabilities, supercharge our existing product differentiation and represent a major step forwards towards a more autonomous supply chains that boost productivity, democratize access to data and generate better customer outcomes faster. We've launched the initial agents with a 30-day trial, after which customers can subscribe to consumption bundles for the full term of their contract.

Our AI strategy is simple and compelling with 3 key goals: to enhance Maestro's core capabilities, to extend our core capabilities within the enterprise and then to share supply chain data with external functions and integrate external data to achieve fully orchestrated organizational decision-making without silos. Let me talk about each of these in turn.

We've been using AI to enhance our core capabilities for some time, embedding machine learning and modules like self-healing supply chain and our AI-powered enterprise demand forecasting and advanced demand forecasting solutions to dramatically improve plan and forecast accuracy. The initial launch of our Maestro agents add to that track record and will dramatically increase user efficiency.

One example, a top 10 global pharmaceutical company used Maestro agents to boost planner productivity tenfold in its work to identify inventory risk, surfacing insights in seconds instead of minutes or hours and driving significant efficiency gains across planning processes. Additionally, one of the world's largest electronics manufacturers cut 30 hours from monthly reporting processes, and we focus that time on improved on-time delivery and higher customer satisfaction.

In short, the benefits of Maestro agents are real and are being experienced in mission-critical supply chains today with some of the biggest brands in the world. Next, we'll be using AI to extend our core capabilities with Maestro Agent Studio, which will allow customers to design and configure agents tailored to their own unique processes and business rules and help them make decisions that are critical to the enterprise.

This capability is already in limited availability to early innovators. After more experience here and working with partners, in 2026, we'll introduce a catalog of prebuilt agents from across our ecosystem that addresses common supply chain use cases and delivers even more out-of-the-box intelligence for our customers.

Finally, we'll share our supply chain data externally and also integrate more with external data by working with a network of third-party agents to enable true orchestrated organizational decision-making that operates without silos. In this phase, our orchestrator agents will resolve issues by coordinating multiple agents, both within and outside Maestro to come up with optimal solutions.

Our partnership with Workday is an excellent early example of this, where agents will exchange labor, financial and supply chain data in real time for vastly improved coordinated decision-making. Each step in our AI journey will add tremendous incremental value for supply chain practitioners and creates a significant Kinaxis opportunity.

Look, AI is the next evolution of software and a massive opportunity in the supply chain space and particularly for Kinaxis. In world-class supply chain software, complex logic modeled via tools such as heuristics, optimization and machine learning is critical for optimizing the design and execution of the supply chain to meet business objectives.

The richness and breadth of Maestro's core orchestration algorithms developed through decades of industry experience and the unique and unified proprietary data they generate will remain a massive differentiator for us even as AI becomes ubiquitous in Maestro. Amongst existing players and any potential new AI platform entrants who are offering custom one-off solutions and lack supply chain experience, we are well positioned.

We're starting our AI journey with a tremendous competitive moat. We offer proven, hardened AI-enhanced software, not a risky custom one-off project. We're already a mission-critical trusted partner to globally referenceable big brands, and we're already embedded in the daily workflow of global supply chain teams. And we're already securely integrated with other key enterprise systems to help in the orchestration of supply chains.

So overall, I'm so pleased with our momentum so far in 2025 and super excited about the future. The talent we added and the refined focus we've implemented is helping to deliver quarters consistently and to scale the company. Our product is a leader in the market, and our AI enhancements are only building on that and growing our opportunity.

We have created a tremendous environment to welcome our new CEO. The search is narrow and focused considerably, and we're confident in a great result for Kinaxis. We'll update you as we move along, and you can count on ongoing strong execution from the high-performance senior team we have in place today.

Blaine, over to you.

Thank you, Bob, and good morning. As a reminder, unless noted otherwise, all figures reported on today's call are in U.S. dollars under IFRS. If you move to Slide 8, I'm very pleased that our strong momentum continued through Q3. As Bob mentioned, this was a record-breaking third quarter for a new organic business based on average annual contract value.

It also marks our second highest quarter on record behind only Q4 2024 when the impact of our go-to-market restructuring started to take hold. Our ARR growth rate in Q3 led to 17%, both as reported and in constant currency, which is a testimony to our growing product leadership, demand in our space and our company-wide efforts to achieve scalability and focus on our very best opportunities.

Stronger-than-expected performance year-to-date enables us to increase fiscal 2025 SaaS revenue guidance for the second consecutive quarter, along with our full year adjusted EBITDA margin outlook. I'll provide details momentarily.

Our trailing 12-month free cash flow margin also remains on a strong trajectory. Briefly for the third quarter and compared to Q3 2024 results, total revenue was $134.6 million, up 11% or 9% in constant currency. As I'll speak about in a moment, our success moving subscription term license business to SaaS lowered total revenue growth by roughly 2 percentage points.

SaaS revenue was $92 million, up 17% or 15% in constant currency, thanks to ongoing strong bookings. Now with respect to subscription term license revenue, certain on-premise customers that want access to exciting new cloud-based product modules, including AI modules, opted to move forward with the renewal and expansion on our hosting offering. This shift meant that starting in Q3, associated revenue is now reported as SaaS.

Consequently, subscription term license revenue was only $79,000 in Q3. If you ignore the expansion amount, this is roughly $3 million less than had the renewal been won on-premise. Given the level of interest in some of our new cloud-only offerings, we are having more transition discussions like these. We will alert you to these types of changes, if any, after they happen.

For professional services, revenue was $37 million, up 4% and similar to last quarter. As we've discussed, there is a competitive pricing environment for professional services, but work is underway to ensure that our pricing fully reflects the premium services our team offers.

We continue to have success working with our systems integrator partners. Over the last 4 quarters, partners have led or jointly delivered more than 75% of new customer implementations won through our direct sales team. Given that ongoing success, our own professional services should be a smaller portion of total revenue in the future, while remaining a key enabler of SaaS business.

Maintenance and support revenue was $5.5 million, up 7%. Naturally, amounts recognized as maintenance and support revenue from the customers who transitioned to the cloud will be recognized as SaaS revenue ahead, though the impact is small.

Our gross profit was up 13% to $85.9 million or a 64% gross margin compared to 63% in the same quarter last year. The term license to SaaS conversion reduced current period gross margin by roughly 1 percentage point, ignoring the expansion component. Our software margin was 79%, up from 76% in Q3 last year.

Professional services gross margin was 24% compared to 32%, consistent with my comments around recent market conditions for these services. Adjusted EBITDA was up 13% to $33.9 million, a record level, reflecting our revenue growth, improving gross margin and despite the $3 million shift from subscription term license revenue to SaaS, adjusted EBITDA margin was 25%, equal to Q3 last year.

We continue to focus on profitability and gaining operating leverage as we scale. Our growth and profitability resulted in Rule of 40 performance for the fifth consecutive quarter, calculated by adding SaaS revenue growth and adjusted EBITDA margin, our usual approach. We are proud to be consistently performing at this elite level again.

Our profit in the quarter was up 150% to $16.9 million or $0.58 per diluted share and versus a profit of $6.8 million or $0.23 per diluted share a year ago. Profit benefited largely from the same factors that supported our adjusted EBITDA performance.

Cash flow from operating activities was $33.6 million, up 12% over the $29.9 million in Q3 2024. Cash, cash equivalents and short-term investments were $334.4 million, up $36 million from the $298.5 million at the end of 2024 despite being active with our NCIB program.

On Slide 9, our trailing 12-month free cash flow margin remained strong at 19.8%. The one-time payments we made in Q1 2025 relating to tax planning and a litigation settlement reduced the result by 5.4 percentage points. So the normalized result is 25.2%, and we're trending in a positive direction.

On Slide 10, I'm very pleased that our annual recurring revenue, or ARR, grew by 17% year-over-year, both as reported and in constant currency. The balance crossed a new threshold to $407 million and grew by $16 million from last quarter despite a slight foreign exchange headwind. This growth was driven by an outstanding quarter winning new business.

Notably, we matched our best quarter ever for contracts exceeding $1 million, including both new customers and expansion deals.

As Bob mentioned, we will exit 2025 with a higher ARR growth rate than we did in 2024 in constant currency terms and otherwise. The split of gross additions to ARR was 49 to 51 between new name accounts and expansion business. We remain very pleased with the healthy mix and the recent improvement in our expansion business under our new go-to-market structure. I'm particularly encouraged that applications made up the largest single component of expansion business as it demonstrates the value of our ongoing innovation.

If you move to Slide 11, our SaaS and total RPO balances remain very strong, growing to $810 million and $846 million, respectively, with 3-year CAGRs of 18% and 16%. This metric continues to highlight growth in our subscription business and our strong gross customer retention. More details on our RPO can be found in the revenue note to our financials.

On Slide 12, I'm very pleased to update our 2025 guidance. We're pleased to maintain total revenue guidance of $535 million to $550 million in both as reported and constant currency terms. Our SaaS business is extremely strong, compensating for the effects on total revenue of the professional services market dynamics and the encouraging shifts from subscription term license revenue to SaaS.

We expect to end 2025 toward the midpoint of the range for the reported results and toward the bottom end in constant currency. For the second consecutive quarter, we're excited to increase our SaaS growth guidance in both as reported and constant currency terms. We now expect full year SaaS revenue growth of 15% to 17% and 14% to 16% in constant currency.

Now thanks to the success converting on-premise business to SaaS and despite increasing customer ARR among those transitioning, we're adjusting our subscription term license revenue guidance to $15 million to $16 million. More conversions could occur this year, but there's also the possibility that new customers join us hybrid or on-premise.

Our current subscription term license revenue and total revenue guidance is based on the status quo. Ultimately, these are accounting details only. All contracts are subscription-based, and we are focused on winning and expanding with customers in a way that best suits them. After multiple quarters of better-than-expected performance and profitability, I'm pleased to increase our adjusted EBITDA margin guidance to between 24% and 26%. While our midterm aspiration has been to hit a normalized adjusted EBITDA margin of 25% by 2026, it is likely we can achieve that goal a year early.

Finally, on Slide 13, we have continued to be active on our normal course issuer bid. In the first 9 months of 2025, we repurchased approximately 467,000 common shares at an average U.S. dollar price of $130.77 for an investment of roughly $61 million. Our NCIB ended November 5, 2025. Over the full life of the plan, we purchased roughly 707,000 shares and invested approximately $92 million. We've entered into a new plan that allows us to purchase 1.4 million shares with a daily maximum of roughly 14,000 shares over a 12-month period ending November 11, 2026.

Overall, I'm very pleased with the momentum in our business. We've been successful and simultaneously improving both ARR growth and profitability in recent quarters. We remain confident with our pipeline for the rest of the year and are encouraged by our success winning key deals and our higher pipeline conversion rates under our new go-to-market structure. Our recently launched Maestro Agents unlock a new revenue stream, and we're only at the very beginning of that journey. I'm excited to see where the business can go from here.

With that, I'll turn the call back to Bob quickly before opening the lines for Q&A.

Thanks, Blaine. Just quickly, a couple of thoughts before we open the Q&A. I'm really, really pleased with the performance of the guidance and excited to raise guidance yet again. We're winning the biggest and most important deals in our markets, both against existing competitors and new entrants. Our product is already the best in our space and Maestro Agents create even more differentiation. And we've launched live solutions ahead of our competition, and we have a growing number of the world's best supply chains invested in our AI road map.

We have 14,000 more at bats with products and organizations and the AI opportunity can create even more. We have 400 of the largest companies in the world that are world-class customers, representing a massive expansion opportunity. Our GTM organization has never been in better shape to take advantage of our product superiority. And the CEO search will conclude soon. Our goal is to announce a new CEO in January. Our new CEO will be welcomed into a tremendous ready for scale organization. Thanks for your support and your ongoing interest in Kinaxis. To date, I'll turn the line over to the operator to start the Q&A session, but thanks for joining us.

[Operator Instructions] Your first question comes from the line of Thanos with BMO Capital Markets.

Regarding the Maestro agents, I realize that it's early days, but should we think about maybe the sales cycles for that upsell opportunity being a lot shorter than for a typical upsell just given the trial dynamic? What are you seeing in that regard?

Well, the way we're -- we've gone into the market is to partner with early innovators for each of the products, and that's going to continue. We're already doing some pretty interesting research and development, I call it applied research and development for future products with customers. And the interest is extremely high. Probably as we go into next year, we'll be in a place where we give some guidance on how that gets monetized, what the traction around that is. But I can tell you that the enthusiasm is high, but the way this alert is they'll have an opportunity to bring the product into their company, do a trial period and then start consuming AI solutions or performance units as they go forward.

So more to come on that as we roll out into 2026. But what I'm super excited about is the enthusiasm from some of the largest customers in the world.

Great. And then looking at the acceleration in ARR growth, to what extent has the demand backdrop is a tailwind? Are you seeing some uplift from tariff uncertainty? Or is the acceleration just far more weighted towards your own internal execution and sales investments?

The biggest change in the last year is a year ago, we were winning with the best product in the industry and a good vision for artificial intelligence. Now when we're engaged in opportunities, we're showing product and around AI. And we've used AI to really enhance the potential in core Maestro. And so, you're seeing that transition where customers want to see the product now. And probably the third part of this, because it's all integrated or unified, the ability to implement these solutions is much less complex than, for example, using third-party agents and setting up the data integration around this. This is a unified offering that customers are using today. They have products in their hands, and they can see yet again a road map that's even going to make this more exciting.

So, I think we put ourselves in a place where we have a product advantage. And then obviously, we're -- from a go-to-market perspective, we've made dramatic changes and improvements in our team. So, we're also executing on the go-to-market on these go-to-market campaigns as well in a much better way.

Next question comes from the line of Doug Taylor with Canaccord Genuity.

Congratulations on another quarter of strong bookings. I'm going to follow up on that question about the market overall right now and the purchasing behavior of your customers that push pull from being distracted by all the tariff shifts and trade challenges versus driving the need for dynamic supply chain management tools. I mean, where would you say we stand right now on that spectrum? I'm just trying to understand if you feel like this strong performance is in the face of headwinds? Or has that shifted to a tailwind now?

I think supply that chain planning with the advent of AI is becoming a core practice inside companies. It's a must-have functionality. And what we're observing is that these are tough competitions, which we're winning. Procurement is tougher than it has been before. We find ourselves in a place where people have high expectations about deployments and returns. And all those things allow us to win. I don't think that's going to change. I think what we'll see is a situation where customers are absolutely looking more and more for these type of solutions because we're in a place now where I don't think the world is going to get less complex. It doesn't mean that people are racing to buy these applications. But when they come to a conclusion that they need it inside their business, we're winning against traditional competitors and new entrants.

So, we feel good about our pipeline. We feel good about our product road map, and we love the quality of execution from the team in a world where these are heavily competed. And there's a lot of oversight right now because of the economy and the challenges on spending. So we feel like we're in a good place.

One more question for me, perhaps for Blaine. Obviously, the margin expansion momentum, particularly impressive considering the on-prem to SaaS dynamic. You've hit that 25% bogey a year early. Can you talk about the next horizon for you? And more broadly, is there a thought to optimizing for growth a bit more versus margin expansion at this stage? Any thoughts there? Or is that a question best suited for the incoming CEO?

You know what, I think the -- and I'll let Blaine jump into this one as well. This is the way I'm thinking about it is that when you're executing the way we are with a great go-to-market team, you find yourself in a place where you create optionality. We have a -- we're obviously building a pretty important investment plan for 2026. And we feel like we have room to really go after both investments that are going to improve the productivity of the organization, a lot of that using AI-based products.

We'll expand our go-to-market team. We'll start new programs, and we can do it in a way where we can continue to be a profitable company. Beyond that, we're looking at multiyear investments that are super exciting that create incremental TAM. So the way I'd say it is that we feel like we're in control of alternatives. We're not going to be just trying to optimize EBITDA margins or margins. We're not going to overweight that. We absolutely believe that there's a growth agenda in front of us, particularly now that we have our AI products in the market.

Blaine, why don't you jump in on that a little bit as well?

Yes. I mean we're in a privileged position to hit our targets a lot earlier than we were expecting. It gives us room to play in the upcoming years to figure out what type of margin do we want to balance with our growth going forward. But we still see some benefits from some opportunities in front of us, like we are going through an ongoing transition of customers from private to public cloud. That will start to eliminate, again, more and more duplicative costs going forward.

We are -- as you've seen, we've been pushing more and more to our PS organization pushing more and more of their deployments into the SI partners rather than taking it on ourselves. And that's a low-margin business. But it's something that we think we can actually increase our SaaS growth even more by working very strong with these SI partners.

I think there's some ongoing traction in higher-margin expansion business that we have involved. The fact that we're now talking about 50-50 versus, I think, even a year ago to 1.5 years ago, we were talking about 65-35 in terms of the new name logos and expansion business balance. And that balance is actually really important for us to get higher-margin business from the expansion business.

The other thing I'll point out is that we're continuing to run the business with like operating efficiency. And as much as we are loving the direction we're going with AI externally, we're also focusing on with AI internally and trying to get a lot of efficiencies by using AI within our everyday processes that we have. We're in the middle of what we call investment planning and our investment planning process looks at 2026. We're in a fortunate position again to have a little bit of room to play with our margins if we want to push that more in a direction of growth. I think 25% is now a floor that we have. And so now we just have to figure out what the next level is, which is the next milestone, which I won't say on this call yet, but I think it's going to be higher than what we're at right now.

Your next question comes from the line of Paul Treiber with RBC Capital Markets.

Just want to follow up on your comment on the shift from private cloud to public cloud. Where are you in the transition? It sounds like that transition is accelerating because of customer interest in AI. So how long do you see that being in a transition period? And remind us again of the financial impact, both to gross margins, but then also on the revenue side.

Yes. Maybe -- yes, I'll start the, it's almost 2 different questions where I'm going to answer here because our private cloud to public cloud migration, there isn't a big impact in terms of the product suite that they have available to -- on beam one or the other. We think we're much more efficient and flexible and it's easier to scale with public cloud. We are in the midst of that. As I've mentioned before, Asia Pacific is done. We are right in the belly of EMEA right now. So Europe should be done, we think, at the middle of 2026, and then it's North America to get to the end of the whole migration process.

We do believe that there's some percentage points that we will be gaining as a result of eliminating those duplicative costs. Maybe just to jump on the second part of, I think, what the question really was is, we have been seeing on-prem customers having a little bit more of a demand to move to our cloud platform. And the reason for that is we have a lot of modules that may not be available on-prem. The most recent quarter, obviously, in Q3, we had some significant movement there that we weren't expecting at the start of the year, but they reached out to us and obviously mentioned that there are some modules that they want available to them and want to move as quickly as possible.

They did that while increasing ARR. So, our total contract value increased when they moved over. But we still have a lot of upsell and cross-sell opportunities with those customers as they come on board and want to get access to those modules that maybe previously weren't available for the on-prem customers. Right now, we do have a number of customers we're talking to that are all asking for access to the AI modules. And so we're getting ready for maybe some switch ups with what we see and foresee with our subscription term license revenue line items.

And just a clarification question on the on-premise or term license to SaaS transition. On a like-for-like basis, I guess if there's no upsell, does that shift have an impact on ARR and RPO growth?

Yes. For us, I'll say in the current quarter and probably every quarter going forward, when this happens, there is an increase in ARR and RPO. In this particular quarter, we had a fairly nice sizable bump up for ARR, which we will recognize over the term of the contract versus upfront. Same thing with RPO. So we were -- we took advantage of a nice renewal that was a little bit of an upsell at the transition. And that's before the opportunity to sell those new modules that we have to those companies.

And just lastly, what do you think the time frame is typically between a customer moving from on-premise to SaaS to you realizing the upsell opportunity?

That's the -- hopefully, the million-dollar question. We are in obviously discussions with them. As we mentioned, the AI modules as an example, right now, they're on version 25 10. That's a flick of the switch right now for some of the modules that the agents, especially the work sheet agents to get access to it. But there are some on the configurable agents that we have available. Those will take a little bit longer, not much longer than what we have with flipping a switch, but there is some extra work that takes place. I think in 2026, we'll start to see some revenue coming in from those upsells and cross-sells.

Next question comes from the line of Lachlan Brown with Rothschild.

Third quarter bookings were quite strong despite being usually a seasonally low quarter. And now we're up to the fourth quarter, which is usually your highest period for bookings. I just want to check if there was any pull forward of bookings that supported the third quarter? And if you can maybe just talk to the deal pipeline that you're seeing and confidence in 4Q bookings being strong relative to prior periods.

Sure. Blaine, do you want that one?

Yes. Yes, I'll jump in. Q3, there weren't any pull-ins for Q3. It was a phenomenal quarter, and there was -- we don't talk about win rates every single quarter, but we won all the major deals. I would say when we looked at any deal that was over $1 million and the opportunity there, we won the vast majority of those. We won the most important deals that were out there. The execution of the sales organization, I applaud them with an amazing quarter. It was beyond expectations, beyond historical norms of what we've seen. And that just is a testament to the product differentiation we have and how important we are to these customers.

We're proud to be able to obviously talk about some of the logos. One of the interesting facts is that we didn't say some of the logos, and there's one particular logo, a very, very large one that we didn't say. And they said, using Kinaxis is a competitive advantage. We don't want our competitors to know that we're using it, you cannot use our logo as part of the earnings call. That's a great excuse for us to be able to say, well, yes, that's great for this company to think of us as such a strong competitive advantage. But we want to make sure that we continue to sell and get those references for Q4 and beyond.

Now Q4 bookings, we're very confident in there. There's some major large enterprises, and that's where we're starting to see a lot of traction that we didn't see in maybe '23 and '24. The large enterprise are back. They're having a lot of discussions. They like our AI road map and where we're going. And I'm confident that we're going in the right direction right now. So there's a very nice pipeline in Q4, I'll say.

Yes. The only thing I would add to that is probably the, one of the biggest changes year-over-year is, as Blaine described, the execution of our sales force and how -- when we're in an opportunity, the type of -- our ability to make sure that they understand our product advantage is really, really important. And we've really done a pretty good job of that in terms of the quality and quantity of people that can execute in a complex environment. But even beside the opportunity for AI, we have products in the market now that allow us to win with new customers but are a big part of our expansion, self-healing supply chain, AI-powered enterprise demand forecasting and advanced demand forecasting.

We're going to continue to come out with products in core Maestro that customers are going to want. And what I loved about the quarter was the ability or the stories that our customers were talking about. We had proof points about how these products and even the new AI products have realized better customer outcomes. And that's going to only reinforce our ability to be the go-to company for both traditional SaaS solutions, AI-enhanced SaaS solutions and now AI stand-alone solutions. So, we've got a really, really big expansion opportunity in front of us.

Appreciated. And more of a modeling question, but margins in professional services, we've seen a step down this year as you make more use of partner integrators and with pricing pressure in the market. But they've been ticking up in recent quarters despite the continued outsourcing. Is this AI and product enhancements beginning to reduce the cost and complexity of Maestro deployments? And how should we think about the right steady state for professional services margins going forward?

Yes. We're going to -- I'm going to definitely -- go ahead, Blaine. Go for it.

I was going to say that, obviously, we don't give guidance on professional services margins. However, we think we're on the low side of where we should be right now for those margins. It should start to tick up over the next little while and get back to what we expect is a good margin for us. We believe right now, we have premium services for professional services team, and that should give us a little more pricing power than what we're seeing right now.

The only other thing I would add is, look, as part of our SI strategy, we're definitely working hard to prioritize industries, markets and the alignment with key partners around Kinaxis because when you have the kind of win rates we're doing, these things kick off fairly important, in many cases, business transformation projects. So, core Maestro, we're going to make it easier to implement, less costly, certainty of outcomes on projects, higher value. But then what you're observing, not unlike Exxon, which has always been a great example, is that people are building a business transformation program around that. And that's why it's so exciting to some of the large SI companies.

And then part of the reason that we're going to defer a little bit on professional services is that we're starting up and have had some early success on subscription-based services. And that's a normal a more normal type of revenue stream that now gets reported by some of the AI native companies as ARR. And so, through 2026 and certainly, we should be in flight in 2027 with more subscription-based services. And we'll talk a lot more about that when we give our guidance going into in the March time frame.

Your next question comes from the line of Richard Tse with National Bank Capital Markets.

It's Mike Stevens on for Rich. Congrats on another strong quarter here. I wanted to follow up on that SI strategy you touched on and the move away from professional services a bit. I'm just wondering if that's brought on any additional challenges at a time when you're bringing a lot of new innovation and products to market. I don't know if you could discuss the dynamics there.

Well, the dynamics of core Maestro have not changed. The economics haven't changed. The opportunity is still there. We'll be working with customers and partners to serve that demand. And when you have the kind of success we've had with ARR growth, new projects, biggest customers in the world and the expansion into other parts of the company, that creates a revenue stream that we hope to encourage our SI partners to start taking one of the ideas of being an enterprise class software is to have the SIs start to take the resources where the pipeline is, and we're seeing that.

People are investing in the SI network in a way where they're going to try and get involved in some of these world-class customers, not unlike Renault, which we just closed and there's a few others. The follow-on to that is, as you go into AI, what's been pretty cool is, there's less complexity in the implementation. And the real opportunity around professional services with AI solutions is the idea that as they become more expert in using Kinaxis AI solutions, they'll be able to roll this out themselves.

But because we're integrated, like, for example, in one of the products that we now have in the market with innovation customers, we're doing something called configurable agents. And what that means is that you can actually build solutions that are unique as we described to your business processes. And there is a level of configuration complexity that's associated with that, but it's so much lower than actually implementing Kinaxis for the first time. So, what we'll see is an opportunity to work with them with this construct of subscription services where we can get them to use our solutions more broadly throughout their company. And then obviously, when you start thinking about using supply chain data more broadly throughout your organization, that also creates some opportunity for mass deployment of artificial intelligence with Maestro at the core.

So, it really is all incremental. The ability to take advantage of AI, the way we've developed them is much less complex than implementing Maestro. But by having these products, our large customers, these massive brands that are our customer base can get it more out of Maestro and they can extend that capability with our AI road map. So, it's pretty cool. It's pretty exciting. It's not dependent on a whole new professional services organization. It's extending the teams we have now in partnering with companies like Workday and the SIs to really, really dramatically extend the functionality of Maestro throughout the company. It's a pretty good business model. We're pretty excited about it.

Okay. No, that's great color. I really appreciate that. And then just on the sales and marketing spend, you're obviously seeing phenomenal returns on that spend. You've also alluded to in the call, probably continuing to invest in these opportunities. The MD&A mentioned a lot of the growth has been driven by additional spending with your partners on that go-to-market. Is that where you're seeing the best ROI on that incremental spend? And going -- looking further out, I don't know if you can give any color on how we should view that growth going forward in sales and marketing.

Look, we have 0 restraints on our spending on sales capacity. What we have is a focus on quality. We wanted to have more productive territories. And a lot of our spend last year was just around transitioning into talent and people and management that is going to make a difference. In the last, I guess, half of the year going into Q4, real focus on business development like and marketing, really, really changing the paradigm of making people aware of Kinaxis, and that's going to be critical. We are a new very experienced, highly connected BD or business development manager, which is about inside sales and really putting a privilege on visibility, marketing messaging, events in a way that now that we think we're in a place where we've created even more differentiation against the competition with our products, we got a great sales execution team.

Now we're going after the 14,000 customers out there that should be on the Kinaxis platform. But this is not straining the company from a margin perspective. This is like rigorous, high-quality ads focused on programs and people that can make difference. And a good example of that is that we did a really nice job at our Connections event in Europe. First time we did it, great turnout, great executive event, world-class. And these things are absolutely going to turn into pipeline for us.

Your next question comes from the line of Stephanie Price with CIBC.

It's Sam Schmidt on for Stephanie Price. I wanted to ask a question around RapidStart. How should we think about the mix of implementations between RapidStart and more fulsome enterprise rollouts? And what trends are you seeing in enterprise rollouts in the current supply chain environment?

Yes, why don't [indiscernible] just to give you a quick answer like, every discussion usually starts with RapidStart. People want to have their solution deployed as soon as possible. It's not even something we track anymore because everyone has taken it in some format. It gets rolled out to additional things that aren't covered under RapidStart. So, if they decide they want enterprise scheduling, that is not covered under RapidStart. If they decide that they want to use advanced demand forecasting, that's not covered under it. But generally, every conversation starts with how fast can you deploy this. Obviously, people want to get access to our solution as quickly as possible.

It is not something we track anymore because it is embedded within every single conversation that we have.

That's helpful. And then just one more for me. Can you share some commentary on net retention and how that's been trending? And maybe any relative differences between the retention for your larger clients versus the more mid-market clients? And then I'll pass the line.

Sure. Yes. So, NRR is a question we get asked quite a bit. It's one of those ones that we're getting warmer and warmer as to should we disclose it more. The truth is our expansion business continues to drive NRR upwards. After getting a quarter where we just doubled our incremental bookings over what we had in Q3 of last year, the second highest quarter ever for incremental bookings only Q4 of 2024, obviously, having a much larger portion of that coming from expansion business. It's going to drive that NRR up. And we have like one of the best-in-class gross dollar retentions, which is as strong as it's ever been. So, we're in a fortunate position, and that's why our constant currency ARR growth has reached 17%. It's actually the -- it was a 4-point increase from Q2, which is the largest quarter-over-quarter gain since ARR tracking began for us.

So, we're excited about the impact that expansion is having on our business. It's helping out with our adjusted EBITDA margins being at a very, I would say, conservative 25% at this stage, which we think is giving us even more opportunity to grow that.

That completes our Q&A session. I will now turn the call back over to Mr. Wosworz for closing remarks.

Yes. Thanks, operator. I will get back to anyone who we missed. We have a tight 9:30 stop here. So, thank you all for participating on today's call. We appreciate your questions, as always, and your ongoing interest and support of Kinaxis. We look forward to speaking with you again when we report fourth quarter results. Thank you very much, and goodbye.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, and welcome to the Kinaxis Inc. Fiscal 2025 Second Quarter Results Conference Call. [Operator Instructions] I'd like to remind everyone that this call is being recorded today, Thursday, August 7, 2025.

And I will now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Kinaxis. Please go ahead, Mr. Wadsworth.

Thanks, operator. Good morning, and welcome to the Kinaxis earnings call. Today, we will be discussing our second quarter 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, August 7, 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 in Kinaxis' SEDAR+ filings.

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 results is available in our earnings press release and MD&A, both of which can be found on the Investor Relations section of our website, kinaxis.com, and on SEDAR+. The webcast is live and being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations section of our website. Neither this call nor the webcast may be rerecorded or otherwise reproduced, or distributed without prior written permission from Kinaxis.

To begin our call, Bob will discuss the highlights of our quarter 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 will let you know when to change slides.

Over to you, Bob.

Thanks, Rick. Good morning, and thank you for joining us today. I'm so pleased with second quarter results and would like to highlight a few items.

First, very encouraged by how much new business we won. It was the highest amount ever for a Q2, and the second highest ever outside of a fourth quarter. Our ARR grew 15% as reported, and 13% in constant currency. Second, we grew SaaS revenue 17%, a strong result, or 14% in constant currency. Third, thanks to strong growth and thoughtful management of the business, profit hit record levels, as Blaine will explain. Our adjusted EBITDA margin was 25%, which helped us achieve our fourth consecutive quarter of Rule of 40 performance. We highly value consistency around this metric, so we're very happy with the result.

Look, I'm thrilled with our performance in the second quarter. It's allowed us to increase our fiscal 2025 guidance for SaaS revenue growth, which is the engine that drives our business. Blaine is going to speak about all the elements of guidance shortly.

As always, we added several new customers in the quarter. Enterprise class companies continue to be the highest cohort, and we're pleased to have won a couple of large enterprise accounts. Consumer products represented the high -- the biggest vertical market. And overall, we continue to be encouraged by our strong win rate. We're fortunate to be able to name just a sample of our new customers today, representing multiple vertical markets and our widening geographic coverage in consumer products.

First, [ Lactalis ] based in France with 2024 revenue over EUR 30 billion, is the world's leading dairy group producing cheese, milk, yogurt, butter, cream and much more. [ Lactalis ] is in 50 countries, has nearly 270 dairies and employs over 85,000 people. [ McKee Foods ], America's largest family bakery and in its fourth generation of family ownership offers brands like the famous Little Debbie, Drakes Cakes, and Sunbelt Bakery. P&L Development is a premier manufacturer, packager and distributor of over-the-counter pharmaceutical products and consumer health goods.

In Life Science, we won Swedish, Orphan, [ Biovitrum or Sobi ], a global biopharma company unlocking the potential of breakthrough innovations to transform the lives of people living with rare diseases. [ Sobi ] has approximately 1,900 employees around the world.

[ Shimatsu ], founded in Japan almost 150 years ago, is a global leader in developing and manufacturing precision instruments and equipment. Their products include analytical and measurement instruments, industrial machinery, aircraft equipment and products and equipment used in health care for diagnosis, treatment or measuring health, and to support the development of new drugs.

In industrial manufacturing, we won [indiscernible] and [ Griller ] [indiscernible] Group, an Austria-based global family-owned business that produces technically advanced high-quality wires and harnesses for automotive and industrial applications. And a nice win in logistics, we won [ SECO Logistics ] based in the U.S. with over 150 offices in more than 60 countries. [ Seco ] is an end-to-end partner from shipper to consumer. They deliver tech-driven shipping solutions that turn supply chains into a competitive differentiator.

Obviously, we're pleased to win leading innovative companies like these. In fact, 3 of [ Gartner's ] 4 masters of supply chain for 2025, their highest ranking are Kinaxis customers. So overall, there's still 14,000 prospects remaining in the vertical and geographic markets we target, and we have never been in a better position to win them.

While adding new customers will be a major part of the Kinaxis' story for many years to come, I'm also very pleased with our ongoing momentum and expansion business. Half of gross additions to ARR came from expansions. In particular, it's encouraging to see for the fifth quarter in a row, applications and scenarios comprised together over half of the expansion amount, a very rare achievement previously. This reflects both the value of recent investments in new product R&D, and the incredible edge that our long-standing proprietary scenario analysis capabilities delivered to our customers.

There is strong demand for Kinaxis' products because increasingly, the best companies recognize that supply chains are a key differentiator to their success. Old, siloed methods are collapsing. And so they turn to Kinaxis for the market's leading, AI-first, real-time, scalable, agile supply chain orchestration platform.

From a product perspective, we're excited to see ongoing demand for some of our newer planning solutions like enterprise scheduling and supply.ai, which we now call supply optimization. The richness and breadth of our core planning algorithms, developed through decades of industry experience, and the unique proprietary data they generate will remain a massive differentiator for Kinaxis even as AI becomes more ubiquitous amongst existing players and even new entrants.

This is especially relevant in supply chain where complex logic modeled via tools such as [ heuristics ], optimization and predictive AI is critical for optimizing the design and execution of the supply chain to meet business objectives. We'll continue to use our unmatched domain expertise to widen that moat with new planning solutions and enhancements we create or acquire.

On top of that, Maestro's new generative and Agentic AI capabilities supercharge our existing product differentiation and represent a major step towards more autonomous supply chains that boost productivity, democratize access to data, and generate better customer outcomes. While automation has played a key role across the supply chain for a long time, AI agents will dramatically expand its scope and intelligence. And our AI agents will be able to monitor, predict and take action in real time to handle use cases across the supply chain, like supply and demand disruptions, inventory management and so many others.

To extend our value even further and to more users, we will also build connectors from [indiscernible] to work in real time with agents from other supply chain management applications, and with a growing ecosystem of third-party agentic systems, such as Google [ Agentpace ] and others.

As you know, real-time concurrent orchestration with a much broader range of planning and execution partners, and capabilities with data is fundamental to our growth strategy. To make our ambitious orchestration vision real and seamless, we are actively augmenting our industry-leading platform by building an agentic AI framework, enabling multi-agent communication, and developing our new supply chain data fabric in partnership with Databricks who have been terrific. We now have major early innovator customers working with our initial commercial, generative and Agentic AI capabilities, and we will be adding more very soon. We'll continue launching these new capabilities into the market through the rest of '25 and into 2026, along with a new Maestro pricing model that we'll be discussing over time.

We couldn't be more excited about how AI will transfer the amount of value we offer customers and the opportunities it represents to Kinaxis. So overall, we're very pleased with our momentum in the final half of 2025, and very excited about the future. The talent that we've added is helping to deliver quarters consistently, and we're in full-scale mode at Kinaxis. Our product is a leader in the market, and our AI enhancements will only add and build on top of that. The Board and I remain focused and patient on finding a new proven CEO with the experience and credentials to be accretive in our exciting direction and momentum.

And with that, I'll turn it over to you, Blaine.

Thank you, Bob, and good morning. As a reminder, unless noted otherwise, all figures reported on today's call are in U.S. dollars under IFRS.

If you move to Slide 7, I'm very pleased that Q2 was another strong quarter for Kinaxis. To emphasize some of what Bob mentioned, it was our best second quarter ever signing new business, and the second best ever outside of a Q4. This is a great accomplishment in such an unpredictable global trade environment, and testimony to a more scalable go-to-market organization and our ongoing product leadership.

Our strong performance in the first half of the year allows us to increase our SaaS revenue guidance for fiscal 2025 on both an as-reported and constant currency basis. Our gross margin and profitability metrics were strong, including new records for profit, earnings per share, and adjusted EBITDA. Our trailing 12-month free cash flow margin remains on a great trajectory.

Briefly for the second quarter, and compared to Q2 2024 results, total revenue was $136.4 million, up 15%, or 13% in constant currency. SaaS revenue was $88.4 million, up 17%, or 14% in constant currency, 14.5% to be more precise. Our subscription term license revenue was $5.1 million, up 270%. Professional services revenue was $37.4 million, up 2%. While utilization across our internal team remains strong, the modest growth reflects market dynamics that are driving lower-than-expected billable rates, largely due to a more competitive environment, and a broader shift towards partner-led delivery. The latter reflects an intentional trade-off as we reshape our professional services model to enable scale and efficiency.

At the center of this transformation is a clear focus on ensuring successful customer deployments, whether delivered by Kinaxis directly, or through our system integration partners. To date this year, partners have led, or jointly delivered, more than 70% of new customer implementations won through our direct sales team. These engagements are strengthening our ecosystem, accelerating knowledge transfer and expanding capacity to serve more customers at scale with consistent quality.

Looking ahead, we're continuing to invest in high-skill consulting talent, new offerings in AI and data integration, and product enhancements that reduce the cost and complexity of deploying Maestro. While we expect professional services to become a smaller percentage of total revenue over time, it remains a critical enabler of SaaS growth. We're pleased with the role it plays in delivering strong outcomes and faster time to value for our customers. Finally, maintenance and support revenue was $5.5 million, up 10%.

Now our gross profit was strong, up 25% to $87.5 million, or a 64% gross margin compared to 59% in the same quarter last year. I am encouraged that for the second consecutive quarter, our software margin hit 80%, up from 74% in Q2 last year. This was due in part to higher subscription term license revenue, more efficient operations and lower amortization.

Professional services gross margin was down to 23% from 27%, consistent with my comments around current market conditions for these services. Adjusted EBITDA was extremely strong, up an impressive 54% to $33.7 million, a record level. The margin was 25% versus 19% in Q2 last year. This reflects numerous factors, including our revenue growth, higher gross margin, and lower operating expenses as a percentage of revenue. We continue to focus on profitability and gain operating leverage as we scale.

Our growth and profitability resulted in Rule of 40 performance for the fourth consecutive quarter, calculated by adding SaaS revenue growth and adjusted EBITDA margin, our usual approach. We are proud of staying at this elite level and continue to target it for full year results no later than 2026.

Our profit in the quarter was up 437%, to $18.4 million, or $0.64 per diluted share, both record levels, and versus a profit of $3.4 million, or $0.12 per diluted share a year ago. Profit benefited largely from the same factors that supported our adjusted EBITDA performance.

Cash flow from operating activities was $22.6 million, up 72% over $13.1 million in Q2 2024. Cash, cash equivalents and short-term investments were $329.4 million, up over $30 million from $298.5 million at the end of 2024 despite being active with our NCIB program.

On Slide 8, our trailing 12-month free cash flow margin remains strong at 19.7%, and on a positive longer-term trajectory. The onetime payments we made in Q1 2025 relating to tax planning and a litigation settlement reduced the results by 5.5 percentage points. So the normalized result is 25.2%.

On Slide 9, our annual recurring revenue, or ARR, grew by 15% year-over-year to $391 million, or 13% in constant currency, an increase of $19 million from last quarter, the highest amount ever. The split of gross additions to ARR was 50-50 between new name accounts and expansion business. We remain very pleased with this healthy mix and the recent improvements in our expansion business under our new go-to-market structure.

As Bob pointed out, this is the fifth quarter in a row where applications and [indiscernible] combined totaled over half of expansion orders, a positive new trend in the business. This reflects the breadth and value of Maestro's unique capabilities and will also contribute to better margins over time.

On Slide 10, our SaaS and total RPO balances remain very strong, growing to $793 million and $834 million, respectively, with 3-year CAGRs of 20% and 19%. This metric continues to highlight growth in our subscription business and our strong gross customer retention. More details on our RPO can be found in the revenue note to our financials.

On Slide 11, I'm pleased to update our 2025 guidance. We're maintaining total revenue guidance of $535 million to $550 million. We are moving the constant currency outlook to the same range due to the factors relating to professional services that I discussed earlier. We're increasing our SaaS growth guidance in both as reported and constant currency terms. We now expect SaaS revenue growth of 13% to 15% in the same range in constant currency. We remain confident with our pipeline for the rest of the year and are encouraged by strong competitive win rates, and higher pipeline conversion rates under our new go-to-market structure.

We're maintaining our subscription term license revenue guidance of $16 million to $18 million. Note that in the second half of the year, some new customers could land a term license, and other existing term license customers could convert to SaaS, but this is our best estimate for now, and we'll update if necessary as we go. The remaining amount of subscription term license revenue for the year will be weighted slightly in favor of Q3. We continue to expect a strong adjusted EBITDA margin between 23% and 25%.

On Slide 12, we have continued to be active in our normal course issuer bid. In the first half of 2025, we repurchased 283,297 shares, at an average U.S. dollar price of $125.85, or an investment of roughly $35.7 million. Our NCIB goes through November 5, 2025.

Overall, I'm very pleased with where the business is at. A number of key business metrics are hitting record levels, and we're just at the beginning of a go-to-market transition and the coming AI transformation. I'm excited to see where the business can go from here. As always, thank you for your ongoing interest in Kinaxis and support to date.

I will now turn the line over to the operator to start the Q&A session.

[Operator Instructions] Our first question is from the line of Richard Tse with National Bank Financial.

Bob, I was wondering if you could maybe talk about the selling environment today. It seems like things have improved a bit, but I'd like to sort of maybe get some commentary. So has the sales cycle improved, softened, stayed the same since, let's say, the beginning of this year?

I think the demand curve is similar to what it's been in the past couple of years. However, saying that our win rate is much improved. Our execution through the cycle is stronger, and we're working with a larger pipeline overall. So I think for us, when you put those three things together, it really leads to the kind of success we're having in the quarter, but also when we look forward into 2026, the interest, some of it driven by tariffs.

But in general, I think people understand more and more the importance of having a strong supply chain planning and orchestration strategy. And that's probably the biggest change that's occurred. Some of it, again, driven by tariffs. But because of that, we're seeing heightened interest in the company, and that's all quite positive. For sure, our execution around deals is much improved and thus the win rate factor.

Okay. And just my sort of second question is kind of related to that. There's no doubt you've made some fairly notable changes on the sales and marketing side to get to this point.

Do you see the business going back to kind of, let's say, the 20% growth rates you've had in the past? And under sort of what kind of conditions, or variables would be required to get to there?

Yes. I think what we've said is that we have a company now that should be operating at a Rule of 40 performance. And as we go forward, and as we deliver our AI products and the data that we produce becomes more important to the organization, we see some interesting growth opportunities that allow us to imagine that we could go faster. But we're not going to get over our skis here. We absolutely -- as Blaine, I can't remember exactly the words he used, that we're a company that is going to invest in the right areas in a very conscious fashion, with a view that we're going to make sure that we deliver that over 40 performance.

I think the fact that we have a company that is in the sweet spot that should be sustained around really understanding your supply chain data and what it means to things like guidance, treasury and all parts of the organization, that we have an unlock opportunity with AI that's incremental, that would allow us to imagine that we could find ways to grow the business more. And if we see those opportunities, we're going to take them.

Our next question is from the line of Thanos Moschopoulos with BMO Capital Markets.

Bob, maybe just circling back on the spending environment. You said the demand has been relatively consistent. And just given the tariffs and [ Liberation Day ], I would have thought that there'd be maybe more of an impact on your business.

Are there underlying themes in terms of maybe just the nature of organizations that are engaging with you that has changed post the tariff discussion, or in terms of time frames or top of funnel? Is it that maybe some verticals are seeing accelerated decision-making, but others are seeing delayed decision-making as a result? Just any additional color on the next layer of that would be good.

Yes. The execution that we talked about at the back end is something that is, I think, pretty well [ understood ]. But our -- when you look at the mix of customers, we're doing super well in markets like Japan, Asia. Europe has been pretty strong. We look at our forward demand in the U.S. looks good.

So I think the one story is that we've added, I don't know, 40-plus people into our go-to-market capacity where we've really brought a lot of talent in the organization, and we're winning in all markets. So that's one thing you have to understand. So you're working off a bigger pipeline.

Secondly, our product execution and our -- when you are in the [ throes ] of a deal with some of the most important companies in the world, they're looking at it today. They're looking at what you've done in terms of references for other customers, and they're betting on the future. And in all three areas, we deliver projects on time, customers get value. We're differentiated on the core product with Maestro, and we have the best story on AI. And so we're presenting that to customers. They get it, and it's causing us to not only win in the core industries where we have the biggest and most important customers on our platform. But if you look at the quarter, the world's largest dairy is a company that might have been in the past, something that maybe one of our competitors are winning.

So we're winning in chemical. We're winning in fluids because we have a really, really, obviously, a strong product. But when you start -- as I said in my comments, when you start thinking about democratizing data, using that data in more strategic ways, using it to manage your overall plans for the company, we got a great story for the future as well. So we love our position. We've got a better team, building on what was already a very strong team. And we're in virtually all of the opportunities that are available in the market, and we're winning.

Great. And then just one for Blaine. Blaine, can you remind us in terms of how much runway may be remaining on normalized software margins as you further progress with the cloud transition?

Yes. the software margins, the last time that I think we got to report 80% subscription margin, software margins, I think it was back in Q4 2022, and we were helped out a little bit by term license that quarter. So obviously very proud.

We're getting to some of the levels we're at a little bit earlier than we expected. There definitely is some runway, and I'm excited to say that our cloud services team is hitting out of the park, not only with making sure that we have the right agreements with our two key cloud providers being [ GCP ], so Google and Microsoft Azure, but also performing at a high level with a team that hasn't been growing at the same rate that our customer base has been growing.

I do think that, that 80%, I guess, target that we've had for a while is something that we're going to play around with for the near term. But I think we have at least a couple of percentage points, if not a little bit more on the subscription side that we'll see as we go forward.

Now one other caveat to all of this is that -- or that I think there's -- one of the reasons why we're doing so well on the subscription margin is because of the fact that we're doing much better on the expansion part of our business. We're obviously getting much higher margins on that expansion business. So every single time that myself, or Bob, gets to talk about the fact that we're moving that balance from winning new logos to winning even more expansion business, I know that it's helping my bottom line, and that's a testament to some strong work that the go-to-market team has been doing, I think.

Our next question is from the line of Paul Treiber with RBC Capital Markets.

It's been a couple of months since you've announced the new AI features as part of Maestro. What's been the feedback from customers and then the pipeline build related to AI? And then how are customers thinking about ROI on those AI features, and also related to that the potential pricing for AI?

Yes. I think that really -- the way we're thinking about it, Paul, is that if you look at Maestro, in some crazy way, you can think about it as a super agent. The things that we do in creating scenarios are all based on a real investment in machine learning to really be able to do the computation calculations that allow us to create these scenarios.

What we're doing now with products like enterprise scheduling, supply.ai, demand.ai, is extending that from that Maestro platform. And that's part of the reason that we're seeing better win rates because we do the core better than everyone else. We've extended the functionality back into your supplier networks. We're starting to create tools that allow you to get a better handle on demand and forecasting. And with some of the most important and biggest companies in the world, they can actually calculate their improvements in on-time delivery. And so that's a huge advantage.

What the Agentic AI and Gen AI provide is a road map now to democratize that data through your organization and make the company better overall. I think that's huge. And what we're doing right now, the way we've decided to approach the market, instead of a mass release of our new Agentic AI products, is to pick very carefully some of the most important companies in the world to partner with them on solving problems that are most critical to that company. And that's a real focus in Q3 and as we go into Q4 to stand those up as an extension to the Maestro capability.

And why I like all of this? If you decode it is that our core business is in really good shape and growing. We've got strong win rates and new functionality. And what we do in AI, particularly with Gen AI and Agentic AI is incremental to that opportunity.

Okay. That's helpful. I understand. And secondly, just on the CEO search, I mean, obviously, no news there. Can you provide an update and expectations just going forward here?

I think with the Board, we've been really, really happy with the performance of the company. And once we got into this and we hired [ Mark Morgan ], the game changed in terms of where we really believe that we have to take the company and set a higher bar. We've seen super strong candidates that you would consider traditionally good software leaders, people that can run a software company. And as we've nuanced our expectations, we're definitely looking for somebody that is going to be able to take advantage of that second part of the story that I described around AI, and creating new business models. And even about thinking about the different ways that we're going to set up partnerships.

So the bar got higher. We're still seeing great candidates. We're not holding it up. We'll take action at a time that makes sense, but we don't want to set a fixed time line.

Our next question is from the line of Lachlan Brown with [ Rothschild ].

Performance obligations for 2026 had a pretty good delivery in the quarter. They represent a greater share of the IPO than this time last year. Could you talk to the nature and the timing of the deals that you secured in the quarter?

And I guess if you look back over the last 12 to 18 months, we did see a more of a skew towards those outer year bookings as deals got pushed out. So are we now seeing a pivot away from that to customers moving quickly -- more quicker on Kinaxis rollouts?

Do you want to go?

Yes. So great observation. I think we are seeing less of those, I guess, trailing deals or phased deals as we call them. We -- I think part of the change in the go-to-market structure, Mark and his team have been emphasizing trying to limit those type of deals.

I think we're also in a different type of environment in terms of we were trying to get a lot more deals over the line over the last 2 years where it was necessary to put phase deals in place. We're not seeing that same type of pressure at this stage, which is nice for us and nice for the team not to have to put some gymnastics into the contracts.

Overall, we're -- part of the RPO issue that we have. And as a result of having the contracts that are anywhere between 3 and 5 years, we will be kind of limited in certain years when we have a low renewal cycle. This happens to be a medium renewal cycle that we have in place. So we've had a number of renewals. I was -- we had obviously a Board meeting yesterday and the person who's in charge of our renewals, which is saying the amount of activity they're seeing, it's super high numbers that you're seeing right now in terms of the renewal activity that the team is having to deal with because these contracts are going through. And that will kind of fluctuate how you think about RPO.

So this is why sometimes we like to make sure that people think of the 3-year CAGR which is getting closer and closer to adjusted EBITDA, but obviously still above. We're proud that it's at 20% for SaaS. The 19% for the total RPO is right in line with what our expectations were. And we have a loyal customer base. We have a lot of renewals that come through. We don't have that much churn or downsell. So we're in a great spot. But we always have to be cognizant of the fact that renewal cycles can play a little bit of havoc with how the growth is in the short term.

That's very clear. And then maybe another RPO question. If we take the performance obligations for the remainder of 2025 for the SaaS revenue guide, I think it only implies you need about $6 million bookings to achieve the midpoint, and $9 million at the top end, which based on your previous performance doesn't seem too difficult to achieve.

So I just want to clarify that is this just conservatism within the guide? Or is there anything else that we should consider?

Straight at it. We knew we had to increase our guidance to where we're at right now. The company is executing extremely well, just like Bob said. I think 13% to 15%, we're extremely confident that we're going to hit that.

We are also hearing some other peers and [indiscernible] competitors having some issues out there. There's been some announcements that weren't great. And just like we said last quarter, we're being prudent with our SaaS guidance. I think there's -- we are looking at Q3 and Q4, and there's some nice things in front of us right now, but we don't want to get too far in front of our skis.

So I will say I'm very confident with the 13% to 15% that we just raised, and we'll see in the next couple of quarters if we decide to increase it some more.

Our next question is from the line of Suthan Sukumar with Stifel.

First question will be over to you, Blaine. Just on the margin expansion outlook. It feels like with the level of expansion business that you're seeing and what also looks like stronger partner engagement, that sort of suggest potential for better-than-expected operating leverage in the business.

Any view on how you're thinking about your medium-term targets here for EBITDA margins as you start to kind of balance that with ongoing investment?

One of the most common discussions that Bob and I have is when do we have a discussion about midterm targets for our bottom line. Obviously, we're hitting 25%. We've been doing it for a little bit. We are also leaving it there for now, just as we try and determine how we're going to invest in the company to make sure that we maximize our growth because as you heard from a previous question, there are some demands to try and get us back to the 20% on SaaS growth. And we think there's opportunities to do both.

So we're leaving our options open, not giving you our new midterm targets yet, but we think there's some opportunities to keep expanding our margins on the bottom line.

Okay. Great. That's helpful. And for my second question, I just want to touch on AI monetization. It's good to hear from where I said that you guys are taking a very thoughtful and calculated approach on rolling out AI and your agent strategy.

But curious, how are you thinking about the inherent pricing opportunity here as you move forward? Will these capabilities be sold as premium add-ons? Or are they more of a lever for more premium pricing on the core platform? Or is there maybe a usage monetization angle to kind of think about?

Yes. First of all, as I said, it enhances win rate on the core platform. And the technologies that are available to enrich the experience for our customers, things like confidence in the data, new data sets coming into Maestro, create a big differentiation from our competitors, like -- and that's part of the win rate, particularly when you start seeing, as I described, some of these new industries and geographies. When they understand that in Maestro, it creates an opportunity for us to continue to grow the business against some of the questions that Blaine just asked.

So from that, the level of relevance of orchestration and planning inside the company is only going to increase. And Gen AI and agentic AI allow to move to a much richer experience in terms of exploring what if analysis throughout the company. And what will come with that, which is really, I think, fairly cool is that in the agentic AI experience, it's not simply [ CAM ] products that produce useful information on a consistent basis from customer to customer. It's the problems or opportunities that you're trying to develop through configured agents that really give you insight into the performance of the business.

When you marry that up with concurrent data inside Maestro, this truly leads to an orchestration environment. And we can get paid for that through win rate. We can pay for that through expansion in our customer base. We get paid for that in terms of a new revenue stream. And finally, we believe that we can create an open platform that allows us to partner and integrate with other players, software players in the marketplace to really create some opportunities.

So it's just -- look at it, it just really changes the paradigm of the importance of our products and the expansion opportunities that come with it.

Our next question is from the line of Stephanie Price with CIBC.

I just wanted to circle back on the sales team. And just in terms of the go-to-market changes that [ Mark Morgan ] has implemented since he's joined, can you talk a little bit about how far along you are on those changes? And how you think about these new sales reps versus the historical reps you've hired? And maybe expectations on sales hiring for the remainder of the year?

Yes. We have had a really good team here. We have some of the best salespeople and have had some really good maturity and experience throughout our organization. The big thing that we're trying to do now is to exploit our strengths in things like high tech, the industry strength that we have. So a lot of the different hiring that we're doing now is to double down on the expansion within geography and industry in a way that even gives us a greater strength on top of our historical product strengths.

And then I think the place where we've really, really done well is in second-level management. The regional [indiscernible] are -- people are strong, [ Fabien ], [ Philip ] and Jeff, super leaders in the industry. Jeff being new to the company, probably of the three. We've added great talent in markets like Japan, [ DACH ], Germany and the like. Europe, we brought in a new leader out of SAP actually that is focused on the customer base.

So the big change has been in terms of bringing some people -- additive like incremental people in to really prosecute against the best practices that you would see in software. And then it's all hands on deck. When you're going after some of the largest companies in the world, we've got our executives engaged. We've got product engaged. We've got Blaine engaged in these deals. And the level of scrutiny on these deals, which is a hallmark of great software companies is really, really, really tight.

And really understanding the competition and their gaps is a big part of that. And I would say that the work that we do in terms of understanding how to build a company-to-company partnership at an executive level has really evolved. And that's -- I mean, look, as the interim CEO, I think I got a lot of experience in that respect all the way back to SAP. And with [ Mark Morgan ] and the team that we put around him, we're a tough company to beat right now.

[Operator Instructions] our next question is from the line of Mark Schappel with Loop Capital Markets.

Bob, in your prepared remarks, you mentioned your partnership with Databricks and plans to add new agentic capabilities into the market with them. I was wondering if you could just provide some additional details around how you are working with Databricks in that area?

Yes. Databricks as a company -- well, first of all, they've been a terrific partner, bringing a lot of talent to [ bear ] in terms of building our data fabric model. So the place where Databricks is going to be super important is in the category of building our data platform to be able to deliver data throughout an organization. But on top of that, really looking at how we have a platform that we can drive partners with as we go forward.

And then as a company that is in the market in the data marketplace, it also allows us to think about how we change our pricing model and economics around data. And why I like it right now is that they're pushing new economic models in the market and they're sharing, and we are building a plan with Databricks that allow us to really go after this together.

They -- and then finally, if you look at the AI evolution, I really -- look, we looked at the market to see what the different scenarios we could consider. We looked at Databricks as a company that could be the most innovative, not only for today, but for what we're trying to do with our overall platform model. Because the evolution is defend Maestro, modernize Maestro, extend Maestro, build in a platform for our customers and our prospects that see how they can use that data inside their company with Agentic AI and Gen AI and then be a wide marketplace partner. And when you're a wide marketplace partner, that's where Databricks is going to make a difference for us as we think about the kind of partnerships that we can create as we go forward.

And we're not just doing it with Databricks. We're talking to a few other companies about their strategy around AI and how we can deploy and create a better experience for our customer. But the neat thing about Databricks, they're in there. They're adding resources. They're giving us ideas. We get to learn how they've created their economic models. These are ones that we can bring into our company. And so we highlighted them a bit today, and we're really, really happy about how they performed.

Thank you for your question. And ladies and gentlemen, that will close our Q&A session for today. I'd like to turn it back over to Mr. Wadsworth for any closing comments.

Great. Thank you, everybody, for participating on today's call. We appreciate your questions, as always, and your ongoing interest in, and support of Kinaxis. We look forward to speaking with you again when we report third quarter results. Thanks, and goodbye.