KXS.TOKXS.TOTSX
Loading
Operator: 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.
Rick 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.
Razat Gaurav: 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.
Blaine Fitzgerald: 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.
Razat Gaurav: 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: [Operator Instructions] Your first question comes from the line of Richard Tse with National Bank Capital Markets.
Richard Tse: 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.
Razat Gaurav: 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.
Richard Tse: 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.
Blaine Fitzgerald: 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.
Razat Gaurav: 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.
Operator: Your next question comes from the line of Thanos Moschopoulos with BMO Capital Markets.
Thanos Moschopoulos: 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?
Blaine Fitzgerald: 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.
Thanos Moschopoulos: 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?
Razat Gaurav: 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.
Operator: Your next question comes from the line of Kevin Krishnaratne with Scotiabank.
Kevin Krishnaratne: 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.
Blaine Fitzgerald: 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.
Razat Gaurav: 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.
Operator: Your next question comes from the line of Paul Treiber with RBC Dominion Securities.
Paul Treiber: 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?
Razat Gaurav: 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.
Paul Treiber: 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?
Razat Gaurav: 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.
Blaine Fitzgerald: 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: [Operator Instructions] Your next question comes from the line of Lachlan Brown with Rothschild & Co. Redburn.
Lachlan Brown: 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?
Blaine Fitzgerald: 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.
Razat Gaurav: 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.
Operator: Your next question comes from the line of Stephanie Price with CIBC World Markets.
Stephanie Price: 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?
Razat Gaurav: 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.
Operator: Your next question comes from the line of John Shao with TD Cowen.
John Shao: 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?
Razat Gaurav: 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.
Operator: 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.
Rick Wadsworth: 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.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.