U.S. tech earnings season is upon us.
So far, we’ve seen IBM, Alphabet, and Microsoft beat expectations, with others still waiting to report. On the whole, it’s been an exciting round of earnings releases from America’s big tech companies, with many twists, turns, and surprises.
Although they might not get as much fanfare as their American counterparts, Canadian tech companies are going to be reporting their own earnings soon, too. On May 2, around the time that U.S. tech earnings season will conclude, Canada’s flurry of tech earnings will begin. If the results from the U.S. tech giants are any indication, it will be epic.
In this article, I will explore three Canadian tech stocks that are going to report earnings next week and give my take on what to expect from their releases.
Shopify (TSX:SHOP) is a Canadian tech company that reports its earnings on May 4. Its most recent quarterly release was seen as a disappointment: although revenue grew 26%, the operating loss and net loss both got wider compared to the year-before quarter.
In the upcoming quarter, Shopify will have the chance to show investors that it’s righting its course. Shopify recently completed hiking its subscription fees, which could help growth on the top line. The company also did some minor cost reductions, which could help with achieving profits.
Shopify has another big advantage going into this earnings release: its stock holdings. Shopify holds a large position in Global-E Holdings, a stock that gained in the first quarter. When stocks rise or fall, their gains/losses are calculated as part of profit on the income statement, whether they were sold or not. In past quarters, this factor worked against Shopify, but in this quarter it will work in its favour.
Kinaxis (TSX:KXS) is a Canadian tech company that reports its earnings on May 2. Kinaxis is best known for being one of Canada’s artificial intelligence (AI) leaders. It uses AI to help companies manage their supply chains. Using KXS’s planning one app, businesses can keep track of every item in their supply chain: inventory, raw inputs, customer purchasing habits, and more. KXS uses AI to analyze all of this complex information and turn it into usable data.
It seems to be working out pretty well for Kinaxis. In its most recent quarter, it delivered the following:
- $98.4 million in revenue, up 44%
- $8.5 million in profit, up from a loss
- $0.30 in earnings per share (EPS), up from a loss
- $21.1 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), up 87%
- $79.4 million in full year EBITDA, up 99%
Overall, it was a pretty good quarter, with strong growth and decent profitability. I’d prefer KXS stock to SHOP stock, because it scores better on both growth and profit.
Open Text (TSX:OTEX) is a Canadian tech company that reports earnings on May 4. Like Kinaxis, it is making big investments in AI. OTEX is not a great historical performer: it has barely any growth in revenue or profit over the last five years.
What’s unique about the company is that it has the opportunity to get into the chatbot business that’s generating so much buzz for U.S. tech companies. OTEX is a word pressing and text analytics company, so it has a logical entry point into that business. We may hear some details about that in the upcoming earnings release, so it will be one to watch.