When markets wobble, and tech stocks feel risky, it’s easy to assume the whole sector is off-limits. But smart investors know that some companies still deserve a spot in a long-term portfolio, especially when they’re growing fast, building cash, and trading below where they should be. Kinaxis (TSX: KXS) fits that bill perfectly. It’s a Canadian tech stock that’s flown under the radar compared to the flashy names, but it has the numbers, the moat, and the growth potential to turn heads. And while shares are down 18% from five-year highs, it’s certainly worth considering.
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The stock
Kinaxis makes software that helps large companies manage supply chains. Global supply chains are fragile, complex, and constantly under pressure. Think back to the pandemic when toilet paper disappeared, and semiconductor shortages halted car production. Companies around the world are investing in ways to prevent that from happening again. That’s where Kinaxis comes in.
Its core product, RapidResponse, lets businesses react in real-time to disruptions. With artificial intelligence (AI) and machine learning built into its platform, Kinaxis helps clients shift production, manage inventory, and reroute logistics, all without missing a beat. This is a software-as-a-service model, which means recurring revenue — and lots of it.
How much revenue?
In 2024, Kinaxis pulled in US$123.9 million in fourth-quarter (Q4) revenue, up 11% from the year before. For the full year, revenue came in at US$484.4 million, with software-as-a-service (SaaS) revenue accounting for US$81.9 million in Q4 alone, a 17% jump. The tech stock’s annual recurring revenue reached US$360 million by the end of 2024, showing that its business model is sticky and growing.
Profitability is also heading in the right direction. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in with a margin of 25% in Q4 2024, up from 18% the year before. That kind of margin expansion shows management is serious about cost discipline, even while investing in growth. On the bottom line, net income for the quarter was US$11.8 million, or US$0.40 per basic share, up from US$0.20 in Q4 2023.
Value and growth
But what really makes Kinaxis stand out right now is its stock price. While it’s bounced back nicely since last fall, rising from around $133 to about $188 at writing, it’s still not fully valued based on its growth. At $188 per share, Kinaxis trades at a premium to traditional companies but not to its software peers in the U.S., especially considering its growth, profitability, and low debt.
And speaking of debt, it barely has any. At the end of 2024, Kinaxis reported US$172.2 million in cash and equivalents. That gives it the flexibility to invest in new technologies, expand globally, or even make strategic acquisitions. There is no dividend yet, but that’s okay. The tech stock is ploughing cash into expanding its competitive moat, and long-term shareholders should appreciate the focus.
Bottom line
For long-term investors looking for a tech stock without the drama, Kinaxis makes a lot of sense. It combines recurring revenue, real-world application, and financial strength in a way few other software companies do. And while it might not be as flashy as an AI chipmaker or social media stock, its quiet rise could turn into something much louder as supply chain management stays front and centre.
In the end, Kinaxis is a story of steady growth, not hype. It’s been quietly building its business for years and continues to benefit from global trends that aren’t going away anytime soon. For those willing to hold through market ups and downs, this is one TSX stock that looks ready to reward patience and then some.
