While much of the AI trade is built on promises and future potential, one Canadian software company is already raking in profits. Kinaxis (TSX:KXS) just posted its strongest first half ever, and it did so without chasing flashy headlines.
The Ottawa-based supply chain software maker reported second-quarter 2026 results on August 6, and the numbers point to a business that is converting AI demand into cash flow.
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Kinaxis stock is an AI play
Kinaxis makes Maestro, a supply chain planning and orchestration platform used by large global manufacturers to manage everything from raw material sourcing to last-mile delivery.
Its customer base includes global giants such as Lacoste, Rockwell Automation, and Dechra, which rely on it to plan production, manage inventory, and optimize supply chains.
Trade and tariff uncertainty, geopolitical conflict, and volatile energy prices are forcing companies to rethink how they plan their supply chains.
According to the company’s Q2 earnings call, scenario planning activity on Kinaxis’ platform rose every month from April through July, with July usage up 30% compared with a year earlier.
The tech stock saw average deal size nearly double year over year, and contracts worth $1 million or more in annual value were won three times as often as they were a year ago.
KXS stock is still a top buy
For the quarter, total revenue came in at US$158.8 million, up 16% year over year. Software as a service, or SaaS, revenue, the core recurring piece of the business, grew 20% to US$106.5 million.
Annual recurring revenue, a key measure of the size of Kinaxis’ subscription book, climbed 19% to US$465.6 million. On a constant currency basis, that growth was even stronger at 21%.
Profitability kept pace with growth rather than lagging behind it. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 23% to US$41.4 million, and the adjusted EBITDA margin expanded to 26%. Diluted earnings per share rose to US$0.76, up 19% from a year ago.
Because of this strength, management raised full year guidance. Kinaxis now expects total revenue of US$625 million to US$640 million, representing growth of roughly 14% to 17%, and SaaS revenue growth of 18% to 20%. It reaffirmed its adjusted EBITDA margin target of 25% to 26%.
CEO Razat Gaurav summed up why this combination matters as AI reshapes the software industry. “We believe AI is making our core strengths more valuable, not less,” he told analysts on the call.
“As the market shifts from experimentation to adoption, customers need trusted intelligence, explainable decisions, and measurable outcomes.”
Kinaxis stock returns cash to shareholders
What sets Kinaxis apart from many AI stocks is that it is already returning cash to shareholders while it grows.
The company repurchased more than 450,000 shares for about $47 million in Q2. Since its buyback program began in November 2025, Kinaxis has bought back 1.2 million shares for roughly $134 million, cutting its share count by 2.9% on a net basis.
The free cash flow margin hit 18% for the quarter, and the trailing 12-month figure sits at 25%. It is a rare mix for a company still investing heavily in new AI agent capabilities and a newly launched Forward Deployed Engineering team designed to build custom AI solutions for its biggest customers.
The Foolish bottom line on KXS Stock
Kinaxis is not chasing an AI moonshot. It is quietly compounding an already profitable business while genuine customer demand for AI-enabled planning tools accelerates.
Between double-digit recurring revenue growth, expanding margins, a rising free cash flow profile, and active share buybacks, this looks like a Canadian technology stock built for investors who want AI exposure without betting on a story that has yet to make money.
