Kinaxis Inc. (TSX:KXS) stock has experienced a decline of over 15% as of 1:30pm on August 9. The company lowered its forecast after a large Asia-based customer breached its contractual obligations during the second quarter. Kinaxis was forced to no longer recognize revenue from the company and removed any further revenue from forecasts. Its strategic partners increased their respective roles in initiating new customer implementations, and gained service revenue. This occurred earlier than Kinaxis anticipated which forced the company to reduce its professional services revenue for 2017.
For the second quarter the company reported revenue of $32.9 million which was up 14% - subscription revenue was posted at $24.2 million representing an increase of 21%. Gross profit was reported at $22.9 million – this was an increase of 14% and 70% of total revenue.
Even after the steep declines on Wednesday, August 9 the share price has still experienced an 8% gain in 2017. Kinaxis has been one of the best growth stocks on the TSX – returning over 400% since its initial public offering in June of 2014. Though this is a setback for the company, Chief Executive Officer John Sicard expressed confidence that business outlook is strong. The company also believes that it will still be able to deliver on subscription growth and positive EBITDA performance.
After an incredible 3 year stretch from this stock and a string of positive earnings this may grant opportunistic investors a chance to buy the dip.
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