Good morning, ladies and gentlemen. Welcome to the Kinaxis Incorporated Fiscal 2023 second quarter results conference call. Currently, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. I'd like to remind everyone that this call is being recorded today, Thursday, August 10th, 2023. I will now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Kinaxis Inc, p lease go ahead, Mr. Wadsworth. Thanks, operator. Good morning, and welcome to the Kinaxis earnings call. Today, we will be discussing our second quarter results, which we issued after closing markets yesterday. With me on the call are John Sicard, our President and Chief Executive Officer, and Blaine Fitzgerald, our Chief Financial Officer. Before we get started, I want to emphasize that some of the information discussed on this call is based on information as of today, August 10, 2023, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth 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 in our MD&A, both of which can be found on the IR section of our website, kinaxis.com, and on SEDAR. Participants are advised that the webcast is live and is also 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 archive may be re-recorded or otherwise reproduced or distributed without prior written permission from Kinaxis. To begin our call, John will discuss the highlights of our quarter, as well as recent business developments, followed by Blaine, to review our financial results and outlook. Finally, John will make some closing statements before opening the line for questions. 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 to change slides. I'll now turn the call over to John. Thank you, Rick. Good morning, and thank you all for joining us today. I'm excited to share our Q2 results and developments with you today. I'll begin with slide four. In the second quarter, we achieved SaaS revenue growth of 25%, total revenue growth of 31%, and our Adjusted EBITDA margin was 14%. These results keep us on track towards our targets for the year. Moving to slide five. We won a record number of new customers in Q2, surpassing the benchmark from last year, which demonstrates our ongoing momentum in the market. Our win rate against the competition continues to increase, and it was our best Q2 ever in terms of incremental subscription business won. In June, we had a record turnout at Kinexions, our annual customer conference, where in-person attendance grew by over 50%. We also held more initial meetings with our prospective accounts in Q2 than any, in any quarter of our history, further suggesting that the market is heating up. While we need, while we need to remain appropriately cautious about the global economy, we continue to see a persistent urgency around the need to transform supply chain governance, and the demand environment for supply chain management solutions remains very strong. Moving to slide six. Thanks in part to the record number of wins in the second quarter, Kinaxis now has over 300 customers. We are leading with leaders, and as always, these companies represent some of the largest and most exciting brands in their sectors. In our industrial segment, we're thrilled to add ExxonMobil, one of the largest publicly traded energy and petrochemical companies, as well as oil and gas giant, Shell International. In the same segment, we welcomed Westlake, a New York Stock Exchange-listed company with roughly $16 billion in revenues last year. In consumer goods, we added major fitness lifestyle company, Peloton, as well as Brown-Forman, distillers and marketers of premium spirits like Jack Daniel's, Finlandia Vodka, and Woodford Reserve. We also won water filtration leader, BRITA, as well as Premier Foods, one of U.K.'s largest food manufacturers, with brands like OXO and Bird's Custard. Unsurprisingly, given this success, consumer goods remains one of our fastest-growing segments. In high tech, we welcomed Kyocera Communication Systems, a Japanese information systems company that is pioneering the communications of the future. This is just a small sample of our wins in Q2, names that clearly demonstrate how global innovation leaders are starting to embrace meaningful supply chain transformation. In total, roughly half of the companies we won in Q2 are enterprise class, and there are many more prospects of similar quality and size in our pipeline today. To me, there is no greater evidence that our opportunity remains in its early stages. Now, moving to slide seven. Siloed approaches to supply chain management are giving way to fully concurrent supply chain orchestration from planning through execution. Kinaxis remains alone in its ability to deliver on that vision, and we recently announced several major innovations that set us apart in this space. First, Enterprise Scheduling. Enterprise Scheduling is the first and only scheduling tool that allows companies to orchestrate production across sites and creates a comprehensive, feasible, and efficient manufacturing schedule, regardless of plant layout. Our new supply chain execution application, a result of our MPO acquisition, includes transportation management, order management, and returns management. It empowers businesses to drive supply chain orchestration from plan through delivery across all time horizons. Our sustainable supply chain offering allows companies to ensure environmental factors are a key part of supply chain decisions by embedding carbon emission factors, including Scope 3 emissions, into RapidResponse scenarios. If you read our ESG report, you'll know that commitment to a sustainable, socially responsible future is one of our core strategic pillars. Finally, Demand.AI will allow companies to better understand how both internal and external factors are influencing demand for their products and to take advantage of these changes quickly. HAVI, a giant in the strategic outsourcing for quick service restaurants and other industries, took the stage at Kinexions to highlight its early adoption of this new capability. On slide eight, not only are our customers recognizing these innovations, but in May, for the ninth consecutive time, Kinaxis was placed in the leaders category of Gartner's Magic Quadrant for Supply Chain Planning Solutions, and became the first company ever to be simultaneously positioned furthest on both completeness of vision and ability to execute. Hopefully, you've seen this report by now, but the amount of white space between Kinaxis and the next competitor in that quadrant speaks for itself, and is a great testament to what our customers see in us. Simply stated, we are the innovative and trusted leader that delivers on our promises. With that, I'll turn the call over to Blaine to review results of the quarter. Thank you, John, and good morning. As a reminder, unless noted otherwise, all figures reported on today's call are in U.S. dollars under IFRS. Starting on slide nine, total revenue in the second quarter was up 31% to $105.8 million. Our SaaS revenue grew 25% to $64.1 million. Ongoing momentum in our markets continues to drive this very healthy growth. Subscription term license revenue was $7.1 million versus $0.4 million in Q2 2022. As you may remember, this item largely follows the normal cadence of renewals among our small group of existing on-premise customers, or those that have the option to move their deployments on-premise. However, it's important to note that in Q2, one of our new customers that joined us will be accounted for as subscription term license revenue. Given our typical experience, we had initially forecast this and all other new wins to come in as SaaS revenue. Our professional services activity resulted in $30 million in revenue, or 18% growth over the second quarter of 2022. New bookings for professional services were also very strong, which will help support our total revenue outlook for the year. This revenue item varies from quarter to quarter based on the number, size, and timing of customer projects underway, as well as the proportion of work assumed by partners. Maintenance and support revenue for the quarter was $4.6 million, up 17%. Second quarter gross profit increased by 28% to $63.7 million due to the significant revenue growth I just discussed. Gross margin in the quarter was 60%, compared to 62% in Q2 of 2022. Software gross margin decreased to 76%, largely due to initial investments in our new public cloud arrangements. We are ahead of plan with respect to the number of customers hosted on public cloud, which is positive, but it does mean that costs are also a little higher than expected. As we move closer to a fully public cloud model, we expect software margins to return closer to 80%. This will also be helped by a higher proportion of expand business in future years. I would like to highlight that in Q2, over 70% of new subscription business, one, was in the land phase of our, our business. Professional services gross margin was healthy at 21%, though slightly lower than in Q2 of 2022, due largely to investments made in additional headcount to support new customer engagements and existing customer expansions. We still foresee a total annual gross margin in the 60%-62% range. Adjusted EBITDA was up 47% to $15.2 million, with a margin of 14%, up 1 percentage point from the second quarter last year. Our loss in the quarter was $2.5 million, or $0.09 per diluted share, a $0.01 improvement from last year. Cash from operating activities was very strong at $13.9 million, compared with $8.4 million in the prior year period. The increase largely reflects normal periodic fluctuations in balances of operating assets and liabilities, as well as higher interest received on balances in Q2 2023. At June 30, 2023, cash, cash equivalents and short-term investments totaled $293.4 million, up from $225.8 million at the end of 2022. On slide 10, our annual recurring revenue, or ARR, grew 22% over the second quarter of 2022 to $293 million, representing a healthy balance and growth rate given the economic backdrop. There is plenty of opportunity for even faster growth, but the final stages of procurement are still taking longer in some cases, a well-documented phenomenon in enterprise class SaaS by now. It's especially applicable when targeting new customer opportunities, and over 70% of our ARR growth in the quarter was from new customers. In short, we have continued to grow well in this unusual environment, which highlights the ongoing urgency around supply chain transformation. Slide 11. At quarter end, our remaining performance obligation, or RPO, was $587 million, up 19% from Q2 2022. Of that total, $542 million relates to SaaS business, up 18% year-over-year. Of the SaaS amount, roughly $127 million converts to revenue in the remainder of 2023. I'll remind you that growth in RPO varies both with incremental business won and renewals of existing subscription amounts, so it's best to focus on trends over the longer term. Further details on our RPO can be found in the revenue note to our financials. Turning to slide 12, we remain excited about 2023 and are pleased to be able to reiterate our outlook for the year. A way of reminder, we expect total revenue of $425 million-$435 million, 25%-27% SaaS revenue growth, $16 million-$18 million in subscription term license revenue, and an Adjusted EBITDA margin of 14%-16%. Now, I mentioned that we won a new customer in the quarter that will be accounted for as subscription term licenses. You will recall, the same thing happened in Q1, and we increased subscription term license and total revenue guidance at the time. In both cases, we had anticipated the business coming in as SaaS revenue, and the combined impact to SaaS growth is roughly 1%. As a result, it will be more difficult to hit the top end of our SaaS revenue growth guidance, while our confidence in the elevated subscription term license outlook has grown. Overall, we remain fully focused on finishing the year within all our target ranges. We remain pleased with our balanced approach to SaaS revenue growth and profitability as we work towards another year of Rule of 40 performance. With that, I will turn the call back to John. Thanks, Blaine. As you know, we're working towards 30% plus SaaS revenue growth and 25% plus adjusted EBITDA margin in the midterm. Internally, we are hyper-focused on our path to crossing $1 billion in revenue. To help achieve these goals, we recently made some exciting changes to our leadership team. First, we appointed a new Chief Product Officer. Andrew Bell will lead the product roadmap and oversee its execution, including our continued excellence in AI and machine learning. Andrew has been with Kinaxis for more than a decade, most recently leading the product management group. We've also created a new Chief Operations Officer role and appointed former Chief HR Officer, Megan Paterson. Megan will have responsibility for our cloud services operations, corporate IT, corporate strategy, HR, and global real estate. We've named Amber Pate as Chief Human Resource Officer. For almost three years, Amber has worked closely with Megan as Vice President in the HR team and has previously led the entire HR resource function for other companies. Finally, we recently announced Margaret Franco as our Chief Marketing Officer. Based in London, Margaret has extensive experience shaping global tech brands and helping companies scale well beyond a billion, and she's previously held positions as CMO at Finastra, held senior marketing global roles at Dell during a 13-year tenure, and was named to the list of The Top 25 Women Leaders in Financial Technology. Our continued strong financial performance, alongside a growing list of world-class enterprise customers, innovative new product capabilities, and an exceptional leadership team, positions us well for our next stage of growth. It is a privilege to lead a company that powers the world's supply chains while preserving the planet's resource, all to ultimately enrich the human experience. I want to thank our amazing team around the world, our customers and partners, and our shareholders for your continued support and commitment to Kinaxis. With that, I'll turn the line over to the operator for Q&A. At this time, I'd like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. We'll pause just for a moment to compile the Q&A roster. Our first question comes from the line of Daniel Chan from TD Cowen. Daniel, your line is open. Hi, good morning. Good to see the strong SaaS bookings in the quarter. If I look at the ARR added in the quarter, relative to the SaaS bookings, it seems that ARR growth isn't quite as strong as what the SaaS bookings would suggest. Is that due to longer contract durations result- resulting in the larger bookings, or is there something else to point out? I'll take this one. Great, great observation, Dan. One of the things we've been noticing is there's a juxtaposition that's happening right now with companies. Number one, they're realizing that they have these constraints on budgets. Number two, they realize they need to have a solution for the supply chain issues that they're going through. The demand is through the roof, it's Taylor Swift heights. What we're starting to get is a situation where we need to get them in the door. The opening footprint, the ARR footprint that we initially get, is smaller than we've seen over the past couple of years. We've seen our pipeline move throughout the quarters, but the biggest thing is getting them in the door. You've seen what our retention rates are. Our retentions is extremely sticky, and we expect that these people will be here for a long time. I'll give you a couple of examples. Our biggest customer coming on, and the biggest contract that we had come on, they have an extremely big ramp. They go from, I'll say, a 1x in the initial contract, and by 2025, that contract is a 3x, and that's for our number one largest customer that we landed. The number two is already lined up for a significant expansion that they have early in this year. We're getting them in the doors, we're showing them what we can do. We know that they're going to stay with us for the long term because of our retention rates, and we expect to see the expansion. we're kind of sticking to the sticking to the script, which is we are in that land phase, we're getting a lot of new name accounts that are coming on board. We're getting them in the door, and then we're expanding from there. we're really happy with sticking to the plan right now. That's very helpful. Thanks for that. As part of that expansion, I did some of your, public cloud investments. Can you just elaborate on what those investments are, and how long you expect those to continue? Sure. The, the biggest investment is. Well, we have, I'll say, two main partners that we're dealing with right now, one of which, we are in the process of moving the majority of our customers over to, and, we will expect that we'll phase out to the double cost that we're, we're going through right now with private cloud as well as public cloud. Should be eliminated by the end of 2024. We are luckily ahead of schedule for, for the business, for finances. It's not always great to have an extra cost that I'm incurring, but there's a high amount of demand to get on board with the public cloud environment. We expect by 2025, that we'll be back to the one cost hitting us. Yeah, I might just add, you know, I'm just going to use the word delight to the speed at which we've been able to adopt, not only the, the, the Microsoft Azure platform, but the Google Cloud platform as well, working both with their teams. They've been hyper-focused on us, which is great. It's awesome to get the attention. I think they, they realize and recognize the same thing that we do, that the world of supply chain is going to undergo this massive transformation over the next five-10 years. So they, they obviously both want to be a major part of that. As you can appreciate, you know, we started, you know, what I'll call public cloud many, many, many years ago. Translating our footprint into those public cloud environments, we had some assumptions around what the technology investments would be, and any engineering investments and what they would be. Thankfully, and of course, sometimes that has some impacts on finance, but we're thrilled to see the speed at which we can migrate and start new customers on those public cloud environments. Thanks. I'll pass the line. Our next call comes from Thanos Moschopoulos of BMO Capital Markets. Your line is open. Hi, good morning. Just looking at the ARR growth, obviously, it'll have to reaccelerate, I guess, longer term in order for you to get to your 30% SaaS revenue target. How do we think about that dynamic? Will that be driven as a function of some of the expansion opportunities kicking in? Maybe kind of a related question from the macro, would you say it's consistent to what you've seen in recent quarters, or is it directionally getting any, any softer? No, again, great question, on ARR, Thanos. We do see that the expansion, part of our business will be accelerating. I think I mentioned in the last call that we, we, for the first time, added in a team that's dedicated to expansion revenue, and building up the, the footprint that our customers have. We obviously have a, a lot more observation into our pipeline right now, especially what the upsell opportunities are, are like. And I can say quite confidently, the, the next two quarters, there's some significant upsells that we have in place right now. So, we think that ARR is going to get to us- get us to a position to get to that 30% midterm SaaS revenue growth that we have in place. I, I, I'll let John add any color that he wants to have on this, because I think it's, it's something that we've been very focused at. Let's get those new name accounts in. We, we were able to say that we have these records coming in place, and we had a, a record incremental bookings also for Q2, which is nice. We also want to do exactly what, what everyone else is hoping for, is get the revenue in the door, and, and we're seeing that path right now. We're in the early stages of growing that path. Yeah, it's everything that you notice, Thanos, we notice first. You know, when we looked at this phenomenon, you know, there's a couple of things that really surfaced for me, really, really, really exciting things. First, I can say for the first time in the history of selling, enterprise-class software in the supply chain space, our sales cycle time fell under a year overall. That's pretty exciting. This, this is like an acceleration in, in, I'd say, the market. You know, the market's clearly seeing, we've got to rethink our supply chain governance models, that's exciting. The other thing we're seeing is, you know, I, I'd say a remarkable, surge in the SMB space. So obviously those deals, much smaller companies, I think I mentioned this in the past, we've closed business with a company that does less than 100 million in revenue. That's phenomenal for a lot of reasons. One, it proves that the financial formula works for both parties at that scale. And also the technology, you know, the technology complexity works for both, right? That this can be absorbed by companies of that magnitude, which is quite exciting. Enterprise class, one of the trends that we're seeing is, yes, sales cycles are shrinking, which is very exciting, but initial deals are, as Blaine noted, initial deals are starting smaller and ramping up. Some of those ramps are outside of the ARR range, but they're baked into the contract, right? They're baked in at year two, three, and sometimes beyond those, those points. We'll see a natural, what I might call a natural escalation occur because they're contracted, and they're sitting out, just outside just beyond that, that one-year horizon. Lastly, you know, clearing 300 customers and continuing to see record logo growth, which is unbelievably exciting for us. To me, that, you know, that is creating. You know, it's creating its own little mini market, if you will, as we produce new products and sell back into it. You know, we expect to start seeing, perhaps a more balanced ratio between subscription from the base versus subscription from landing net new. Now, you know, current state of the pipeline, and I'm, you know, I look at the current state, you know, when I think about pipeline, years ago might have been the size of an orange, now it's more like a watermelon. It's just growing. You know, it's, it's quite exciting, a different mix, but I think we're going to continue to be able to say, net, net new logos are, are going to be the story for a while here as, as we start seeing more and more adoption. Appreciate the color. Just on the term license guidance, given that you had an unexpected term license win, why are you not raising the full year term license guide? Is there maybe a term license renewal that is now going to transition to cloud, or what's the dynamic? Yeah, no, there's a, there's a term license customer that has just come in. I will use the words that how the contract was constructed, the recognition of revenue may depe- be dependent upon certain clauses in that, that contract. It doesn't mean that... I, I, I will just say, just could, that, that revenue will come in, it's a matter of when. I haven't I haven't figured out which period it's going to come in at. Oh, okay. That makes sense. I'll pass along. Thanks. Our next call comes from Paul Treiber, from RBC Capital Markets. Your line is open. Oh, thanks very much, and good morning. Just wanted to quickly clarify, John's last comment, just on ARR and the calculation there. The, he, he, he mentioned that the, the expansion in year two and three is outside of ARR. Can you just walk through the ARR calculation, and then is there a risk, any risk that the expansion may not occur, and that, and that's like, if it's not contracted? Can you just walk through, you know, how you think about the future expansion? Yeah. So, the example that John spoke about, it's committed ARR. It is in our RPO right now, and it will come through, so they're contractually obligated to pay that amount, so I have no concerns. The way it works in our calculation is, if we have a ramping deal, and I'm just going to throw out, like, random numbers. Say in year one, they are committed to pay based on certain modules, certain amount of users, say it's $100,000, which would be low. If they came in with that amount, that's what we would recognize as ARR for that first year. If, say, in year two, it is now ramped up to $300,000, we wouldn't start recognizing that ARR until we've, we've gone over the cliff of, it's within 12 months that we expect to recognize a certain amount of revenue that's recurring. We're in a period where we're more in the $100,000 range versus the $300,000 range for that particular customer. Okay, thank you. That's, that's helpful. Just in terms of customer wins, it sounds like the momentum is being much stronger than you would have expected at the start of the year. Is there any way to quantify, you know, how customer wins have been tracking versus your expectations? There's, there's a couple of things. One, we, we obviously track overall sales cycle, and, and it's been, you know, over the past, I wanna say, you know, two, three years, it's been slowly coming down and, you know, the- compressing, I'd say. This quarter, you know, we measure this religiously, this quarter, first time ever, less than 365 days is a pretty big milestone for us, less than a year. This has all kinds of implications in terms of how we, how we ramp up net new sales, when we look at the pipeline, how we ramp up sales executives and, and work with partners. That's one of the key, one of the key areas that, that we focus on. The other, obviously, we're, we're, we're studying, net new wins across the segments that we serve and, the size companies that we serve. As I stated in the script, about half of the customers were in the SMB space, and half were in the enterprise, enterprise space. I, I think that's, you know, that trend continues. I think over time, obviously, the TAM of SMB versus TAM in enterprise, enterprise deals will be larger in general. They may, they may have ramps. We're happy to do those. It's very, very common for extremely large enterprises to bake in a three to five-year contract where they know what they're going to do. They just don't wanna pay the full freight on year one. It's impossible to, you know, to cover every, every country, every theater, every product family, in a short time frame like that, so it's very common to have that ramp. In the case of SMB, we, in some cases, still have ramps, because they don't, they don't choose every module right away. They start with what is most urgent, and then, and then grow it from there. So far, you know, looking at the pipeline and current activity and current state, as I said, I think we're gonna, you know, we're gonna be talking about this net new logo, surge, for some time. I'll just maybe add in on that. So the, it's a good thing to touch on, which is the number of new name accounts that we are seeing at any particular quarter and is that within our expectations. John touched on the SMB side, and we haven't talked about value-added resellers, but I'm sure someone will ask a question at some point, either on this call or during today. We had a, obviously had a conservative outlook as to how this would grow. We're seeing where the pipeline is right now, and it is a lot bigger than what we expected at this stage. So that will also contribute to the amount of new name accounts we come in place, but we're very happy with where that, that pipeline is, and that will help contribute with the beats that we're seeing on new name accounts. Just one last question from me. Just on land and expand, can you speak to, you know, what's your typical expansion rate, you know, historically, or just general thoughts around that? Can you give us a sense for the magnitude of how that's changed here? Yeah, I... You know, in, in past conversations, you know, we've talked about looking at the whole cohort, where subscription would, on average, see sort of a 3x over a three-year, sorry, a 2x over a three-year period. You know, that would be a, a, you know, a typical over the, you know, over past past segments. Now, with... You know, in, in cases like that, that was when we were dealing with enterprise. We had no SMB space. It's a little early now to look at the sum of both. In fact, you know, I, I would expect to see those two cohorts having differing ratios, looking at SMB versus versus enterprise. I haven't seen anything to suggest that, you know, the ramping, if you will, the subscription ramping would be any different. I will admit that we haven't been monitoring. It's a little earlier, too early to say whether the SMB market will be yielding different ratios. We just don't have the, the years of history, you know, to, to be confident with the number. Thanks for taking the questions. Our next question comes from Richard Tse from National Bank Financial. Your line is open. Yes, thank you. It's nice to see the growing base, like you said, 300 customers plus today. Could you maybe share the mix of SMB versus enterprise in terms of the wins? I guess, related to that, is the cost to acquire and serve those SMB customers the same, you know, on a relative basis as large enterprise? Sure. On the call, we mentioned that our enterprise versus, I guess, mid-market SMB, somewhere around 50/50. We don't split out the SMB versus mid-market. Cost of acquisition, I'll say for mid-market, is quite similar to enterprise. Once you get to SMB, especially because of the relationship with the Value-Added Resellers that are mainly concentrated on that area, the cost of acquisition is higher. As you can imagine, there's a, or sorry, the, the cost of the gross margin that we have at the initial deal is smaller for those SMBs.... As you can imagine, we don't have the sales, we don't have some of the support, and some of the PS issues that we have with our own business, so the contracted margins we have with that. Overall, we are continuing to evaluate, and I think what John mentioned on the expansion piece of the business, as we expect a higher percentage of expansion with those SMBs, that's gonna contribute to larger gross margins over the lifetime of the contracts. As of the early days, the margins are thinner for SMBs. Okay, thanks. John, I appreciate your comments about sort of this billion-dollar revenue target and 25% margins. Like, if you kinda look ahead, let's say on the next three years, like, what's your kind of vision for the company from almost maybe as a product perspective? Are you kind of, you know, moving potentially beyond sort of Supply Chain Planning? There were certainly glimmers of that at your recent user conference, maybe help us to kinda understand, you know, what the company will look like from a, a platform product perspective. Yeah, absolutely. You know, there's a few things that are, you know, perhaps quite unique about Kinaxis that are noteworthy. One, we have exactly one code base. You know, we do not believe in, in custom coding. In fact, when I meet with prospects, you know, I, I, I often educate them, "If anyone ever tells you that they can do anything they need to be done with enough time and their money, run. This isn't the path to, to excellence." So, you know, when you look at Kinaxis being able to support some of the largest, CPG companies, some of the largest life science, automotive, aerospace and defense, now, you know, the oil and gas sector, you start seeing quite unique, supply chains being supported by this platform. It's unbelievably exciting and certainly gives me great confidence in our, in our journey towards $1 billion, and well beyond, frankly. When I think about the next three years, we're gonna continue along that path. You know, I think about, you know, for lack of a better analogy, being the sales force of supply chain, you know? You know, being the ubiquitous golden standard, regardless of industry and regardless of size. So, you know, some of the things that excite me, while might not be wildly financially, you know, a, a huge part of our business, when you close, when you close a deal under $100 million, it tells you that the, the economics work for both parties. That's a momentous thing. It's just momentous to, to, to realize that the economics work for both, because now you start thinking about what kind of impact could you have on the planet if you could serve every manufacturer that does $50 billion or higher. You know, it's just an incredible thing. again, using this... You know, you have this company that does less than $100 million in revenue, using the same technology as a company doing $150 billion. They're using exactly the same software. That's exciting. I think about the next next three years, I think we're gonna continue down that, that penetration, that land, that land route. leveraging RapidResponse, when I think about innovation, Kinaxis can never be the bottleneck for innovation, and so we've been focused a lot... A lot of our energy is focused on building out RapidResponse as a platform and allowing partners to create their own intellectual property on top of that platform. That's just going to accelerate innovation for a growing market, and not only a growing market, a market that's desperately in need of transformation. That, to me, are, are the sort of key ingredients to fuel the confidence behind $1 billion and beyond. You know, that's, that's how I think about it. Obviously, machine learning, we have more patents in machine learning. You know, it, it's so concentrated, you have no idea how many people are focused on this. You know, focused on leveraging machine learning for the purpose of automating the obvious, for the purpose of demand sensing, absorbing, you know, what I'd say is unstructured, sentiment and signal data that we've never been able to process before. It's unbelievable what's happening there. I think all of those things are gonna be fueling a continued, you know, a continued surge in our business. Okay, thank you. I'll pass the line. Thank you. Our next question comes from Robert Young of Canaccord Genuity. Your line is open. Hi, good morning. I'm just trying to understand the professional services, the amount of growth here in the quarter relative to all of the new wins and the high-level new logos. Is this just a function of smaller wedge contracts that are easier to deploy, or is there some other dynamic at play? Sure. I'll, I'll at least start, and John can always add in some color if he wants to as well. So when we think about our professional services growth, we've been doing our best to, obviously, make sure our partners are involved. We like to make sure that our, our part- it's a partner-first type of organization, where we want them to be focused on growing, their, their footprint, and they point to us as being the solution that they think, should be used going forward. Part of the, the growth that you're seeing there is on that. Now, the, we like to talk about records. Sometimes talking about records just gets boring, and we don't talk about all the records. We had a record bookings number for professional services in, in Q2. which we did mention before. We're extremely excited with the fact that we have a long runway in terms of where we think that revenue's going. Ultimately, what we're trying to do is move that revenue stream as much as possible into the hands of our solution integration partners that are out there. Okay, that's great to hear. The win rates being strong and sales cycle decreasing, the high level of new logos. I mean, how has this changed your outlook on the sales headcount? Is efficiency increasing, or, like, do you have to expand to keep capitalizing on all of this top-of-funnel activity? I'll pass the line. Sure. Yeah, our sales efficiency has come down a little bit from crazy high numbers, which when I say crazy, it means, like, I think we were missing out on opportunities, and I've, I've mentioned this before. I think they're at the levels that are now what I would say are just best-in-class, and they're not crazy anymore. Best-in-class is getting us to a position where we're pretty comfortable with the continued growth at sales marketing at a reasonable level, rather than bring on as many as we had. Now, what you would see from our sales and marketing team is that we have a large cohort of sales folks that are still early in their tenure at Kinaxis, and the productivity or the efficiency they get doesn't take place until closer to the sales cycle times that we just mentioned. We are in early days of getting that new cohort ready to go and accelerate and expand our wins even more in the future. I'm excited to see when they get past that 12-month mark, because we might see another acceleration. Okay, great. Thanks. Pass the line. The next question comes from Mark Schappel from Loop Capital Markets. Mark, your line is open. Hi, good morning. Thank you for taking my question. John, just stepping back a little bit here at a higher level, could you just speak to the changes that you're seeing with respect to executive sponsorship for supply chain software, you know, over the last, say, six months or so? Oh, absolutely. I'll tell you, chief supply chain officers are being invited to every board meeting, not just once a year. I mean, there. It's, you know, people are realizing that supply chain done well is a weapon. Coming out of, out of the pandemic, you know, many have realized. Well, I'll say first, many boards are asking their CEOs: What are you going to do next time? You know, of course, you know, CEOs aren't necessarily supply chain practitioners, so they swivel and ask the team's supply chain officer: What are we going to do next time? Oh, by the way, boards are also taking governance responsibility for ESG. There's no discipline on this planet that consumes the Earth's natural resources more than supply chain. So boards are saying, "Can you be more resilient?" Which basically means, can you absorb volatility faster? Can you absorb or avoid hardship faster? Oh, by the way, do less harm. Those two narratives are colliding, which is what I, I believe is causing this surge. It's causing what I often describe as a supply chain renaissance, a rebirth. People are rethinking. Look, every 30 years, you think about this, right? That 30 years ago, where were we with technology? 60 years ago, where were we with technology? You know, these, these, you know, these types of periods cause you to rethink and adopt new ways, new techniques, that are, are giant leaps forward. So conversations have been really, really fascinating. I, I... There's nothing I enjoy more than spending time with practitioners and, and learning the new language they use to describe the pain they're, they're experiencing. I, you know, if you were to if I were to answer the question, how is, how is the narrative changing? Well, first, I would say there's this realization that the pain they're feeling is not a failure in technology, it's a failure in technique, and that is what is fueling a great resurgence in this space. It's not just, "Hey, I need to keep doing what I'm doing, only a little bit better." They're having conversations about doing things completely different. It's like the birth of the internet. We're not going to write each other letters anymore and lick stamps. That's absurd. There's no breakthrough in that, right? Even if you get a a stamp-licking machine, well, that's still not gonna make communications faster, right? This is what we're seeing, now, and, and why I'm. Well, as you, you some might tell, I'm, I'm a little excited about, the state of the business and obviously, the state of the craft of supply chain. It's, it's fascinating to, to hear the, the narrative. That's helpful. Thank you. The next question comes from Kiran Sritharan from Eight Capital. Your line is open. Good morning, guys. Thanks for taking my question. Now to start here with the MPO being rebranded and fully integrated, are you approaching certain end markets differently? Maybe a few thoughts on how your changes to the broader branding strategy, given the new CMO as well? Yeah, absolutely. I, I think I might have said this during the last, last earnings call that, well, I certainly have said it publicly, that there may be a day people will no longer use the term supply chain planning. That's just one side of a two-sided coin. So, you know, with our acquisition of MPO, we're able to satisfy the needs of supply chain execution. So the sum of the two, at least the, the terminology being used by practitioners, is orchestration. Supply chain orchestration is the fusing together of planning a thing and executing on that plan, and course-correcting when invariably the plan never happens, right? Like, you know, that it's one thing to plan things, it's another to actually execute in an environment that's forever shifting. You know, that's one area that, you know, of the narrative that we're seeing, change. Obviously, with our acquisition of MPO, puts us in a, in a very advantageous position to be able to fuse together those two, those two elements of supply chain. Thanks. For my second here, just looking to unpack, how your AI/ML solutions are positioned today. How has the competitive landscape, changed with regards to, you know, any other innovative AI features you're seeing? Also, how crowded is the AI pointed solutions market in SCM? I'll leave it there. Thanks. Yeah. Well, that's a great question, and as a software engineer, myself, I'm always enthusiastically researching these types of technologies. Like anything, techniques inform technology, not the other way around. There's a lot of interesting technologies that have no value. Value is always in the eye of the benefactor, in our case, the benefactor is the Chief Supply Chain Officer. I have as many conversations with data scientists and our PhDs in machine learning here at Kinaxis, as I do with practitioners, and work to really tie the needs of the practitioners with the abilities of the science. Now, I will say there are a lot of competitors out there that are leveraging machine learning and AI to improve a specific function of supply chain. I think that's incrementally better. There's no breakthrough in it. It's incrementalism. At Kinaxis, we think about leveraging machine learning and AI above a concurrent environment. When you can start automating decisions that have implications across a vast number of processes in supply chain, that's where the breakthrough comes in. That's where we have been working very, very closely with innovators like HAVI, you know, other innovators in the CPG space that are dealing with enormous data sets, where signals can dramatically impact their demand at a moment's notice, and that needs to be absorbed all the way through, right through to distribution. Our, our machine learning and AI posture, and all the patents we're working on, is around that. The other area, there are many machine learning technologists out there that say, "It's just a really smart black box. You should just do what it says!" Of course, humans don't trust what they don't understand. Explainability is everything. Explainability is everything, especially now. We're dealing with a lot of very smart practitioners out there that are saying, "Okay, I see the answer, but I don't understand it." A lot of our patents and a lot of our investments are, are going towards explainability, which is actually a technology. When you unpack what machine learning and artificial intelligence are surfacing for you, it's understanding: Why did you surface that for me? This is where we are spending our energy, and I think that's where the breakthroughs are gonna come from. Thanks, John. Our next question comes from Martin Toner from ATB Capital Markets. Your line is open. Hey, guys, Martin Toner here. Congrats on another good quarter. At Kinexions, there were a tremendous number of new initiatives announced, very impressive. What's the OpEx impact? What do you see the OpEx impact of how busy you are there, and when should we expect EBITDA margins to start to improve? Sure. Well, obviously, I'll answer this, Martin Toner. The OpEx is, is usually in the past at this stage. The R&D impact that we had was something that we've, we put through our P&L already, for the most part. That's why we've, we've talked about where we are in the progress of those initiatives. There is, like, phase two, phase three, phase four, and where, where those, those products could go. I think, Supply.ai is a good example. We have two main use cases that it's that it's focused on. There's gonna be more use cases in the future. We're seeing a high amount of demand already for those first two. Demand.AI is, is... I, I'm just blown away by some of the results we're seeing with our early, early adoption and how much better the forecasts are, are getting on the demand sense and demand planning side of those customers. That's another area that we'll continue to focus, but it's gonna be natural R&D investments that we're gonna have in there over time. I think the sales and marketing will be the main driver of OpEx as we continue to move forward, as we try and make sure we have a good balance of where our sales efficiency is. Overall, we've talked about where we want our, our midterm targets to be for Adjusted EBITDA, and that's about 25% in the next two-four years. We are absolutely focused on, on getting to that position. I have no, no worries that we're gonna get there. That's great, thank you. I apologize if I missed this earlier, but, you know, you, you talked a little bit about customer caution. Can you just tell us what does the pipeline look like today compared to when you announced last quarter's result? Well, recently we saw another, I'd say, tip over a record in terms of that pipeline. The shape of it is, is shifting a little bit, as I said, as a result of our investment in the SMB space, and our investment with VARs. That's starting to contribute. I won't say that the VAR contribution is huge right now, but it's, it's essentially where we expected it to be. We're, we're investing quite a bit of energy right now in training and preparing the VAR community to sell on our behalf. Not only sell, but to deploy on our behalf. You know, that's, that's the, the commentary. I, I, I wouldn't say there's any huge shift in terms of the market verticals that we serve. I, I think I mentioned earlier that CPG is definitely one of the larger segments for us. We've done exceptionally well there, and some of the names that we announced, you know, during the call, are just an example. And so we're seeing, we're seeing some continued pipeline interest from that particular segment. You know, I, I will also say maybe, just make sure this gets mentioned, as it not only relates to the pipeline, but relates to, to, to deals that are closing. You know, there... We had mentioned that w- when we're cautious because of some delays in getting ink to dry, getting signatures done, you know, I've been studying that very, very deliberately, and that's mostly in the enterprise class, for one thing. You know, that's one thing that we've noticed, and it's mostly with the very very largest deals that we will see that. In fact, you know, one of the... Well, definitely one of the top 3 deals that we were working on slipped just outside the quarter because of such a thing. You know, very large, in the automotive space, where it just slipped outside by days. Again, you know, we, we continue to see a little bit of that prolonging of signatures during that process, and sometimes goes, goes back to the board, and so on. We're not... We remain confident at that stage that ink will dry, but in some cases there, we're seeing little slips that are, that are elongated there. Ultimately, I think the pipeline is strong, gives us confidence in the year, guidance gives us confidence in our ultimate, midterm, goals. You know, we have little code words here at Kinaxis to talk about that path to $1 billion and beyond, that keep us razor, razor focused. You know, we all, we all have a flagpole we hang on to. That's a great color. Thank you very much. I'll pass the line. Our next question comes from Suthan Sukumar. Your line is open. Good morning, gents, and thanks for taking my question. First question I wanted to ask on was on Planning.AI. It sounds like your early progress has been encouraging here. Can you provide an update on, you know, some of the early results and engagement you're seeing with, with initial customers? When do you expect to make a full commercial rollout? Just, just wondering what the factors there might be. Yeah, well, it's first of all, it is commercially available, make no mistake. For those that attended Kinexions, you know, would have seen some great demonstrations of which, and, and, some great sessions around our machine learning and AI posture. I would say, you know, in terms of results, maybe I'll add this color, because in some cases, we are replacing competitive products, which is always exciting for me. I, I There's only one thing I, I enjoy more than replacing a competitive product, it's when you get proof positive that your forecasts are 2x better, and they're, you know, in some cases, more than that, faster, you know? You're faster and better, which is very, very exciting. Obviously, we're leveraging that success with real-life customer examples. Trust me, in the world of demand sensing and ingesting sentiment data, and weather data, and promotion data, huge, huge volumes, and when you're able to prove that your results are not only significantly better than something that had been being in place for decades, you know, decades of mathematicians working on this, we step in, giant leaps forward in accuracy and a huge improvement in speed. It's just, it's super exciting. Obviously, we're working to leverage that. I think we're gonna continue to see that penetrate through, through the customer base and through prospects. Great. Thanks for the color. I want to touch on supply chain execution next. Can you talk a little bit about how much of a role is having, you know, execution now with capability? You know, how is that helping with new customer discussions and, and new win rates there? Yeah, it's a great, great question. This is something that we can't, you know, coming out of the pandemic, you know, many people realized that material in motion was one of the biggest areas of risk. You couldn't find a container to save your life, and even if you could find one, the cost of said container was, in some cases, 5x, 10x, 20x more to get, to get that capacity. That is ultimately what caused the urgency in fusing together the two. I would say fusing supply chain execution and planning has been a topic talked about for decades, so it's not like that's new. Being able to actually produce an end-to-end concurrent system that actually does it, that's been relatively new. It's early days for Kinaxis. Certainly, we, we just absorbed the acquisition of MPO. It's going exceptionally well. Martin, who led that organization, has a very, very senior role here with us. He's not only academically incredibly bright, but he understands tremendous about business and is definitely the smartest I've met in the world of supply chain execution. He is already infusing his intellect into into our product management into our product management function. In terms of the impact it has on sales, in some cases, it got us in the door. In some cases, it's an opportunity for us to expand with our own with our own customers and being able to offer up a supply chain execution attachment, if you will, to RapidResponse. Very early days, but let me tell you, the use case is unbelievably natural. Thank you. That's helpful. Uh-huh. There are no further questions at this time. I turn the call back over to you, Mr. Wadsworth. Thanks, operator. Thank you for participating on today's call, everyone. We appreciate your questions and your ongoing interest and support of Kinaxis. We look forward to speaking with you again when we report our third quarter results. Bye for now. This concludes today's conference call. You may now disconnect.