Pinned straw:
Unfortunately I missed the call (will review when they put it on their web site), but judging by the degree of spin in the slides I think I get the message anyway – the world is in the poo but that just means we are more relevant!
So I will focus on the numbers:
- Sales went no where for the quarter and up only 5% PcP in total. The rotation from transaction revenue to subscription being the main story, which in fairness is better quality income and now at 61% of sales.
- Pipeline growth for Kinatico Compliance is looking healthy and supposedly improved in quality, but this is very subjective, so future sales growth will prove or disprove this.
- EBITDA% is ticking up and showing some operating leverage (up 3.0% pcp), but I would rather see what is happening with FCF.
In short, I don’t see it as a good quarter and management is focusing on PcP and other matters to divert from this (may explain the price action today). That said, the business is still redefining it’s self and it’s product change is still new, so it’s a complex period in which to assess numbers.
The business continues to make the case of AI as an advantage rather than a threat, which I agree to if used well. Macro-economic conditions are providing a headwind, but increases in regulatory requirement a tailwind – tsunami or cyclone, pick your metaphor but a view of the horizon is tricky either way.
Disc: I own RL
@Tom73 I had a look at this one earlier in the year, and even for a short moment opened a small position. However, on doing a deeper dive, I've concluded that $KYP is operating in a space with plenty of other players, with a low moat, and I am unclear whether - even if it can continue to scale - whether the margins achieved can be sustained.
I was able to generate a bull case valuation range of $0.41 to $0.72, but I really had no conviction this can be supported on a sustained basis. In retrospect, when I look back at my analysis I can see I was anchoring on the momentum during late 2025, and I never had enough conviction to post my valuation on Strawman. (After all, you can generate any numbers you like in a model - the real question is, are those numbers a reasonable representation of how the future might unfold. I concluded they weren't)
I suspect $KYP is being disporportionately hit in the SaaSsacre, but as a lower quality software stock, maybe that is not totally undeserved. For now, it is not even on my watch list.
Disc: Not held