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

Below are my as it ran notes form the webinar and quick take on H1 results. On hearing the expansion in TAM opportunity I bought a small (1%) monitor position on the basis that the thing stopping me was my view on a very limited TAM, but that bear case is a lot less likely now. Market liked it, going from a balance buy/sell to almost 4:1 with the price up 16.7% as I write.

Webinar notes:

• AI embedded over the last 12 months, but not shared due to viewing as a competitive advantage. Has evolved over the period naturally with learnings and experience rather than to be forced on expectations.
• Compliance is complex and bespoke to companies.
• KC now opens up 5-500 worker range (300k potential customers) Vs previous 500+ workers (2k potential customers)
• Deployment advantage from an implementation for large customers, but SMB now online and via live chat to speed up enterprise also.
• Marketing spend remains constant but CV check redirected to KC. Increase in spend would be data dependent.
• AI is 80% people and 20% tech, it is mistakenly seen as the other way around. People leader is the AI leader (Odelia) - AI first but not always…
• Using Claud as their selected LLM for the last 12 months.
• AI embedded in end-to-end development process.
• Plan to use of natural language queries within the platform and anticipatory offering
• Private data handling – probably not something an LLM will be trusted with.
• Investment is already done in KC with AI as native to it’s architecture.
• Built a ~$10m pipeline in 3 months and SMB 35 sign ups.
• Only 3 months into launch so unable to predict conversion rates or growth expectations, but should have some indication by Q4.
• Will allow existing SAAS customers to choose when/if they want to roll over to KC.
• Management target of having international revenue this year – will share more as this evolves.
• Capex spend currently expected to be a little lower but subject to opportunities.
• AI offers higher servicing capacity on existing head count rather than an opportunity to reduce head count.

Quick observations on H1 Results

• NPAT of A$861k was better than I anticipated, up slightly on H2 FY25 (A$712k), I had expected high employee costs (+SBC) given a significant jump last half, but it’s basically flat.
• Most of the half on half increase in cost was depreciation and amortization +350k (+22%) but also country to the talk in the presentation marketing was up +133k (+11%).
• Revenue up A$1.1m (+7%) half on half was a surprise and carried the result.
• Margin lifted slightly half on half from 65.5% to 65.9%, moving in the right direction but still shy of 66.9% peak for FY22, so I am wondering how long before we see the improved margins from SAAS Michael talked about in the SM interview.
• CF yet to look at closely, receipts and payments are up and any change is small and messy at a glance, we are coming off low bases for FCF so hard to judge any breakout.

I had done some preparation work coming into the result but need to do more before any further purchases, hopefully the price holds around current levels. I was looking for below 15c but the update makes me comfortable around 20c for a small research position.

Market Cap $103.7m at share price $0.24

Board Bio's

Ivan Gustavino - Non-Executive Chair

Ivan Gustavino joined Kinatico (formerly CVCheck) as non-executive director and chair in August 2018. Ivan has over 25 years of history in technology companies, including vast experience in leading, advising and investing in high growth technology businesses.

Ivan brings extensive experience in deal making and advising technology investors and businesses at board level on a range of matters including business strategy, growth and M&A transactions. He is a recognised leader in software technology entrepreneurship in Australia and a highly regarded authority in business strategy, corporate transactions and in the marketing of emerging technologies.

Ivan has a Bachelor of Business (Information Processing) from Curtin University of Technology.

Jon Birman - Non-Executive Director

Jon Birman has a wealth of experience including previously having been the inaugural Chief Executive Officer of UGL Resources Pty Ltd. As CEO of UGL Resources, he helped grow the business from inception to $1 billion in revenues. Jon’s experience and entrepreneurship brings depth and complimentary skills to Kinatico’s current board members.

Jon has a Bachelor of Arts (Politics & Industrial Relations) from the University of Western Australia.

Georg Chmiel - Non-Executive Director

Mr. Chmiel brings three decades of experience in rapidly growing, disruptive online businesses and holds a unique combination of experience and skills in technology businesses, international enterprises, and boards of ASX-listed companies. Throughout his career, he has been instrumental in significantly growing shareholder value. Mr. Chmiel is currently co-founder and chair of Juwai-IQI, Asia’s leading PropTech group, and Chair of Spacetalk (ASX:SPA), a global technology provider of secure communication solutions for families. He is also a non-executive director of ASX-listed FinTech companies Butn and Centrepoint Alliance.

Mr. Chmiel is also a Senior Advisor to BrioHR, ASEAN’s leading HRTech platform, and a member of the advisory board to MadeComfy, a tech company in the Australian short-term rental market.

Kinatico looks like an interesting, fast growing SaaS business and the 1H26 results look impressive. However, it appears the market was expecting more with the share price down 9% today (14/01/26). This looks like a good business to own, but at what price? It currently trades on 100 times FY25 earnings and 45 times analyst earnings forecasts for FY26. It stays on my watchlist until I can work out what it’s worth.

Highlights

• Q2FY26 SaaS revenue of $4.9m (up $1.5m or 42% on prior corresponding period (pcp)), representing 58% of total revenue (46% pcp) with annualised SaaS revenue of $19.7m on the basis of Q2FY26 run rate
• H1FY26 total revenue of $17.6m (up $2.0m or 13% on pcp)
• Kinatico’s H1FY26 closing cash and cash equivalents balance was $10.4m (up $0.6m on pcp)
• H1FY26 SaaS revenue of $9.7m (up $3.2m or 49% on (pcp)

Leading Australian “Know Your People” RegTech company, Kinatico Limited (ASX: KYP) (Company or Kinatico) is pleased to provide the following unaudited flash results for the first half of the 2026 financial year.

Kinatico CEO Michael Ivanchenko said: "Annualised SaaS revenue has grown 42% to $19.7m, with SaaS now representing 58% of quarterly revenue. This is clear evidence of the success of our strategy.

At the same time, we have launched our new solution, Kinatico Compliance continues to resonate with SMEs and also large enterprise. The combination of the ongoing operational performance and the addition of our new solution gives confidence that we are well positioned for continued momentum. Disciplined execution, while remaining cash accretive reflects the operational leverage emerging in the business. To the Kinatico team—thank you for your continued commitment to our customers and delivery of our common goals. These results are yours."

Not held

Much like Stakk yesterday, the Kinatico story is about a business pivoting away from its original model to leverage its tech investment in a new way. The key difference is that Kinatico is further along in this journey and has already demonstrated early success.

Michael appeared to have a very level-headed approach, ranging from making tough decisions and applying sensible capital allocation frameworks to envisioning the business's long-term future. He frankly admitted to early missteps and acknowledged (unprompted) past errors regarding over-promising and under-delivering. It was also clear that the focus is squarely on solving customer pain points in the most user-friendly manner possible.

He also offered a very practical perspective on AI and its specific application to the business, devoid of the usual fluff or hype.

The business seems to be in a strong position, with a right-sized cost base capable of significant scaling; Michael believes the current cost structure could sustain double the current revenue. They boast a healthy balance sheet, positive operating cash flow, and extremely sticky customers. While it is early days for the SaaS model, churn sits at 0% so far.

He used the phrase "the overnight success that's been 18 years in the making," which I liked (I use a version of it regularly!), but the point was that they seem to have reached a stage where they possess a commercially ready product set, are self-sustaining with plenty of runway, and now simply need to execute on the operational front.

Shares are trading at ~7x recurring revenue, which isn't excessive provided they can sustain recurring revenue growth and further unlock their operating leverage.

I'm going to add a small watching position.

You can interrogate the transcript here: Kinetico Transcript.pdf

Here are some AI generated notes from the meeting:

Corporate Evolution and Strategic Pivot

• Transformation from CV Check: The company has successfully evolved from "CV Check" (a transactional background screening provider) to Kinatico, a broader RegTech SaaS platform. This move was driven by customer feedback requesting easier compliance management rather than just raw data.
• Solving the "Excel" Problem: Their primary competitor remains the spreadsheet. Kinatico’s value proposition is replacing manual, error-prone Excel processes used by companies to track workforce compliance.
• Focus on Usability: Unlike competitors who focus strictly on the regulatory requirements, Kinatico focuses on the user experience of the staff managing compliance. The goal is to minimize distraction and overhead for the client.

Business Model and Sales

• Frictionless Onboarding: They have removed barriers to entry by offering month-to-month contracts (no lock-ins), a free tier for up to five users, and unlimited free admin seats. The pricing model is a simple "per worker per month" fee.
• Zero Churn: Since launching the SaaS product, the company reports zero churn, attributing this stickiness to the product's daily utility and the lack of restrictive contracts.
• "When Harry Met Sally" Effect: Sales are seeing a network effect where winning a client in a specific sector or suburb (e.g., aged care) leads to inbound inquiries from neighboring businesses due to word-of-mouth.
• Self-Serve Focus: While enterprise pipelines are strong, current growth is heavily driven by self-serve signups, which lowers the cost of sales.

Operational Efficiency and Financials

• Massive Operating Leverage: The company has reduced headcount from ~134 to 70 while simultaneously doubling revenue. Management believes they can double revenue again without increasing the current headcount.
• Capital Management: The business is profitable, debt-free, and cash-flow positive. They do not capitalize operational spend; normalized CapEx is expected to be between $3m–$3.5m annually.
• Transactional vs. SaaS: The traditional transactional revenue (background checks) is expected to decline as a standalone product but is being integrated into the SaaS offering, reducing the need to constantly "re-win" customers.

Technology and AI

• "AI First" Philosophy: The company has adopted a practical AI strategy. This includes using AI to enhance internal staff productivity (Ivanchenko uses AI for 30-40% of his day) and upcoming product features, such as allowing clients to query compliance data using natural language prompts.
• Digital Identity Stance: Management views the inevitable government rollout of digital identity as a positive tailwind. It would remove the cost and security burden of biometric identity verification from Kinatico’s platform, allowing them to focus on higher-value workflow automation.
• Moat: The competitive moat consists of 18 years of accumulated domain knowledge, deep integrations with government databases, and the difficult-to-replicate nuance of making complex software feel easy to use.

Growth Targets and Expansion

• Revenue Goals: The medium-term target (3-5 years) is to reach $75m–$90m in revenue, with 80% derived from SaaS.
• International Strategy: The US is not a priority target due to the complexity of state-by-state regulations. The focus is on Southeast Asia, utilizing a partnership/JV model rather than opening physical offices.
• M&A Criteria: The company is open to inorganic growth but remains disciplined. Targets must be accretive (no "basket cases") and provide either access to a new customer segment or product acceleration.
• Future Vision: While currently focused on workforce compliance, the platform is effectively a digital workflow engine that could eventually be applied to any form of compliance beyond just people.

Thanks Andrew - good interview. Appreciated you doing that. I hold IRL and here, and that confirmed my thesis - I think there is a lot of operating leverage to come and if he can keep Capex to that number - it could get pretty interesting returns wise. Given we're only talking $130m market cap and with no borrowings, cash in the bank and growing topline with (hopefully) widening margins, I think it's one to watch. Thanks again for doing that...what a great platform this is!

Started a deep dive on KYP ahead of next week's meeting. I found doing this deep dive ahead of a SM meeting extremely helpful with RTH. Pre-meeting, I was clear what I needed to see/hear before I decisively entered (as was the case with RTH) or I pull the pin and move on. I also found doing this deep dive in logical chunks, over a few days, very helpful, to gradually build understanding of the story which in turns builds (or kills) conviction.

I used inputs from my buddy, Chat, but have asked the questions in multiple ways to see if I get the same answers. I then synthesised and summarised the inputs. Questions that I had, I have/will add to the KYP Slido.

Further context is that in my past life, I had to work out how to deal with the issue of managing Reg Tech compliance within a SAP SuccessFactors/SAP HR back end, so I do have some appreciation of the technical integration challenges of bolting on something like KYP to an existing ERP. This is key to point out as most of my doubts/commentary centre around the robustness of the KYP product and how ready/capable/scalable it truly is, outside of ANZ.

With that context, here is Part 1: KYP's Products.

1. KINATICO COMPLIANCE (SaaS)

This is the core SaaS workforce-compliance / credential-management platform. Key features:

• Real-time dashboard of workforce compliance status and visibility across people, roles and tasks
• End-to-end lifecycle: hiring → onboarding → ongoing compliance tracking → off-boarding
• Mobile app access for workers: upload documents/photos, complete forms, receive alerts
• HRIS / HCM / ATS integrations: supports a wide list of systems (Workday, SAP SuccessFactors, BambooHR etc) for sync of user/role data
• Verifications & checks included as part of plans (and add-ons available): e.g., working rights, police checks, driver’s licence, qualification verification, AML screening, etc
• Configurability: organisations can create custom workflows, digital forms, assign activities by role/location, set up alerts/renewals
• Data security / compliance credentials: e.g., ISO 27001 certification, accreditation for national police checks, document verification service
• Tiered pricing: Starter (free up to 5 users), Core (~US$15/user/month), Premium (~US$24/user/month) with more features/verification inclusions

So in short: a platform to manage workforce credentialing, compliance, verification, ongoing monitoring, with dashboards, mobile app and integrations.

2. COMPLIANCEX

Although less fully detailed, this is described as the “new platform” version / upgraded workflow engine for Kinatico. Key notes:

• Launched during 2025
• Designed to simplify people-management workflows by synchronising disparate screening, validation, compliance and procedural systems into one real-time, secure, self-serve solution
• Positioned as an evolution of their compliance platform — likely the next-gen version/underlying tech of Kinatico Compliance.
• According to a broker note: “the company’s new compliance SaaS solution … underlying real-time workforce compliance management”

Here’s a timeline-style table summarising what Kinatico Ltd (ASX: KYP) has publicly disclosed about the development and rollout of their “ComplianceX” platform — what features they plan, when they said they’ll deliver them, and how that maps to what we know so far. Some dates are exact, others are inferred from announcements.

• Development for ComplianceX appears to have been ongoing through 2023 and into 2024, with roadmap features clearly defined by Sept 2024.
• Various news articles in April 2025 describe the “launch” of the ComplianceX workflow platform. For example, one: “the latest version of Kinatico’s platform … ComplianceX … synchronises disparate screening, validation, compliance and procedural systems.” 
• In their FY25 full year results announcement they said they “invested in excess of $3.5m of operating cash flow into new compliance technology” while focusing on building their new solution
• The formal launch of the platform was scheduled for 6 March 2025.
• The product is already in market (Q3 FY25 ended March 2025) with revenue impact. Q3 FY25 (quarter ended March 2025) results show SaaS revenue of US $4 m (or AU$4 m) for that quarter, up 60% YoY, with mention that “while simultaneously focusing on the launch of its new platform
• They stated that the platform was built with international markets in mind: one source notes “Compliance X was developed with international markets in mind. The company aims to achieve international revenue within the next calendar year, potentially through partnerships or acquisitions in other jurisdictions
• The roadmap features (self-service config, predictive tasks, geolocation triggers) are still being delivered — implying a phased feature rollout over 2025 and beyond.
• The company also mentions international rollout ambitions as part of the ComplianceX strategy.

Deployment Plans

• 2025 (Calendar Year): Full commercial availability of core ComplianceX platform in ANZ; customer onboarding; feature enhancements and module rollouts (predictive tasks, geo-triggers, dynamic dashboards).
• 2026 and beyond: Expansion into international markets using ComplianceX as the core platform, possibly via partnerships/acquisitions, localised integrations and new modules for global compliance. (Inferred from roadmap & strategy commentary)

3. CVCHECK SCREENING & Verification Services

This is the legacy / foundational business of Kinatico. Highlights:

• Pre-employment screening, background checks, verification of credentials, references, police checks, etc
• Understood to serve many thousands of clients in Australia & NZ across enterprise and SMB
• It remains part of the group and provides the “screening & verification” layer which complements the compliance/credential-management SaaS.
• The re-branding from CVCheck Ltd to Kinatico took effect October 2022, reflecting an expanded product offering including broader RegTech / compliance workflows.

4. Additional modules / vertical-specific offerings

• While less fully detailed in public documentation, some other product/solution names and modules are indicated:
• Cited – referenced as part of their suite (pre-existing product under the group) which provides compliance management
• OnCite – mentioned in context of mobile application enabling workers to manage daily compliance and credentials
• Industry/vertical-specific modules: though not always branded with unique names, Kinatico notes they serve sectors like aged care, mining, healthcare, government, education and have configurable workflows for regulated industries. (From “Who We Serve” pages)

Notes/Caveats

• While the “Kinatico Compliance” and “ComplianceX” names are quite prominent, the exact modular breakdown (e.g., “contractor-management”, “visitor-credentialing”, “asset-based compliance”) is not always separately itemised in the public site.
• Some older products (e.g., Cited, OnCite) seem to be being folded into the broader “Kinatico Compliance / ComplianceX” stack — so there may be overlap or rebranding underway.
• Pricing and feature-inclusion vary by plan; some verification checks are add-ons
• The company is in a transition phase (from more transactional screening business to recurring SaaS) which means product road-map and packaging may evolve rapidly

TARGET INDUSTRIES

As mentioned above, Kinatico clearly targets multiple industry verticals and offers tailored compliance workflows for them. Based on “Who We Serve” on their website:

• Aged Care – organisations dealing with mounting regulation and credential verification burdens
• Education – staff vetting, credentialing of teaching/support roles, cyber-incident tracking etc
• Financial Services – high trust/credential regimes, data security, regulatory compliance
• Disability Care – compliance paperwork, verification, streamlined workflows
• Energy & Resources – contractor management, site compliance, credential tracking across locations
• Critical Infrastructure – regulatory obligations (e.g., SOCI Act), credential oversight across roles and supply chain.
• Utilities – workforce of contractors, internal employees, supply chain – manage credentials and compliance across roles/locations.
• Healthcare – staff credentialing, audits, compliance-heavy environment.

USE CASES

• Mining & Resources / Mobile Workforces: Validate + Logistics modules are explicitly designed for asset-owners, multiple sites, mobile workforce, travel/accommodation management
• Regulated Sectors (Health, Aged Care, Education, Financial Services): Modules tailor workflows for credential/licence tracking, working-with-children, AML, cyber policy acknowledgement etc. (via core Compliance product)
• Small/Mid-Sized Organisations: Starter plan for up to 5 users; self-service model emphasised to capture smaller organisations. Kinatico+1

KEY TAKEAWAYS

1. Think KYP has evolved from the old CVCheck company which existed years ago
2. Kinatico Compliance appears to have morphed into “ComplianceX”, positioned as the “next generation” of Kinatico Compliance - this will likely encompass “everything” into a single, seamless platform
3. ComplianceX was launched on 6 March 2025, and as at Q3FY25, appears to be revenue generating
4. There are intentions on international rollout as part of the ComplianceX strategy - 2026 and beyond: Expansion into international markets using ComplianceX as the core platform, possibly via partnerships/acquisitions, localised integrations and new modules for global compliance. (Inferred from roadmap & strategy commentary)

AREAS TO FOCUS ON/QUESTIONS AT THIS POINT

Q1. International expansion - what is KYP’s capability to achieve this and plans thereof? Ambition is one thing, capability is quite another, especially when there are existing RegTech providers overseas (subject of next deep dive part).

The commentary says ComplianceX was built with international expansion in mind - this may be nothing more than ensuring that there is country code field to enable the adding of diferent countries to either a module or an industry vertical sub-module, or both. I think of how XRO has struggled to gain significant traction outside of ANZ.

Q2. What edge does KYP bring that other RegTech in foreign jurisdictions not have for customers to switchover to KYP such that KYP can "rule the RegTech" world? I ask this thinking about my other holdings: RTH in horse racing data, SDR in small hotels/revenue management AIM in enterprise captioning/translating, C79 in PhotonAssay, EOS in kinetic anti-drone - these are all companies with a product that is global. I do not include XRO in this list because, like KYP, XRO needs very specific tailoring of its product for each jurisdiction that it enters.

Q3. Does KYP have the financial ability to undertake foreign M&A, balance sheet-wise? Have not looked at the financials yet, but there was commentary about $10m cash, no debt - that does not feel like much of a war chest for any M&A without an associated capital raising, which given how far the price has come, looks like a distinct possibility. Given RegTech complexities, rather than focused on the revenue opportunity an M&A presents, I would be more focused on investment requirements, why and how customers will transition over to a KYP bolt-on.

Q4. Spend of $3.5m to develop ComplianceX (number needs to be validated), feels very, very light for a "strategic asset" - raises questions on the extent of this product - was it a platform rebuild (ala CAT, which revamped its platform for scale) or was it a quick cosmetic integration/makeover of the hodge podge of solutions, to make it look seamless. Goes back to the "what is the moat" question as well.

Have opened a position in Kinatico (KYP) - IRL and here. Another company converting from traditional software to SaaS. They do compliance software for workplaces - think certification checking when onboarding staff and ongoing monitoring. Eg mining drivers, aged care, etc. “RegTech” is a growing area with compliance requirements only getting more complex - their product integrates with most HR systems and handles this complexity for clients. Some nice enterprise clients and adding more as time goes by.

My theory is that they are at an inflection point and with moderate growth and a lower R&D / development bill in FY26 and ongoing they could start a much more profitable trajectory as the operating leverage starts to kick in.

Balance sheet is solid with $10m cash, positive cash flow and no debt. About $120m market cap and at current numbers a very high PE (just over $1m profit this year) but expecting that PE to drop to the 20s on FY26 results and more beyond.

I’ve not met management but the 3 key execs have good pedigree and skin in the game. I really like the chief revenue officer - seems to know his product very well (and gets more airtime than the CEO at briefings!)

In summary my thesis is:

• growing SaaS revenue into a market that is growing - they say TAM is $2.8b and growing
• pricing is ok if you look forward (and squint back :-)
• solid balance sheet
• Should get lots of leverage from growth and capex bill has peaked (at least CEO thinks so) - just turning NPAT profitable in FY25
• product is sticky and gaining in acceptance / child care is a interesting opportunity off the back of the inquiry also
• shares on issue have stabilised and even a little buyback last year - there’s no major dilutive options or like out there
• management have good pedigree and are well aligned

Downsides/question marks/risks:

• that money burns a hole in their pocket and they do something stupid like M&A
• management take increases - it’s been big as a %age of profits but my theory is it’s front ended and will fall as a percentage of earnings
• The big ERP players figure out reg tech and start doing it for themselves
• it’s scalable here but limited / costly if you go overseas
• liquidity of the stock isn’t ideal

Thats about it - would be interested in other straw folks views…@Strawman - would be great to get them on for a meeting too…

Rich