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.