Kinatico (ASX:KYP) used its half-year results webinar to outline what management described as a step-change in the company’s addressable market, driven by the launch of its new Kinatico Compliance platform (KC) and an “AI-first” operating approach that the company said has been embedded for more than 12 months.
CEO Michael Ivanchenko said the business is executing a strategy to move beyond pre-employment screening in what he called a commoditized market and toward lifecycle compliance solutions. He said a key historical constraint was deployment complexity: integration and rollout could take 5–6 months, limiting Kinatico’s reach largely to large enterprises. KC was built to shorten implementations and expand the product’s suitability to smaller businesses, while maintaining a focus on “certainty” and secure handling of compliance requirements.
Half-year financial performance
- SaaS revenue growth of 50%
- Net profit up 107% to almost AUD 1 million
- Positive free cash flow (second consecutive half, according to management)
- Customer base up more than 26%
Management reported revenue growth of 49.5% to AUD 9.7 million for the half, which it annualized to AUD 19.7 million. The CFO contrasted this with SaaS revenue of AUD 3.9 million in 2022. SaaS revenue represented 55% of consolidated revenue in the period, with the company again referencing a compound annual growth rate above 50%.
On profitability, the CFO said EBITDA rose 30% and attributed the larger increase in net profit to operating leverage and mix shift rather than reduced investment. Earnings per share were reported up 102%, and return on equity was described as nearly double the prior period.
From a cash perspective, Kinatico ended the half with AUD 10.4 million in cash and cash equivalents and zero debt. Operating cash flow was said to be broadly in line with the prior period, while cash used in investing declined due to a lower level of capitalized development costs. Management said product investment would continue, but noted that much of the foundational work had been completed.
KC launch: expanding beyond enterprise
Jeff (surname not provided), who presented on product progress, said KC changes Kinatico’s serviceable market by enabling shorter deployments and a self-serve onboarding model suited to small and mid-sized businesses. He said the legacy approach worked well for enterprise customers with 500+ workers but constrained the addressable market to about 2,000 customers in Australia.
With KC, Kinatico is targeting the 5–500 worker segment and described the potential customer universe as 300,000+ Australian businesses—about 150 times the prior enterprise-only opportunity. Jeff said KC does not replace existing offerings, but expands them and accelerates implementation.
Management highlighted early outcomes since KC’s launch in October, including 35 SMB sign-ups via a digital self-serve channel. Jeff said the company has also seen an “unexpected bonus” in its sales pipeline: where pipeline had historically ranged AUD 5–7 million, it is now around AUD 10 million, with management expecting conversions to emerge in the second half based on sales-cycle timing.
Go-to-market plan and marketing approach
Chantal (surname not provided) discussed the company’s go-to-market plan and said Kinatico’s serviceable addressable market (SAM) has expanded to 300,000 businesses, which she framed as roughly AUD 1.2 billion of annual RegTech software spend in Australia. She said the sizing assumptions were validated using sources including ABS employment data, Gartner market sizing, PwC surveys, and Kinatico’s own customer research, and aligned to the company’s monthly price-point assumptions for different business sizes.
She also described a freemium offering aimed at Australia’s 700,000 micro businesses (under five workers), positioning it as both supportive to small-business growth and a potential future pipeline as those companies scale.
On spend, management emphasized that the KC campaign was being executed within the existing marketing budget. Chantal said improved return on ad spend in the CVCheck channel allowed funds to be repurposed to support “above-the-line” awareness for KC. She highlighted placements intended to increase brand visibility, including advertising in Sydney airport terminals and in major CBD locations, and said the company had refined creative and messaging based on performance data from the initial digital launch.
AI strategy, governance, and operational impact
Ivanchenko said Kinatico had used AI in the business for more than 12 months but had not previously discussed it publicly because it considered the capability a competitive advantage. He also said the company expanded Odelia’s role from Chief People Officer to Chief People and AI Officer, arguing that successful AI transformation is “80% people and 20% technology.” He cited internal education efforts, saying employee confidence in identifying security, privacy, and accuracy risks when using AI rose by 24% over four months to 76%.
Odelia outlined a responsible AI strategy framework, including ethics and governance, opportunity identification, and a roadmap. She said 88% of staff are confident using AI in day-to-day work and noted alignment with the ISO 42001 AI management standard, with formal certification “in our sights.” She linked this to the company’s existing ISO 27001 certification and said Kinatico is extending established governance and audit discipline to AI systems.
Operationally, she said the company selected Anthropic’s Claude large language model for broad deployment across functions in early 2025, and that AI is embedded in the end-to-end product development process, increasing feature development velocity by more than 50%. She also described customer-facing AI support within KC, branded as “KC, the Kelpie,” and said Kinatico is developing proprietary AI models alongside embedded AI capabilities.
In product terms, Odelia described planned functionality such as natural language querying for compliance reporting (for example, prompts to generate board-ready reports) and workflows where prompts initiate onboarding activities. She also discussed testing an AI support agent for the company’s CVCheck product that would surface information from internal systems to update customers on screening and compliance status, while stressing that privacy and accuracy requirements mean the company is cautious about production release.
Outlook and management commentary
In Q&A, Ivanchenko said the company aims in the second half to increase SMB uptake, build critical mass, and convert the large-business pipeline. He declined to provide a conversion target for the AUD 10 million pipeline, noting the uncertainty of enterprise procurement cycles, but said a historical pipeline conversion rate has been about 8%. He also said the pipeline figure excludes existing customer revenue shifting between products and reflects only incremental revenue opportunities.
On timing, he said it is “too early” to expect full top-line effects only three months after launch, suggesting results may be clearer in Q4 than Q3 and that the company plans to share more detailed data after Q4 when there is sufficient statistical information.
Ivanchenko also addressed concerns about cannibalization, saying management expects CVCheck to “stabilize and remain constant,” estimating AUD 15–16 million per annum, and described the screening product as a funnel into the broader SaaS compliance offering rather than a business being displaced.
He said KC is ready to scale for enterprise use, though he added the company will continue iterative investment in product enhancements. On M&A, he said the company continues to review opportunities but has not found any meeting its criteria for being accretive, non-distracting to management, and not draining cash reserves. He also said Kinatico has a plan to generate international revenue in the current calendar year and is actively pursuing it, with further updates to come.
About Kinatico (ASX:KYP)
Kinatico Ltd provides screening, verification, and SaaS-based workforce management and compliance technology systems in Australia and New Zealand. It offers real-time workforce compliance management via its core Software-as-a-Service solution; single pre-employment screening checks and verification of candidate information; and certifications and compliance data solutions. The company’s software solutions enables scalable compliance monitoring, including pre-employment to real-time requirements related to geo-location, roles, and tasks across a range of industries.
