Kinatico Energises Compliance Technology

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New research on compliance solutions business Kinatico highlights the step-change to operations provided by new product ComplianceX.

• New research highlights Kinatico as an emerging, high-growth, high-quality business with accelerating free cash flow
• Company considered well positioned to capitalise on rising demand for compliance technology
• Transition into a SaaS-oriented compliance solutions firm on a low-cost base
• Newly released compliance platform ComplianceX to assist with margin expansion

By Mark Woodruff

Australian-based Kinatico ((KYP)), a leading provider of “know your people” workforce compliance solutions in Australia and New Zealand, is well positioned to capitalise on rising demand for compliance technology, according to company management.

At face value, compliance technology appears a dry topic, but what’s not to like about an established legacy business with over 10,000 repeat corporate customers helping fund a new SaaS-based business driving revenue and profit growth, supported by a robust balance sheet and strong cash generation?

These fundamentals help underpin the investment thesis, suggest analysts at Canaccord Genuity in their initiation of research report.

The company’s technology enables organisations to automate employee verification, credential checks, and ongoing compliance management across sectors including aged care, mining, and government. This helps organisations streamline employee compliance across hiring, onboarding, and daily operations.

While the legacy business, CVCheck, provides employment screening and verification services, Kinatico is evolving into a SaaS-oriented compliance solutions firm. This transition fundamentally shifts Kinatico’s revenue profile and growth trajectory.

Listed on the ASX in 2015 as CVCheck at an IPO price of 20 cents, the evolution began in FY22 with the rebranding to Kinatico and the quick scaling of recurring software revenue to $15m in FY25. 

Management has confidence in delivering more than 50% SaaS revenue growth in FY26, and a medium-term ambition of achieving 80% SaaS revenue as a percentage of total revenue by FY28, compared to 46% in FY25.

Bell Potter is forecasting 57% in FY26 and 66% in FY27.

Canaccord describes Kinatico as an emerging, high-growth, high-quality business with accelerating free cash flow (FCF) generation.

The numbers certainly support this view: in FY25, group revenue rose by 12% to $32.1m, with SaaS revenue surging by 54%. Kinatico’s free cash flow (FCF) is expected to grow to $4.0m by FY28 from about $1.0m in FY25.

The company’s SaaS revenue carries gross margins above 85%, which Canaccord expects will lift overall group margins to around 70% and cash earnings (EBIT) margins to 15% by FY28, up from the respective FY25 levels of 65% and 4%.

This margin expansion is expected to be driven by operating leverage, supported by a largely fixed cost base of around $16m.

Enterprise and small and medium-sized enterprise (SMEs) customers subscribe to Kinatico’s core products, being CVCheck, Enable, Cited, and most recently its newly released compliance platform, ComplianceX.

ComplianceX

According to Canaccord, ComplianceX marks a step-change in the company’s revenue growth potential.

This product delivers a stronger customer value proposition by consolidating multiple compliance workflows into a single, streamlined platform, explains the broker.

Taylor Collison believes the company has a clear pathway to converting a significant portion of its existing customer base and sales pipeline to ComplianceX, noting the freemium-led go-to-market strategy is well positioned to capture growth in the SME segment.

Management’s research and industry feedback indicate strong demand across Health (Aged Care and Day Surgery), Industrials, Manufacturing, and Financials sectors. These areas are characterised by fragmented compliance systems and increasing regulatory pressure, notes the broker.

SaaS growth so far for Kinatico comprises around 60% new customers and 40% conversions from existing clients, underscoring to Canaccord the significant opportunity to leverage the established base of around 10,000 legacy customers compared with approximately 200 SaaS customers today.

Taylor Collison anticipates limited go-to-market risk, noting this is not a test of product and market fit, but rather the measured rollout of a platform already validated through strong customer engagement.

Four revenue growth drivers

It is Shaw and Partners’ view management has several growth levers to drive revenue expansion.

Migrating the company’s $17.5m annual recurring revenue (ARR) base from the legacy platform to ComplianceX is expected to deliver a revenue uplift, though the magnitude is yet to be determined.

This broker also points to significant cross-sell potential with larger clients. For example, Kinatico currently services only BHP Group’s ((BHP)) Iron Ore division, but is in discussions to expand across other business units.

No international revenue is included in internal forecasts, highlight the analysts, despite a go-live planned for next year, potentially providing additional upside.

Strong reference clients such as NSW Treasury are generating new leads, an effect Shaw expects to accelerate after ComplianceX launches.

Despite potential for strong revenue flows (in the absence of any M&A), Bell Potter continues to forecast no dividend payouts.

The cash balance is forecast to grow from $10.2m in FY25 to $12.8m in FY26 and $18.1m in FY27.

Competition

The Governance, Risk and Compliance (GRC) and Workforce Workflow Software market in Australia remains highly fragmented, with no dominant all-in-one provider.

Canaccord analysts list key participants including SafetyCulture (around $160m revenue), Kinatico ($32m), the previously ASX-listed Elmo Software ($91m), and SAI360, which focuses on enterprise Enterprise Governance, Risk & Compliance (GRC).

While global players such as ServiceNow, SAP, Oracle and Workday are also active, the broker explains these companies primarily target large enterprises.

ComplianceX offers seamless integration with over 50 leading Human Resources Information Systems (HRIS), Applicant Tracking System (ATS), and payroll systems, including Workday, Bullhorn, Employment Hero, HR Cloud, and Oracle Recruiting.

Kinatico differentiates itself, explains Canaccord, by pursuing the broader mass market rather than concentrating solely on enterprise software sales.

Management is targeting Australia’s circa one million SMEs, an under-served segment for workflow and compliance solutions.

Canaccord suggests the platform is competitively priced at $15-24 per user per month, positioning it as an affordable and scalable option for smaller businesses.

Legacy business funding the evolution of Kinatico

Formerly, Kinatico was solely a transactional screening provider, but that business is becoming increasingly commoditised. This market segment is also subject to seasonal fluctuations around recruitment cycles and compliance deadlines.

As explained further in FNArena’s recent article https://fnarena.com/index.php/2025/07/16/legacy-business-fuels-kinaticos-saas-ambition/ the existing division is cash generative and has allowed the company to invest in its product development (circa -$15m since FY22), in addition to serving as a customer acquisition channel and marketing tool for SaaS conversion.

To capitalise on this vast market, management is prioritising instant sign-up, user-friendly design, and minimal onboarding friction by offering no minimum-term contracts and a self-service model to drive rapid adoption across its addressable market.

Canaccord explains the SME segment complements Kinatico’s larger enterprise contracts, which typically involve longer sales cycles of around three months. 

These enterprise agreements are more bespoke, requiring a high-touch sales approach and dedicated account management.

A prime example is Kinatico’s largest customer, BHP Group under a contract valued at $1.5m per annum, the analysts highlight.

Outlook

Canaccord Genuity’ begins research coverage of Kinatico with a 50c target boosting the average of (now) four brokers.

The two brokers covered daily by FNArena and two outside of daily coverage all have Buy (or equivalent) ratings, with Shaw and Partners affixing a High-Risk ranking.

The average target of these four is 37.25 cents, which compares to a current share price of around 33 cents.

The author owns shares in Kinatico.

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