Press Release

Kinaxis Inc. Reports First Quarter 2019 Results

Reports 24% growth in total revenue and Adjusted EBITDA(1) of 35% of revenue

OTTAWA, May 10, 2019 /CNW/ - Kinaxis® (TSX: KXS) , the leader in empowering people to make confident supply chain decisions, today reported results for its fiscal first quarter ended March 31, 2019. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), including the adoption of IFRS 15 and 16, unless otherwise indicated.

Q1 2019 total revenue increased 24% to $45.8 million; SaaS revenue grew by 17% to $27.3 million; subscription term license revenue grew 87% to $8.4 million; Adjusted EBITDA(1) was up 29% to $16.0 million (35% of revenue); and profit increased 53% to $7.0 million from $4.6 million.

"We are pleased with these strong first quarter results and with the overall health of our global pipeline. This performance is largely due to our significantly expanded sales team and focused global marketing activities.  During the quarter, we expanded business within our on-premise customer base and closed new SaaS opportunities, however some large and active deals are taking longer to finalize than expected.  We fully expect strong SaaS bookings in coming quarters.  Overall, we are reaffirming our full year revenue guidance, with slightly higher contribution from subscription term license revenue and related support and slightly lower SaaS revenue.  Given the strength of Q1 and our business outlook, we are increasing our guidance for full year Adjusted EBITDA.  As we have consistently demonstrated through marquee new partnerships and customer announcements, such as Lenovo this past quarter, our competitive position remains extremely strong. I remain firmly confident in our market position, our sales strategy, and our unique concurrent planning platform as we continue to execute against our growth plans," said John Sicard, Kinaxis CEO.

 

Q1 2019 Highlights





$ USD millions, except as otherwise indicated

Q1 2019

Q1 2018

Change

Total Revenue

45.8

36.8

24%

SaaS

27.3

23.3

17%

Subscription term license

8.4

4.5

87%

Gross profit

33.6

26.7

26%


(73%)

(72%)


Profit

7.0

4.6

53%


($0.26/diluted share)

($0.17/diluted share)


Adjusted EBITDA(1)

16.0

12.3

29%


(35%)

(33%)


Cash from operating activities

18.8

10.4

81%


(1)

"Adjusted EBITDA" is a non-IFRS measure and is not a recognized, defined or a standardized measure under IFRS. This measure as well as other non-IFRS financial measures reported by Kinaxis are defined in the "Non-IFRS Measures" section of this news release.

 

Analysis of Q1 2019 vs Q1 2018 Financial Highlights
Revenue: SaaS revenue growth of 17% resulted from contracts secured with new customers, as well as expansion of existing customer subscriptions. Subscription term license revenue growth of 87% relates to the timing of renewals, expansions and new engagements for on-premise and hybrid subscription arrangements, and will vary substantially quarter to quarter. Together, SaaS and subscription term license revenue growth were the main drivers behind the 24% increase in total revenue.

Gross profit margin: Growth in gross profit margin to 73% resulted from the growth in SaaS and subscription term license revenue, partly offset by an increase in costs of revenue. Such costs included headcount increases, an increase in partner and third-party costs, and higher depreciation costs associated with the expansion of data center capacity.

Profit and adjusted EBITDA: The 53% increase in profit and 29% growth in Adjusted EBITDA was due to an increase in revenue and gross profit, partly offset by an increase in operating expenses. Additional investments in research and development and sales and marketing, including new headcount and higher marketing event activity, drove operating expense growth.

Cash from operating activities: The 81% increase in cash from operating activities was due to collection of trade and other receivables and higher profit. At March 31, 2019, cash, cash equivalents and short-term investments grew by $18.3 million to $199.9 million from $181.5 million at December 31, 2018.

Financial Guidance
Kinaxis has updated its 2019 fiscal year financial targets, as follows:

 


Previous FY 2019 Guidance

Updated FY 2019 Guidance

Total revenue

$183-188 million

$183-188 million


SaaS

22-24% growth

20-22% growth




Subscription term license

$20-22 million

 $22-24 million

Adjusted EBITDA margin

23-25% of revenue

25-27% of revenue

 

This guidance is provided to enhance visibility into Kinaxis' expectations for financial targets for the periods indicated. Please refer to the section regarding forward-looking statements which forms an integral part of this release.

The nature of the company's long-term contracts provides visibility into future, contracted revenue. The following table presents revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at March 31, 2019.

 


Remainder of
2019

2020

2021
and thereafter

Total

SaaS

77.3

67.1

68.3

212.6

Subscription term license

2.1

-

-

2.1

Maintenance and support

8.8

6.0

5.0

19.8

Total

88.2

73.1

73.2

234.5

 

This press release, along with the financial statements and MD&A for the three months ended March 31, 2019, are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call today, May 10, 2019, to discuss these results. John Sicard, Chief Executive Officer, and Richard Monkman, Chief Financial Officer, will host the call starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation.

 

Date:

Friday, May 10, 2019

Time:

8:30 a.m. Eastern Time

Webcast:

https://bit.ly/2KURAdS

Dial-in number:

(647) 427-7450 or (888) 231-8191

Replay:

(416) 849-0833 or (855) 859-2056


Available until 12:00 a.m., Eastern Daylight Time Friday, May 17, 2019

Reference number:

6196908

 

Please call the conference telephone number five to ten minutes prior to the start time. An operator will register your name and organization.

About Kinaxis Inc.
Eliminating volatility in your supply chain is impossible, but managing it is not. Trusted by top brands, Kinaxis® gives people the confidence to know they are making the best planning decisions to maximize business performance. We solve complex business problems in easy-to-understand ways faster by combining human and machine intelligence to plan for any future, monitor risks and opportunities and respond at the pace of change. With the support of our community of supply chain experts and using our unique concurrent planning technique and single integrated planning platform, customers can realize higher revenue, lower costs and fewer risks.  For more Kinaxis news, visit Kinaxis.com or follow us on LinkedIn, Twitter or Facebook.

Non-IFRS Measures
This news release contains non-IFRS measures, specifically, Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA.  We use Adjusted profit and Adjusted diluted earnings per share, which remove the impact of our redeemable preferred shares and share based compensation plans, to measure our performance as these measurements better align the reporting of our results and improve comparability against our peers. We use Adjusted EBITDA to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures.  We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.  Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and work capital requirements. Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA will likely differ from that used by other companies (including our peers) and therefore comparability may be limited.  Non-IFRS measures should not be considered a substitute for or in isolation from measures prepared in accordance with IFRS. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-IFRS measures and view them in conjunction with the most comparable IFRS financial measures. Kinaxis has reconciled Adjusted profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:

 


Three months ended March 31,


2019


2018


(In thousands of USD)







Profit

$

6,966


$

4,553

Share-based compensation


3,072



3,158

Adjusted profit

$

10,038


$

7,711

Income tax expense


3,818



3,130

Depreciation


2,677



1,820

Foreign exchange loss (gain)


170



(196)

Net finance income


(765)



(145)



5,900



4,609

Adjusted EBITDA

$

15,938


$

12,320

Adjusted EBITDA as a percentage of revenue


35%



33%

 

Forward-Looking Statements

Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws.  Forward-looking statements include statements as to our expectations for growth of annual total revenue, annual SaaS and Subscription term licenses revenue, and our expectations for Adjusted EBITDA margin achievement, in each case looking forward for our fiscal year ending December 31, 2019, as well as statements as to Kinaxis' growth opportunities and the potential benefits of, and markets and demand for, Kinaxis' products and services. These statements are subject to certain assumptions, risks and uncertainties, including our view of the relative position of Kinaxis' products and services compared to competitive offerings in the industry.

In particular, our guidance for 2019 annual total revenue, annual SaaS and Subscription term license revenue and annual Adjusted EBITDA margin, is subject to certain assumptions, including:

  • our ability to win business from new customers and expand business from existing customers;
  • the timing of new customer wins and expansion decisions by our existing customers;
  • maintaining our current customer retention levels; and
  • with respect to Adjusted EBITDA, our ability to contain expense levels while expanding our business.   

These and other assumptions, risks and uncertainties may cause Kinaxis' actual results, performance, achievements and developments to differ materially from the results, performance, achievements or developments expressed or implied by forward-looking statements. Material risks and uncertainties relating to our business are described under the headings "Forward-Looking Statements" and "Risks and Uncertainties" in our annual MD&A dated February 28, 2019, under the heading "Risk Factors" in our Annual Information Form dated March 29, 2018, and in our other public documents filed with Canadian securities regulatory authorities, which are available at www.sedar.com. Forward-looking statements are provided to help readers understand management's expectations as at the date of this release and may not be suitable for other purposes. Readers are cautioned not to place undue reliance on forward-looking statements. Kinaxis assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Financial Position


As at March 31, 2019 and December 31, 2018

(Expressed in thousands of USD)

(Unaudited)





March 31,
2019

December 31,
2018




Assets






Current assets:



Cash and cash equivalents

156,984

126,144

Short-term investments 

42,907

55,404

Trade and other receivables

43,848

64,330

Prepaid expenses

6,926

5,815


250,665

251,693




Non-current assets:



Property and equipment

21,598

22,785

Right-of-use assets

11,541

8,873

Contract acquisition costs

13,337

13,902

Unbilled receivables

2,977

457

Deferred tax assets

27

49





300,145

297,759




Liabilities and Shareholders' Equity






Current liabilities:



Trade payables and accrued liabilities

14,148

21,623

Deferred revenue

75,001

78,496

Lease obligations

2,720

2,572


91,869

102,691

Non-current liabilities:



Lease obligations

8,987

6,311

Deferred tax liabilities

3,680

4,075


12,667

10,386




Shareholders' equity:



Share capital

126,339

124,951

Contributed surplus

26,913

24,284

Accumulated other comprehensive loss

(375)

(319)

Retained earnings

42,732

35,766


195,609

184,682





300,145

297,759

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Comprehensive Income


For the three months ended March 31, 2019 and 2018

(Expressed in thousands of USD, except share and per share data)

(Unaudited)





2019

2018




Revenue

45,754

36,849




Cost of revenue

12,191

10,135




Gross profit

33,563

26,714




Operating expenses:



Selling and marketing

9,315

7,386

Research and development

7,994

6,749

General and administrative

6,065

5,237


23,374

19,372





10,189

7,342

Other income (expense):



Foreign exchange gain (loss)

(170)

196

Net finance income

765

145


595

341




Profit before income taxes

10,784

7,683




Income tax expense

3,818

3,130




Profit

6,966

4,553




Other comprehensive income (loss):



Items that are or may be reclassified subsequently to profit or loss:



Foreign currency translation differences - foreign operations

(56)

400




Total comprehensive income

6,910

4,953




Basic earnings per share

0.27

0.18




Weighted average number of basic Common Shares

26,091,542

25,542,978




Diluted earnings per share

0.26

0.17




Weighted average number of diluted Common Shares

26,805,963

26,667,141

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity


For the three months ended March 31, 2019 and 2018

(Expressed in thousands of USD)

(Unaudited)








 

Share

capital

 

Contributed

surplus

Accumulated

other

comprehensive

income (loss)

 

Retained

earnings

(deficit)

 

Total equity










Balance, December 31, 2017

108,253

19,294

(284)

(2,475)

124,788







Adjustment on initial application of IFRS 15

-

-

-

23,833

23,833

Adjusted balance, January 1, 2018

108,253

19,294

(284)

21,358

148,621







Profit

-

-

-

4,553

4,553

Other comprehensive income

-

-

400

-

400

Total comprehensive income

-

-

400

4,553

4,953







Share options exercised

3,798

(1,020)

-

-

2,778

Share based payments                              

-

3,158

-

-

3,158

Total shareholder transactions

3,798

2,138

-

-

5,936







Balance, March 31, 2018

112,051

21,432

116

25,911

159,510







Balance, December 31, 2018

124,951

24,284

(319)

35,766

184,682







Profit

-

-

-

6,966

6,966

Other comprehensive loss

-

-

(56)

-

(56)

Total comprehensive income (loss)

-

-

(56)

6,966

6,910







Share options exercised

1,388

(443)

-

-

945

Share based payments

-

3,072

-

-

3,072

Total shareholder transactions

1,388

2,629

-

-

4,017







Balance, March 31, 2019

126,339

26,913

(375)

42,732

195,609


 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Cash Flows


For the three months ended March 31, 2019 and 2018

(Expressed in thousands of USD)

(Unaudited)





2019

2018




Cash flows from operating activities:



Profit

6,966

4,553

Items not affecting cash:



Depreciation of property and equipment and right-of-use assets

2,677

1,820

Share-based payments

3,072

3,158

Investment tax credits recoverable

-

911

Net finance income

(765)

(145)

Income tax expense

3,818

3,130

Change in operating assets and liabilities

13,019

(1,759)

Interest received

873

361

Interest paid

(112)

(148)

Income taxes paid

(10,789)

(1,501)


18,759

10,380




Cash flows from investing activities:



Purchase of property and equipment

(893)

(4,821)

Purchase of short-term investments

(15,005)

(15,043)

Redemption of short-term investments

27,506

40,005


11,608

20,141




Cash flows from financing activities:



Payment of lease obligations

(600)

(454)

Common shares issued on exercise of stock options

945

2,778


345

2,324




Increase in cash and cash equivalents

30,712

32,845




Cash and cash equivalents, beginning of period

126,144

103,392




Effects of exchange rates on cash and cash equivalents

128

350




Cash and cash equivalents, end of period

156,984

136,587

 

SOURCE Kinaxis Inc.

 

Investor Relations

Rick Wadsworth | Kinaxis
rwadsworth@kinaxis.com
(613) 907-7613

Media Relations

Danielle McNeil Taylor | Kinaxis
Tel: (343) 998-7284 
dmcneiltaylor@kinaxis.com