News Release

Kinaxis Inc. Reports Fourth Quarter 2019 Results

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  • Q4 SaaS revenue grows 26% to $32.0 million; full year SaaS revenue grows 22%
  • Q4 2019 total revenue grows 47% to $56.3 million; full year total revenue grows 27%
  • Q4 adjusted EBITDA(1) margin of 32%; full year adjusted EBITDA(1) margin of 30%

OTTAWA, Feb. 25, 2020 /CNW/ - Kinaxis® (TSX: KXS) , the leader in empowering people to make confident supply chain decisions, today reported results for its fourth quarter ended December 31, 2019. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"I am extremely pleased with our Q4 and overall 2019 performance, and happy to report that we were able to meet or exceed our 2019 annual guidance for all key financial metrics," said John Sicard, President and Chief Executive Officer of Kinaxis. "Bookings were very strong in the fourth quarter driving our multi-year SaaS revenue backlog up by 40% from a year ago. Our success is a result of closing new customers in the quarter, including recently announced Dr. Reddy's Laboratories and Lundbeck, as well as signing existing customer renewals, including Schneider Electric, Unilever and Merck. Our partners continue to be key influencers in the healthy and continuously growing market, and they continue to share in our success as a result. It is with confidence in our market position that we will continue to make strategic investments across our operations in 2020 to spur future growth."

 

Q4 2019 Highlights

       

$ USD thousands, except as otherwise indicated

Q4 2019

Q4 2018

Change

Total Revenue

56,312

38,299

47%

SaaS

32,006

25,492

26%

Subscription term license

12,120

2,390

407%

Gross profit

41,440

25,909

60%

 

(74%)

(68%)

 

Profit

7,831

2,925

168%

 

($0.29/diluted share)

($0.11/diluted share)

 

Adjusted EBITDA(1)

18,134

8,986

102%

 

(32%)

(23%)

 

Cash from operating activities

8,025

6,654

21%

 

FY 2019 Highlights

       

$ USD thousands, except as otherwise indicated

FY 2019

FY 2018

Change

Total Revenue

191,549

150,727

27%

SaaS

118,860

97,157

22%

Subscription term license

26,218

9,935

164%

Gross profit

137,699

103,695

33%

 

(72%)

(69%)

 

Profit

23,331

14,408

62%

 

($0.87/diluted share)

($0.54/diluted share)

 

Adjusted EBITDA(1)

57,727

41,687

38%

 

(30%)

(28%)

 

Cash from operating activities

36,599

27,915

31%

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.

 

Financial Guidance and Outlook

Kinaxis is initiating 2020 fiscal year financial targets, as follows:

   
 

FY 2020 Guidance

Total revenue

$211-215 million

SaaS

23-25% growth

Subscription term license

 $12-14 million

Adjusted EBITDA margin

20-23% 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 that 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 December 31, 2019.

 

$USD millions

2020

2021

2022 and later

Q4 2019 Total

Q4 2018 Total

Change

SaaS

122.1

91.8

96.7

310.6

222.3

40%

Maintenance and support

11.1

8.3

4.9

24.3

15.0

62%

Subscription term license

4.5

-

-

4.5

0.2

-

Total

137.8

100.1

101.6

339.4

237.5

43%

 

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

Conference Call
Kinaxis will host a conference call tomorrow, February 26, 2020, 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:

Wednesday, February 26, 2020

Time:

8:30 a.m. Eastern Time

Webcast:

https://bit.ly/2u5uBpa

Dial-in number:

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

Replay:

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

 

Available until 11:59 p.m. EDT, Wednesday, March 4, 2020

Reference number:

4386215

 

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 supply chain planning decisions to maximize business performance. We solve complex business problems in easy-to-understand ways 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, 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, Adjusted EBITDA and Adjusted EBITDA margin.  We use Adjusted profit and Adjusted diluted earnings per share, which remove the impact of our 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 working 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
December 31,

 

Year ended
December 31,

 

2019

 

2018

 

2019

 

2018

 

(In thousands of USD)

Profit

$

7,831

 

$

2,925

 

$

23,331

 

$

14,408

Share-based compensation

 

3,177

   

2,924

   

13,367

   

11,568

Adjusted profit

$

11,008

 

$

5,849

 

$

36,698

 

$

25,976

Income tax expense

 

4,484

   

1,796

   

11,932

   

8,068

Depreciation

 

3,212

   

2,571

   

11,908

   

9,272

Foreign exchange loss

 

40

   

(22)

   

226

   

181

Net finance income

 

(610)

   

(1,208)

   

(3,037)

   

(1,810)

   

7,126

   

3,137

   

21,029

   

15,711

Adjusted EBITDA

$

18,134

 

$

8,986

 

$

57,727

 

$

41,687

Adjusted EBITDA as a percentage of revenue

 

32%

   

23%

   

30%

   

28%

 

Note:

(1)

We adopted IFRS 15 and 16 effective January 1, 2018. Under this adoption, the comparative information for 2017 was not restated.

 

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, 2020; and
  • contracted revenue in future periods, including 2020, 2021 and 2022.

This release also includes forward-looking 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 2020 annual total revenue, annual SaaS and Subscription term license revenue and annual Adjusted EBITDA margin, is subject to certain assumptions and associated risks 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.

Our guidance and commentary for achievement of contracted revenue in future periods, including in 2020, 2021 and 2022, is based on assumptions and associated risks including:

  • our ability to satisfy material unperformed obligations under our long-term contracts; and
  • the continued financial capacity and creditworthiness of our customers under long-term contracts.

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 25, 2020, under the heading "Risk Factors" in our Annual Information Form dated February 28, 2019 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 Statements of Financial Position

 

As at December 31, 2019 and December 31, 2018

(Expressed in thousands of USD)

     
 

2019

2018

Assets

   

Current assets:

   

Cash and cash equivalents

182,284

126,144

Short-term investments 

30,319

55,404

Trade and other receivables

81,336

64,330

Prepaid expenses

6,534

5,815

 

300,473

251,693

Non-current assets:

   

Property and equipment

25,704

22,785

Right-of-use assets

8,671

8,873

Contract acquisition costs

15,497

13,902

Unbilled receivables

249

457

Deferred tax assets

149

49

 

350,743

297,759

Liabilities and Shareholders' Equity

   

Current liabilities:

   

Trade payables and accrued liabilities

20,770

21,623

Deferred revenue

83,673

78,496

Lease obligations

2,288

2,572

 

106,731

102,691

Non-current liabilities:

   

Lease obligations

6,818

6,311

Deferred tax liabilities

7,092

4,075

 

13,910

10,386

Shareholders' equity:

   

Share capital

140,961

124,951

Contributed surplus

30,392

24,284

Accumulated other comprehensive loss

(348)

(319)

Retained earnings

59,097

35,766

 

230,102

184,682

 

350,743

297,759

 

 

Kinaxis Inc.

Condensed Consolidated Statements of Comprehensive Income

 

For the three months and years ended December 31, 2019 and 2018

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

 
 

For the three months ended
December 31,

For the year ended
December 31,

 

2019

2018

2019

2018

Revenue

56,312

38,299

191,549

150,727

Cost of revenue

14,872

12,390

53,850

47,032

Gross profit

41,440

25,909

137,699

103,695

Operating expenses:

       

Selling and marketing

13,747

10,285

44,270

35,055

Research and development

9,443

7,105

34,125

27,626

General and administrative

6,505

5,028

26,852

20,167

 

29,695

22,418

105,247

82,848

 

11,745

3,491

32,452

20,847

Other income (expense):

       

Foreign exchange gain (loss)

(40)

22

(226)

(181)

Net finance income

610

1,208

3,037

1,810

 

570

1,230

2,811

1,629

Profit before income taxes

12,315

4,721

35,263

22,476

Income tax expense

4,484

1,796

11,932

8,068

Profit

7,831

2,925

23,331

14,408

Other comprehensive income (loss):

       

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

       

Foreign currency translation differences - foreign operations

100

178

(29)

(35)

Total comprehensive income

7,931

3,103

23,302

14,373

Basic earnings per share

0.30

0.11

0.89

0.56

Weighted average number of basic Common Shares

26,294,645

26,037,096

26,180,034

25,820,518

Diluted earnings per share

0.29

0.11

0.87

0.54

Weighted average number of diluted Common Shares

27,184,684

26,812,260

26,967,805

26,824,435

 

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

 

For the years ended December 31, 2019 and 2018

(Expressed in thousands of USD)

           
     

Accumulated

   
     

other

Retained

 
 

Share

Contributed

comprehensive

earnings

 
 

capital

surplus

loss

(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

Balance, January 1, 2018

108,253

19,294

(284)

21,358

148,621

           

Profit

-

-

-

14,408

14,408

Other comprehensive loss

-

-

(35)

-

(35)

Total comprehensive income (loss)

-

-

(35)

14,408

14,373

Share options exercised

14,012

(3,892)

-

-

10,120

Restricted share units vested

1,834

(1,834)

-

-

-

Deferred share units exercised

852

(852)

-

-

-

Share based payments

-

11,568

-

-

11,568

Total shareholder transactions

16,698

4,990

-

-

21,688

Balance, December 31, 2018

124,951

24,284

(319)

35,766

184,682

Profit

-

-

-

23,331

23,331

Other comprehensive loss

-

-

(29)

-

(29)

Total comprehensive income (loss)

-

-

(29)

23,331

23,302

Share options exercised

12,042

(3,291)

-

-

8,751

Restricted share units vested

3,968

(3,968)

-

-

-

Share based payments

-

13,367

-

-

13,367

Total shareholder transactions

16,010

6,108

-

-

22,118

Balance, December 31, 2019

140,961

30,392

(348)

59,097

230,102

           

 

 

Kinaxis Inc.

Condensed Consolidated Statements of Cash Flows

 

For the three months and years ended December 31, 2019 and 2018

(Expressed in thousands of USD)

 
 
   

For the three months ended December 31,

For the year ended December 31,

 

2019

2018

2019

2018

Cash flows from operating activities:

       

Profit

7,831

2,925

23,331

14,408

Items not affecting cash:

       

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

3,212

2,571

11,908

9,272

Share-based payments

3,177

2,924

13,367

11,568

Investment tax credits recoverable

-

-

-

911

Net finance income

(610)

(1,208)

(3,037)

(1,810)

Income tax expense

4,484

1,796

11,932

8,068

Change in operating assets and liabilities

(8,074)

(4,089)

(9,161)

(13,215)

Interest received

660

1,100

3,653

2,413

Interest paid

(112)

(62)

(531)

(773)

Income taxes paid

(2,543)

697

(14,863)

(2,927)

 

8,025

6,654

36,599

27,915

Purchase of property and equipment

(1,378)

(1,198)

(11,719)

(12,310)

Purchase of short-term investments

(10,000)

(27,597)

(60,108)

(112,684)

Redemption of short-term investments

10,000

42,539

85,108

112,588

 

(1,378)

13,744

13,281

(12,406)

Payment of lease obligations

(679)

(582)

(2,674)

(2,160)

Common shares issued on exercise of stock options

4,428

478

8,751

10,120

 

3,749

(104)

6,077

7,960

Increase in cash and cash equivalents

10,396

20,294

55,957

23,469

Cash and cash equivalents, beginning of period

171,957

106,040

126,144

103,392

Effects of exchange rates on cash and cash equivalents

(69)

(190)

183

(717)

Cash and cash equivalents, end of period

182,284

126,144

182,284

126,144

               

 

SOURCE Kinaxis Inc.

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