News Release

Kinaxis Inc. Reports Second Quarter 2020 Results

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  • SaaS revenue grows 26% to $35.7 million
  • Total revenue grows 45% to $61.4 million
  • Adjusted EBITDA(1) margin of 37%

OTTAWA, ON, Aug. 5, 2020 /CNW/ - Kinaxis® (TSX: KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, today reported results for its second quarter ended June 30, 2020. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"We are pleased to report another very strong quarter. SaaS revenue grew by 26% and our sales pipeline and field teams have continued to expand despite every employee continuing to work remotely. At the start of Q3, we also acquired Rubikloud, an AI-based demand planning SaaS provider that immediately adds value for our CPG customers and creates an important entry point for us into the enterprise retail industry – our seventh target market," said John Sicard, President and CEO of Kinaxis. "On the strength of our backlog and sales pipeline, we are able to reiterate our SaaS revenue guidance for fiscal 2020 while increasing other aspects of 2020 guidance.  Due to COVID-19, we have seen some customers and prospects expand their contract approval processes, which has delayed some deal signings. We remain confident in our ability to close these opportunities and interest and engagement from the market remains high and well-balanced across geographies and verticals.  Kinaxis has quite simply never been more relevant. There has never been more attention on global supply chain resilience, and the power of concurrent planning to provide the agility needed to respond to daily disruption."


Q2 2020 Highlights








$ USD thousands, except as otherwise indicated

Q2 2020

Q2 2019

Change

Total Revenue

61,373

42,352

45%

SaaS

35,741

28,283

26%

Subscription term license

10,003

2,414

314%

Professional services

12,400

8,358

48%

Maintenance and support

3,229

3,297

-2%

Gross profit

45,739

29,368

56%


(75%)

(69%)


Profit

9,004

4,001

125%


($0.32/diluted share)

($0.15/diluted share)


Adjusted EBITDA(1)

22,471

11,555



(37%)

(27%)

94%

Cash from operating activities

30,813

8,761

252%

(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
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 June 30, 2020.


$USD millions

2020

2021

2022 and
later

Total
backlog

SaaS

71.2

105.9

125.7

302.7

Subscription term license

0.7

0.2

-

0.9

Maintenance and support

6.4

11.3

11.7

29.5

Total

78.3

117.4

137.4

333.0

Based on this backlog and its current outlook, Kinaxis is reiterating its fiscal 2020 SaaS revenue growth and Adjusted EBITDA margin guidance and increasing other aspects of its financial guidance for the year, as follows:


FY 2020 Guidance

Total revenue

$216-220 million

SaaS

23-25% growth

Subscription term license

 $16-17 million

Adjusted EBITDA margin

20-23% of revenue

Guidance in this press release 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. This press release along with the financial statements and MD&A for the three months ended June 30, 2020 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, August 6, 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:

Thursday, August 6, 2020

Time:

8:30 a.m. Eastern Time

Webcast:

https://bit.ly/309hS0i

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, Thursday, August 13, 2020

Reference number:

8089191

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.
Everyday volatility and uncertainty demand quick action. Kinaxis® delivers the agility to make fast, confident decisions across integrated business planning and the digital supply chain. People can plan better, live better and change the world. Trusted by innovative brands, we combine human intelligence with AI and concurrent planning to help companies plan for any future, monitor risks and opportunities and respond at the pace of change. Powered by an extensible, cloud-based platform, Kinaxis delivers industry-proven applications so everyone can know sooner, act faster and remove waste. For more Kinaxis news, follow us on LinkedIn or Twitter.

Non-IFRS Measures
This news release contains non-IFRS measures, specifically Adjusted EBITDA and Adjusted EBITDA margin. 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 EBITDA and Adjusted EBITDA margins are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted EBITDA and Adjusted EBITDA margin 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 EBITDA to the most comparable IFRS financial measure as follows:


Three months ended June 30,


Six months ended June 30,


2020


2019


2020


2019


(In thousands of USD)

Profit

$

9,004


$

4,001


$

14,585


$

10,967

Share-based compensation

3,723


3,581


7,499


6,653

Adjusted profit

$

12,727


$

7,582


$

22,084


$

17,620

Income tax expense

6,264


1,905


9,740


5,723

Depreciation and amortization

3,627


2,974


6,568


5,651

Foreign exchange loss (gain)

5


(85)


(44)


85

Net finance income

(152)


(821)


(825)


(1,586)


9,744


3,973


15,439


9,873

Adjusted EBITDA

$

22,471


$

11,555


$

37,523


$

27,493

Adjusted EBITDA as a percentage of revenue

37%


27%


33%


31%

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 and later.

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 and later, 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 March 23, 2020 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 June 30, 2020 and December 31, 2019
(Expressed in thousands of USD) (Unaudited)





June 30,
2020

December 31,
2019




Assets






Current assets:



Cash and cash equivalents

$

184,992

$

182,284

Short-term investments

75,571

30,319

Trade and other receivables

54,764

80,623

Prepaid expenses

8,777

6,534


324,104

299,760




Non-current assets:



Property and equipment

32,088

25,704

Right-of-use assets

14,085

8,671

Contract acquisition costs

15,306

15,497

Unbilled receivables

3,035

249

Other receivables

719

713

Deferred tax assets

407

149

Intangible assets

646

-

Goodwill

3,659

-





$

394,049

$

350,743




Liabilities and Shareholders' Equity






Current liabilities:



Trade payables and accrued liabilities

$

29,027

$

20,770

Deferred revenue

79,308

83,673

Lease obligations

3,657

2,288


111,992

106,731

Non-current liabilities:



Lease obligations

11,013

6,818

Deferred tax liabilities

7,565

7,092


18,578

13,910




Shareholders' equity:



Share capital

156,234

140,961

Contributed surplus

33,966

30,392

Accumulated other comprehensive loss

(403)

(348)

Retained earnings

73,682

59,097


263,479

230,102





$

394,049

$

350,743


 

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income




For the three and six months ended June 30, 2020 and 2019
(Expressed in thousands of USD, except share and per share data) (Unaudited)





For the three months
ended June 30,

For the six months
ended June 30,


2020

2019

2020

2019






Revenue

$

61,373

$

42,352

$

114,128

$

88,106






Cost of revenue

15,634

12,984

31,470

25,175






Gross profit

45,739

29,368

82,658

62,931






Operating expenses:





Selling and marketing

12,253

10,446

24,228

19,761

Research and development

10,257

8,101

19,934

16,095

General and administrative

8,108

5,821

15,040

11,886


30,618

24,368

59,202

47,742







15,121

5,000

23,456

15,189

Other income (expense):





Foreign exchange gain (loss)

(5)

85

44

(85)

Net finance income

152

821

825

1,586


147

906

869

1,501






Profit before income taxes

15,268

5,906

24,325

16,690






Income tax expense

6,264

1,905

9,740

5,723






Profit

9,004

4,001

14,585

10,967






Other comprehensive income (loss):










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





Foreign currency translation differences - foreign operations

69

21

(55)

(35)






Total comprehensive income

$

9,073

$

4,022

$

14,530

$

10,932






Basic earnings per share

$

0.34

$

0.15

$

0.55

$

0.42






Weighted average number of basic Common Shares

26,546,213

26,146,682

26,489,205

26,119,264






Diluted earnings per share

$

0.32

$

0.15

$

0.53

$

0.41






Weighted average number of diluted Common Shares

27,960,482

26,840,552

27,776,206

26,841,775







 

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity


For the six months ended June 30, 2020 and 2019
(Expressed in thousands of USD) (Unaudited)










Accumulated






other




Share

Contributed

comprehensive

Retained



capital

surplus

loss

earnings

Total equity







Balance, December 31, 2018

$

124,951

$

24,284

$

(319)

$

35,766

$

184,682







Profit

-

-

-

10,967

10,967

Other comprehensive loss

-

-

(35)

-

(35)

Total comprehensive income (loss)

-

-

(35)

10,967

10,932







Share options exercised

3,026

(928)

-

-

2,098

Share based payments

-

6,653

-

-

6,653

Total shareholder transactions

3,026

5,725

-

-

8,751







Balance, June 30, 2019

$

127,977

$

30,009

$

(354)


46,733

$

204,365







Balance, December 31, 2019

$

140,961

$

30,392

$

(348)


59,097

$

230,102







Profit

-

-

-

14,585

14,585

Other comprehensive loss

-

-

(55)

-

(55)

Total comprehensive income (loss)

-

-

(55)

14,585

14,530







Share options exercised

15,273

(3,925)

-

-

11,348

Share based payments

-

7,499

-

-

7,499

Total shareholder transactions

15,273

3,574

-

-

18,847







Balance, June 30, 2020

$

156,234

$

33,966

$

(403)


73,682

$

263,479

 

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows


For the three and six months ended June 30, 2020 and 2019
(Expressed in thousands of USD) (Unaudited)







For the three months
ended June 30,

For the six months
ended June 30,


2020

2019

2020

2019






Cash flows from (used in) operating activities:










Profit

$

9,004

$

4,001

$

14,585

$

10,967






Items not affecting cash:





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

3,565

2,974

6,464

5,651

Amortization of intangible assets

62

-

104

-

Share-based payments

3,723

3,581

7,499

6,653

Net finance income

(152)

(821)

(825)

(1,586)

Income tax expense

6,264

1,905

9,740

5,723

Change in operating assets and liabilities

8,837

(2,045)

15,693

10,974

Interest received

200

1,000

1,062

1,873

Interest paid

(169)

(158)

(289)

(270)

Income taxes paid

(521)

(1,676)

(2,260)

(12,465)


30,813

8,761

51,773

27,520






Cash flows from (used in) investing activities:










Acquisition of business, net of cash acquired

(167)

-

(2,577)

-

Purchase of property and equipment

(9,329)

(8,301)

(11,038)

(9,194)

Purchase of short-term investments

(10,000)

(15,001)

(75,302)

(30,006)

Redemption of short-term investments

10,000

22,500

30,102

50,006


(9,496)

(802)

(58,815)

10,806






Cash flows from (used in) financing activities:










Payment of lease obligations

(894)

(687)

(1,485)

(1,287)

Common shares issued on exercise of stock options

6,338

1,153

11,348

2,098


5,444

466

9,863

811






Increase in cash and cash equivalents

26,761

8,425

2,821

39,137






Cash and cash equivalents, beginning of period

158,148

156,984

182,284

126,144






Effects of exchange rates on cash and cash equivalents

83

103

(113)

231






Cash and cash equivalents, end of period

$

184,992

$

165,512

$

184,992

$

165,512

 

SOURCE Kinaxis Inc.

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