News Release

Kinaxis Inc. Reports Third Quarter 2020 Results

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  • SaaS revenue grows 26% to $39.3 million
  • Total revenue grows 17% to $55.1 million
  • Adjusted EBITDA(1) margin of 18%

OTTAWA, ON, Nov. 4, 2020 /CNW/ - Kinaxis® (TSX: KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, today reported results for its third quarter ended September 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 strong quarter as SaaS revenue grew by 26% and we achieved an Adjusted EBITDA margin of 18%, even after making an acquisition and other significant investments in the business. On the strength of year-to-date results and a growing backlog, we are able to tighten our annual SaaS revenue growth guidance to the high end of our initial range, and increase both our total revenue and adjusted EBITDA margin guidance," said John Sicard, President and CEO of Kinaxis.

Added Sicard, "Throughout Q3, and consistent with recent supply chain industry reports, we continued to see the impact of COVID-19 through protracted contract approval processes and deferred projects for some companies. Also, while retention rates remain very high, the environment has put some customers in a position where they are not currently able to renew their subscription agreements. However, the disruption has brought new levels of awareness to our unique differentiator – concurrent planning. We saw ongoing growth in our sales pipeline, and an unprecedented level of attendance by new prospects and customers at our Kinexions '20 event. The integration of our Rubikloud acquisition is going as planned. We have closed our first joint customer, Coty, a marquee consumer products company, and are making headway with others. Quite simply, Kinaxis has never been more relevant, as massive disruption focuses attention on global supply chain resilience and agility, and the power of concurrent planning to enable it."

  Q3 2020 Highlights

 

$ USD thousands, except as otherwise indicated

Q3 2020

Q3 2019

Change

Total Revenue

55,116

47,131

17%

SaaS

39,322

31,229

26%

Subscription term license

1,035

3,278

-68%

Professional services

11,492

9,348

23%

Maintenance and support

3,267

3,276

0%

Gross profit

36,559   
(66%) 
 

33,328   
(71%) 
 

10%

Profit

731   
($0.03/diluted share)
 

4,533   
 ($0.17/diluted share)
   

-84%

Adjusted EBITDA(1)

10,134   
(18%)   

12,100 
(26%) 

-16%

Cash from operating activities

4,497

1,054

327%

(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 September 30, 2020.


$USD millions

2020

2021

2022 and
later

Total
backlog

SaaS

38.1

124.3

172.5

334.9

Subscription term license

1.9

0.5

-

2.4

Maintenance and support

3.2

11.7

12.5

27.4

Total

43.2

136.5

185.0

364.7

Based on this backlog and its current outlook, Kinaxis is updating its fiscal 2020 financial guidance, including increases in expectations for total revenue and adjusted EBITDA, as follows:

 

FY 2020 Guidance

Total revenue

$220-223 million

SaaS

24-25% growth

Subscription term license

 $16-17 million

Adjusted EBITDA margin

22-24% 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 and nine months ended September 30, 2020 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, November 5, 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. Investors and participants must register for the call in advance. See registration link below. Please call the conference telephone number fifteen minutes prior to the start time.

CONFERENCE CALL DETAILS

DATE:

Thursday, November 5, 2020

TIME:

8:30 a.m. Eastern Time

CALL REGISTRATION:

http://www.directeventreg.com/registration/event/5957056

WEBCAST:

https://bit.ly/3iWk4zS

REPLAY:

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

 

Available until 11:59 p.m. ET, Thursday, November 12, 2020

REFERENCE NUMBER:

5957056

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
September 30,

   

Nine months ended
September 30,

   

2020

 

2019

 

2020

 

2019

 

(In thousands of USD)

Profit............................................................................

$

731

 

$

4,533

 

$

15,316

 

$

15,500

Share-based compensation........................................

 

4,732

   

3,537

   

12,231

   

10,190

Adjusted profit............................................................

$

5,463

 

$

8,070

 

$

27,547

 

$

25,690

Income tax expense....................................................

 

354

   

1,725

   

10,094

   

7,448

Depreciation and amortization...................................

 

4,500

   

3,045

   

11,068

   

8,696

Foreign exchange loss (gain)......................................

 

(124)

   

101

   

(168)

   

186

Net finance income.....................................................

 

(59)

   

(841)

   

(884)

   

(2,427)

   

4,671

   

4,030

   

20,110

   

13,903

Adjusted EBITDA.........................................................

$

10,134

 

$

12,100

 

$

47,657

 

$

39,593

Adjusted EBITDA as a percentage of revenue............

 

18%

   

26%

   

28%

   

29%

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 September 30, 2020 and December 31, 2019

(Expressed in thousands of USD)

(Unaudited)

 
   

September 30,
2020

 

December 31,
2019

         

Assets

       
         

Current assets:

       

Cash and cash equivalents

$

179,856

$

182,284

Short-term investments  

 

30,177

 

30,319

Trade and other receivables

 

45,512

 

80,623

Prepaid expenses

 

8,610

 

6,534

   

264,155

 

299,760

         

Non-current assets:

       

Property and equipment

 

31,163

 

25,704

Right-of-use assets

 

16,450

 

8,671

Contract acquisition costs

 

15,087

 

15,497

Unbilled receivables

 

1,683

 

249

Other receivables

 

733

 

713

Deferred tax assets

 

2,033

 

149

Intangible assets

 

13,585

 

-

Goodwill

 

39,988

 

-

         
 

 

$

384,877

 

$

350,743

         

Liabilities and Shareholders' Equity

       
         

Current liabilities:

       

Trade payables and accrued liabilities

$

25,841

$

20,770

Deferred revenue

 

62,893

 

83,673

Lease obligations

 

4,369

 

2,288

   

93,103

 

106,731

Non-current liabilities:

       

Lease obligations

 

12,796

 

6,818

Deferred tax liabilities

 

3,342

 

7,092

   

16,138

 

13,910

         

Shareholders' equity:

       

Share capital 

 

164,845

 

140,961

Contributed surplus

 

36,635

 

30,392

Accumulated other comprehensive loss

 

(257)

 

(348)

Retained earnings

 

74,413

 

59,097

   

275,636

 

230,102

         
 

$

384,877

$

350,743

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Comprehensive Income

 

For the three and nine months ended September 30, 2020 and 2019

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

 
 

For the three months
ended September 30,

For the nine months
ended September 30,

   

2020

 

2019

 

2020

 

2019

                 

Revenue 

$

55,116

$

47,131

$

169,244

$

135,237

                 

Cost of revenue

 

18,557

 

13,803

 

50,027

 

38,978

                 

Gross profit

 

36,559

 

33,328

 

119,217

 

96,259

                 

Operating expenses:

               

Selling and marketing

 

12,881

 

10,762

 

37,109

 

30,523

Research and development 

 

13,664

 

8,587

 

33,598

 

24,682

General and administrative

 

9,209

 

8,461

 

24,249

 

20,347

   

35,754

 

27,810

 

94,956

 

75,552

                 
   

805

 

5,518

 

24,261

 

20,707

Other income :

               

Foreign exchange gain (loss)

 

124

 

(101)

 

168

 

(186)

Net finance and other income 

 

156

 

841

 

981

 

2,427

   

280

 

740

 

1,149

 

2,241

                 

Profit before income taxes

 

1,085

 

6,258

 

25,410

 

22,948

                 

Income tax expense

 

354

 

1,725

 

10,094

 

7,448

                 

Profit 

 

731

 

4,533

 

15,316

 

15,500

                 

Other comprehensive income (loss):

               

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

               

Foreign currency translation differences - foreign operations

 

146

 

(94)

 

91

 

(129)

                 

Total comprehensive income

$

877

$

4,439

$

15,407

$

15,371

                 

Basic earnings per share

$

0.03

$

0.17

$

0.58

$

0.59

                 

Weighted average number of basic Common Shares 

 

26,596,412

 

26,184,980

 

26,622,939

 

26,141,410

                 

Diluted earnings per share

$

0.03

$

0.17

$

0.55

$

0.58

                 

Weighted average number of diluted Common Shares

 

27,766,505

 

26,928,596

 

28,000,655

 

26,888,187

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity 

 

For the nine months ended September 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

 

-

 

-

 

-

 

15,500

 

15,500

Other comprehensive loss

 

-

 

-

 

(129)

 

-

 

(129)

Total comprehensive income (loss)

 

-

 

-

 

(129)

 

15,500

 

15,371

                     

Share options exercised

 

6,059

 

(1,736)

 

-

 

-

 

4,323

Share based payments                               

 

-

 

10,190

 

-

 

-

 

10,190

Total shareholder transactions

 

6,059

 

8,454

 

-

 

-

 

14,513

                     

Balance, September 30, 2019

$

131,010

$

32,738

$

(448)

$

51,266

$

214,566

                     

Balance, December 31, 2019

$

140,961

$

30,392

$

(348)

$

59,097

$

230,102

                     

Profit

 

-

 

-

 

-

 

15,316

 

15,316

Other comprehensive income

 

-

 

-

 

91

 

-

 

91

Total comprehensive income 

 

-

 

-

 

91

 

15,316

 

15,407

                     

Share options exercised

 

23,884

 

(5,988)

 

-

 

-

 

17,896

Share based payments

 

-

 

12,231

 

-

 

-

 

12,231

Total shareholder transactions

 

23,884

 

6,243

 

-

 

-

 

30,127

                     

Balance, September 30, 2020

$

164,845

$

36,635

$

(257)

$

74,413

$

275,636

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Cash Flows

 

For the three and nine months ended September 30, 2020 and 2019

(Expressed in thousands of USD)

(Unaudited)

 
 

 

For the three months
ended September 30,

 

For the nine months
ended September 30,

   

2020

 

2019

 

2020

 

2019

                 

Cash flows from (used in) operating activities:

               
                 

Profit 

$

731

$

4,533

$

15,316

$

15,500

Items not affecting cash:

               

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

 

3,939

 

3,045

 

10,403

 

8,696

Amortization of intangible assets

 

561

 

-

 

665

 

-

Share-based payments

 

4,732

 

3,537

 

12,231

 

10,190

Net finance income

 

(156)

 

(841)

 

(981)

 

(2,427)

Income tax expense

 

354

 

1,725

 

10,094

 

7,448

Change in operating assets and liabilities

 

(5,219)

 

(12,061)

 

10,474

 

(1,087)

Interest received

 

596

 

1,120

 

1,658

 

2,993

Interest paid

 

(198)

 

(149)

 

(487)

 

(419)

Income taxes received (paid)

 

(843)

 

145

 

(3,103)

 

(12,320)

   

4,497

 

1,054

 

56,270

 

28,574

                 

Cash flows from (used in) investing activities:

               
                 

Acquisition of businesses, net of cash acquired

 

(59,166)

 

-

 

(61,743)

 

-

Purchase of property and equipment

 

(1,299)

 

(1,147)

 

(12,337)

 

(10,341)

Purchase of short-term investments

 

(20,150)

 

(20,102)

 

(95,452)

 

(50,108)

Redemption of short-term investments

 

65,302

 

25,102

 

95,404

 

75,108

   

(15,313)

 

3,853

 

(74,128)

 

14,659

                 

Cash flows from (used in) financing activities:

               
                 

Payment of lease obligations

 

(1,154)

 

(708)

 

(2,639)

 

(1,995)

Common shares issued on exercise of stock options

 

6,548

 

2,225

 

17,896

 

4,323

   

5,394

 

1,517

 

15,257

 

2,328

                 

(Decrease) increase in cash and cash equivalents

 

(5,422)

 

6,424

 

(2,601)

 

45,561

                 

Cash and cash equivalents, beginning of period

 

184,992

 

165,512

 

182,284

 

126,144

                 

Effects of exchange rates on cash and cash equivalents

 

286

 

21

 

173

 

252

                 

Cash and cash equivalents, end of period

$

179,856

$

171,957

$

179,856

$

171,957

 

 

SOURCE Kinaxis Inc.

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