News Release

Kinaxis Inc. Reports Second Quarter 2021 Results

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  • SaaS revenue grows 18% to $42.3 million
  • Adjusted EBITDA(1) margin of 12%

OTTAWA, ON, Aug. 5, 2021 /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. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"After three consecutive quarters of strong business momentum, I'm confident that the market has returned to a very healthy growth environment. With all the well-known disruptions that supply chains have endured over the past year, we are seeing a heightened level of interest in the hyper-agility that only Kinaxis can bring to the planning process," said John Sicard, President and CEO of Kinaxis. "Compared to the first half of last year, we have won over twice the number of new customers, and our annual recurring revenue2 is 24% higher than a year ago. We believe that these are excellent indicators of the positive trends in our business and give us even greater confidence in our expectation of a return to higher SaaS revenue growth next year."

 Q2 2021 Highlights

$ USD thousands, except as otherwise indicated

Q2 2021

Q2 2020

Change

Total Revenue

60,056

61,373

-2%

SaaS

42,301

35,741

18%

Subscription term license

620

10,003

(94%)

Professional services

14,001

12,400

13%

Maintenance and support

3,134

3,229

(3%)

Gross profit

40,273

45,739

(12)%


67%

75%


Profit

3,088   

9,004

(66%)


$0.11/diluted share

$0.32/diluted share


Adjusted EBITDA(1)

7,149

22,471

(68%)


12%

37%


Cash from operating activities

15,002

30,813

(51%)

(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.

Key Performance Indicators
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, 2021.


$USD millions

2021

2022

2023 and later

Total
backlog

SaaS

86.3

132.0

140.6

358.9

Maintenance and support

6.2

8.7

5.7

20.6

Subscription term license

1.5

-

-

1.5

Total

94.0

140.7

146.3

381.0

The company's Annual Recurring Revenue2 (ARR), which includes amounts related to both SaaS and on-premise subscription contracts, rose 24% to $200 million at the end of the quarter.

$USD millions

2019

2020

Q1 2021

Q2 2021

Annual recurring revenue2

159

185

191

200

Year-over-year growth

20.7%

15.3%

18.2%

24.3%

(2)

Annual Recurring Revenue (ARR) is the total annualized value of recurring subscription amounts (ultimately recognized as SaaS, Subscription Term Licenses and Maintenance & Support revenue) of all subscription contracts at a point in time. Annualized subscription amounts are determined solely by reference to the underlying contracts, normalizing for the varying revenue recognition treatments under IFRS 15 for cloud-based versus on-premise subscription amounts. It excludes one-time fees, such as for non-recurring professional services, and assumes that customers will renew the contractual commitments on a periodic basis as those commitments come up for renewal, unless such renewal is known to be unlikely. We believe that this measure provides a more current indication of our performance in the growth of our subscription business than other metrics.

Financial Guidance
Based on our current business outlook, Kinaxis is reiterating its fiscal 2021 financial guidance, as follows:


FY 2021 Guidance

Total revenue

$242-247 million

SaaS

17-20% growth

Subscription term license

$3-5 million

Adjusted EBITDA(1) margin      

11-14%

Beyond 2021, and assuming an ongoing return to more typical business and market conditions, the company continues to believe that annual SaaS revenue growth of 23-25% is achievable in the mid-term.

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, 2021 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, August 6, 2021, to discuss these results. John Sicard, Chief Executive Officer, and Blaine Fitzgerald, 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:                                   Friday, August 6, 2021
TIME:                                    8:30 a.m. Eastern Time
CALL REGISTRATION:        https://dpregister.com/sreg/10158854/eb660d628c
WEBCAST:                           https://bit.ly/3hIIcIZ (available for three months)
REPLAY:                               (877)-344-7529
                                              Available through Friday, August 20, 2021
REFERENCE NUMBER:      10158854

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,


2021


2020


2021


2020


(In thousands of USD)

Profit

$

3,088


$

9,004


$

1,554


$

14,585

Share-based compensation


5,902


3,723


11,209


7,499

Non-recurring item(3)


(7,906)



(7,906)


Adjusted profit

$

1,084


$

12,727


$

4,857


$

22,084

Income tax expense


916


6,264


984


9,740

Depreciation and amortization


4,598


3,627


9,068


6,568

Foreign exchange loss (gain)


443


5


911


(44)   

Net finance expense (income)


108


(152)


370


(825)



6,065


9,744


11,333


15,439

Adjusted EBITDA

$

7,149


$

22,471


$

16,190


$

37,523

Adjusted EBITDA as a percentage of revenue


12%


37%


14%


33%



(3)

The non-recurring item this quarter relates to non-refundable government grants relating to the pandemic that were claimed during the three months ended June 30th, 2021 and are unlikely to recur in the future.

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, 2021; and
  • contracted revenue in future periods, including 2021, 2022 and 2023 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 2021 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 customer retention levels, and specifically, that customers will renew contractual commitments on a periodic basis as those commitments come up for renewal, at rates consistent with our historic experience; 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 2021, 2022 and 2023 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.

Our guidance and commentary for annual SaaS revenue growth beyond 2021 is based on assumptions and associated risks including normalization of macroeconomic factors, including business and market conditions, relative to recent conditions that have been affected by the COVID-19 pandemic. 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 March 3, 2021, under the heading "Risk Factors" in our Annual Information Form dated March 25, 2021 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

(Expressed in thousands of USD)
(Unaudited)








June 30,
2021


December 31,
2020

Assets





Current assets:





Cash and cash equivalents       

$

202,771

$

182,958

Short-term investments   


30,172


30,180

Trade and other receivables 


65,891


82,883

Investment tax credits recoverable  



1,109

Prepaid expenses 


10,595


9,264



309,429


306,394

Non-current assets:





Property and equipment  


41,674


30,746

Right-of-use assets


13,953


15,722

Contract acquisition costs 


16,639


16,484

Unbilled receivables 


196


2,013

Other receivables


701


752

Deferred tax assets


3,894


2,308

Investment tax credits recoverable  


1,840


980

Intangible assets 


11,901


13,023

Goodwill


39,988


39,988







$

440,215

$

428,410






Liabilities and Shareholders' Equity





Current liabilities:





Trade payables and accrued liabilities

$

28,136

$

33,030

Deferred revenue


94,867


94,275

Lease obligations  


4,857


4,554



127,860


131,859

Non-current liabilities:





Lease obligations 


10,203


12,065

Deferred tax liabilities


3,298


2,729



13,501


14,794






Shareholders' equity:  





Share capital 


179,268


173,104

Contributed surplus  


45,455


35,846

Accumulated other comprehensive loss 


(250)


(20)

Retained earnings 


74,381


72,827



298,854


281,757







$

440,215

$

428,410

 

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income

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





For the three months
ended June 30,
2020

For the six months
ended June 30,
2020


2021

2020

2021

2020

Revenue

$

60,056

$

61,373

$

117,784

$

114,128

Cost of revenue


19,783


15,634


40,289


31,470

Gross profit   


40,273


45,739


77,495


82,658










Operating expenses:










Selling and marketing 


14,279


12,253


27,117


24,228


Research and development  


11,223


10,257


24,905


19,934


General and administrative


10,323


8,108


21,865


15,040



35,825


30,618


73,887


59,202



4,448


15,121


3,608


23,456

Other income (expense):










Foreign exchange gain (loss)  


(443)


(5)


(911)


44


Net finance and other income (expense)


(1)


152


(159)


825



(444)


147


(1,070)


869

Profit before income taxes   


4,004


15,268


2,538


24,325










Income tax expense


916


6,264


984


9,740

Profit  


3,088


9,004


1,554


14,585










Other comprehensive income (loss)









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










Foreign currency translation
  differences - foreign operations


39


69


(230)


(55)

Total comprehensive income

$

3,127

$

9,073

$

1,324

$

14,530










Basic earnings per share

$

0.11

$

0.34

$

0.06

$

0.55

Weighted average number of basic
   Common Shares 


27,110,830


26,546,213


27,165,088


26,489,205










Diluted earnings per share  

$

0.11

$

0.32

$

0.05

$

0.53

Weighted average number of diluted
   Common Shares 


28,132,511


27,960,482


28,260,273


27,776,206

 

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

(Expressed in thousands of USD)
(Unaudited)








Share
capital

Contributed
surplus

Accumulated
other
comprehensive
loss

Retained
earnings

Total equity

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












Balance, December 31, 2020

$

173,104

$

35,846

$

(20)

$

72,827

$

281,757












Profit





1,554


1,554

Other comprehensive loss




(230)



(230)

Total comprehensive income (loss) 




(230)


1,554


1,324












Share options exercised  


6,164


(1,600)




4,564

Share based payments



11,209




11,209

Total shareholder transactions 


6,164


9,609




15,773












Balance, June 30, 2021

$

179,268

$

45,455

$

(250)

$

74,381

$

298,854

 

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of USD)
(Unaudited)





For the three months
ended June 30,

For the six months
ended June 30,


2021

2020

2021

2020

Cash flows from operating activities:










Profit 

$

3,088

$

9,004

$

1,554

$

14,585


Items not affecting cash:











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


4,037


3,565


7,946


6,464



Amortization of intangible assets


561


62


1,122


104



Share-based payments   


5,902


3,723


11,209


7,499



Net finance and other income (expense)


1


(152)


159


(825)



Income tax expense 


916


6,264


984


9,740



Income tax credits recoverable  


674



249



Change in operating assets and liabilities


70


8,837


13,010


15,693


Interest received 


183


200


206


1,062


Interest paid   


(173)


(169)


(357)


(289)


Income taxes paid    


(257)


(521)


(431)


(2,260)



15,002


30,813


35,651


51,773










Cash flows used in investing activities:










Acquisition of business, net of cash acquired 



(167)


(800)


(2,577)


Purchase of property and equipment


(12,489)


(9,329)


(16,930)


(11,038)


Purchase of short-term investments 


(15,154)


(10,000)


(30,160)


(75,302)


Redemption of short-term investments 


15,154


10,000


30,160


30,102



(12,489)


(9,496)


(17,730)


(58,815)










Cash flows from financing activities:










Payment of lease obligations 


(1,185)


(894)


(2,357)


(1,485)


Common shares issued on exercise of stock options  


2,304


6,338


4,564


11,348



1,119


5,444


2,207


9,863










Increase in cash and cash equivalents  


3,632


26,761


20,128


2,821










Cash and cash equivalents, beginning of period


199,143


158,148


182,958


182,284










Effects of exchange rates on cash and cash equivalents 


(4)


83


(315)


(113)










Cash and cash equivalents, end of period  

$

202,771

$

184,992

$

202,771

$

184,992

 

SOURCE Kinaxis Inc.

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