News Release

OTTAWA--(BUSINESS WIRE)-- Kinaxis® (TSX:KXS), the leading provider of supply chain management solutions, reported results for its second quarter ended June 30, 2023. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

“We had a record number of customer wins, an increasing win rate against competitors, and the highest amount of incremental subscription business won in any second quarter in Kinaxis' history,” said John Sicard, president and CEO of Kinaxis. “While we need to remain appropriately cautious about the global economy, we continue to see a persistent urgency to transform supply chain management practices. Siloed approaches are giving way to a concurrent, end-to-end orchestration model and Kinaxis remains alone in its ability to deliver on that vision.”

Q2 2023 Highlights

$ USD thousands, except as otherwise indicated	Q2 2023		Q2 2022		Change
Total Revenue	105,772		80,800		31 %
SaaS	64,104		51,109		25 %
Subscription term licenses	7,086		378		1775 %
Professional services	29,991		25,386		18 %
Maintenance and support	4,591		3,927		17 %
Gross profit Margin	63,670 60%		49,776 62%		28 %
Profit (loss) Per diluted share	(2,540) $(0.09)		(2,632) $(0.10)		3 %
Adjusted EBITDA1 Margin	15,202 14%		10,376 13%		47 %
Cash from operating activities	13,943		8,415		66 %

(1)

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

Key Performance Indicators

The company’s Annual Recurring Revenue² (ARR), which includes subscription amounts related to both SaaS and on-premise contracts, rose 22% to $293 million at the end of the quarter.

$USD millions	Q2 2023	Q2 2022	Change
Annual recurring revenue2	293	241	22 %

(2)

Annual Recurring Revenue (ARR) is the total annualized value of recurring subscription amounts (ultimately recognized as SaaS, Subscription term licenses and Maintenance and 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.

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, 2023.

$USD millions	Remainder of 2023	2024	2025 and later	Total
SaaS	127.4	205.0	210.1	542.5
Maintenance and support	9.3	16.1	16.2	41.6
Subscription term licenses	2.3	0.4	0.1	2.8
Total	139.0	221.5	226.4	586.9

Financial Guidance

Kinaxis is reiterating its fiscal 2023 financial guidance, as follows.

	FY 2023 Guidance
Total revenue	$425-435 million
SaaS	25-27% growth
Subscription term license	$16-18 million
Adjusted EBITDA1 margin	14-16%

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 quarter ended June 30, 2023 are available on Kinaxis’ website and on SEDAR at www.sedar.com.

Conference Call

Kinaxis will host a conference call tomorrow, August 10, 2023, 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.

DATE:			Thursday, August 10, 2023
TIME:			8:30 a.m. Eastern Time
CALL REGISTRATION:			https://conferencingportals.com/event/wAzPWobN
WEBCAST:			https://events.q4inc.com/attendee/842174481 (available for three months)
REPLAY:			(800)-770-2030 or (647)-362-9199
			Available through August 24, 2023
			Reference number: 29488

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

Adjusted EBITDA and Adjusted EBITDA Margin

This press 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,
		2023				2022			2023				2022
	(In thousands of USD)								(In thousands of USD)
Profit (loss)		(2,540	)			(2,632	)		(1,351	)			9,890
Change in fair value of contingent consideration		462				—			2,656				—
Share-based compensation		9,155				6,503			17,374				12,506
Adjusted profit		7,077				3,871			18,679				22,396
Income tax expense		997				986			1,301				8,114
Depreciation and amortization		6,517				6,061			13,404				11,975
Foreign exchange loss (gain)		2,374				(623	)		2,109				542
Net finance expense (income)		(1,763	)			81			(3,149	)			498
		8,125				6,505			13,665				21,129
Adjusted EBITDA		15,202				10,376			32,344				43,525
Adjusted EBITDA as a percentage of revenue		14	%			13	%		16	%			24	%

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, 2023; and
• SaaS growth and increased profitability in years beyond 2023; and
• contracted revenue in future periods, including 2023, 2024 and 2025 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 2023 annual total revenue, annual SaaS and Subscription term license revenue and annual Adjusted EBITDA margin, as well as our comments on our expectations for SaaS growth and increased profitability in years beyond 2023, are 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;
• fluctuations in the value of foreign currencies relative to the U.S. Dollar; and
• with respect to Adjusted EBITDA and profitability, our ability to contain expense levels while expanding our business.

Our guidance and commentary for achievement of contracted revenue in future periods, including in 2023, 2024 and 2025 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 March 1, 2023, under the heading “Risk Factors” in our Annual Information Form dated March 3, 2023 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.

SOURCE: Kinaxis Inc.

Kinaxis Inc.
Consolidated Statements of Financial Position (Expressed in thousands of USD) (Unaudited)
	June 30, 2023	December 31, 2022
Assets
Current assets:
Cash and cash equivalents	201,608	175,347
Short-term investments	91,789	50,476
Trade and other receivables	120,773	157,657
Prepaid expenses	14,383	13,660
	428,553	397,140
Non-current assets:
Unbilled receivables	3,134	7,245
Other receivables	954	971
Prepaid expenses	2,389	2,395
Investment tax credits recoverable	9,000	7,591
Deferred tax assets	2,368	1,065
Contract acquisition costs	26,283	24,892
Property and equipment	46,216	51,852
Right-of-use assets	49,821	53,537
Intangible assets	25,815	28,271
Goodwill	74,020	73,314
	240,000	251,133
	668,553	648,273
Liabilities and Shareholders’ Equity
Current liabilities:
Trade payables and accrued liabilities	35,524	40,107
Deferred revenue	120,261	133,467
Provisions	—	296
Contingent consideration	6,021	9,146
Lease obligations	6,341	6,991
	168,147	190,007
Non-current liabilities:
Lease obligations	47,994	49,977
Deferred tax liabilities	5,172	6,861
	53,166	56,838
Shareholders’ equity:
Share capital	278,497	244,713
Contributed surplus	77,988	65,129
Accumulated other comprehensive income (loss)	364	(156	)
Retained earnings	90,391	91,742
	447,240	401,428
	668,553	648,273

Kinaxis Inc.
Consolidated Statements of Comprehensive Income (Loss) (Expressed in thousands of USD, except share and per share data) (Unaudited)
	Three months ended June 30,						Six months ended June 30,
		2023			2022			2023			2022
Revenue	$	105,772		$	80,800		$	206,902		$	178,908
Cost of revenue		42,102			31,024			82,231			59,490
Gross profit		63,670			49,776			124,671			119,418
Operating expenses:
Selling and marketing		28,417			21,138			52,581			38,264
Research and development		21,002			18,076			40,931			36,233
General and administrative		14,777			12,817			29,568			26,001
		64,196			52,031			123,080			100,498
		(526	)		(2,255	)		1,591			18,920
Other income (expense):
Foreign exchange gain (loss)		(2,374	)		623			(2,109	)		(542	)
Net finance and other income (expense)		1,819			(14	)		3,124			(374	)
Change in fair value of contingent consideration		(462	)		—			(2,656	)		—
		(1,017	)		609			(1,641	)		(916	)
Profit (loss) before income taxes		(1,543	)		(1,646	)		(50	)		18,004
Income tax expense		997			986			1,301			8,114
Profit (loss)		(2,540	)		(2,632	)		(1,351	)		9,890
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to profit:
Foreign currency translation differences - foreign operations		(423	)		(1,059	)		289			(1,439	)
Change in net unrealized gain on cash flow hedges		154			—			231			—
		(269	)		(1,059	)		520			(1,439	)
Total comprehensive income (loss)	$	(2,809	)	$	(3,691	)	$	(831	)	$	8,451
Basic earnings (loss) per share	$	(0.09	)	$	(0.10	)	$	(0.05	)	$	0.36
Weighted average number of basic Common Shares		28,318,956			27,593,598			28,181,727			27,537,845
Diluted earnings (loss) per share	$	(0.09	)	$	(0.10	)	$	(0.05	)	$	0.35
Weighted average number of diluted Common Shares		28,318,956			27,593,598			28,181,727			28,478,656

Kinaxis Inc.
Consolidated Statements of Changes in Shareholders’ Equity (Expressed in thousands of USD) (Unaudited)
						Accumulated other comprehensive income (loss)
	Share capital		Contributed surplus			Cash flow hedges		Currency translation adjustments			Total			Retained earnings			Total equity
Balance, December 31, 2021	$	195,414	$	54,739		$	—	$	(597	)	$	(597	)	$	71,662		$	321,218
Profit		—		—			—		—			—			20,080			20,080
Other comprehensive income		—		—			—		441			441			—			441
Total comprehensive income		—		—			—		441			441			20,080			20,521
Share options exercised		38,791		(9,076	)		—		—			—			—			29,715
Restricted share units vested		10,091		(10,091	)		—		—			—			—			—
Performance share units vested		417		(417	)		—		—			—			—			—
Share based payments		—		29,974			—		—			—			—			29,974
Total shareholder transactions		49,299		10,390			—		—			—			—			59,689
Balance, December 31, 2022		244,713		65,129			—		(156	)		(156	)		91,742			401,428
Loss		—		—			—		—			—			(1,351	)		(1,351	)
Other comprehensive income		—		—			231		289			520			—			520
Total comprehensive income (loss)		—		—			231		289			520			(1,351	)		(831	)
Share options exercised		25,706		(6,062	)		—		—			—			—			19,644
Performance share units vested		2,297		(2,297	)		—		—			—			—			—
Share based payments		—		21,218			—		—			—			—			21,218
Shares issued for contingent consideration		5,781		—			—		—			—			—			5,781
Total shareholder transactions		33,784		12,859			—		—			—			—			46,643
Balance, June 30, 2023		278,497		77,988			231		133			364			90,391			447,240

Kinaxis Inc.
Consolidated Statements of Cash Flows (Expressed in thousands of USD) (Unaudited)
	Three Months Ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Cash flows from operating activities:
Profit (loss)	$	(2,540	)	$	(2,632	)	$	(1,351	)	$	9,890
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets		5,186			5,437			10,661			10,768
Amortization of intangible assets		1,331			624			2,743			1,207
Share-based payments		9,155			6,503			17,374			12,506
Net finance expense (income)		(1,763	)		81			(3,149	)		498
Change in fair value of contingent consideration		462			—			2,656			—
Income tax expense		997			986			1,301			8,114
Investment tax credits recoverable		(494	)		(1,482	)		(1,409	)		(2,524	)
Change in operating assets and liabilities		1,587			(64	)		24,546			(7,296	)
Interest received		1,934			372			3,195			402
Interest paid		(415	)		(475	)		(848	)		(929	)
Income taxes paid		(1,497	)		(935	)		(2,871	)		(2,228	)
		13,943			8,415			52,848			30,408
Cash flows used in investing activities:
Acquisition of business, net of cash acquired		—			9			—			(3,019	)
Purchase of property and equipment and intangible assets		(769	)		(1,275	)		(1,632	)		(7,554	)
Purchase of short-term investments		(45,588	)		(15,154	)		(100,671	)		(30,160	)
Redemption of short-term investments		45,154			15,154			60,160			30,160
		(1,203	)		(1,266	)		(42,143	)		(10,573	)
Cash flows from financing activities:
Payment of lease obligations		(1,737	)		(1,754	)		(3,556	)		(3,231	)
Lease incentives received		—			3,858			—			3,858
Proceeds from exercise of stock options		9,133			516			19,644			7,693
		7,396			2,620			16,088			8,320
Increase in cash and cash equivalents		20,136			9,769			26,793			28,155
Cash and cash equivalents, beginning of period		181,566			221,983			175,347			203,220
Effects of exchange rates on cash and cash equivalents		(94	)		(3,890	)		(532	)		(3,513	)
Cash and cash equivalents, end of period	$	201,608		$	227,862		$	201,608		$	227,862

 

Source: Kinaxis Inc.