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Kinaxis Inc. Reports Third Quarter 2020 Results

November 4, 2020
  • 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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