News Release Details

Kinaxis Inc. Reports Second Quarter 2022 Results

August 9, 2022
  • SaaS revenue grows 21%; constant currency1 SaaS revenue grows 27%
  • Total revenue grows 35%; constant currency1 total revenue grows 42%
  • Adjusted EBITDA1 margin of 13%; constant currency1 adjusted EBITDA1 margin of 15%
  • ARR grows 21%; constant currency1 ARR grows 25% as company experiences ongoing strength in new customer wins and existing customer expansions

Kinaxis ® (TSX:KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, reported results for its second quarter ended June 30, 2022. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

“Each quarter we continue to see significant growth in new customers over comparable periods, and the demand environment for supply chain planning continues to strengthen. We remain at the epicenter of a wave of transformation to end-to-end digital supply chains and are the only solution provider to offer real-time visibility, actionability and agility through a unique concurrent planning approach,” said John Sicard, President and CEO of Kinaxis. “While foreign exchange fluctuations are a headwind to reported results for North American SaaS companies right now, our constant currency1 results and outlook clearly demonstrate how we are experiencing ongoing momentum in SaaS revenue and ARR growth, and are executing to plan against our profitability goals for the year.”

Q2 2022 Highlights

$ USD thousands, except as otherwise indicated

   

Q2 2022

   

Q2 2021

   

Change

Total Revenue

   

80,800

 

 

60,056

 

 

35%

(constant currency1)

   

85,264

 

 

 

 

 

42%

SaaS

   

51,109

 

 

42,301

 

 

21%

(constant currency1)

   

53,530

 

 

 

 

 

27%

Subscription term licenses

   

378

 

 

620

 

 

(39%)

Professional services

   

25,386

 

 

14,001

 

 

81%

Maintenance and support

   

3,927

 

 

3,134

 

 

25%

Gross profit

   

49,776

 

 

40,273

 

 

24%

Margin

   

62%

 

 

67%

 

 

 

Profit

   

(2,632)

 

 

3,088

 

 

(185%)

Per diluted share

   

($0.10)

 

 

$0.11

 

 

 

Adjusted EBITDA1

   

10,376

 

 

7,149

 

 

45%

Margin

   

13%

 

 

12%

 

 

 

(constant currency1)

   

13,107

 

 

 

 

 

83%

   

15%

 

 

 

 

 

 

Cash from operating activities

   

8,415

 

 

15,002

 

 

(44%)

(1)

“Adjusted EBITDA” and constant currency metrics are non-IFRS measures and are not recognized, defined or standardized measures under IFRS. These 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 25% in constant currency1 to $249 million at the end of the quarter.

$USD millions

Q2 2022

Q2 2021

Change

Annual recurring revenue2

241

200

21%

Annual recurring revenue2,
constant currency1

249

200

25%

(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, 2022.

$USD millions

Remainder of
2022

2023

2024 and later

Total

SaaS

101.5

169.4

188.7

459.6

Maintenance and support

7.2

11.1

14.0

32.3

Subscription term licenses

2.8

-

0.1

2.9

Total

111.6

180.5

202.7

494.8

Financial Guidance
Kinaxis is updating its previous fiscal 2022 financial guidance. To date in 2022, Kinaxis has seen an incremental strengthening of the U.S. dollar that has negatively impacted reported results – most notably for SaaS revenue. Removing the impact of these foreign exchange fluctuations, on a constant currency1 basis Kinaxis sees SaaS revenue growth of 25-27% for FY 2022, reflecting the ongoing underlying strength in the business environment.

 

Previous FY 2022 Guidance

Updated FY 2022 Guidance

Total revenue

$345-355 million

$355-365 million

SaaS

23-25% growth

21-23% growth
(25-27%, constant currency1 basis)

Subscription term license

$32-34 million

$34-36 million

Adjusted EBITDA1 margin

16-19%

16-19%

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, 2022 are available on Kinaxis’ website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, August 10, 2022, 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:   

 

Wednesday, August 10, 2022

TIME:

 

8:30 a.m. Eastern Time

CALL REGISTRATION:

 

https://conferencingportals.com/event/eopSfgtI

WEBCAST:

 

https://events.q4inc.com/attendee/109665882 (available for three months)

REPLAY:

 

(800)-770-2030 or (647)-362-9199
Available through August 24, 2022
Reference number: 2948803

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 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,

 

2022

 

2021

 

2022

 

 

2021

 

(In thousands of USD)

 

 

 

 

 

 

 

 

 

Profit (loss)

$

(2,632

)

 

$

3,088

 

 

$

9,890

 

 

 

$

1,554

 

Share-based compensation

 

6,503

 

 

 

5,902

 

 

 

12,506

 

 

 

 

11,209

 

Non-recurring item

 

 

 

 

(7,906

)

 

 

 

 

 

 

(7,906

)

Adjusted profit

$

3,871

 

 

$

1,084

 

 

$

22,396

 

 

 

$

4,857

 

Income tax expense

 

986

 

 

 

916

 

 

 

8,114

 

 

 

 

984

 

Depreciation and amortization

 

6,061

 

 

 

4,598

 

 

 

11,975

 

 

 

 

9,068

 

Foreign exchange loss (gain)

 

(623

)

 

 

443

 

 

 

542

 

 

 

 

911

 

Net finance expense

 

81

 

 

 

108

 

 

 

498

 

 

 

 

370

 

 

 

6,505

 

 

 

6,065

 

 

 

21,129

 

 

 

 

11,333

 

Adjusted EBITDA

$

10,376

 

 

$

7,149

 

 

$

43,525

 

 

 

$

16,190

 

Adjusted EBITDA as a percentage of revenue

 

13

%

 

 

12

%

 

 

24

%

 

 

 

14

%

Constant Currency metrics
We present SaaS revenue, total revenue, adjusted EBITDA, ARR and their related growth rates under constant currency, a non-IFRS measure, to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. Such results for entities reporting in currencies other than U.S. Dollars (“USD”) are converted into USD at the average exchange rates in effect during the comparison period (i.e., for Q2 2022, the average exchange rates in effect for Q2 2021), rather than the actual average exchange rates in effect during the current period. The outlook for constant currency SaaS revenue growth rate is derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the guidance period (i.e., for FY 2022 constant currency guidance, the average exchange rates in effect for FY 2021). We believe the presentation of the above metrics and applicable related growth rates adjusted for constant currency facilitates the corresponding year‑over‑year comparisons.

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, 2022; and
  • contracted revenue in future periods, including 2022, 2023 and 2024 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 2022 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;
  • fluctuations in the value of foreign currencies relative to the U.S. Dollar; 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 2022, 2023 and 2024 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, 2022, under the heading “Risk Factors” in our Annual Information Form dated March 25, 2022 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.

Condensed Consolidated Interim Statements of Financial Position
(Expressed in thousands of USD)
(Unaudited)

 

 

June 30,
2022

December 31,
2021

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

227,862

 

$

203,220

 

Short-term investments

 

30,197

 

 

30,168

 

Trade and other receivables

 

84,582

 

 

89,247

 

Prepaid expenses

 

11,721

 

 

8,502

 

 

 

354,362

 

 

331,137

 

Non-current assets:

 

 

Unbilled receivables

 

2,766

 

 

512

 

Other receivables

 

967

 

 

1,096

 

Prepaid expenses

 

2,878

 

 

1,780

 

Investment tax credits recoverable

 

6,140

 

 

3,616

 

Deferred tax assets

 

987

 

 

6,000

 

Contract acquisition costs

 

22,276

 

 

19,691

 

Property and equipment

 

51,025

 

 

52,093

 

Right-of-use assets

 

55,142

 

 

53,578

 

Intangible assets

 

11,215

 

 

10,778

 

Goodwill

 

42,412

 

 

39,988

 

 

 

195,808

 

 

189,132

 

 

$

550,170

 

$

520,269

 

Liabilities and Shareholders’ Equity

 

 

Current liabilities:

 

 

Trade payables and accrued liabilities

$

37,629

 

$

43,328

 

Deferred revenue

 

102,356

 

 

99,239

 

Provisions

 

367

 

 

716

 

Lease obligations

 

7,042

 

 

2,526

 

 

 

147,394

 

 

145,809

 

Non-current liabilities:

 

 

Lease obligations

 

53,867

 

 

53,233

 

Deferred tax liabilities

 

1,021

 

 

9

 

 

 

54,888

 

 

53,242

 

Shareholders’ equity:

 

 

Share capital

 

206,298

 

 

195,414

 

Contributed surplus

 

62,074

 

 

54,739

 

Accumulated other comprehensive loss

 

(2,036

)

 

(597

)

Retained earnings

 

81,552

 

 

71,662

 

 

 

347,888

 

 

321,218

 

 

$

550,170

 

$

520,269

 

Condensed Consolidated Interim 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,

 

2022

2021

2022

2021

 

 

 

 

 

Revenue

$

80,800

 

$

60,056

 

$

178,908

 

$

117,784

 

 

 

 

 

 

Cost of revenue

 

31,024

 

 

19,783

 

 

59,490

 

 

40,289

 

Gross profit

 

49,776

 

 

40,273

 

 

119,418

 

 

77,495

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling and marketing

 

21,138

 

 

14,279

 

 

38,264

 

 

27,117

 

Research and development

 

18,076

 

 

11,223

 

 

36,233

 

 

24,905

 

General and administrative

 

12,817

 

 

10,323

 

 

26,001

 

 

21,865

 

 

 

52,031

 

 

35,825

 

 

100,498

 

 

73,887

 

 

 

(2,255

)

 

4,448

 

 

18,920

 

 

3,608

 

 

 

 

 

 

Other income (expense):

 

 

 

 

Foreign exchange gain/(loss)

 

623

 

 

(443

)

 

(542

)

 

(911

)

Net finance and other expense

 

(14

)

 

(1

)

 

(374

)

 

(159

)

 

 

609

 

 

(444

)

 

(916

)

 

(1,070

)

Profit (loss) before income taxes

 

(1,646

)

 

4,004

 

 

18,004

 

 

2,538

 

 

 

 

 

 

Income tax expense

 

986

 

 

916

 

 

8,114

 

 

984

 

Profit (loss)

 

(2,632

)

 

3,088

 

 

9,890

 

 

1,554

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Foreign currency translation differences - foreign operations

 

(1,059

)

 

39

 

 

(1,439

)

 

(230

)

Total comprehensive income (loss)

$

(3,691

)

$

3,127

 

$

8,451

 

$

1,324

 

 

 

 

 

 

Basic earnings (loss) per share

$

(0.10

)

$

0.11

 

$

0.36

 

$

0.06

 

 

 

 

 

 

Weighted average number of basic Common Shares

 

27,593,598

 

 

27,110,830

 

 

27,537,845

 

 

27,165,088

 

 

 

 

 

 

Diluted earnings (loss) per share

$

(0.10

)

$

0.11

 

$

0.35

 

$

0.05

 

 

 

 

 

 

Weighted average number of diluted Common Shares

 

27,593,598

 

 

28,132,511

 

 

28,478,656

 

 

28,260,273

 

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, 2020

$

173,104

$

35,846

 

$

(20

)

$

72,827

$

281,757

 

 

 

 

 

 

 

Profit

 

 

 

 

 

 

1,554

 

1,554

 

Other comprehensive loss

 

 

 

 

(230

)

 

 

(230

)

Total comprehensive 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

 

 

 

 

 

 

 

Balance, December 31, 2021

$

195,414

$

54,739

 

$

(597

)

$

71,662

$

321,218

 

 

 

 

 

 

 

Profit

 

 

 

 

 

 

9,890

 

9,890

 

Other comprehensive loss

 

 

 

 

(1,439

)

 

 

(1,439

)

Total comprehensive income (loss)

 

 

 

 

(1,439

)

 

9,890

 

8,451

 

 

 

 

 

 

 

Share options exercised

 

9,869

 

(2,176

)

 

 

 

 

7,693

 

Restricted share units vested

 

598

 

(598

)

 

 

 

 

 

Performance share units vested

 

417

 

(417

)

 

 

 

 

 

Share based payments

 

 

10,526

 

 

 

 

 

10,526

 

Total shareholder transactions

 

10,884

 

7,335

 

 

 

 

 

18,219

 

 

 

 

 

 

 

Balance, June 30, 2022

$

206,298

$

62,074

 

$

(2,036

)

$

81,552

$

347,888

 

Condensed Consolidated Interim Statements of Cash Flows
(Expressed in thousands of USD)
(Unaudited)

 

 

Three Months Ended June 30,

Six months ended June 30,

 

2022

2021

2022

2021

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Profit (loss)

$

(2,632

)

$

3,088

 

$

9,890

 

$

1,554

 

Items not affecting cash:

 

 

 

 

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

 

5,437

 

 

4,037

 

 

10,768

 

 

7,946

 

Amortization of intangible assets

 

624

 

 

561

 

 

1,207

 

 

1,122

 

Share-based payments

 

6,503

 

 

5,902

 

 

12,506

 

 

11,209

 

Net finance expense

 

81

 

 

1

 

 

498

 

 

159

 

Income tax expense

 

986

 

 

916

 

 

8,114

 

 

984

 

Investment tax credits recoverable

 

(1,482

)

 

674

 

 

(2,524

)

 

249

 

Change in operating assets and liabilities

 

(64

)

 

70

 

 

(7,296

)

 

13,010

 

Interest received

 

372

 

 

183

 

 

402

 

 

206

 

Interest paid

 

(475

)

 

(173

)

 

(929

)

 

(357

)

Income taxes paid

 

(935

)

 

(257

)

 

(2,228

)

 

(431

)

 

 

8,415

 

 

15,002

 

 

30,408

 

 

35,651

 

 

 

 

 

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

 

 

Acquisition of business, net of cash acquired

 

9

 

 

 

 

(3,019

)

 

(800

)

Purchase of property and equipment and intangible assets

 

(1,275

)

 

(12,489

)

 

(7,554

)

 

(16,930

)

Purchase of short-term investments

 

(15,154

)

 

(15,154

)

 

(30,160

)

 

(30,160

)

Redemption of short-term investments

 

15,154

 

 

15,154

 

 

30,160

 

 

30,160

 

 

 

(1,266

)

 

(12,489

)

 

(10,573

)

 

(17,730

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Payment of lease obligations

 

(1,754

)

 

(1,185

)

 

(3,231

)

 

(2,357

)

Lease incentive received

 

3,858

 

 

 

 

3,858

 

 

 

Proceeds from exercise of stock options

 

516

 

 

2,304

 

 

7,693

 

 

4,564

 

 

 

2,620

 

 

1,119

 

 

8,320

 

 

2,207

 

 

 

 

 

 

Increase in cash and cash equivalents

 

9,769

 

 

3,632

 

 

28,155

 

 

20,128

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

221,983

 

 

199,143

 

 

203,220

 

 

182,958

 

 

 

 

 

 

Effects of exchange rates on cash and cash equivalents

 

(3,890

)

 

(4

)

 

(3,513

)

 

(315

)

 

 

 

 

 

Cash and cash equivalents, end of period

$

227,862

 

$

202,771

 

$

227,862

 

$

202,771

 

SOURCE: Kinaxis Inc.

Investor Relations
Rick Wadsworth | Kinaxis
rwadsworth@kinaxis.com
613-907-7613

Media Relations
Jaime Cook | Kinaxis
jcook@kinaxis.com
289-552-4640

Source: Kinaxis Inc.
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