Kinaxis Inc. Reports First Quarter 2020 Results

• SaaS revenue grows 24% to $34.0 million
• Total revenue grows 15% to $52.8 million
• Adjusted EBITDA⁽¹⁾ margin of 29%

OTTAWA, May 6, 2020 /CNW/ - Kinaxis® (TSX: KXS), the leader in empowering people to make confident supply chain decisions, today reported results for its first quarter ended March 31, 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 a very strong Q1. Our results were driven by our expanding base of multi-year subscription contracts with their corresponding long-term backlog.  We were encouraged that, even in these challenging times, our sales pipeline grew overall, we continued to expand relationships with customers, and we won several new customers, including one of the world's largest consumer product companies," said John Sicard, President and CEO of Kinaxis. "I am very pleased that our team has responded so well to the restrictions imposed by COVID-19. Our level of engagement with customers and prospects remains high and the use of RapidResponse has grown dramatically as customers cope with unprecedented supply chain disruptions. While we've seen the pandemic slow the progress of some opportunities as prospects adjust to new ways of working, and it is challenging to predict its full impact ahead, we remain positive given the strength of our backlog, a growing pipeline, and current sales activity. We are very pleased to be able to reiterate our confidence in achieving our initial guidance for the year. Long-term, the integral value of our unique concurrent planning approach has never been more relevant."

Q1 2020 Highlights
$ USD thousands, except as otherwise indicated	Q1 2020	Q1 2019	Change
Total Revenue	52,755	45,754	15%
SaaS	33,995	27,342	24%
Subscription term license	4,904	8,406	-42%
Professional services	10,673	6,912	54%
Maintenance and support	3,183	3,094	3%
Gross profit	36,919	33,563	10%
	(70%)	(73%)
Profit	5,581	6,966	-20%
	($0.20/diluted share)	($0.26/diluted share)
Adjusted EBITDA^(1)	15,052	15,938	-6%
	(29%)	(35%)
Cash from operating activities	20,960	18,759	12%

(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 March 31, 2020.

$USD millions	2020	2021	2022 and later	Q1 2020 Total
SaaS	102.4	98.2	110.1	310.8
Subscription term license	7.0	-	-	7.0
Maintenance and support	9.2	9.9	8.1	27.1
Total	118.6	108.1	118.2	344.9

Based on this backlog, Kinaxis is reiterating fiscal 2020 financial guidance, as follows:

	FY 2020 Guidance
Total revenue	$211-215 million
SaaS	23-25% growth
Subscription term license	$12-14 million
Adjusted EBITDA margin	20-23% 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 months ended March 31, 2020 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, May 7, 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.

Date:	Thursday, May 7, 2020
Time:	8:30 a.m. Eastern Time
Webcast:	https://bit.ly/2V5TeN0
Dial-in number:	[phone] or [phone]
Replay:	[phone] or [phone]
	Available until 11:59 p.m. EDT, Thursday, May 14, 2020
Reference number:	1285437

Please call the conference telephone number five to ten minutes prior to the start time. An operator will register your name and organization.

About Kinaxis Inc.
Eliminating volatility in your supply chain is impossible, but managing it is not. Trusted by top brands, Kinaxis® gives people the confidence to know they are making the best supply chain planning decisions to maximize business performance. We solve complex business problems in easy-to-understand ways by combining human and machine intelligence to plan for any future, monitor risks and opportunities and respond at the pace of change. With the support of our community of supply chain experts and using our unique concurrent planning technique and single integrated planning platform, customers can realize higher revenue, lower costs and fewer risks.  For more Kinaxis news, follow us on LinkedIn, Twitter or Facebook.

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 March 31,
	2020			2019
		(In thousands of USD)
Profit	$	5,581		$	6,966
Share-based compensation		3,776			3,072
Adjusted profit	$	9,357		$	10,038
Income tax expense		3,476			3,818
Depreciation and amortization		2,941			2,677
Foreign exchange loss (gain)		(49)			170
Net finance income		(673)			(765)
		5,695			5,900
Adjusted EBITDA	$	15,052		$	15,938
Adjusted EBITDA as a percentage of revenue		29%			35%

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.

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, 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 February 28, 2019 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 March 31, 2020 and December 31, 2019
(Expressed in thousands of USD) (Unaudited)
	March 31, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	158,148	$	182,284
Short-term investments	75,450		30,319
Trade and other receivables	66,257		80,623
Prepaid expenses	8,791		6,534
	308,646		299,760
Non-current assets:
Property and equipment	25,108		25,704
Right-of-use assets	8,009		8,671
Contract acquisition costs	16,121		15,497
Unbilled receivables	510		249
Other receivables	713		713
Deferred tax assets	398		149
Intangible assets	708		-
Goodwill	3,659		-
	$	363,872	$	350,743
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables and accrued liabilities	$	21,235	$	20,770
Deferred revenue	82,611		83,673
Lease obligations	2,133		2,288
	105,979		106,731
Non-current liabilities:
Lease obligations	6,107		6,818
Deferred tax liabilities	7,441		7,092
	13,548		13,910
Shareholders' equity:
Share capital	147,685		140,961
Contributed surplus	32,454		30,392
Accumulated other comprehensive loss	(472)		(348)
Retained earnings	64,678		59,097
	244,345		230,102
	$	363,872	$	350,743

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income
For the three months ended March 31, 2020 and 2019
(Expressed in thousands of USD, except share and per share data) (Unaudited)
	2020		2019
Revenue	$	52,755	$	45,754
Cost of revenue	15,836		12,191
Gross profit	36,919		33,563
Operating expenses:
Selling and marketing	11,975		9,315
Research and development	9,677		7,994
General and administrative	6,932		6,065
	28,584		23,374
	8,335		10,189
Other income (expense):
Foreign exchange gain (loss)	49		(170)
Net finance income	673		765
	722		595
Profit before income taxes	9,057		10,784
Income tax expense	3,476		3,818
Profit	5,581		6,966
Other comprehensive loss:
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations	(124)		(56)
Total comprehensive income	$	5,457	$	6,910
Basic earnings per share	$	0.21	$	0.27
Weighted average number of basic Common Shares	26,432,585		26,091,542
Diluted earnings per share	$	0.20	$	0.26
Weighted average number of diluted Common Shares	27,534,441		26,805,963

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
For the three months ended March 31, 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	-		-		-		6,966		6,966
Other comprehensive loss	-		-		(56)		-		(56)
Total comprehensive income (loss)	-		-		(56)		6,966		6,910
Share options exercised	1,388		(443)		-		-		945
Share based payments	-		3,072		-		-		3,072
Total shareholder transactions	1,388		2,629		-		-		4,017
Balance, March 31, 2019	$	126,339	$	26,913	$	(375)	$	42,732	$	195,609
Balance, December 31, 2019	$	140,961	$	30,392	$	(348)	$	59,097	$	230,102
Profit	-		-		-		5,581		5,581
Other comprehensive loss	-		-		(124)		-		(124)
Total comprehensive income (loss)	-		-		(124)		5,581		5,457
Share options exercised	6,724		(1,714)		-		-		5,010
Share based payments	-		3,776		-		-		3,776
Total shareholder transactions	6,724		2,062		-		-		8,786
Balance, March 31, 2020	$	147,685	$	32,454	$	(472)	$	64,678	$	244,345

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows
For the three months ended March 31, 2020 and 2019
(Expressed in thousands of USD) (Unaudited)
	2020		2019
Cash flows from operating activities:
Profit	$	5,581	$	6,966
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets	2,899		2,677
Amortization of intangible assets	42		-
Share-based payments	3,776		3,072
Net finance income	(673)		(765)
Income tax expense	3,476		3,818
Change in operating assets and liabilities	6,856		13,019
Interest received	862		873
Interest paid	(120)		(112)
Income taxes paid	(1,739)		(10,789)
	20,960		18,759
Cash flows used investing activities:
Acquisition of business, net of cash acquired	(2,410)		-
Purchase of property and equipment	(1,709)		(893)
Purchase of short-term investments	(65,302)		(15,005)
Redemption of short-term investments	20,102		27,506
	(49,319)		11,608
Cash flows from financing activities:
Payment of lease obligations	(591)		(600)
Common shares issued on exercise of stock options	5,010		945
	4,419		345
Increase (decrease) in cash and cash equivalents	(23,940)		30,712
Cash and cash equivalents, beginning of period	182,284		126,144
Effects of exchange rates on cash and cash equivalents	(196)		128
Cash and cash equivalents, end of period	$	158,148	$	156,984

SOURCE Kinaxis Inc.

Investor Relations: Rick Wadsworth, Kinaxis, Tel: [phone], [email protected], Media Relations: Danielle McNeil Taylor, Kinaxis, Tel: [phone], [email protected]

Related Links

www.kinaxis.com