Kinaxis Inc. Reports First Quarter 2022 Results

• SaaS revenue grows 22% to $49.3 million, total revenue grows 70% to $98.1 million, adjusted EBITDA¹ margin of 34%
• New customer wins match Q4 '21 record levels
• ARR grows 24% in constant currency
• Company increases guidance

OTTAWA, ON, May 5, 2022 /CNW/ - Kinaxis® (TSX: KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, reported results for its first quarter ended March 31, 2022. 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 start to the year with first quarter financial performance beating our expectations and ultimately driving an improved outlook for the full calendar year. Momentum in winning new customers continues to accelerate as more companies consider replacing inflexible, legacy cascaded planning techniques in favour of a more agile concurrent planning approach." said John Sicard, President and CEO of Kinaxis. "Uncertainty and disruption are the only true constants in today's supply chain, regardless of industry. We continue to be humbled by the number of world leading companies that put their trust and confidence in Kinaxis and RapidResponse to bring about transformative improvement in supply chain planning performance. We will continue to invest to meet the growing opportunity in front of us."

Q1 2022 Highlights

$ USD thousands, except as otherwise indicated	Q1 2022	Q1 2021	Change
Total Revenue	98,108	57,728	70%
SaaS	49,320	40,576	22%
Subscription term licenses	23,474	2,059	1,040%
Professional services	21,458	12,027	78%
Maintenance and support	3,856	3,066	26%
Gross profit	69,642	37,222	87%
Margin	71%	64%
Profit	12,522	(1,534)	nm
Per diluted share	$0.44	($0.06)
Adjusted EBITDA^(1)Margin	33,149   34%	9,041   16%	267%
Cash from operating activities	21,993	20,649	7%

(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 company's Annual Recurring Revenue² (ARR), which includes subscription amounts related to both SaaS and on-premise contracts, rose 24% in constant currency to $236 million at the end of the quarter

$USD millions	Q1 2022	Q1 2021
Annual recurring revenue^2	232 22%	191 18%
Year-over-year growth
Annual recurring revenue^2, constant currency Year-over-year growth	236 24%	189 17%

(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 March 31, 2022.

$USD millions		Remainder of 2022		2023		2024 and later		Total
SaaS		145.2		151.6		148.4		445.2
Maintenance and support		10.8		10.5		12.3		33.6
Subscription term licenses		0.3		-		0		0.3
Total		156.3		162.1		160.7		479.1

Financial Guidance
Based on the current business outlook, Kinaxis is updating its fiscal 2022 financial guidance, as follows:

	FY 2022 Guidance
Total revenue	$345-355 million
SaaS	23-25% growth
Subscription term license	$32-34 million
Adjusted EBITDA^(1) margin	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 March 31, 2022 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, May 6, 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:                                   Friday, May 6, 2022
TIME:                                    8:30 a.m. Eastern Time
CALL REGISTRATION:        https://dpregister.com/sreg/10165881/f258f2c0cd
WEBCAST:                           https://bit.ly/3rpPeqs (available for three months)
REPLAY:                               (877)-344-7529
                                              Available through May 20, 2022
                                              Reference number: 9783912

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 March 31,
	2022		2021
	(In thousands of USD)
Profit (loss)	$                  12,522		$                   (1,534)
Share-based compensation	6,003		5,307
Adjusted profit	$                  18,525		$                    3,773
Income tax expense	7,128		68
Depreciation and amortization	5,914		4,470
Foreign exchange loss	1,165		468
Net finance expense	417		262
	14,624		5,268
Adjusted EBITDA	$                  33,149		$                    9,041
Adjusted EBITDA as a percentage of revenue	34%		16%

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; 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

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

	March 31, 2022	December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$              221,983	$              203,220
Short-term investments	30,175	30,168
Trade and other receivables	106,715	89,247
Prepaid expenses	11,649	8,502
	370,522	331,137
Non-current assets:
Unbilled receivables	1,371	512
Other receivables	1,051	1,096
Prepaid expenses	3,095	1,780
Investment tax credits recoverable	4,658	3,616
Deferred tax assets	2,311	6,000
Contract acquisition costs	22,501	19,691
Property and equipment	54,472	52,093
Right-of-use assets	57,452	53,578
Intangible assets	11,095	10,778
Goodwill	42,420	39,988
	200,426	189,132
	$              570,948	$              520,269
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables and accrued liabilities	$                39,583	$                43,328
Deferred revenue	121,183	99,239
Provisions	551	716
Lease obligations	3,324	2,526
	164,641	145,809
Non-current liabilities:
Lease obligations	57,476	53,233
Deferred tax liabilities	2,340	9
	59,816	53,242
Shareholders' equity:
Share capital	205,626	195,414
Contributed surplus	57,658	54,739
Accumulated other comprehensive loss	(977)	(597)
Retained earnings	84,184	71,662
	346,491	321,218
	$              570,948	$              520,269

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(Expressed in thousands of USD, except share and per share data)
(Unaudited)

	Three months ended March 31,
	2022	2021
Revenue	$                98,108	$                57,728
Cost of revenue	28,466	20,506
Gross profit	69,642	37,222
Operating expenses:
Selling and marketing	17,126	12,838
Research and development	18,157	13,682
General and administrative	13,184	11,542
	48,467	38,062
	21,175	(840)
Other expense:
Foreign exchange loss	(1,165)	(468)
Net finance and other expense	(360)	(158)
	(1,525)	(626)
Profit (loss) before income taxes	19,650	(1,466)
Income tax expense	7,128	68
Profit (loss)	12,522	(1,534)
Other comprehensive loss
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations	(380)	(269)
Total comprehensive income (loss)	$                12,142	$                 (1,803)
Basic earnings (loss) per share	$                    0.46	$                   (0.06)
Weighted average number of basic Common Shares	27,481,560	27,109,227
Diluted earnings (loss) per share	$                    0.44	$                   (0.06)
Weighted average number of diluted Common Shares	28,466,916	27,109,227

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, 2020	$         173,104	$           35,846	$                    (20)	$           72,827	$         281,757
Loss	—	—	—	(1,534)	(1,534)
Other comprehensive loss	—	—	(269)	—	(269)
Total comprehensive loss	—	—	(269)	(1,534)	(1,803)
Share options exercised	3,159	(899)	—	—	2,260
Share based payments	—	5,307	—	—	5,307
Total shareholder transactions	3,159	4,408	—	—	7,567
Balance, March 31, 2021	$         176,263	$           40,254	$                  (289)	$           71,293	$         287,521
Balance, December 31, 2021	$         195,414	$           54,739	$                  (597)	$           71,662	$         321,218
Profit	—	—	—	12,522	12,522
Other comprehensive loss	—	—	(380)	—	(380)
Total comprehensive income (loss)	—	—	(380)	12,522	12,142
Share options exercised	9,197	(2,020)	—	—	7,177
Restricted share units vested	598	(598)	—	—	—
Performance share units vested	417	(417)	—	—	—
Share based payments	—	5,954	—	—	5,954
Total shareholder transactions	10,212	2,919	—	—	13,131
Balance, March 31, 2022	$         205,626	$           57,658	$                  (977)	$           84,184	$         346,491

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

	Three months ended March 31,
	2022	2021
Cash flows from operating activities:
Profit (loss)	$                12,522	$                 (1,534)
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets	5,331	3,909
Amortization of intangible assets	583	561
Share-based payments	6,003	5,307
Net finance expense	417	158
Income tax expense	7,128	68
Investment tax credits recoverable	(1,042)	(425)
Change in operating assets and liabilities	(7,232)	12,940
Interest received	30	23
Interest paid	(454)	(184)
Income taxes paid	(1,293)	(174)
	21,993	20,649
Cash flows used in investing activities:
Acquisition of business, net of cash acquired	(3,028)	(800)
Purchase of property and equipment	(6,279)	(4,441)
Purchase of short-term investments	(15,006)	(15,006)
Redemption of short-term investments	15,006	15,006
	(9,307)	(5,241)
Cash flows from financing activities:
Payment of lease obligations	(1,477)	(1,172)
Proceeds from exercise of stock options	7,177	2,260
	5,700	1,088
Increase in cash and cash equivalents	18,386	16,496
Cash and cash equivalents, beginning of period	203,220	182,958
Effects of exchange rates on cash and cash equivalents	377	(311)
Cash and cash equivalents, end of period	$              221,983	$              199,143

SOURCE Kinaxis Inc.

Investor Relations, Rick Wadsworth | Kinaxis, [email protected], 613-907-7613; Media Relations, Jaime Cook | Kinaxis, [email protected], 289-552-4640