Kinaxis Inc. Reports Fiscal First Quarter 2015 Results

- Reports 36% Subscription Revenue Growth, 28% Adjusted EBITDA and Adjusted diluted EPS of $0.13 per share -

OTTAWA, May 6, 2015 /CNW/ - Kinaxis^®(TSX:KXS), provider of RapidResponse^®, delivering cloud-based SCM and S&OP applications, reported results for its fiscal first quarter ended March 31, 2015. All figures are in U.S. dollars and prepared in accordance with International Financial Reporting Standards (IFRS).

First Quarter 2015 Highlights
(Comparisons made between fiscal Q1 2015 and fiscal Q1 2014 results, unless otherwise noted)

• Subscription revenue was $15.4 million, up 36%
• Revenue totaled $19.7 million, up 26%
• Gross profit was $13.9 million (71% of total revenue), up 29%
• Adjusted EBITDA totaled $5.6 million (28% of total revenue), up 47%
• Adjusted diluted earnings per share of $0.13

"We've continued to see strong demand for our innovative supply chain management solutions, particularly in the first quarter which drove record quarterly growth in our subscription revenue base," said Doug Colbeth, President and CEO of Kinaxis. "Given the results of the first quarter and the strong forward revenue visibility of our business model, we are confident to revise our overall subscription growth outlook for 2015 from 25% to a range of 26 to 28%.  We remain in an excellent position within our market and see opportunity to enter new verticals and grow our customer base to continue to deliver solid results."

Fiscal Q1 2015 Financial Results

Total revenue for the three months ended March 31, 2015 (Q1 2015) was $19.7 million, an increase of 26% compared to the same period in 2014.

Subscription revenue was $15.4 million in Q1 2015, an increase of 36% from $11.3 million for the same period in 2014. The increase in subscription revenue is due to revenue from contracts secured with new customers during the third and fourth quarters of 2014 and expansion of existing customer subscriptions.

Professional services revenue was $4.0 million in Q1 2015, compared to $4.0 million for the same period in 2014. Growth was in-line with the prior year due to the timing of new customer project commencement engagements coupled with the completion of other customer deployment projects. In addition, our partners continue to play an increasing role in supporting new customer deployment.

Gross profit was $13.9 million in Q1 2015, compared to $10.8 million for the same period in 2014. As a percentage of revenue, gross profit was 71% in Q1 2015 compared to 69% in the prior year quarter. The improvement in gross margin in the first quarter of 2015 was due to the growth in subscription revenue in the period compared to the first quarter of 2014 while the growth in cost of revenue was lower in the first quarter of 2015.

Adjusted EBITDA was $5.6 million in Q1 2015, compared to Adjusted EBITDA of $3.8 million in the same period last year. The increase in Adjusted EBITDA in Q1 2015 is the result of an increase in operating profits which was driven primarily by increased subscription revenues and higher gross margin.

Profit for Q1 2015 was $2.4 million or $0.10 per basic and diluted share compared to a profit of $2.0 million or $0.15 per basic and 0.10 per diluted share for the same period in 2014. The increase in profit was primarily driven by higher operating profits. 

Cash generated by operating activities was $23.6 million for Q1 2015 compared to $0.3 million in Q1 2014. The increase in cash provided by operating activities was due primarily to the receipt of prepayment of subscription arrangements and the increase in net income, share based compensation, and income tax expense.

Cash and cash equivalents were $78.8 million as at March 31, 2015 as compared to $56.7 million as at December 31, 2014. The increase is primarily due to the receipt of a prepayment of a multi-year subscription of approximately $20.0 million as well as other subscription arrangements.

Please refer to the section regarding forward-looking statements which forms an integral part of this release. These results, along with the unaudited condensed consolidated interim financial statements and the company's unaudited MD&A, are available on the company's website at www.kinaxis.com and on SEDAR at www.sedar.com.

Full Year 2015 Financial Guidance

For the full year 2015, Kinaxis expects to grow annual subscription revenue in the 26 to 28% range and to achieve Adjusted EBITDA in excess of 20% of total revenue. Furthermore, Kinaxis expects professional services revenue will grow between 10% and 15%.

Conference Call

The company will host a conference call tomorrow (Thursday, May 7, 2015) to discuss these results. Doug Colbeth, President & CEO and Richard Monkman, CFO 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, 2015
Time: 8:30 a.m. Eastern time
Dial-In Number: 1 [phone]
International: 1 [phone]
Conference ID#: 27385248

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

A replay of the call will be available after 11:30 a.m. Eastern time on the same day through May 14, 2015.

Toll-Free Replay Number: 1 [phone]
International Replay Number: 1 [phone]
Replay PIN: 27385248

Live Webcast: http://bit.ly/1FTlvGY
Webcast will be archived for one year

About Kinaxis Inc.

Kinaxis is a leading provider of cloud-based subscription software that enables our customers to improve and accelerate analysis and decision-making across their supply chain operations. The supply chain planning and analytics capabilities of our product, RapidResponse, create the foundation for managing multiple, interconnected supply chain management processes. By using the single RapidResponse product instead of combining individual disparate software solutions, our customers gain visibility across their supply chains, can respond quickly to changing conditions, and ultimately realize significant operating efficiencies.

Non-IFRS Measures

This news release contains non-IFRS measures, specifically, Adjusted diluted earnings per share (which is derived from Adjusted profit) and Adjusted EBITDA.  We use Adjusted profit and Adjusted diluted earnings per share, which remove the impact of our redeemable preferred shares and stock option plans, to measure our performance as these measurements better align the reporting of our results and improve comparability against our peers. 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 work capital requirements.  Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted profit, Adjusted EBITDA and Adjusted diluted earnings per share 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.

We have reconciled Adjusted profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:

				Three months ended March 31,
				2015		2014
Statement of Operations				(In thousands of U.S. dollars)
Profit				$         2,388		$          1,957
Loss due to change in fair value of redeemable preferred shares				̶		179
Share-based compensation				964		388
				964		567
Adjusted profit				$        3,352		$         2,524
Income tax expense				1,405		803
Depreciation				354		240
Foreign exchange loss (gain)				479		(47)
Net finance (income) expense				(24)		257
				2,214		1,253
Adjusted EBITDA				$        5,566		$         3,777

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 updated expectations for growth of annual subscription revenue, Adjusted EBITDA achievement, and growth in professional services revenue, in each case looking forward for the balance of our fiscal year ending December 31, 2015, as well as 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 2015 subscription revenue, Adjusted EBITDA, and professional services revenue is subject to certain assumptions, 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.

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 heading "Risks and Uncertainties" in the MD&A dated February 24, 2015 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, 2015 and December 31, 2014
(Expressed in thousands of U.S. dollars)
(Unaudited)
					March 31,		December 31,
					2015		2014
Assets
Current assets:
	Cash and cash equivalents				$       78,764		$       56,725
	Trade and other receivables				15,328		17,023
	Investment tax credits receivable				1,816		1,974
	Prepaid expenses				2,387		1,926
					98,295		77,648
Non-current assets:
	Property and equipment				6,074		4,744
	Investment tax credits recoverable				3,430		3,091
	Deferred tax assets				4,591		5,726
					$     112,390		$       91,209
Liabilities
Current liabilities:
	Accounts payable and accrued liabilities				$        4,077		$       6,945
	Deferred revenue				42,330		35,740
					46,407		42,685
Non-current liabilities:
	Lease inducement				98		109
	Deferred revenue				15,721		1,778
					15,819		1,887
Shareholders' Equity
Share capital					87,496		87,219
Contributed surplus					7,029		6,152
Accumulated other comprehensive loss					(468)		(453)
Deficit					(43,893)		(46,281)
					50,164		46,637
					$     112,390		$       91,209

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income
For the three months ended March 31, 2015 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)
(Unaudited)
					2015			2014
Revenue				$	19,711		$	15,623
Cost of revenue					5,805			4,829
Gross profit					13,906			10,794
Operating expenses:
	Selling and marketing				3,799			3,053
	Research and development				3,671			2,959
	General and administrative				2,188			1,633
					9,658			7,645
					4,248			3,149
Other income (expense):
	Loss due to change in fair value of redeemable preferred shares				–			(179)
	Foreign exchange (loss) gain				(479)			47
	Net finance income (expense)				24			(257)
					(455)			(389)
Profit before income taxes					3,793			2,760
Income tax expense:
	Current				270			206
	Deferred				1,135			597
					1,405			803
Profit					2,388			1,957
Other comprehensive income (loss)
Items that are or may be reclassified subsequently to profit or loss:
	Foreign currency translation differences - foreign operations				(15)			15
Total comprehensive income				$	2,373		$	1,972
Basic earnings per share				$	0.10		$	0.15
Weighted average number of basic common shares					23,759,940			13,279,075
Diluted earnings per share					0.10			0.10
Weighted average number of diluted common shares					25,133,286			19,679,029

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity (Deficiency)
For the three months ended March 31, 2015 and 2014
(Expressed in thousands of U.S. dollars)
(Unaudited)
						Accumulated
						other
		Share		Contributed		comprehensive				Total equity
		capital		surplus		loss		Deficit		(deficiency)
Balance, December 31, 2013	$	9,902	$	3,948	$	(360)	$	(87,070)	$	(73,580)
Profit		–		–		–		1,957		1,957
Other comprehensive income		–		–		15		–		15
Total comprehensive income		–		–		15		1,957		1,972
Shares issued for cash		585		–		–		–		585
Share options exercised		280		–		–		–		280
Share based payments		–		388		–		–		388
Total shareholder transactions		865		388		–		–		1,253
Balance, March 31, 2014	$	10,767	$	4,336	$	(345)	$	(85,113)	$	(70,355)
Balance, December 31, 2014	$	87,219	$	6,152	$	(453)	$	(46,281)	$	46,637
Profit								2,388		2,388
Other comprehensive loss		–		–		(15)		–		(15)
Total comprehensive income		–		–		(15)		2,388		2,373
Share options exercised		277		(87)		–		–		190
Share based payments		–		964		–		–		964
Total shareholder transactions		277		877		–		–		1,154
Balance, March 31, 2015	$	87,496	$	7,029	$	(468)	$	(43,893)	$	50,164

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows
For the three months ended March 31, 2015 and 2014
(Expressed in thousands of U.S. dollars)
(Unaudited)
					2015			2014
Cash flows from operating activities:
Profit				$	2,388		$	1,957
Items not affecting cash:
	Depreciation of property and equipment				354			240
	Loss due to change in fair value of
	redeemable preferred shares				–			179
	Share-based compensation				964			388
	Amortization of lease inducement				(11)			(12)
	Long-term investment tax credits recoverable				(339)			(249)
	Income tax expense				1,405			803
	Change in operating assets and liabilities				19,210			(2,559)
Interest paid					–			(53)
Income taxes paid					(356)			(350)
					23,615			344
Cash flows from investing activities:
	Purchase of property and equipment				(1,684)			(889)
Cash flows from financing activities:
	Non-Voting Common Shares issued and share
	subscriptions received				–			865
	Common Shares issued				190			–
	Issuance of long-term debt				–			5,000
					190			5,865
Increase in cash and cash equivalents					22,121			5,320
Cash and cash equivalents, beginning of period					56,725			13,804
Effects of exchange rates on cash and cash equivalents					(82)			64
Cash and cash equivalents, end of period				$	78,764		$	19,188

SOURCE Kinaxis Inc.

Investor Relations: Robert Kelly, TMX Equicom, T: [phone] ext. 253, [email protected]