Kinaxis Inc. Reports Fiscal First Quarter 2017 Results

- Reports 29% Growth in Subscription Revenue and 26% Adjusted EBITDA Margin -

OTTAWA, May 3, 2017 /CNW/ - Kinaxis^® (TSX:KXS), provider of RapidResponse®, delivering the leading cloud-based concurrent planning solution, reported results for its fiscal first quarter, which ended March 31, 2017. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

First Quarter 2017 Highlights
(Comparisons made between fiscal Q1 2017 and fiscal Q1 2016 results, unless otherwise noted)

• Revenue totaled $32.5 million, up 20%
• Subscription revenue was $23.9 million, up 29%
• Gross profit was $22.2 million (68% of total revenue), up 17%
• Profit was $3.2 million or $0.13 per basic and $0.12 per diluted share
• Adjusted EBITDA⁽¹⁾ totaled $8.5 million (26% of total revenue)
• Adjusted diluted earnings per share⁽¹⁾ of $0.23

(1) "Adjusted EBITDA" and "Adjusted diluted earnings per share" are non-IFRS measures and are not recognized, defined or standardized measures under IFRS. These measures as well as other non-IFRS financial measures reported by Kinaxis are defined in the "Non-IFRS Measures" section of this news release.

"Our growth continues to be fueled by expansion of our subscription revenue base, which increased 29% in the first quarter," said John Sicard, Chief Executive Officer of Kinaxis.  "Global enterprises are turning to Kinaxis to solve their end-to-end supply chain management challenges with concurrent planning, enabling real-time simulation, collaboration and decision-making between previously disconnected teams. Our unique business model supported by our technologically advanced platform enable us to deliver consistent, top and bottom line growth and robust cash generation.

Fiscal Q1 2017 Financial Results

Total revenue for the three months ending March 31, 2017 (Q1 2017) was $32.5 million, an increase of 20% compared to the same period in 2016.

Subscription revenue was $23.9 million in Q1 2017, an increase of 29% from $18.5 million for the same period in 2016. The increase was driven by contracts secured with new customers in the last twelve months, as well as expansion of existing customer subscriptions.

Professional services revenue increased 2% to $8.4 million in Q1 2017, compared to $8.3 million for the same period in 2016. The level of Professional services revenue growth reflects the increased project activity supported by our partners implementing new customers.

Gross profit was $22.2 million in Q1 2017, compared to $18.9 million for the same period in 2016. As a percentage of revenue, gross profit was 68% compared to 70% in the prior year quarter. The percentage change in Q1 2017 was due to investments in additional headcount, increased leverage of qualified third party providers and, expanded global data center capability.  These investments support current and forecasted growth.

Profit for Q1 2017 was $3.2 million or $0.13 per basic and $0.12 per diluted share compared to a profit of $3.4 million or $0.14 per basic and $0.13 per diluted share for the same period in 2016. The change compared to the prior period was primarily driven by our investment in professional service and data center capacity and research and development and an increase in share-based payments. 

Adjusted EBITDA increased 6% to $8.5 million in Q1 2017, compared to $8.0 million in the same period last year. The increase in the period was driven by the growth in revenue offset by an increase in operating expenses from investments in headcount and program spending.

Cash provided by operating activities was $10.3 million for Q1 2017 compared to $8.8 million generated in the same period in 2016. The change resulted from an increase in deferred revenue, share-based payments and depreciation, which was partially offset by a decrease in accounts receivable and an increase in income taxes paid.

Cash and cash equivalents were $142.0 million as at March 31, 2017 as compared to $127.9 million as at December 31, 2016.

Full Year 2017 Financial Guidance

With today's announcement, the Company is updating its 2017 full-year financial guidance:

• Annual total revenue to be in the range of $140 million to $144 million
• Annual subscription revenue to grow 26% to 28%
• Annual Adjusted EBITDA as a percentage of total revenue to be between 25% and 27% of total revenue

This guidance is provided to enhance visibility into the Company's expectations for financial targets for the year ending December 31, 2017.  Please refer to the section regarding forward-looking statements which forms an integral part of this release.

This press release, along with the unaudited condensed consolidated interim financial statements and the Company's corresponding MD&A, are available on the Company's website at www.kinaxis.com and on SEDAR at www.sedar.com.

Conference Call

The Company will host a conference call tomorrow, May 4, 2017 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 4, 2017
Time: 8:30 a.m. Eastern Time
Dial-In Number: 1 [phone]
International: 1 [phone]
Conference ID#: 3134549

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 until 12:00 midnight Eastern Time on Thursday, May 11, 2017.

Toll-Free Replay Number: 1 [phone]
International Replay Number: 1 [phone]
Replay PIN: 3134549

Live Webcast: http://bit.ly/2oRcZoq

Webcast will be archived for 90 days

About Kinaxis Inc.

Offering the industry's only concurrent planning solution, Kinaxis is helping organizations around the world revolutionize their supply chain planning. With RapidResponse®, our cloud-based supply chain management software, we connect your data, processes, and people into a single harmonious environment. With a consolidated view of the entire supply chain, you can plan expected performance, monitor progress, and respond to disconnects when reality hits. RapidResponse lets you know sooner and act faster, leading to reduced decision latency, and improved operational and financial performance. We can prove it.  From implementation to expansion, we're here to help our customers with every step of their supply chain journey.

Non-IFRS Measures
This news release contains non-IFRS measures, specifically, Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA. We use Adjusted profit and Adjusted diluted earnings per share, which remove the impact of our redeemable preferred shares and share based compensation 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 working 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.

The Company has reconciled Adjusted profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:

		Three months ended March 31,
		2017			2016
Statement of Operations		(In thousands of U.S. dollars)
Profit		$	3,226		$	3,369
Share-based compensation		2,716			2,280
Adjusted profit		$	5,942		$	5,649
Income tax expense		1,931			2,177
Depreciation		788			520
Foreign exchange loss (gain)		11			(266)
Net finance income		(167)			(74)
		2,563			2,357
Adjusted EBITDA		$	8,505		$	8,006
Adjusted EBITDA as a percentage of revenue		26%			30%

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 subscription revenue, and our expectations for Adjusted EBITDA achievement, in each case looking forward for the balance of our fiscal year ending December 31, 2017, as well as statements as to Kinaxis' growth opportunities, the potential benefits of our strategic partnerships 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 2017 annual revenue total revenue, annual subscription revenue and annual Adjusted EBITDA, 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 headings "Forward Looking Statements" and "Risks and Uncertainties" in our annual MD&A dated February 28, 2017, under the heading "Risk Factors" in our Annual Information Form dated March 27, 2017, 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, 2017 and December 31, 2016
(Expressed in thousands of U.S. dollars)
(Unaudited)
		March 31, 2017		December 31, 2016
Assets
Current assets:
	Cash and cash equivalents	$	141,989	$	127,910
	Trade and other receivables	27,405		23,820
	Investment tax credits receivable	1,592		1,583
	Investment tax credits recoverable	546		755
	Prepaid expenses	3,538		3,333
		175,070		157,401
Non-current assets:
	Property and equipment	10,297		10,652
	Deferred tax assets	195		239
		$	185,562	$	168,292
Liabilities and Shareholders' Equity
Current liabilities:
	Trades payable and accrued liabilities	$	10,448	$	10,495
	Deferred revenue	62,507		55,458
		72,955		65,953
Non-current liabilities:
	Lease inducement	4		18
	Deferred revenue	13,629		13,198
	Deferred tax liability	1,205		1,412
		14,838		14,628
Shareholders' Equity
	Share capital	102,741		97,164
	Contributed surplus	15,033		13,924
	Accumulated other comprehensive loss	(373)		(519)
	Deficit	(19,632)		(22,858)
		97,769		87,711
		$	185,562	$	168,292

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income
For the three months ended March 31, 2017 and 2016
(Expressed in thousands of U.S. dollars, except share and per share data)
(Unaudited)
		2017		2016
Revenue		$	32,542	$	27,032
Cost of revenue		10,377		8,105
Gross profit		22,165		18,927
Operating expenses:
	Selling and marketing	6,931		5,979
	Research and development	6,223		4,737
	General and administrative	4,010		3,005
		17,164		13,721
		5,001		5,206
Other income (expense):
	Foreign exchange (gain) loss	(11)		266
	Net finance income	167		74
		156		340
Profit before income taxes		5,157		5,546
Income tax expense		1,931		2,177
Profit		3,226		3,369
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
	Foreign currency translation differences - foreign operations	146		61
Total comprehensive income		$	3,372	$	3,430
Basic earnings per share		$	0.13	$	0.14
Weighted average number of basic common shares		25,043,512		24,445,630
Diluted earnings per share		0.12		0.13
Weighted average number of diluted common shares		26,316,198		25,744,984

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
For the three months ended March 31, 2017 and 2016
(Expressed in thousands of U.S. dollars)
(Unaudited)
					Accumulated
					other
	Share		Contributed		comprehensive
	capital		surplus		loss		Deficit		Total equity
Balance, December 31, 2015	$	90,808	$	8,873	$	(474)	$	(33,603)	$	65,604
Profit	-		-		-		3,369		3,369
Other comprehensive income	-		-		61		-		61
Total comprehensive income	-		-		61		3,369		3,430
Share options exercised	561		(188)		-		-		373
Share based payments	-		2,280		-		-		2,280
Total shareholder transactions	561		2,092		-		-		2,653
Balance, March 31, 2016	$	91,369	$	10,965	$	(413)	$	(30,234)	$	71,687
Balance, December 31, 2016	$	97,164	$	13,924	$	(519)	$	(22,858)	$	87,711
Profit	-		-		-		3,226		3,226
Other comprehensive income	-		-		146		-		146
Total comprehensive income	-		-		146		3,226		3,372
Share options exercised	5,577		(1,607)		-		-		3,970
Share based payments	-		2,716		-		-		2,716
Total shareholder transactions	5,577		1,109		-		-		6,686
Balance, March 31, 2017	$	102,741	$	15,033	$	(373)	$	(19,632)	$	97,769

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows
For the three months ended March 31, 2017 and 2016
(Expressed in thousands of U.S. dollars)
(Unaudited)
		2017		2016
Cash flows from operating activities:
Profit		$	3,226	$	3,369
Items not affecting cash:
	Depreciation of property and equipment	788		520
	Share-based payments	2,716		2,280
	Amortization of lease inducement	(14)		(11)
	Investment tax credits recoverable	209		422
	Income tax expense	1,931		2,177
	Change in operating assets and liabilities	3,334		743
Interest paid		(1,931)		(713)
		10,259		8,787
Cash flows used investing activities:
	Purchase of property and equipment	(317)		(358)
Cash flows from financing activities:
	Common Shares issued	3,970		373
Increase in cash and cash equivalents		13,912		8,802
Cash and cash equivalents, beginning of period		127,910		99,390
Effects of exchange rates on cash and cash equivalents		167		156
Cash and cash equivalents, end of period		$	141,989	$	108,348

SOURCE Kinaxis Inc.

Media Relations: Melissa Clow, Tel: [phone] ext. 5513, [email protected]; Investor Relations: Rob Kelly, LodeRock Advisors Inc., Tel: [phone], [email protected]