Kinaxis Inc. Reports Fiscal Second Quarter 2015 Results

- Reports 32% Total Revenue Growth and 39% Adjusted EBITDA -

OTTAWA, Aug. 6, 2015 /CNW/ - Kinaxis^® (TSX:KXS), provider of RapidResponse^®, delivering cloud-based SCM and S&OP applications, reported results for its fiscal second quarter ended  June 30, 2015. All figures are in U.S. dollars and prepared in accordance with International Financial Reporting Standards (IFRS).

Second Quarter 2015 Highlights
(Comparisons made between fiscal Q2 2015 and fiscal Q2 2014 results, unless otherwise noted)

• Revenue totaled $23.7 million, up 32%
• Subscription revenue was $16.3 million, up 29%
• Gross profit was $17.4 million (73% of total revenue), up 42%
• Adjusted EBITDA⁽¹⁾ totaled $9.2 million (39% of total revenue), up 183%
• Adjusted diluted earnings per share⁽¹⁾ of $0.25

(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 second quarter results showed impressive growth in many areas, demonstrating the earnings power of our business model as overall revenues increase," said Doug Colbeth, President and CEO of Kinaxis.  "The combination of revenue growth and strong Adjusted EBITDA results highlights the uniqueness of our supply chain solutions. Given the forward revenue visibility of our business, we have raised our fiscal 2015 professional services revenue guidance to a range of $22 million to $23 million. The increase in professional services revenue combined with our strong 26%-28% annual growth in subscription revenue, also supports the upgrading of our annual Adjusted EBITDA range to between 26%-29% of total revenues."

Fiscal Q2 2015 Financial Results

Total revenue for the three months ended June 30, 2015 (Q2 2015) was $23.7 million, an increase of 32% compared to the same period in 2014.

Subscription revenue was $16.3 million in Q2 2015, an increase of 29% from $12.6 million for the same period in 2014. The increase in subscription revenue is due to revenue from contracts secured with new customers during the second half of 2014 and first quarter of 2015, in addition to expansion of existing customer subscriptions.

Professional services revenue was $7.1 million in Q2 2015, compared to $5.0 million for the same period in 2014. Growth was primarily driven by the commencement of project engagements for new customers secured in the second half of 2014 and first quarter of 2015, as well as additional engagements with existing customers.

Gross profit was $17.4 million in Q2 2015, compared to $12.3 million for the same period in 2014. As a percentage of revenue, gross profit was 73% in Q2 2015 compared to 69% in the prior year quarter. The improvement in gross profit in the second quarter of 2015 was due to the revenue growing at a higher rate than cost of revenue in the comparative period.

Adjusted EBITDA was $9.2 million in Q2 2015, compared to Adjusted EBITDA of $3.3 million in the same period last year. The increase in Adjusted EBITDA in the quarter was primarily the result of the growth rate of revenues exceeding the growth rate in cost of revenue and operating costs for the corresponding period.

Profit for Q2 2015 was $5.2 million or $0.22 per basic and $0.20 per diluted share compared to a loss of $5.3 million or $0.34 per basic and diluted share for the same period in 2014. The increase in profit was primarily driven by higher revenue and the lower fair value adjustment on redeemable preferred shares which were converted to common shares at the time of the company's initial public offering in June 2014. In addition, profit increased due to a favourable impact on operating expenses from a weakened Canadian dollar versus the U.S. dollar for Q2 2015 compared to 2014.

Cash generated by operating activities was $7.3 million for Q2 2015 compared to $6.9 million in 2014. The increase in cash provided by operating activities was due primarily to the increase in profit before taxes and share based compensation partially offset by the fair value adjustment recorded in Q2 2014 on redeemable preferred shares which were converted to common shares at the time of our initial public offering in June 2014.

Cash and cash equivalents were $85.2 million as at June 30, 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, the company reaffirms its expectation to grow annual subscription revenue in the 26% to 28% range and is pleased to revise its expectations for full year professional services revenue to between $22.0 million and $23.0 million.

Given the continued growth of the business and planned key investments scheduled for the remainder of the year, the company expects Adjusted EBITDA performance for fiscal 2015 to range between 26% to 29% of total revenues. 

Conference Call

The company will host a conference call today (Thursday, August 6, 2015) to discuss these results. Doug Colbeth, President & CEO and Richard Monkman, CFO, will host the call starting at 6:00 p.m. Eastern time. A question and answer session will follow management's presentation.

Date: Thursday, August 6, 2015
Time: 6:00 p.m. Eastern time
Dial-In Number: 1 [phone]
International: 1 [phone]
Conference ID#: 81807148

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 August 13, 2015.

Toll-Free Replay Number: 1 [phone]
International Replay Number: 1 [phone]
Replay PIN: 81807148

Live Webcast: http://bit.ly/1UKHx74
Webcast will be archived for 90 days

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 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 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 June 30,						Six months ended June 30,
		2015			2014			2015			2014
Statement of Operations		(In thousands of U.S. dollars)
Profit (loss)...................................................................................	$	5,198		$	(5,274)			7,586		$	(3,317)
Loss due to change in fair value of redeemable preferred shares.........................................................................		−			6,581			−			6,760
Share-based compensation....................................................		1,083			631			2,047			1,019
		1,083			7,212			2,047			7,779
Adjusted profit.............................................................................	$	6,281		$	1,938			9,633		$	4,462
Income tax expense...................................................................		2,537			889			3,942			1,692
Depreciation................................................................................		412			260			766			500
Foreign exchange loss (gain)..................................................		47			(81)			526			(128)
Net finance (income) expense.................................................		(42)			253			(66)			510
		2,954			1,321			5,168			2,574
Adjusted EBITDA.........................................................................	$	9,235		$	3,259			14,801			7,036

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 subscription revenue, and updated expectations for 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, planned key investments scheduled for the remainder of the year 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 "Forward Looking Statements" in our interim MD&A dated August 6, 2015, under the heading "Risk Factors" in our Annual Information Form dated March 2, 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 June 30, 2015 and December 31, 2014
(Expressed in thousands of U.S. dollars)
(Unaudited)
			June 30,		December 31,
			2015		2014
Assets
Current assets:
	Cash and cash equivalents	$	85,166	$	56,725
	Trade and other receivables		10,407		17,023
	Investment tax credits receivable		1,858		1,974
	Prepaid expenses		1,703		1,926
			99,134		77,648
Non-current assets:
	Property and equipment		6,888		4,744
	Investment tax credits recoverable		3,595		3,091
	Deferred tax assets		1,917		5,726
		$	111,534	$	91,209
Liabilities
Current liabilities:
	Accounts payable and accrued liabilities	$	3,434	$	6,945
	Deferred revenue		37,380		35,740
			40,814		42,685
Non-current liabilities:
	Lease inducement		86		109
	Deferred revenue		13,841		1,778
			13,927		1,887
Shareholders' Equity
Share capital			88,043		87,219
Contributed surplus			7,928		6,152
Accumulated other comprehensive loss			(483)		(453)
Deficit			(38,695)		(46,281)
			56,793		46,637
		$	111,534	$	91,209

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income
For the three and six months June 30, 2015 and 2014
(Expressed in thousands of U.S. dollars, except share and per share data)
(Unaudited)
			For the three months June 30,					For the six months ended June 30,
			2015		2014			2015		2014
Revenue		$	23,704	$	17,930		$	43,415	$	33,553
Cost of revenue			6,287		5,628			12,092		10,457
Gross profit			17,417		12,302			31,323		23,096
Operating expenses:
	Selling and marketing		3,922		3,954			7,721		7,007
	Research and development		3,955		3,563			7,626		6,522
	General and administrative		1,800		2,417			3,988		4,050
			9,677		9,934			19,335		17,579
			7,740		2,368			11,988		5,517
Other income (expense):
	Loss due to change in fair value of redeemable preferred shares		-		(6,581)			-		(6,760)
	Foreign exchange (loss) gain		(47)		81			(526)		128
	Net finance income (expense)		42		(253)			66		(510)
			(5)		(6,753)			(460)		(7,142)
Profit (loss) before income taxes			7,735		(4,385)			11,528		(1,625)
Income tax expense:
	Current		(138)		188			132		394
	Deferred		2,675		701			3,810		1,298
			2,537		889			3,942		1,692
Profit (loss)			5,198		(5,274)			7,586		(3,317)
Other comprehensive income (loss)
Items that are or may be reclassified subsequently to profit or loss:
	Foreign currency translation differences - foreign operations		(15)		9			(30)		24
Total comprehensive profit (loss)		$	5,183	$	(5,265)		$	7,556	$	(3,293)
Basic earnings (loss) per share		$	0.22	$	(0.34)		$	0.32	$	(0.23)
Weighted average number of basic common shares (note 8)			23,835,000		15,636,918			23,797,678		14,422,822
Diluted earnings (loss) per share		$	0.20	$	(0.34)		$	0.30	$	(0.23)
Weighted average number of diluted common shares (note 8)			25,394,345		15,636,918			25,273,997		14,422,822

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity (Deficiency)
For the six months June 30, 2015 and 2014
(Expressed in thousands of U.S. dollars)
(Unaudited)
						Accumulated other comprehensive loss
		Share capital		Contributed surplus						Total equity (deficiency)
								Deficit
Balance, December 31, 2013	$	9,902	$	3,948	$	(360)	$	(87,070)	$	(73,580)
Loss		-		-		-		(3,317)		(3,317)
Other comprehensive income		-		-		24		-		24
Total comprehensive income (loss)		-		-		24		(3,317)		(3,293)
Conversion of Class A preferred shares to Common Shares		60,895		-		-		-		60,895
Shares issued per offering		59,562		-		-		-		59,562
Share issuance costs		(3,837)		-		-		-		(3,837)
Reduction of share capital		(41,010)		-		-		41,010		-
Shares issued for cash		585		-		-		-		585
Share options exercised		419		-		-		-		419
Share based payments		-		1,019		-		-		1,019
Total shareholder transactions		76,614		1,019		-		41,010		118,643
Balance, June 30, 2014	$	86,516	$	4,967	$	(336)	$	(49,377)	$	41,770
Balance, December 31, 2014	$	87,219	$	6,152	$	(453)	$	(46,281)	$	46,637
Profit		-		-		-		7,586		7,586
Other comprehensive loss		-		-		(30)		-		(30)
Total comprehensive income		-		-		(30)		7,586		7,556
Share options exercised		824		(271)		-		-		553
Share based payments		-		2,047		-		-		2,047
Total shareholder transactions		824		1,776		-		-		2,600
Balance, June 30, 2015	$	88,043	$	7,928	$	(483)	$	(38,695)	$	56,793

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows
For the three and six months June 30, 2015 and 2014
(Expressed in thousands of U.S. dollars)
(Unaudited)
			For the three months ended June 30,					For the six months ended June 30,
			2015		2014			2015		2014
Cash flows from operating activities:
Profit		$	5,198	$	(5,274)		$	7,586	$	(3,317)
Items not affecting cash:
	Depreciation of property and equipment		412		260			766		500
	Loss due to change in fair value of
	redeemable preferred shares		-		6,581			-		6,760
	Share-based compensation		1,083		631			2,047		1,019
	Amortization of lease inducement		(12)		(11)			(23)		(23)
	Long-term investment tax credits recoverable		(165)		(227)			(504)		(476)
	Income tax expense		2,537		889			3,942		1,692
	Change in operating assets and liabilities		(1,633)		8,755			17,577		6,196
Interest paid			-		(465)			-		(518)
Income taxes paid			(108)		(4,226)			(464)		(4,576)
			7,312		6,913			30,927		7,257
Cash flows from investing activities:
	Purchase of property and equipment		(1,226)		(1,548)			(2,910)		(2,437)
Cash flows from financing activities:
	Non-Voting Common Shares issued and share
	subscriptions received		-		126			-		991
	Common Shares issued		363		13			553		13
	Common shares issued per offering		-		59,562			-		59,562
	Share issuance cost net of tax		-		(3,837)			-		(3,837)
	Issuance of long-term debt		-		-			-		5,000
	Repayment of long-term debt		-		(30,000)			-		(30,000)
			363		25,864			553		31,729
Increase in cash and cash equivalents			6,449		31,229			28,570		36,549
Cash and cash equivalents, beginning of period			78,764		19,188			56,725		13,804
Effects of exchange rates on cash and cash equivalents			(47)		35			(129)		99
Cash and cash equivalents, end of period		$	85,166	$	50,452		$	85,166	$	50,452

SOURCE Kinaxis Inc.

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