Kinaxis Inc. Reports Fiscal Third Quarter 2017 Results

- Reports 24% Growth in Subscription Revenue and 32% Adjusted EBITDA Margin -

OTTAWA, Nov. 1, 2017 /CNW/ - Kinaxis^® (TSX:KXS), provider of RapidResponse®, delivering the leading cloud-based concurrent planning solution, reported results for its fiscal third quarter, which ended September 30, 2017. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

Third Quarter 2017 Highlights
(Comparisons made between fiscal Q3 2017 and fiscal Q3 2016 results, unless otherwise noted)

• Revenue totaled $33.5 million, up 12%
• Subscription revenue was $25.8 million, up 24%
• Gross profit was $23.8 million (71% of total revenue), up 16%
• Profit was $6.0 million or $0.24 per basic and $0.23 per diluted share
• Adjusted EBITDA⁽¹⁾ totaled $10.8 million (32% of total revenue)
• Adjusted diluted earnings per share⁽¹⁾ of $0.31

(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 strong third quarter results demonstrate that sustained subscription revenue growth and consistent profitability remain the fundamental tenets of our robust business model," said John Sicard, Chief Executive Officer of Kinaxis. "Our business momentum continues to be fueled by a world class product delivered by a growing strategic partner ecosystem.  Our partners expand access to new prospective customer relationships and deliver value through an accredited network of knowledgeable professionals.   This is a powerful combination that enables us to profitably scale Kinaxis. Our leadership team remains focused on delivering on our promise to revolutionize supply chain planning and enable customers to proactively plan and respond in today's complex and unpredictable business environment. With the recent addition of Paul Carreiro as Chief Revenue Officer, we are well positioned for continued growth." 

Fiscal Q3 2017 Financial Results

Total revenue for the three months ending September 30, 2017 (Q3 2017) was $33.5 million, an increase of 12% compared to the same period in 2016.

Subscription revenue was $25.8 million in Q3 2017, an increase of 24% from $20.8 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 was $7.4 million in Q3 2017, a decline of 17% compared to $8.9 million for the same period in 2016. Professional services revenue reflects the ongoing strong support of our partners in implementing new customer projects.

Gross profit was $23.8 million in Q3 2017, compared to $20.5 million for the same period in 2016. As a percentage of revenue, gross profit increased to 71% from 68%. The increase came as a result of revenue growing at a higher rate than the cost of revenue compared to the prior year period.

Profit for Q3 2017 was $6.0 million or $0.24 per basic and $0.23 per diluted share compared to a profit of $2.4 million or $0.10 per basic and $0.09 per diluted share for the same period in 2016. The change was primarily driven by an increase in subscription revenue, which was partially offset by the investment in professional services, data center capacity, research and development and an increase in share-based payments. 

Adjusted EBITDA increased 59% to $10.8 million in Q3 2017, compared to $6.8 million in the same period last year. The increase was driven by the growth in subscription revenue offset by an increase in operating expenses from investments in headcount and program spending.

Cash provided by operating activities was $3.3 million for Q3 2017 compared to $1.5 million used in the same period in 2016. The change resulted from an increase in profit and in trade and other receivables which was partially offset by an increase in deferred revenue.

Cash and cash equivalents were $151.4 million as at September 30, 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 $132 million to $134 million
• Annual subscription revenue to grow 22% to 23%
• Annual Adjusted EBITDA as a percentage of total revenue to be between 27% and 29% 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, November 2, 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, November 2, 2017
Time: 8:30 a.m. Eastern Time
Dial-In Number: 1 [phone]
International: 1 [phone]
Conference ID#: 97697899

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, November 9, 2017.

Toll-Free Replay Number: 1 [phone]
International Replay Number: 1 [phone]
Replay PIN: 97697899

Live Webcast: http://bit.ly/2z4IwcK
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 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 September 30,						Nine months ended September 30,
	2017			2016			2017			2016
	(In thousands of U.S. dollars, except percentages)
Statement of Operations
Profit	$	6,032		$	2,425		$	14,898		$	9,034
Share-based compensation		2,299			2,060			7,412			6,190
Adjusted profit	$	8,331		$	4,485		$	22,310		$	15,224
Income tax expense		1,817			1,687			4,791			5,374
Depreciation		911			683			2,517			1,746
Foreign exchange loss (gain)		30			53			53			(25)
Net finance income		(276)			(96)			(753)			(229)
		2,482			2,327			6,608			6,866
Adjusted EBITDA	$	10,813		$	6,812		$	28,918		$	22,090
Adjusted EBITDA as a percentage of revenue		32%			23%			29%			26%

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 September 30, 2017 and December 31, 2016
(Expressed in thousands of U.S. dollars)
(Unaudited)
		September 30, 2017	December 31, 2016
Assets
Current assets:
	Cash and cash equivalents	151,435	127,910
	Trade and other receivables	28,854	23,820
	Investment tax credits receivable	-	1,583
	Investment tax credits recoverable	1,287	755
	Prepaid expenses	3,272	3,333
		184,848	157,401
Non-current assets:
	Property and equipment	12,515	10,652
	Deferred tax assets	193	239
		197,556	168,292
Liabilities and Shareholders' Equity
Current liabilities:
	Trades payable and accrued liabilities	11,239	10,495
	Deferred revenue	58,500	55,458
		69,739	65,953
Non-current liabilities:
	Lease inducement	-	18
	Deferred revenue	10,120	13,198
	Deferred tax liability	1,113	1,412
		11,233	14,628
Shareholders' Equity
	Share capital	106,220	97,164
	Contributed surplus	18,712	13,924
	Accumulated other comprehensive loss	(388)	(519)
	Deficit	(7,960)	(22,858)
		116,584	87,711
		197,556	168,292

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income
For the three and nine months ended September 30, 2017 and 2016
(Expressed in thousands of U.S. dollars, except share and per share data)
(Unaudited)
		For the three months ended September 30,		For the nine months ended September 30,
		2017	2016	2017	2016
Revenue		33,486	29,921	98,894	85,687
Cost of revenue		9,681	9,466	30,043	26,284
Gross profit		23,805	20,455	68,851	59,403
Operating expenses:
	Selling and marketing	7,100	8,085	21,398	21,847
	Research and development	5,986	5,684	18,083	15,157
	General and administrative	3,116	2,617	10,381	8,245
		16,202	16,386	49,862	45,249
		7,603	4,069	18,989	14,154
Other income (expense):
	Foreign exchange (loss) gain	(30)	(53)	(53)	25
	Net finance income	276	96	753	229
		246	43	700	254
Profit before income taxes		7,849	4,112	19,689	14,408
Income tax expense		1,817	1,687	4,791	5,374
Profit		6,032	2,425	14,898	9,034
Other comprehensive income (loss)
Items that are or may be reclassified subsequently to profit or loss:
	Foreign currency translation differences - foreign operations	2	20	131	154
Total comprehensive income		6,034	2,445	15,029	9,188
Basic earnings per share		0.24	0.10	0.59	0.37
Weighted average number of basic Common Shares		25,417,766	24,739,556	25,265,637	25,585,823
Diluted earnings per share		0.23	0.09	0.56	0.35
Weighted average number of diluted Common Shares		26,507,279	26,113,401	26,440,167	25,905,597

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
For the nine months ended September 30, 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	-	-	-	9,034	9,034
Other comprehensive income	-	-	154	-	154
Total comprehensive income	-	-	154	9,034	9,188
Share options exercised	4,393	(1,426)	-	-	2,967
Deferred share units vested	151	(151)	-	-	-
Share based payments	-	6,190	-	-	6,190
Total shareholder transactions	4,544	4,613	-	-	9,157
Balance, September 30, 2016	95,352	13,486	(320)	(24,569)	83,949
Balance, December 31, 2016	97,164	13,924	(519)	(22,858)	87,711
Profit	-	-	-	14,898	14,898
Other comprehensive income	-	-	131	-	131
Total comprehensive income	-	-	131	14,898	15,029
Share options exercised	9,056	(2,624)	-	-	6,432
Share based payments	-	7,412	-	-	7,412
Total shareholder transactions	9,056	4,788	-	-	13,844
Balance, September 30, 2017	106,220	18,712	(388)	(7,960)	116,584

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows
For the three and nine months ended September 30, 2017 and 2016
(Expressed in thousands of U.S. dollars)
(Unaudited)
		For the three months ended September 30,		For the nine months ended September 30,
		2017	2016	2017	2016
Cash flows from operating activities:
Profit		6,032	2,425	14,898	9,034
Items not affecting cash:
	Depreciation of property and equipment	911	683	2,517	1,746
	Share-based payments	2,299	2,060	7,412	6,190
	Amortization of lease inducement	-	(10)	(18)	(32)
	Investment tax credits recoverable	310	397	(532)	941
	Income tax expense	1,817	1,687	4,791	5,374
	Change in operating assets and liabilities	(7,436)	(8,493)	(4,270)	(7,968)
Income taxes paid		(662)	(259)	(3,749)	(1,248)
		3,271	(1,510)	21,049	14,037
Cash flows used investing activities:
	Purchase of property and equipment	(2,660)	(2,712)	(4,304)	(5,125)
Cash flows from financing activities:
	Common shares issued on exercise of stock options	510	1,199	6,432	2,967
Increase in cash and cash equivalents		1,121	(3,023)	23,177	11,879
Cash and cash equivalents, beginning of period		150,425	114,836	127,910	99,390
Effects of exchange rates on cash and cash equivalents		(111)	(152)	348	392
Cash and cash equivalents, end of period		151,435	111,661	151,435	111,661

SOURCE Kinaxis

Media Relations: Mike McAllister | Kinaxis, Tel: [phone] ext. 5513, [email protected]; Investor Relations: Rob Kelly | LodeRock Advisors Inc., Tel: [phone], [email protected]

Related Links

www.kinaxis.com