Kinaxis Inc. Reports Fourth Quarter 2017 and Full Year 2017 Results

- Reports 23% growth in annual subscription revenue and annual Adjusted EBITDA of 30% of revenue -

OTTAWA, Feb. 28, 2018 /CNW/ - Kinaxis^® (TSX:KXS), provider of RapidResponse®, the leading cloud-based supply chain management solution based on concurrent planning, today reported results for its fiscal fourth quarter and year ended December 31, 2017. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

"Today's results reflect both strong top line and bottom line growth. We continue to win exciting new customer contracts as a result of our global expansion investments, including Toyota, recently announced. Customers continue to expand their subscriptions as they look to broaden the value they receive from our products. Our success is driven by the strength of our internal team combined with our ever-expanding partner network supported by the launch of our Partner Enablement Program this past quarter," said John Sicard, Chief Executive Officer of Kinaxis. "We are the only company in our industry uniquely focused on concurrent planning, and that commitment continues to deliver breakthrough business outcomes for our growing global customer list."

Mr. Sicard added, "The strength of our financial results coupled with the long-term revenue visibility of our business model gives us the confidence to accelerate our investments to expand our salesforce, continue our product innovation and further build our global operations in Europe and Asia.  We believe that these key investments will enable future revenue growth while supporting our growing customer base and partnerships."

Fiscal 2017 Highlights

$ USD millions, except as otherwise indicated	FY 2017		FY 2016		Change
Revenue	133.3		116.0		15%
Subscription revenue	100.8		81.8		23%
Gross profit	93.5	(70% of revenue)	80.2	(69% of revenue)	17%
Profit	20.4	($0.77 per diluted share)	10.7	($0.41 per diluted share)	90%
Adjusted EBITDA^(1)	40.1	(30% of revenue)	28.5	(25% of revenue)	40%
Cash from operating activities	33.6		31.1		8%

Q4 2017 Highlights

$ USD millions, except as otherwise indicated	Q4 2017		Q4 2016		Change
Revenue	34.4		30.3		14%
Subscription revenue	27.0		22.7		19%
Gross profit	24.7	(72% of revenue)	20.8	(69% of revenue)	19%
Profit	5.5	($0.21 per diluted share)	1.7	($0.07 per diluted share)	221%
Adjusted EBITDA^(1)	11.2	(32% of revenue)	6.4	(21% of revenue)	73%
Cash from operating activities	12.5		17.1		-27%

(1)	"Adjusted EBITDA"is a non-IFRS measures and is not 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.

Analysis of Fiscal Q4 2017 and Full Year 2017 Financial Highlights

Subscription revenue increases of 19% and 23% in the respective periods were driven by contracts secured with new customers and expansion of existing customer subscriptions, while total revenue grew at slightly lower rates due to significant increases in Kinaxis' partners assuming deployment activity and the related professional services revenue in 2017.

Growth in gross profit as a percentage of revenue to 72% and 70% in the respective periods reflected the higher growth rate of revenue in the period. Growth in profit of 221% and 90% in the respective periods was primarily driven by an increase in overall subscription revenue, partially offset by investments in professional service and data center capacity, research and development and an increase in share-based payments.

Growth in adjusted EBITDA of 73% and 40% in the respective periods was a result of the higher growth of revenue compared to operating expenses excluding share-based compensation in the current periods.  The 27% decrease in cash from operating activities for Q4 2017 resulted from an increase in trade and other receivables during the fourth quarter of 2017 compared to a decrease in trade and other receivables during the same period in 2016, partially offset by an increase in profit. The 8% increase in cash from operating activities in FY 2017 was due to an increase in profit, partially offset by a smaller increase in deferred revenue during fiscal 2017 compared to the same period in 2016.

Cash and cash equivalents were $158.4 million as at December 31, 2017 as compared to $127.9 million as at December 31, 2016.

Full Year 2018 Financial Guidance

Kinaxis has set the following 2018 full year financial targets:

• Annual total revenue to be in the range of $158 million to $163 million
• Annual subscription revenue to grow 23% to 26%
• Annual Adjusted EBITDA as a percentage of total revenue to be between 23% and 26% of total revenue, reflecting enhanced investments in the direct salesforce and marketing programs to support both direct sales and our partners together with continued investment in R&D as well as new data centre investments.

This guidance is provided to enhance visibility into the Company's expectations for financial targets for the year ending December 31, 2018 under IFRS standards as applicable at December 31, 2017. The Company will provide revised guidance following the implementation of IFRS 15 & 16 accounting standards as part of the Q1 2018 earnings announcement.  Please refer to the section regarding forward-looking statements which forms an integral part of this release.

This press release, along with the audited consolidated annual financial statements and the Company's annual 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, March 1^st, 2018 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, March 1^st, 2018
Time:	8:30 a.m. (ET)
Dial In Number:	[phone] or [phone]
Live Webcast:	http://bit.ly/2sahXU3
	Webcast will be archived for 90 days
Taped Replay:	[phone] or [phone]
	Available until 12:00 midnight (ET) Thursday, March 8, 2018
Reference Number:	8783059

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

About Kinaxis Inc.
Offering the industry's only concurrent planning solution, Kinaxis is helping organizations around the world revolutionize their supply chain planning. Kinaxis RapidResponse, our cloud-based supply chain management software, connects 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 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 diluted earnings per share and Adjusted EBITDA 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 December 31,						Years ended December 31,
		2017			2016			2017			2016
		(In thousands of U.S. dollars, except percentages)
Statement of Operations
Profit	$	5,485		$	1,711		$	20,383		$	10,745
Share-based compensation		2,334			1,950			9,746			8,140
Adjusted profit	$	7,819		$	3,661		$	30,129		$	18,885
Income tax expense		2,584			1,884			7,375			7,258
Depreciation		1,101			748			3,618			2,494
Foreign exchange loss		31			223			84			198
Net finance income		(378)			(78)			(1,131)			(307)
		3,338			2,777			9,946			9,643
Adjusted EBITDA	$	11,157		$	6,438		$	40,075		$	28,528
Adjusted EBITDA as a percentage of revenue		32%			21%			30%			25%

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, 2018, 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 2018 annual 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, 2018, 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.
Consolidated Statements of Financial Position
As at December 31
(Expressed in thousands of U.S. dollars)
		2017		2016
Assets
Current assets:
	Cash and cash equivalents	$	158,398	$	127,910
	Trade and other receivables	31,783		23,820
	Investment tax credits receivable	-		1,583
	Investment tax credits recoverable	911		755
	Prepaid expenses	4,196		3,333
		195,288		157,401
Non-current assets:
	Property and equipment	17,350		10,652
	Deferred tax assets	55		239
		$	212,693	$	168,292
Liabilities and Shareholders' Equity
Current liabilities:
	Trades payable and accrued liabilities	$	11,176	$	10,495
	Deferred revenue	67,040		55,458
		78,216		65,953
Non-current liabilities:
	Lease inducement	-		18
	Deferred revenue	7,745		13,198
	Deferred tax liability	1,944		1,412
		9,689		14,628
Shareholders' equity:
	Share capital	108,253		97,164
	Contributed surplus	19,294		13,924
	Accumulated other comprehensive loss	(284)		(519)
	Deficit	(2,475)		(22,858)
		124,788		87,711
		$	212,693	$	168,292

Kinaxis Inc.
Consolidated Statements of Comprehensive Income
For the three months and years ended December 31
(Expressed in thousands of U.S. dollars, except share and per share data)
		For the three months ended December 31,					For the year  ended December 31,
		2017		2016			2017		2016
Revenue		$	34,423	$	30,264		$	133,317	$	115,951
Cost of revenue		9,737		9,493			39,780		35,777
Gross profit		24,686		20,771			93,537		80,174
Operating expenses:
	Selling and marketing	7,882		8,503			29,280		30,350
	Research and development	5,608		5,495			23,691		20,652
	General and administrative	3,474		3,033			13,855		11,278
		16,964		17,031			66,826		62,280
		7,722		3,740			26,711		17,894
Other income (expense):
	Foreign exchange loss	(31)		(223)			(84)		(198)
	Net finance income	378		78			1,131		307
		347		(145)			1,047		109
Profit before income taxes		8,069		3,595			27,758		18,003
Income tax expense		2,584		1,884			7,375		7,258
Profit		5,485		1,711			20,383		10,745
Other comprehensive income (loss)
Items that are or may be reclassified subsequently to profit or loss:
	Foreign currency translation differences - foreign operations	104		(199)			235		(45)
Total comprehensive income		$	5,589	$	1,512		$	20,618	$	10,700
Basic earnings per share		$	0.22	$	0.07		$	0.81	$	0.44
Weighted average number of basic Common Shares		25,457,874		24,898,361			25,314,091		24,654,369
Diluted earnings per share		$	0.21	$	0.07		$	0.77	$	0.41
Weighted average number of diluted Common Shares		26,502,885		26,234,783			26,479,621		25,977,615

Kinaxis Inc.
Consolidated Statements of Changes in Shareholders' Equity
For the years ended December 31
(Expressed in thousands of U.S. dollars)
					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	-		-		-		10,745		10,745
Other comprehensive income	-		-		(45)		-		(45)
Total comprehensive income	-		-		(45)		10,745		10,700
Share options exercised	4,845		(1,578)		-		-		3,267
Restricted share units vested	1,360		(1,360)		-		-		-
Deferred share units vested	151		(151)		-		-		-
Share based payments	-		8,140		-		-		8,140
Total shareholder transactions	6,356		5,051		-		-		11,407
Balance, December 31, 2016	$	97,164	$	13,924	$	(519)	$	(22,858)	$	87,711
Profit	-		-		-		20,383		20,383
Other comprehensive income	-		-		235		-		235
Total comprehensive income	-		-		235		20,383		20,618
Share options exercised	9,437		(2,724)		-		-		6,713
Restricted share units vested	1,652		(1,652)		-		-		-
Share based payments	-		9,746		-		-		9,746
Total shareholder transactions	11,089		5,370		-		-		16,459
Balance, December 31, 2017	$	108,253	$	19,294	$	(284)	$	(2,475)	$	124,788

Kinaxis Inc.
Consolidated Statements of Cash Flows
For the three months and years ended December 31
(Expressed in thousands of U.S. dollars, except share and per share data)
			For the three months ended December 31,					For the year ended December 31,
			2017		2016			2017		2016
Cash flows from operating activities:
	Profit		$	5,485	$	1,711		$	20,383	$	10,745
	Items not affecting cash:
		Depreciation of property and equipment	1,101		748			3,618		2,494
		Share-based payments	2,334		1,950			9,746		8,140
		Amortization of lease inducement	-		(12)			(18)		(44)
		Investment tax credits recoverable	376		387			(156)		1,328
		Income tax expense	2,584		1,884			7,375		7,258
		Change in operating assets and liabilities	1,509		11,376			(2,761)		3,408
	Income taxes paid		(875)		(955)			(4,624)		(2,203)
			12,514		17,089			33,563		31,126
Cash flows used investing activities:
	Purchase of property and equipment		(5,845)		(669)			(10,149)		(5,794)
Cash flows from financing activities:
	Common shares issued on exercise of stock options		281		300			6,713		3,267
Increase in cash and cash equivalents			6,950		16,720			30,127		28,599
Cash and cash equivalents, beginning of period			151,435		111,661			127,910		99,390
Effects of exchange rates on cash and cash equivalents			13		(471)			361		(79)
Cash and cash equivalents, end of period			$	158,398	$	127,910		$	158,398	$	127,910

SOURCE Kinaxis Inc.

Media Relations: Mike McAllister, Kinaxis, Tel: [phone], [email protected]; Investor Relations, Rick Wadsworth, Kinaxis, Tel: [phone], [email protected]

Related Links

www.kinaxis.com