Kinaxis Inc. Reports Fourth Quarter 2019 Results

• Q4 SaaS revenue grows 26% to $32.0 million; full year SaaS revenue grows 22%
• Q4 2019 total revenue grows 47% to $56.3 million; full year total revenue grows 27%
• Q4 adjusted EBITDA⁽¹⁾ margin of 32%; full year adjusted EBITDA⁽¹⁾ margin of 30%

OTTAWA, Feb. 25, 2020 /CNW/ - Kinaxis® (TSX: KXS) , the leader in empowering people to make confident supply chain decisions, today reported results for its fourth quarter ended December 31, 2019. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"I am extremely pleased with our Q4 and overall 2019 performance, and happy to report that we were able to meet or exceed our 2019 annual guidance for all key financial metrics," said John Sicard, President and Chief Executive Officer of Kinaxis. "Bookings were very strong in the fourth quarter driving our multi-year SaaS revenue backlog up by 40% from a year ago. Our success is a result of closing new customers in the quarter, including recently announced Dr. Reddy's Laboratories and Lundbeck, as well as signing existing customer renewals, including Schneider Electric, Unilever and Merck. Our partners continue to be key influencers in the healthy and continuously growing market, and they continue to share in our success as a result. It is with confidence in our market position that we will continue to make strategic investments across our operations in 2020 to spur future growth."

Q4 2019 Highlights
$ USD thousands, except as otherwise indicated	Q4 2019	Q4 2018	Change
Total Revenue	56,312	38,299	47%
SaaS	32,006	25,492	26%
Subscription term license	12,120	2,390	407%
Gross profit	41,440	25,909	60%
	(74%)	(68%)
Profit	7,831	2,925	168%
	($0.29/diluted share)	($0.11/diluted share)
Adjusted EBITDA^(1)	18,134	8,986	102%
	(32%)	(23%)
Cash from operating activities	8,025	6,654	21%

FY 2019 Highlights
$ USD thousands, except as otherwise indicated	FY 2019	FY 2018	Change
Total Revenue	191,549	150,727	27%
SaaS	118,860	97,157	22%
Subscription term license	26,218	9,935	164%
Gross profit	137,699	103,695	33%
	(72%)	(69%)
Profit	23,331	14,408	62%
	($0.87/diluted share)	($0.54/diluted share)
Adjusted EBITDA^(1)	57,727	41,687	38%
	(30%)	(28%)
Cash from operating activities	36,599	27,915	31%

¹  "Adjusted EBITDA" is a non-IFRS measure and is not a 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.

Financial Guidance and Outlook
Kinaxis is initiating 2020 fiscal year financial targets, as follows:
	FY 2020 Guidance
Total revenue	$211-215 million
SaaS	23-25% growth
Subscription term license	$12-14 million
Adjusted EBITDA margin	20-23% of revenue

This guidance is provided to enhance visibility into Kinaxis' expectations for financial targets for the periods indicated. Please refer to the section regarding forward-looking statements that forms an integral part of this release.

The nature of the company's long-term contracts provides visibility into future, contracted revenue. The following table presents revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at December 31, 2019.

$USD millions	2020	2021	2022 and later	Q4 2019 Total	Q4 2018 Total	Change
SaaS	122.1	91.8	96.7	310.6	222.3	40%
Maintenance and support	11.1	8.3	4.9	24.3	15.0	62%
Subscription term license	4.5	-	-	4.5	0.2	-
Total	137.8	100.1	101.6	339.4	237.5	43%

This press release, along with the financial statements and MD&A for the three and twelve months ended December 31, 2019, are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, February 26, 2020, 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:	Wednesday, February 26, 2020
Time:	8:30 a.m. Eastern Time
Webcast:	https://bit.ly/2u5uBpa
Dial-in number:	[phone] or [phone]
Replay:	[phone] or [phone]
	Available until 11:59 p.m. EDT, Wednesday, March 4, 2020
Reference number:	4386215

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

About Kinaxis Inc.
Eliminating volatility in your supply chain is impossible, but managing it is not. Trusted by top brands, Kinaxis® gives people the confidence to know they are making the best supply chain planning decisions to maximize business performance. We solve complex business problems in easy-to-understand ways by combining human and machine intelligence to plan for any future, monitor risks and opportunities and respond at the pace of change. With the support of our community of supply chain experts and using our unique concurrent planning technique and single integrated planning platform, customers can realize higher revenue, lower costs and fewer risks.  For more Kinaxis news, follow us on LinkedIn, Twitter or Facebook.

Non-IFRS Measures
This news release contains non-IFRS measures, specifically, Adjusted profit, Adjusted diluted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin.  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 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. Kinaxis has reconciled Adjusted profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:

	Three months ended December 31,						Year ended December 31,
	2019			2018			2019			2018
	(In thousands of USD)
Profit	$	7,831		$	2,925		$	23,331		$	14,408
Share-based compensation		3,177			2,924			13,367			11,568
Adjusted profit	$	11,008		$	5,849		$	36,698		$	25,976
Income tax expense		4,484			1,796			11,932			8,068
Depreciation		3,212			2,571			11,908			9,272
Foreign exchange loss		40			(22)			226			181
Net finance income		(610)			(1,208)			(3,037)			(1,810)
		7,126			3,137			21,029			15,711
Adjusted EBITDA	$	18,134		$	8,986		$	57,727		$	41,687
Adjusted EBITDA as a percentage of revenue		32%			23%			30%			28%

Note:
(1)	We adopted IFRS 15 and 16 effective January 1, 2018. Under this adoption, the comparative information for 2017 was not restated.

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 SaaS and Subscription term licenses revenue, and our expectations for Adjusted EBITDA margin achievement, in each case looking forward for our fiscal year ending December 31, 2020; and
• contracted revenue in future periods, including 2020, 2021 and 2022.

This release also includes forward-looking 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 2020 annual total revenue, annual SaaS and Subscription term license revenue and annual Adjusted EBITDA margin, is subject to certain assumptions and associated risks 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.

Our guidance and commentary for achievement of contracted revenue in future periods, including in 2020, 2021 and 2022, is based on assumptions and associated risks including:

• our ability to satisfy material unperformed obligations under our long-term contracts; and
• the continued financial capacity and creditworthiness of our customers under long-term contracts.

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 25, 2020, under the heading "Risk Factors" in our Annual Information Form dated February 28, 2019 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 Statements of Financial Position
As at December 31, 2019 and December 31, 2018
(Expressed in thousands of USD)
	2019	2018
Assets
Current assets:
Cash and cash equivalents	182,284	126,144
Short-term investments	30,319	55,404
Trade and other receivables	81,336	64,330
Prepaid expenses	6,534	5,815
	300,473	251,693
Non-current assets:
Property and equipment	25,704	22,785
Right-of-use assets	8,671	8,873
Contract acquisition costs	15,497	13,902
Unbilled receivables	249	457
Deferred tax assets	149	49
	350,743	297,759
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables and accrued liabilities	20,770	21,623
Deferred revenue	83,673	78,496
Lease obligations	2,288	2,572
	106,731	102,691
Non-current liabilities:
Lease obligations	6,818	6,311
Deferred tax liabilities	7,092	4,075
	13,910	10,386
Shareholders' equity:
Share capital	140,961	124,951
Contributed surplus	30,392	24,284
Accumulated other comprehensive loss	(348)	(319)
Retained earnings	59,097	35,766
	230,102	184,682
	350,743	297,759

Kinaxis Inc.
Condensed Consolidated Statements of Comprehensive Income
For the three months and years ended December 31, 2019 and 2018
(Expressed in thousands of USD, except share and per share data)
	For the three months ended December 31,			For the year ended December 31,
	2019		2018	2019		2018
Revenue	56,312		38,299	191,549		150,727
Cost of revenue	14,872		12,390	53,850		47,032
Gross profit	41,440		25,909	137,699		103,695
Operating expenses:
Selling and marketing	13,747		10,285	44,270		35,055
Research and development	9,443		7,105	34,125		27,626
General and administrative	6,505		5,028	26,852		20,167
	29,695		22,418	105,247		82,848
	11,745		3,491	32,452		20,847
Other income (expense):
Foreign exchange gain (loss)	(40)		22	(226)		(181)
Net finance income	610		1,208	3,037		1,810
	570		1,230	2,811		1,629
Profit before income taxes	12,315		4,721	35,263		22,476
Income tax expense	4,484		1,796	11,932		8,068
Profit	7,831		2,925	23,331		14,408
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations	100		178	(29)		(35)
Total comprehensive income	7,931		3,103	23,302		14,373
Basic earnings per share	0.30		0.11	0.89		0.56
Weighted average number of basic Common Shares	26,294,645		26,037,096	26,180,034		25,820,518
Diluted earnings per share	0.29		0.11	0.87		0.54
Weighted average number of diluted Common Shares	27,184,684		26,812,260	26,967,805		26,824,435

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
For the years ended December 31, 2019 and 2018
(Expressed in thousands of USD)
			Accumulated
			other	Retained
	Share	Contributed	comprehensive	earnings
	capital	surplus	loss	(deficit)	Total equity
Balance, December 31, 2017	108,253	19,294	(284)	(2,475)	124,788
Adjustment on initial application of IFRS 15	-	-	-	23,833	23,833
Balance, January 1, 2018	108,253	19,294	(284)	21,358	148,621
Profit	-	-	-	14,408	14,408
Other comprehensive loss	-	-	(35)	-	(35)
Total comprehensive income (loss)	-	-	(35)	14,408	14,373
Share options exercised	14,012	(3,892)	-	-	10,120
Restricted share units vested	1,834	(1,834)	-	-	-
Deferred share units exercised	852	(852)	-	-	-
Share based payments	-	11,568	-	-	11,568
Total shareholder transactions	16,698	4,990	-	-	21,688
Balance, December 31, 2018	124,951	24,284	(319)	35,766	184,682
Profit	-	-	-	23,331	23,331
Other comprehensive loss	-	-	(29)	-	(29)
Total comprehensive income (loss)	-	-	(29)	23,331	23,302
Share options exercised	12,042	(3,291)	-	-	8,751
Restricted share units vested	3,968	(3,968)	-	-	-
Share based payments	-	13,367	-	-	13,367
Total shareholder transactions	16,010	6,108	-	-	22,118
Balance, December 31, 2019	140,961	30,392	(348)	59,097	230,102

Kinaxis Inc.
Condensed Consolidated Statements of Cash Flows
For the three months and years ended December 31, 2019 and 2018
(Expressed in thousands of USD)
			For the three months ended December 31,		For the year ended December 31,
			2019	2018	2019		2018
Cash flows from operating activities:
Profit			7,831	2,925	23,331		14,408
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets			3,212	2,571	11,908		9,272
Share-based payments			3,177	2,924	13,367		11,568
Investment tax credits recoverable			-	-	-		911
Net finance income			(610)	(1,208)	(3,037)		(1,810)
Income tax expense			4,484	1,796	11,932		8,068
Change in operating assets and liabilities			(8,074)	(4,089)	(9,161)		(13,215)
Interest received			660	1,100	3,653		2,413
Interest paid			(112)	(62)	(531)		(773)
Income taxes paid			(2,543)	697	(14,863)		(2,927)
			8,025	6,654	36,599		27,915
Purchase of property and equipment			(1,378)	(1,198)	(11,719)		(12,310)
Purchase of short-term investments			(10,000)	(27,597)	(60,108)		(112,684)
Redemption of short-term investments			10,000	42,539	85,108		112,588
			(1,378)	13,744	13,281		(12,406)
Payment of lease obligations			(679)	(582)	(2,674)		(2,160)
Common shares issued on exercise of stock options			4,428	478	8,751		10,120
			3,749	(104)	6,077		7,960
Increase in cash and cash equivalents			10,396	20,294	55,957		23,469
Cash and cash equivalents, beginning of period			171,957	106,040	126,144		103,392
Effects of exchange rates on cash and cash equivalents			(69)	(190)	183		(717)
Cash and cash equivalents, end of period			182,284	126,144	182,284		126,144

SOURCE Kinaxis Inc.

Investor Relations, Rick Wadsworth | Kinaxis, Tel: [phone], [email protected]; Media Relations, Danielle McNeil Taylor | Kinaxis, Tel: [phone], [email protected]

Related Links

www.kinaxis.com