Kinaxis Inc. Reports Fourth Quarter 2020 Results

• SaaS revenue grows 24% to $39.8 million in fourth quarter, and grows 25% for the year
  
  
• Adjusted EBITDA⁽¹⁾ margin of 11% in fourth quarter, and 24% for the year

OTTAWA, ON, March 3, 2021 /CNW/ - Kinaxis^® (TSX: KXS), the authority in driving agility for fast, confident decision-making in an unpredictable world, today reported results for its fourth quarter and year ended December 31, 2020. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"We are pleased to report another very strong quarter and year. We met or exceeded every aspect of our initial guidance for 2020, which pre-dated the pandemic – truly an impressive accomplishment by the Kinaxis team given the circumstances. I am also extremely pleased that we saw a return to strong sales momentum in Q4, when quarterly bookings of incremental subscription business and new customer wins were near all-time highs and included some truly iconic brand names. Separately, we were recently positioned furthest on the Completeness of Vision axis in the Leaders quadrant of the 2021 Gartner Magic Quadrant for Supply Chain Planning Solutions," said John Sicard, President and CEO of Kinaxis. "The COVID-related incremental booking delays we experienced earlier in 2020 have been reflected in our fiscal 2021 guidance. With the continued recovery of a more normal business environment, we expect our current momentum and positive outlook to drive a return to higher growth for 2022 and beyond. Our year-end sales pipeline grew more than 40% from 2019, as manufacturers continue to recognize the urgency in driving hyper-agility in their supply chain. We made some key strategic investments in 2020, both organically and by acquisitions, which will better enable us to execute on our growing pipeline, accelerate our product innovation, and exceed the needs of our growing customer base."

 Q4 2020 Highlights

$ USD thousands, except as otherwise indicated	Q4 2020	Q4 2019	Change
Total Revenue	54,945	56,312	-2%
SaaS	39,815	32,006	24%
Subscription term license	1,948	12,120	-84%
Professional services	11,334	8,931	27%
Maintenance and support	1,848	3,255	-43%
Gross profit	34,841    (63%)	41,440    (74%)	-16%
Profit	-1,586    (-$0.06/diluted share)	7,831    ($0.29/diluted share)	-120%
Adjusted EBITDA^(1)	6,095    (11%)	18,134    (32%)	-66%
Cash from operating activities	3,200	8,025	-60%

FY 2020 Highlights

$ USD thousands, except as otherwise indicated	FY 2020	FY 2019	Change
Total Revenue	224,189	191,549	17%
SaaS	148,873	118,860	25%
Subscription term license	17,890	26,218	-32%
Professional services	45,899	33,549	37%
Maintenance and support	11,527	12,922	-11%
Gross profit	154,058    (69%)	137,699    (72%)	12%
Profit	13,730    ($0.49/diluted share)	23,331    ($0.87/diluted share)	-41%
Adjusted EBITDA^(1)	53,751    (24%)	57,727    (30%)	-7%
Cash from operating activities	59,470	36,599	62%

(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
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, 2020.

$USD millions	2021	2022	2023 and later	Total backlog
SaaS	144.5	104.9	104.1	353.5
Subscription term license	12.2	8.3	5.1	25.6
Maintenance and support	2.2	-	-	2.2
Total	158.9	113.2	109.2	381.3

Based on this backlog and the current outlook, Kinaxis is initiating fiscal 2021 financial guidance, as follows:

	FY 2021 Guidance
Total revenue	$242-247 million
SaaS	17-20% growth
Subscription term license	$3-5 million
Adjusted EBITDA^(1) margin	11-14%

Beyond 2021, and assuming more typical business and market conditions, the company continues to believe that annual SaaS revenue growth of 23-25% is achievable in the mid-term.

Guidance in this press release 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. This press release along with the financial statements and MD&A for the three months and year ended December 31, 2020 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, March 4, 2021, 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. Investors and participants must register for the call in advance. See registration link below. Please call the conference telephone number fifteen minutes prior to the start time.

CONFERENCE CALL DETAILS

DATE:	Thursday, March 4, 2021
TIME:	8:30 a.m. Eastern Time
CALL REGISTRATION:	http://www.directeventreg.com/registration/event/3383678
WEBCAST:	https://bit.ly/39ih534
REPLAY:	[phone] or [phone]
	Available until 11:59 p.m. ET, Thursday, March 18, 2021
REFERENCE NUMBER:	3383678

About Kinaxis Inc.
Everyday volatility and uncertainty demand quick action. Kinaxis® delivers the agility to make fast, confident decisions across integrated business planning and the digital supply chain. People can plan better, live better and change the world. Trusted by innovative brands, we combine human intelligence with AI and concurrent planning to help companies plan for any future, monitor risks and opportunities and respond at the pace of change. Powered by an extensible, cloud-based platform, Kinaxis delivers industry-proven applications so everyone can know sooner, act faster and remove waste. For more Kinaxis news, follow us on LinkedIn or Twitter.

Non-IFRS Measures
This news release contains non-IFRS measures, specifically Adjusted EBITDA and Adjusted EBITDA margin. 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 EBITDA and Adjusted EBITDA margins are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted EBITDA and Adjusted EBITDA margin 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 EBITDA to the most comparable IFRS financial measure as follows:

	Three months ended December 31,						Year ended December 31,
	2020			2019			2020			2019
	(In thousands of USD)
Profit (loss)..................................................................	$	(1,586)		$	7,831		$	13,730		$	23,331
Share-based compensation........................................		4,986		3,177			17,217			13,367
Adjusted profit............................................................	$	3,400		$	11,008		$	30,947		$	36,698
Income tax expense (recovery)...................................		(2,354)		4,484			7,740			11,932
Depreciation and amortization...................................		4,494		3,212			15,562			11,908
Foreign exchange loss.................................................		364		40			196			226
Net finance expense (income)....................................		191		(610)			(694)			(3,037)
		2,695		7,126			22,804			21,029
Adjusted EBITDA.........................................................	$	6,095		$	18,134		$	53,751		$	57,727
Adjusted EBITDA as a percentage of revenue............		11%		32%			24%			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 SaaS and Subscription term licenses revenue, and our expectations for Adjusted EBITDA margin achievement, in each case looking forward for our fiscal years ending December 31, 2021; and
• contracted revenue in future periods, including 2021, 2022 and 2023 and later.

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 2021 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 2021, 2022 and 2023 and later, 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.

Our guidance and commentary for annual SaaS revenue growth beyond 2021 is based on assumptions and associated risks including normalization of macroeconomic factors, including business and market conditions, relative to recent conditions that have been affected by the COVID-19 pandemic. 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 March 3, 2021, under the heading "Risk Factors" in our Annual Information Form dated March 23, 2020 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, 2020 and December 31, 2019
(Expressed in thousands of USD)

	December 31, 2020	December 31, 2019
Assets
Current assets:
Cash and cash equivalents	182,958	182,284
Short-term investments	30,180	30,319
Trade and other receivables	82,883	80,623
Investment tax credits recoverable	1,109	-
Prepaid expenses	9,264	6,534
	306,394	299,760
Non-current assets:
Property and equipment	30,746	25,704
Right-of-use assets	15,722	8,671
Contract acquisition costs	16,484	15,497
Unbilled receivables	2,013	249
Other receivables	752	713
Deferred tax assets	2,308	149
Investment tax credits recoverable	980	-
Intangible assets	13,023	-
Goodwill	39,988	-
	428,410	350,743
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables and accrued liabilities	33,030	20,770
Deferred revenue	94,275	83,673
Lease obligations	4,554	2,288
	131,859	106,731
Non-current liabilities:
Lease obligations	12,065	6,818
Deferred tax liabilities	2,729	7,092
	14,794	13,910
Shareholders' equity:
Share capital	173,104	140,961
Contributed surplus	35,846	30,392
Accumulated other comprehensive loss	(20)	(348)
Retained earnings	72,827	59,097
	281,757	230,102
	428,410	350,743

Kinaxis Inc.
Consolidated Statements of Comprehensive Income

For the three months and years ended December 31, 2020 and 2019
(Expressed in thousands of USD, except share and per share data)

	For the three months ended December 31,		For the year ended December 31,
	2020	2019	2020	2019
Revenue	54,945	56,312	224,189	191,549
Cost of revenue	20,104	14,872	70,131	53,850
Gross profit	34,841	41,440	154,058	137,699
Operating expenses:
Selling and marketing	15,521	13,747	52,630	44,270
Research and development	13,822	9,443	47,420	34,125
General and administrative	8,983	6,505	33,232	26,852
	38,326	29,695	133,282	105,247
	(3,485)	11,745	20,776	32,452
Other income (expense):
Foreign exchange gain (loss)	(364)	(40)	(196)	(226)
Net finance and other income	(91)	610	890	3,037
	(455)	570	694	2,811
Profit (loss) before income taxes	(3,940)	12,315	21,470	35,263
Income tax expense (recovery)	(2,354)	4,484	7,740	11,932
Profit (loss)	(1,586)	7,831	13,730	23,331
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations	237	100	328	(29)
Total comprehensive income (loss)	(1,349)	7,931	14,058	23,302
Basic earnings (loss) per share	(0.06)	0.30	0.51	0.89
Weighted average number of basic Common Shares	26,993,691	26,294,645	26,716,027	26,180,034
Diluted earnings (loss) per share	(0.06)	0.29	0.49	0.87
Weighted average number of diluted Common Shares	28,212,731	27,184,684	28,138,911	26,967,805

Kinaxis Inc.
Consolidated Statements of Changes in Shareholders' Equity

For the years ended December 31, 2020 and 2019
(Expressed in thousands of USD)

			Accumulated
			other
	Share	Contributed	Comprehensive	Retained
	capital	surplus	income (loss)	earnings	Total equity
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
Balance, December 31, 2019	140,961	30,392	(348)	59,097	230,102
Profit	-	-	-	13,730	13,730
Other comprehensive income	-	-	328	-	328
Total comprehensive income	-	-	328	13,730	14,058
Share options exercised	27,187	(6,807)	-	-	20,380
Restricted share units vested	4,956	(4,956)	-	-	-
Share based payments	-	17,217	-	-	17,217
Total shareholder transactions	32,143	5,454	-	-	37,597
Balance, December 31, 2020	173,104	35,846	(20)	72,827	281,757

Kinaxis Inc.
Consolidated Statements of Cash Flows

For the three months and years ended December 31, 2020 and 2019
(Expressed in thousands of USD)

		For the three months ended December 31,			For the year ended December 31,
			2020	2019	2020		2019
	Cash flows from  operating activities:
	Profit (loss)		(1,586)	7,831	13,730		23,331
	Items not affecting cash:
	Depreciation of property and equipment and right-of-use assets		3,932	3,212	14,335		11,908
	Amortization of intangible assets		562	-	1,227		-
	Share-based payments		4,986	3,177	17,217		13,367
	Net finance income		91	(610)	(890)		(3,037)
	Income tax expense		(2,354)	4,484	7,740		11,932
	Income tax credits recoverable		(2,089)	-	(2,089)		-
	Change in operating assets and liabilities		18	(8,074)	10,492		(9,161)
	Interest received		103	660	1,761		3,653
	Interest paid		(187)	(112)	(674)		(531)
	Income taxes received (paid)		(276)	(2,543)	(3,379)		(14,863)
			3,200	8,025	59,470		36,599
	Cash flows from (used in) investing activities:
	Acquisition of businesses, net of cash acquired		(24)	-	(61,767)		-
	Purchase of property and equipment		(2,102)	(1,378)	(14,439)		(11,719)
	Purchase of short-term investments		(15,164)	(10,000)	(110,616)		(60,108)
	Redemption of short-term investments		15,154	10,000	110,558		85,108
			(2,136)	(1,378)	(76,264)		13,281
	Cash flows from  financing activities:
	Payment of lease obligations		(1,103)	(679)	(3,742)		(2,674)
	Common shares issued on exercise of stock options		2,484	4,428	20,380		8,751
			1,381	3,749	16,638		6,077
	(Decrease) increase in cash and cash equivalents		2,445	10,396	(156)		55,957
	Cash and cash equivalents, beginning of period		179,856	171,957	182,284		126,144
	Effects of exchange rates on cash and cash equivalents		657	(69)	830		183
	Cash and cash equivalents, end of period		182,958	182,284	182,958		182,284

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