Kinaxis Inc. Reports Second Quarter 2020 Results

• SaaS revenue grows 26% to $35.7 million
• Total revenue grows 45% to $61.4 million
• Adjusted EBITDA⁽¹⁾ margin of 37%

OTTAWA, ON, Aug. 5, 2020 /CNW/ - Kinaxis® (TSX: KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, today reported results for its second quarter ended June 30, 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. SaaS revenue grew by 26% and our sales pipeline and field teams have continued to expand despite every employee continuing to work remotely. At the start of Q3, we also acquired Rubikloud, an AI-based demand planning SaaS provider that immediately adds value for our CPG customers and creates an important entry point for us into the enterprise retail industry – our seventh target market," said John Sicard, President and CEO of Kinaxis. "On the strength of our backlog and sales pipeline, we are able to reiterate our SaaS revenue guidance for fiscal 2020 while increasing other aspects of 2020 guidance.  Due to COVID-19, we have seen some customers and prospects expand their contract approval processes, which has delayed some deal signings. We remain confident in our ability to close these opportunities and interest and engagement from the market remains high and well-balanced across geographies and verticals.  Kinaxis has quite simply never been more relevant. There has never been more attention on global supply chain resilience, and the power of concurrent planning to provide the agility needed to respond to daily disruption."

Q2 2020 Highlights
$ USD thousands, except as otherwise indicated	Q2 2020	Q2 2019	Change
Total Revenue	61,373	42,352	45%
SaaS	35,741	28,283	26%
Subscription term license	10,003	2,414	314%
Professional services	12,400	8,358	48%
Maintenance and support	3,229	3,297	-2%
Gross profit	45,739	29,368	56%
	(75%)	(69%)
Profit	9,004	4,001	125%
	($0.32/diluted share)	($0.15/diluted share)
Adjusted EBITDA^(1)	22,471	11,555
	(37%)	(27%)	94%
Cash from operating activities	30,813	8,761	252%

(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 June 30, 2020.

$USD millions	2020	2021	2022 and later	Total backlog
SaaS	71.2	105.9	125.7	302.7
Subscription term license	0.7	0.2	-	0.9
Maintenance and support	6.4	11.3	11.7	29.5
Total	78.3	117.4	137.4	333.0

Based on this backlog and its current outlook, Kinaxis is reiterating its fiscal 2020 SaaS revenue growth and Adjusted EBITDA margin guidance and increasing other aspects of its financial guidance for the year, as follows:

	FY 2020 Guidance
Total revenue	$216-220 million
SaaS	23-25% growth
Subscription term license	$16-17 million
Adjusted EBITDA margin	20-23% of revenue

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 ended June 30, 2020 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, August 6, 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:	Thursday, August 6, 2020
Time:	8:30 a.m. Eastern Time
Webcast:	https://bit.ly/309hS0i
Dial-in number:	[phone] or [phone]
Replay:	[phone] or [phone]
	Available until 11:59 p.m. EDT, Thursday, August 13, 2020
Reference number:	8089191

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.
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 June 30,						Six months ended June 30,
	2020			2019			2020			2019
	(In thousands of USD)
Profit	$	9,004		$	4,001		$	14,585		$	10,967
Share-based compensation	3,723			3,581			7,499			6,653
Adjusted profit	$	12,727		$	7,582		$	22,084		$	17,620
Income tax expense	6,264			1,905			9,740			5,723
Depreciation and amortization	3,627			2,974			6,568			5,651
Foreign exchange loss (gain)	5			(85)			(44)			85
Net finance income	(152)			(821)			(825)			(1,586)
	9,744			3,973			15,439			9,873
Adjusted EBITDA	$	22,471		$	11,555		$	37,523		$	27,493
Adjusted EBITDA as a percentage of revenue	37%			27%			33%			31%

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 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 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 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.

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 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. Condensed Consolidated Interim Statements of Financial Position
As at June 30, 2020 and December 31, 2019 (Expressed in thousands of USD) (Unaudited)
	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	184,992	$	182,284
Short-term investments	75,571		30,319
Trade and other receivables	54,764		80,623
Prepaid expenses	8,777		6,534
	324,104		299,760
Non-current assets:
Property and equipment	32,088		25,704
Right-of-use assets	14,085		8,671
Contract acquisition costs	15,306		15,497
Unbilled receivables	3,035		249
Other receivables	719		713
Deferred tax assets	407		149
Intangible assets	646		-
Goodwill	3,659		-
	$	394,049	$	350,743
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables and accrued liabilities	$	29,027	$	20,770
Deferred revenue	79,308		83,673
Lease obligations	3,657		2,288
	111,992		106,731
Non-current liabilities:
Lease obligations	11,013		6,818
Deferred tax liabilities	7,565		7,092
	18,578		13,910
Shareholders' equity:
Share capital	156,234		140,961
Contributed surplus	33,966		30,392
Accumulated other comprehensive loss	(403)		(348)
Retained earnings	73,682		59,097
	263,479		230,102
	$	394,049	$	350,743

Kinaxis Inc. Condensed Consolidated Interim Statements of Comprehensive Income
For the three and six months ended June 30, 2020 and 2019 (Expressed in thousands of USD, except share and per share data) (Unaudited)
	For the three months ended June 30,				For the six months ended June 30,
	2020		2019		2020		2019
Revenue	$	61,373	$	42,352	$	114,128	$	88,106
Cost of revenue	15,634		12,984		31,470		25,175
Gross profit	45,739		29,368		82,658		62,931
Operating expenses:
Selling and marketing	12,253		10,446		24,228		19,761
Research and development	10,257		8,101		19,934		16,095
General and administrative	8,108		5,821		15,040		11,886
	30,618		24,368		59,202		47,742
	15,121		5,000		23,456		15,189
Other income (expense):
Foreign exchange gain (loss)	(5)		85		44		(85)
Net finance income	152		821		825		1,586
	147		906		869		1,501
Profit before income taxes	15,268		5,906		24,325		16,690
Income tax expense	6,264		1,905		9,740		5,723
Profit	9,004		4,001		14,585		10,967
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations	69		21		(55)		(35)
Total comprehensive income	$	9,073	$	4,022	$	14,530	$	10,932
Basic earnings per share	$	0.34	$	0.15	$	0.55	$	0.42
Weighted average number of basic Common Shares	26,546,213		26,146,682		26,489,205		26,119,264
Diluted earnings per share	$	0.32	$	0.15	$	0.53	$	0.41
Weighted average number of diluted Common Shares	27,960,482		26,840,552		27,776,206		26,841,775

Kinaxis Inc. Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
For the six months ended June 30, 2020 and 2019 (Expressed in thousands of USD) (Unaudited)
					Accumulated
					other
	Share		Contributed		comprehensive		Retained
	capital		surplus		loss		earnings		Total equity
Balance, December 31, 2018	$	124,951	$	24,284	$	(319)	$	35,766	$	184,682
Profit	-		-		-		10,967		10,967
Other comprehensive loss	-		-		(35)		-		(35)
Total comprehensive income (loss)	-		-		(35)		10,967		10,932
Share options exercised	3,026		(928)		-		-		2,098
Share based payments	-		6,653		-		-		6,653
Total shareholder transactions	3,026		5,725		-		-		8,751
Balance, June 30, 2019	$	127,977	$	30,009	$	(354)		46,733	$	204,365
Balance, December 31, 2019	$	140,961	$	30,392	$	(348)		59,097	$	230,102
Profit	-		-		-		14,585		14,585
Other comprehensive loss	-		-		(55)		-		(55)
Total comprehensive income (loss)	-		-		(55)		14,585		14,530
Share options exercised	15,273		(3,925)		-		-		11,348
Share based payments	-		7,499		-		-		7,499
Total shareholder transactions	15,273		3,574		-		-		18,847
Balance, June 30, 2020	$	156,234	$	33,966	$	(403)		73,682	$	263,479

Kinaxis Inc. Condensed Consolidated Interim Statements of Cash Flows
For the three and six months ended June 30, 2020 and 2019 (Expressed in thousands of USD) (Unaudited)
	For the three months ended June 30,				For the six months ended June 30,
	2020		2019		2020		2019
Cash flows from (used in) operating activities:
Profit	$	9,004	$	4,001	$	14,585	$	10,967
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets	3,565		2,974		6,464		5,651
Amortization of intangible assets	62		-		104		-
Share-based payments	3,723		3,581		7,499		6,653
Net finance income	(152)		(821)		(825)		(1,586)
Income tax expense	6,264		1,905		9,740		5,723
Change in operating assets and liabilities	8,837		(2,045)		15,693		10,974
Interest received	200		1,000		1,062		1,873
Interest paid	(169)		(158)		(289)		(270)
Income taxes paid	(521)		(1,676)		(2,260)		(12,465)
	30,813		8,761		51,773		27,520
Cash flows from (used in) investing activities:
Acquisition of business, net of cash acquired	(167)		-		(2,577)		-
Purchase of property and equipment	(9,329)		(8,301)		(11,038)		(9,194)
Purchase of short-term investments	(10,000)		(15,001)		(75,302)		(30,006)
Redemption of short-term investments	10,000		22,500		30,102		50,006
	(9,496)		(802)		(58,815)		10,806
Cash flows from (used in) financing activities:
Payment of lease obligations	(894)		(687)		(1,485)		(1,287)
Common shares issued on exercise of stock options	6,338		1,153		11,348		2,098
	5,444		466		9,863		811
Increase in cash and cash equivalents	26,761		8,425		2,821		39,137
Cash and cash equivalents, beginning of period	158,148		156,984		182,284		126,144
Effects of exchange rates on cash and cash equivalents	83		103		(113)		231
Cash and cash equivalents, end of period	$	184,992	$	165,512	$	184,992	$	165,512

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