Kinaxis Inc. Reports Third Quarter 2020 Results

• SaaS revenue grows 26% to $39.3 million
• Total revenue grows 17% to $55.1 million
• Adjusted EBITDA⁽¹⁾ margin of 18%

OTTAWA, ON, Nov. 4, 2020 /CNW/ - Kinaxis^® (TSX: KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, today reported results for its third quarter ended September 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 strong quarter as SaaS revenue grew by 26% and we achieved an Adjusted EBITDA margin of 18%, even after making an acquisition and other significant investments in the business. On the strength of year-to-date results and a growing backlog, we are able to tighten our annual SaaS revenue growth guidance to the high end of our initial range, and increase both our total revenue and adjusted EBITDA margin guidance," said John Sicard, President and CEO of Kinaxis.

Added Sicard, "Throughout Q3, and consistent with recent supply chain industry reports, we continued to see the impact of COVID-19 through protracted contract approval processes and deferred projects for some companies. Also, while retention rates remain very high, the environment has put some customers in a position where they are not currently able to renew their subscription agreements. However, the disruption has brought new levels of awareness to our unique differentiator – concurrent planning. We saw ongoing growth in our sales pipeline, and an unprecedented level of attendance by new prospects and customers at our Kinexions '20 event. The integration of our Rubikloud acquisition is going as planned. We have closed our first joint customer, Coty, a marquee consumer products company, and are making headway with others. Quite simply, Kinaxis has never been more relevant, as massive disruption focuses attention on global supply chain resilience and agility, and the power of concurrent planning to enable it."

 Q3 2020 Highlights

$ USD thousands, except as otherwise indicated	Q3 2020	Q3 2019	Change
Total Revenue	55,116	47,131	17%
SaaS	39,322	31,229	26%
Subscription term license	1,035	3,278	-68%
Professional services	11,492	9,348	23%
Maintenance and support	3,267	3,276	0%
Gross profit	36,559    (66%)	33,328    (71%)	10%
Profit	731    ($0.03/diluted share)	4,533     ($0.17/diluted share)	-84%
Adjusted EBITDA^(1)	10,134    (18%)	12,100  (26%)	-16%
Cash from operating activities	4,497	1,054	327%

(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 September 30, 2020.

$USD millions	2020	2021	2022 and later	Total backlog
SaaS	38.1	124.3	172.5	334.9
Subscription term license	1.9	0.5	-	2.4
Maintenance and support	3.2	11.7	12.5	27.4
Total	43.2	136.5	185.0	364.7

Based on this backlog and its current outlook, Kinaxis is updating its fiscal 2020 financial guidance, including increases in expectations for total revenue and adjusted EBITDA, as follows:

	FY 2020 Guidance
Total revenue	$220-223 million
SaaS	24-25% growth
Subscription term license	$16-17 million
Adjusted EBITDA margin	22-24% 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 and nine months ended September 30, 2020 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, November 5, 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. 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, November 5, 2020
TIME:	8:30 a.m. Eastern Time
CALL REGISTRATION:	http://www.directeventreg.com/registration/event/5957056
WEBCAST:	https://bit.ly/3iWk4zS
REPLAY:	[phone] or [phone]
	Available until 11:59 p.m. ET, Thursday, November 12, 2020
REFERENCE NUMBER:	5957056

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 September 30,						Nine months ended September 30,
		2020		2019			2020			2019
	(In thousands of USD)
Profit............................................................................	$	731		$	4,533		$	15,316		$	15,500
Share-based compensation........................................		4,732			3,537			12,231			10,190
Adjusted profit............................................................	$	5,463		$	8,070		$	27,547		$	25,690
Income tax expense....................................................		354			1,725			10,094			7,448
Depreciation and amortization...................................		4,500			3,045			11,068			8,696
Foreign exchange loss (gain)......................................		(124)			101			(168)			186
Net finance income.....................................................		(59)			(841)			(884)			(2,427)
		4,671			4,030			20,110			13,903
Adjusted EBITDA.........................................................	$	10,134		$	12,100		$	47,657		$	39,593
Adjusted EBITDA as a percentage of revenue............		18%			26%			28%			29%

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 September 30, 2020 and December 31, 2019
(Expressed in thousands of USD)
(Unaudited)
		September 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	179,856	$	182,284
Short-term investments		30,177		30,319
Trade and other receivables		45,512		80,623
Prepaid expenses		8,610		6,534
		264,155		299,760
Non-current assets:
Property and equipment		31,163		25,704
Right-of-use assets		16,450		8,671
Contract acquisition costs		15,087		15,497
Unbilled receivables		1,683		249
Other receivables		733		713
Deferred tax assets		2,033		149
Intangible assets		13,585		-
Goodwill		39,988		-
	$	384,877	$	350,743
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables and accrued liabilities	$	25,841	$	20,770
Deferred revenue		62,893		83,673
Lease obligations		4,369		2,288
		93,103		106,731
Non-current liabilities:
Lease obligations		12,796		6,818
Deferred tax liabilities		3,342		7,092
		16,138		13,910
Shareholders' equity:
Share capital		164,845		140,961
Contributed surplus		36,635		30,392
Accumulated other comprehensive loss		(257)		(348)
Retained earnings		74,413		59,097
		275,636		230,102
	$	384,877	$	350,743

Kinaxis Inc.
Condensed Consolidated Interim Statements of Comprehensive Income
For the three and nine months ended September 30, 2020 and 2019
(Expressed in thousands of USD, except share and per share data) (Unaudited)
	For the three months ended September 30,				For the nine months ended September 30,
		2020		2019		2020		2019
Revenue	$	55,116	$	47,131	$	169,244	$	135,237
Cost of revenue		18,557		13,803		50,027		38,978
Gross profit		36,559		33,328		119,217		96,259
Operating expenses:
Selling and marketing		12,881		10,762		37,109		30,523
Research and development		13,664		8,587		33,598		24,682
General and administrative		9,209		8,461		24,249		20,347
		35,754		27,810		94,956		75,552
		805		5,518		24,261		20,707
Other income :
Foreign exchange gain (loss)		124		(101)		168		(186)
Net finance and other income		156		841		981		2,427
		280		740		1,149		2,241
Profit before income taxes		1,085		6,258		25,410		22,948
Income tax expense		354		1,725		10,094		7,448
Profit		731		4,533		15,316		15,500
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations		146		(94)		91		(129)
Total comprehensive income	$	877	$	4,439	$	15,407	$	15,371
Basic earnings per share	$	0.03	$	0.17	$	0.58	$	0.59
Weighted average number of basic Common Shares		26,596,412		26,184,980		26,622,939		26,141,410
Diluted earnings per share	$	0.03	$	0.17	$	0.55	$	0.58
Weighted average number of diluted Common Shares		27,766,505		26,928,596		28,000,655		26,888,187

Kinaxis Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
For the nine months ended September 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		-		-		-		15,500		15,500
Other comprehensive loss		-		-		(129)		-		(129)
Total comprehensive income (loss)		-		-		(129)		15,500		15,371
Share options exercised		6,059		(1,736)		-		-		4,323
Share based payments		-		10,190		-		-		10,190
Total shareholder transactions		6,059		8,454		-		-		14,513
Balance, September 30, 2019	$	131,010	$	32,738	$	(448)	$	51,266	$	214,566
Balance, December 31, 2019	$	140,961	$	30,392	$	(348)	$	59,097	$	230,102
Profit		-		-		-		15,316		15,316
Other comprehensive income		-		-		91		-		91
Total comprehensive income		-		-		91		15,316		15,407
Share options exercised		23,884		(5,988)		-		-		17,896
Share based payments		-		12,231		-		-		12,231
Total shareholder transactions		23,884		6,243		-		-		30,127
Balance, September 30, 2020	$	164,845	$	36,635	$	(257)	$	74,413	$	275,636

Kinaxis Inc.
Condensed Consolidated Interim Statements of Cash Flows
For the three and nine months ended September 30, 2020 and 2019
(Expressed in thousands of USD)
(Unaudited)
	For the three months ended September 30,				For the nine months ended September 30,
		2020		2019		2020		2019
Cash flows from (used in) operating activities:
Profit	$	731	$	4,533	$	15,316	$	15,500
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets		3,939		3,045		10,403		8,696
Amortization of intangible assets		561		-		665		-
Share-based payments		4,732		3,537		12,231		10,190
Net finance income		(156)		(841)		(981)		(2,427)
Income tax expense		354		1,725		10,094		7,448
Change in operating assets and liabilities		(5,219)		(12,061)		10,474		(1,087)
Interest received		596		1,120		1,658		2,993
Interest paid		(198)		(149)		(487)		(419)
Income taxes received (paid)		(843)		145		(3,103)		(12,320)
		4,497		1,054		56,270		28,574
Cash flows from (used in) investing activities:
Acquisition of businesses, net of cash acquired		(59,166)		-		(61,743)		-
Purchase of property and equipment		(1,299)		(1,147)		(12,337)		(10,341)
Purchase of short-term investments		(20,150)		(20,102)		(95,452)		(50,108)
Redemption of short-term investments		65,302		25,102		95,404		75,108
		(15,313)		3,853		(74,128)		14,659
Cash flows from (used in) financing activities:
Payment of lease obligations		(1,154)		(708)		(2,639)		(1,995)
Common shares issued on exercise of stock options		6,548		2,225		17,896		4,323
		5,394		1,517		15,257		2,328
(Decrease) increase in cash and cash equivalents		(5,422)		6,424		(2,601)		45,561
Cash and cash equivalents, beginning of period		184,992		165,512		182,284		126,144
Effects of exchange rates on cash and cash equivalents		286		21		173		252
Cash and cash equivalents, end of period	$	179,856	$	171,957	$	179,856	$	171,957

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