Kinaxis Inc. Reports First Quarter 2019 Results
Reports 24% growth in total revenue and Adjusted EBITDA((1)) of 35% of revenue
Kinaxis® (TSX:KXS.TO) , the leader in empowering people to make confident supply chain decisions, today reported results for its fiscal first quarter ended March 31, 2019. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), including the adoption of IFRS 15 and 16, unless otherwise indicated.
Q1 2019 total revenue increased 24% to $45.8 million; SaaS revenue grew by 17% to $27.3 million; subscription term license revenue grew 87% to $8.4 million; Adjusted EBITDA((1)) was up 29% to $16.0 million (35% of revenue); and profit increased 53% to $7.0 million from $4.6 million.
"We are pleased with these strong first quarter results and with the overall health of our global pipeline. This performance is largely due to our significantly expanded sales team and focused global marketing activities. During the quarter, we expanded business within our on-premise customer base and closed new SaaS opportunities, however some large and active deals are taking longer to finalize than expected. We fully expect strong SaaS bookings in coming quarters. Overall, we are reaffirming our full year revenue guidance, with slightly higher contribution from subscription term license revenue and related support and slightly lower SaaS revenue. Given the strength of Q1 and our business outlook, we are increasing our guidance for full year Adjusted EBITDA. As we have consistently demonstrated through marquee new partnerships and customer announcements, such as Lenovo this past quarter, our competitive position remains extremely strong. I remain firmly confident in our market position, our sales strategy, and our unique concurrent planning platform as we continue to execute against our growth plans," said John Sicard, Kinaxis CEO.
Q1 2019 Highlights $ USD millions, except as otherwise indicated Q1 2019 Q1 2018 Change --- Total Revenue 45.8 36.8 24% --- SaaS 27.3 23.3 17% Subscription term license 8.4 4.5 87% --- Gross profit 33.6 26.7 26% (73%) (72%) Profit 7.0 4.6 53% ($0.26/diluted share) ($0.17/diluted share) Adjusted EBITDA(1) 16.0 12.3 29% (35%) (33%) Cash from operating activities 18.8 10.4 81% ---
(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.
Analysis of Q1 2019 vs Q1 2018 Financial Highlights Revenue: SaaS revenue growth of 17% resulted from contracts secured with new customers, as well as expansion of existing customer subscriptions. Subscription term license revenue growth of 87% relates to the timing of renewals, expansions and new engagements for on-premise and hybrid subscription arrangements, and will vary substantially quarter to quarter. Together, SaaS and subscription term license revenue growth were the main drivers behind the 24% increase in total revenue.
Gross profit margin: Growth in gross profit margin to 73% resulted from the growth in SaaS and subscription term license revenue, partly offset by an increase in costs of revenue. Such costs included headcount increases, an increase in partner and third-party costs, and higher depreciation costs associated with the expansion of data center capacity.
Profit and adjusted EBITDA: The 53% increase in profit and 29% growth in Adjusted EBITDA was due to an increase in revenue and gross profit, partly offset by an increase in operating expenses. Additional investments in research and development and sales and marketing, including new headcount and higher marketing event activity, drove operating expense growth.
Cash from operating activities: The 81% increase in cash from operating activities was due to collection of trade and other receivables and higher profit. At March 31, 2019, cash, cash equivalents and short-term investments grew by $18.3 million to $199.9 million from $181.5 million at December 31, 2018.
Financial GuidanceKinaxis has updated its 2019 fiscal year financial targets, as follows:
Previous FY 2019 Guidance Updated FY 2019 Guidance Total revenue $183-188 million $183-188 million --- SaaS 22-24% growth 20-22% growth --- Subscription term license $20-22 million $22-24 million Adjusted EBITDA margin 23-25% of revenue 25-27% 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 which 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 March 31, 2019.
Remainder of 2020 2021 Total 2019 and thereafter SaaS 77.3 67.1 68.3 212.6 --- Subscription term license 2.1 2.1 --- Maintenance and support 8.8 6.0 5.0 19.8 --- Total 88.2 73.1 73.2 234.5 ---
This press release, along with the financial statements and MD&A for the three months ended March 31, 2019, are available on Kinaxis' website and on SEDAR at www.sedar.com.
Conference CallKinaxis will host a conference call today, May 10, 2019, 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: Friday, May 10, 2019 Time: 8:30 a.m. Eastern Time Webcast: https://bit.ly/2KURAdS Dial-in number: (647) 427-7450 or (888) 231-8191 Replay: (416) 849-0833 or (855) 859-2056 Available until 12:00 a.m., Eastern Daylight Time Friday, May 17, 2019 Reference number: 6196908
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 planning decisions to maximize business performance. We solve complex business problems in easy-to-understand ways faster 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, visit Kinaxis.com or follow us on LinkedIn, Twitter or Facebook.
Non-IFRS MeasuresThis 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. Kinaxis has reconciled Adjusted profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:
Three months ended March 31, 2019 2018 (In thousands of USD) Profit $ 6,966 $ 4,553 Share- based compensation 3,072 3,158 Adjusted profit $ 10,038 $ 7,711 Income tax expense 3,818 3,130 Depreciation 2,677 1,820 Foreign exchange loss (gain) 170 (196) Net finance income (765) (145) 5,900 4,609 Adjusted EBITDA $ 15,938 $ 12,320 Adjusted EBITDA as a percentage of revenue 35% 33%
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, 2019, 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 2019 annual total revenue, annual SaaS and Subscription term license revenue and annual Adjusted EBITDA margin, 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, 2019, under the heading "Risk Factors" in our Annual Information Form dated March 29, 2018, 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 March 31, 2019 and December 31, 2018 (Expressed in thousands of USD) (Unaudited) March 31, December 31, 2019 2018 --- Assets Current assets: Cash and cash equivalents 156,984 126,144 Short-term investments 42,907 55,404 Trade and other receivables 43,848 64,330 Prepaid expenses 6,926 5,815 --- 250,665 251,693 Non-current assets: Property and equipment 21,598 22,785 Right-of-use assets 11,541 8,873 Contract acquisition costs 13,337 13,902 Unbilled receivables 2,977 457 Deferred tax assets 27 49 300,145 297,759 Liabilities and Shareholders' Equity Current liabilities: Trade payables and accrued liabilities 14,148 21,623 Deferred revenue 75,001 78,496 Lease obligations 2,720 2,572 --- 91,869 102,691 Non-current liabilities: Lease obligations 8,987 6,311 Deferred tax liabilities 3,680 4,075 --- 12,667 10,386 Shareholders' equity: Share capital 126,339 124,951 Contributed surplus 26,913 24,284 Accumulated other comprehensive loss (375) (319) Retained earnings 42,732 35,766 --- 195,609 184,682 300,145 297,759
Kinaxis Inc. Condensed Consolidated Interim Statements of Comprehensive Income For the three months ended March 31, 2019 and 2018 (Expressed in thousands of USD, except share and per share data) (Unaudited) 2019 2018 --- Revenue 45,754 36,849 Cost of revenue 12,191 10,135 Gross profit 33,563 26,714 Operating expenses: Selling and marketing 9,315 7,386 Research and development 7,994 6,749 General and administrative 6,065 5,237 --- --- 23,374 19,372 10,189 7,342 Other income (expense): Foreign exchange gain (loss) (170) 196 Net finance income 765 145 --- --- 595 341 Profit before income taxes 10,784 7,683 Income tax expense 3,818 3,130 Profit 6,966 4,553 Other comprehensive income (loss): Items that are or may be reclassified subsequently to profit or loss: Foreign currency translation differences - foreign operations (56) 400 Total comprehensive income 6,910 4,953 === === Basic earnings per share 0.27 0.18 Weighted average number of basic Common Shares 26,091,542 25,542,978 Diluted earnings per share 0.26 0.17 Weighted average number of diluted Common Shares 26,805,963 26,667,141
Kinaxis Inc. Condensed Consolidated Interim Statements of Changes in Shareholders' Equity For the three months ended March 31, 2019 and 2018 (Expressed in thousands of USD) (Unaudited) Accumulated Share Contributed other Retained Total equity capital surplus comprehensive earnings income (loss) (deficit) --- Balance, December 31, 2017 108,253 19,294 (284) (2,475) 124,788 Adjustment on initial application of IFRS 15 - 23,833 23,833 --- --- Adjusted balance, January 1, 2018 108,253 19,294 (284) 21,358 148,621 Profit - 4,553 4,553 Other comprehensive income - 400 400 --- --- Total comprehensive income - 400 4,553 4,953 Share options exercised 3,798 (1,020) 2,778 Share based payments - 3,158 3,158 --- --- Total shareholder transactions 3,798 2,138 5,936 Balance, March 31, 2018 112,051 21,432 116 25,911 159,510 === Balance, December 31, 2018 124,951 24,284 (319) 35,766 184,682 Profit - 6,966 6,966 Other comprehensive loss - (56) (56) --- --- Total comprehensive income (loss) - (56) 6,966 6,910 Share options exercised 1,388 (443) 945 Share based payments - 3,072 3,072 --- --- Total shareholder transactions 1,388 2,629 4,017 Balance, March 31, 2019 126,339 26,913 (375) 42,732 195,609 ===
Kinaxis Inc. Condensed Consolidated Interim Statements of Cash Flows For the three months ended March 31, 2019 and 2018 (Expressed in thousands of USD) (Unaudited) 2019 2018 --- Cash flows from operating activities: Profit 6,966 4,553 Items not affecting cash: Depreciation of property and equipment and right-of-use assets 2,677 1,820 Share-based payments 3,072 3,158 Investment tax credits recoverable - 911 Net finance income (765) (145) Income tax expense 3,818 3,130 Change in operating assets and liabilities 13,019 (1,759) Interest received 873 361 Interest paid (112) (148) Income taxes paid (10,789) (1,501) --- --- 18,759 10,380 Cash flows from investing activities: Purchase of property and equipment (893) (4,821) Purchase of short-term investments (15,005) (15,043) Redemption of short-term investments 27,506 40,005 --- --- 11,608 20,141 Cash flows from financing activities: Payment of lease obligations (600) (454) Common shares issued on exercise of stock options 945 2,778 --- --- 345 2,324 Increase in cash and cash equivalents 30,712 32,845 Cash and cash equivalents, beginning of period 126,144 103,392 Effects of exchange rates on cash and cash equivalents 128 350 Cash and cash equivalents, end of period 156,984 136,587 === ===
SOURCE Kinaxis Inc.
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SOURCE: Kinaxis Inc.
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