Kinaxis Inc. Reports Fiscal First Quarter 2017 Results

- Reports 29% Growth in Subscription Revenue and 26% Adjusted EBITDA Margin -

OTTAWA, May 3, 2017 /CNW/ - Kinaxis® (TSX:KXS), provider of RapidResponse®, delivering the leading cloud-based concurrent planning solution, reported results for its fiscal first quarter, which ended March 31, 2017. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

First Quarter 2017 Highlights
(Comparisons made between fiscal Q1 2017 and fiscal Q1 2016 results, unless otherwise noted)

  • Revenue totaled $32.5 million, up 20%
  • Subscription revenue was $23.9 million, up 29%
  • Gross profit was $22.2 million (68% of total revenue), up 17%
  • Profit was $3.2 million or $0.13 per basic and $0.12 per diluted share
  • Adjusted EBITDA(1) totaled $8.5 million (26% of total revenue)
  • Adjusted diluted earnings per share(1) of $0.23

(1) "Adjusted EBITDA" and "Adjusted diluted earnings per share" are non-IFRS measures and are not recognized, defined or standardized measures under IFRS. These measures as well as other non-IFRS financial measures reported by Kinaxis are defined in the "Non-IFRS Measures" section of this news release.

 

"Our growth continues to be fueled by expansion of our subscription revenue base, which increased 29% in the first quarter," said John Sicard, Chief Executive Officer of Kinaxis.  "Global enterprises are turning to Kinaxis to solve their end-to-end supply chain management challenges with concurrent planning, enabling real-time simulation, collaboration and decision-making between previously disconnected teams. Our unique business model supported by our technologically advanced platform enable us to deliver consistent, top and bottom line growth and robust cash generation.

Fiscal Q1 2017 Financial Results

Total revenue for the three months ending March 31, 2017 (Q1 2017) was $32.5 million, an increase of 20% compared to the same period in 2016.

Subscription revenue was $23.9 million in Q1 2017, an increase of 29% from $18.5 million for the same period in 2016. The increase was driven by contracts secured with new customers in the last twelve months, as well as expansion of existing customer subscriptions.

Professional services revenue increased 2% to $8.4 million in Q1 2017, compared to $8.3 million for the same period in 2016. The level of Professional services revenue growth reflects the increased project activity supported by our partners implementing new customers.

Gross profit was $22.2 million in Q1 2017, compared to $18.9 million for the same period in 2016. As a percentage of revenue, gross profit was 68% compared to 70% in the prior year quarter. The percentage change in Q1 2017 was due to investments in additional headcount, increased leverage of qualified third party providers and, expanded global data center capability.  These investments support current and forecasted growth.

Profit for Q1 2017 was $3.2 million or $0.13 per basic and $0.12 per diluted share compared to a profit of $3.4 million or $0.14 per basic and $0.13 per diluted share for the same period in 2016. The change compared to the prior period was primarily driven by our investment in professional service and data center capacity and research and development and an increase in share-based payments. 

Adjusted EBITDA increased 6% to $8.5 million in Q1 2017, compared to $8.0 million in the same period last year. The increase in the period was driven by the growth in revenue offset by an increase in operating expenses from investments in headcount and program spending.

Cash provided by operating activities was $10.3 million for Q1 2017 compared to $8.8 million generated in the same period in 2016. The change resulted from an increase in deferred revenue, share-based payments and depreciation, which was partially offset by a decrease in accounts receivable and an increase in income taxes paid.

Cash and cash equivalents were $142.0 million as at March 31, 2017 as compared to $127.9 million as at December 31, 2016.

Full Year 2017 Financial Guidance

With today's announcement, the Company is updating its 2017 full-year financial guidance:

  • Annual total revenue to be in the range of $140 million to $144 million
  • Annual subscription revenue to grow 26% to 28%
  • Annual Adjusted EBITDA as a percentage of total revenue to be between 25% and 27% of total revenue

This guidance is provided to enhance visibility into the Company's expectations for financial targets for the year ending December 31, 2017.  Please refer to the section regarding forward-looking statements which forms an integral part of this release.

This press release, along with the unaudited condensed consolidated interim financial statements and the Company's corresponding MD&A, are available on the Company's website at www.kinaxis.com and on SEDAR at www.sedar.com.

Conference Call

The Company will host a conference call tomorrow, May 4, 2017 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, May 4, 2017
Time: 8:30 a.m. Eastern Time
Dial-In Number: 1 (888) 231-8191
International: 1 (647) 427-7450
Conference ID#: 3134549

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

A replay of the call will be available until 12:00 midnight Eastern Time on Thursday, May 11, 2017.

Toll-Free Replay Number: 1 (855) 859-2056
International Replay Number: 1 (416) 849-0833
Replay PIN: 3134549

Live Webcast: http://bit.ly/2oRcZoq

Webcast will be archived for 90 days

About Kinaxis Inc.

Offering the industry's only concurrent planning solution, Kinaxis is helping organizations around the world revolutionize their supply chain planning. With RapidResponse®, our cloud-based supply chain management software, we connect your data, processes, and people into a single harmonious environment. With a consolidated view of the entire supply chain, you can plan expected performance, monitor progress, and respond to disconnects when reality hits. RapidResponse lets you know sooner and act faster, leading to reduced decision latency, and improved operational and financial performance. We can prove it.  From implementation to expansion, we're here to help our customers with every step of their supply chain journey.

Non-IFRS Measures
This 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 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 EBITDA and Adjusted diluted earnings per share 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.

The Company has reconciled Adjusted profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:



Three months ended
March 31,



2017


2016

Statement of Operations


(In thousands of U.S. dollars)

Profit


$

3,226


$

3,369

Share-based compensation


2,716


2,280

Adjusted profit


$

5,942


$

5,649

Income tax expense


1,931


2,177

Depreciation


788


520

Foreign exchange loss (gain)


11


(266)

Net finance income


(167)


(74)



2,563


2,357

Adjusted EBITDA


$

8,505


$

8,006

Adjusted EBITDA as a percentage of revenue


26%


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 subscription revenue, and our expectations for Adjusted EBITDA achievement, in each case looking forward for the balance of our fiscal year ending December 31, 2017, as well as statements as to Kinaxis' growth opportunities, the potential benefits of our strategic partnerships 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 2017 annual revenue total revenue, annual subscription revenue and annual Adjusted EBITDA, 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, 2017, under the heading "Risk Factors" in our Annual Information Form dated March 27, 2017, 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, 2017 and December 31, 2016

(Expressed in thousands of U.S. dollars)

(Unaudited)





March 31,
2017

December 31,
2016




Assets






Current assets:




Cash and cash equivalents

$

141,989

$

127,910


Trade and other receivables

27,405

23,820


Investment tax credits receivable

1,592

1,583


Investment tax credits recoverable

546

755


Prepaid expenses

3,538

3,333


175,070

157,401




Non-current assets:




Property and equipment

10,297

10,652


Deferred tax assets

195

239






$

185,562

$

168,292




Liabilities and Shareholders' Equity






Current liabilities:




Trades payable and accrued liabilities

$

10,448

$

10,495


Deferred revenue

62,507

55,458


72,955

65,953

Non-current liabilities:




Lease inducement

4

18


Deferred revenue

13,629

13,198


Deferred tax liability

1,205

1,412


14,838

14,628




Shareholders' Equity




Share capital

102,741

97,164


Contributed surplus

15,033

13,924


Accumulated other comprehensive loss

(373)

(519)


Deficit

(19,632)

(22,858)


97,769

87,711





$

185,562

$

168,292

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Comprehensive Income


For the three months ended March 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share data)

(Unaudited)





2017

2016






Revenue

$

32,542

$

27,032




Cost of revenue

10,377

8,105




Gross profit

22,165

18,927




Operating expenses:




Selling and marketing

6,931

5,979


Research and development

6,223

4,737


General and administrative

4,010

3,005


17,164

13,721





5,001

5,206

Other income (expense):




Foreign exchange (gain) loss

(11)

266


Net finance income

167

74


156

340




Profit before income taxes

5,157

5,546




Income tax expense

1,931

2,177




Profit

3,226

3,369




Other comprehensive income






Items that are or may be reclassified subsequently to profit or loss:




Foreign currency translation differences - foreign operations

146

61






Total comprehensive income

$

3,372

$

3,430




Basic earnings per share

$

0.13

$

0.14




Weighted average number of basic common shares

25,043,512

24,445,630




Diluted earnings per share

0.12

0.13




Weighted average number of diluted common shares

26,316,198

25,744,984

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity 


For the three months ended March 31, 2017 and 2016

(Expressed in thousands of U.S. dollars)

(Unaudited)










Accumulated






other




Share

Contributed

comprehensive




capital

surplus

loss

Deficit

Total equity







Balance, December 31, 2015

$

90,808

$

8,873

$

(474)

$

(33,603)

$

65,604







Profit

-

-

-

3,369

3,369

Other comprehensive income

-

-

61

-

61

Total comprehensive income

-

-

61

3,369

3,430







Share options exercised

561

(188)

-

-

373

Share based payments

-

2,280

-

-

2,280

Total shareholder transactions

561

2,092

-

-

2,653







Balance, March 31, 2016

$

91,369

$

10,965

$

(413)

$

(30,234)

$

71,687







Balance, December 31, 2016

$

97,164

$

13,924

$

(519)

$

(22,858)

$

87,711







Profit

-

-

-

3,226

3,226

Other comprehensive income

-

-

146

-

146

Total comprehensive income

-

-

146

3,226

3,372







Share options exercised

5,577

(1,607)

-

-

3,970

Share based payments

-

2,716

-

-

2,716

Total shareholder transactions

5,577

1,109

-

-

6,686







Balance, March 31, 2017

$

102,741

$

15,033

$

(373)

$

(19,632)

$

97,769

 

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Cash Flows


For the three months ended March 31, 2017 and 2016

(Expressed in thousands of U.S. dollars)

(Unaudited)





2017

2016




Cash flows from operating activities:






Profit

$

3,226

$

3,369

Items not affecting cash:




Depreciation of property and equipment

788

520


Share-based payments

2,716

2,280


Amortization of lease inducement

(14)

(11)


Investment tax credits recoverable

209

422


Income tax expense

1,931

2,177


Change in operating assets and liabilities

3,334

743

Interest paid

(1,931)

(713)


10,259

8,787




Cash flows used investing activities:




Purchase of property and equipment

(317)

(358)




Cash flows from financing activities:




Common Shares issued

3,970

373







Increase in cash and cash equivalents

13,912

8,802




Cash and cash equivalents, beginning of period

127,910

99,390




Effects of exchange rates on cash and cash equivalents

167

156




Cash and cash equivalents, end of period

$

141,989

$

108,348

 

SOURCE Kinaxis Inc.

For further information: Media Relations: Melissa Clow, Tel: (613) 592-5780 ext. 5513, mclow@kinaxis.com; Investor Relations: Rob Kelly, LodeRock Advisors Inc., Tel: (416) 992-4539, rob.kelly@loderockadvisors.com


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