Kinaxis Inc. Reports Fiscal Fourth Quarter 2014 and Full Year 2014 Results

- Reports 28% Annual Subscription Revenue Growth, 23% Adjusted Annual EBITDA and Adjusted Annual EPS of $0.41 per share -

OTTAWA, Feb. 24, 2015 /CNW/ - Kinaxis® (TSX:KXS), provider of RapidResponse®, delivering cloud-based SCM and S&OP applications, reported results for its fiscal fourth quarter and year ended December 31, 2014. All figures are in U.S. dollars and have been prepared in accordance with International Financial Reporting Standards (IFRS), except for Adjusted EBITDA as described below under the heading "Non-IFRS Measures".

Fiscal 2014 Highlights
(Comparisons made between fiscal 2014 and fiscal 2013 results, unless otherwise noted)

  • Subscription revenue was $51.1 million, up 28%
  • Total revenue was $70.1 million, up 15%
  • Gross profit was $49.3 million (70% of total revenue), up 15%
  • Adjusted EBITDA totaled $16.1 million (23% of total revenue), up 7%
  • Loss totaled $0.2 million or $0.01 per diluted share
  • Adjusted diluted earnings per share of $0.41

Fourth Quarter 2014 Highlights
(Comparisons made between fiscal Q4 2014 and fiscal Q4 2013 results, unless otherwise noted)

  • Subscription revenue was $13.9 million, up 27%
  • Total revenue was $18.8 million, up 15%
  • Gross profit was $13.4 million (71% of total revenue), up 14%
  • Adjusted EBITDA totaled $3.8 million (20% of total revenue), down 15%
  • Profit totaled $0.6 million or $0.02 per diluted share
    • $20 million multiyear subscription agreement - $0.05 per share customer acquisition cost expensed in Q4

    "In 2014 we delivered on our goal to grow subscription revenues and EBITDA, while simultaneously delivering value to our customers through our supply chain management applications," said Doug Colbeth, President and CEO of Kinaxis. "By leveraging the power of RapidResponse, our customers are improving their supply chain visibility and analysis, and in doing so, empowering their ability to make better supply chain decisions and proactively react to change".

    Mr. Colbeth added: "Looking to 2015, we remain confident that we will continue to grow annual subscription revenue in excess of 25% and expect to achieve Adjusted EBITDA in excess of 20% of total revenue. Furthermore, as we continue to have success with our partners and as they expand their role in customer deployments, we expect professional services revenue will grow between 10% and 15%. We look forward to continuing to build on the great achievements our team made this year."

    Fiscal Q4 2014 and Full Year 2014 Financial Results

    Total revenue for the three months ended December 31, 2014 (Q4 2014) was $18.8 million, an increase of 15% from $16.3 million for the same period in 2013. For the year ended December 31, 2014 (FY 2014), revenue was $70.1 million, an increase of 15% compared to the same year ago period.

    Subscription revenue was $13.9 million in Q4 2014, an increase of 27% from $10.9 million for the same period in 2013. FY 2014 subscription revenue was $51.1 million, an increase of 28% over the same period in 2013. The increase was due to additional revenue from contracts secured with new customers as well as expansion of existing customer subscriptions.

    Professional services revenue was $4.7 million in Q4 2014, compared to $5.1 million for the same period in 2013. FY 2014 professional services revenue was $17.8 million as compared to $19.2 million in the same year ago period. The change was due to the end of a significant services engagement with an existing customer in December of 2013, and was largely offset by services provided for deployment of new customers throughout 2014.

    Gross profit was $13.4 million in Q4 2014, compared to $11.7 million for the same period in 2013. FY 2014 gross profit was $49.3 million compared to $42.8 million in the same year ago period. As a percentage of revenue, gross profit was 71% in the fourth quarter compared to 72% in the fourth quarter of 2013 and was 70% in both the years ended December 31, 2014 and 2013.

    Operating expenses were $10.8 million in Q4 2014, compared to $7.8M for the same period in 2013.  In late 2014, the company closed a multi-year subscription agreement that provided for a single payment of the initial term subscription fee.   The subscription fee for this initial multi-year term was approximately $20.0 million.  While this fee was invoiced and received in the first quarter of 2015, the customer acquisition costs, equivalent to $0.05 per diluted share, were expensed in Q4 2014. 

    Adjusted EBITDA was $3.8 million in Q4 2014 or 20% of total revenue, compared to Adjusted EBITDA of $4.5 million, or 27% of total revenue in the same period last year.  FY 2014 Adjusted EBITDA was $16.1 million or 23% of revenue compared to $15.0 million or 25% of revenue in the prior year period. The change in Adjusted EBITDA during the year was driven by an increase in profit from operations, excluding the impact of an increase in share-based payment expenses for the year end 2014 compared to the same period for 2013.

    Profit for the fourth quarter of 2014 was $0.6 million or $0.02 per basic and diluted share compared to a net loss of $0.8 million or $0.05 per basic and diluted share for the same period in 2013. Year to date, the loss decreased to $0.2 million or $0.01 per basic and diluted share from $9.7 million or $0.59 per basic and diluted. The increase in profit was primarily driven by a lower fair value adjustment on the redeemable preferred shares which were converted to Common Shares at the time of our initial public offering in June 2014.

    Cash generated by operating activities was $16.3 million for the year ended December 31, 2014 as compared to $19.6 million in the same period of 2013. The decrease in cash provided by operating activities of $3.3 million was due primarily to the Part VI.1 tax of $4.0 million paid in the first quarter of 2014 and interest paid on the term loan of $0.5 million during 2014.

    Cash and cash equivalents were $56.7 million at December 31, 2014 as compared to $13.8 million at December 31, 2013. The increase is primarily due to the proceeds from our initial public offering net of repayment of our term loan, as well as cash from operations for fiscal year 2014. 

    Please refer to the section regarding forward-looking statements which forms an integral part of this release. These results, along with the unaudited condensed consolidated interim financial statements and the company's unaudited 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 (Wednesday, February 25, 2015) to discuss these results. Doug Colbeth, President & CEO and Richard Monkman, CFO will host the call starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation.

    Date: Wednesday, February 25, 2015
    Time: 8:30 a.m. Eastern time
    Dial-In Number: 1 (888) 231-8191
    International: 1 (647) 427-7450
    Conference ID#: 72033107
    Live Webcast:  http://bit.ly/1Gw4g22

    Webcast will be archived for one year

    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 after 11:30 a.m. Eastern time on the same day through March 4, 2015.

    Toll-Free Replay Number: 1 (855) 859-2056
    International Replay Number: 1 (416) 849-0833
    Replay PIN: 72033107

    About Kinaxis Inc.

    Kinaxis is a leading provider of cloud-based subscription software that enables our customers to improve and accelerate analysis and decision-making across their supply chain operations. The supply chain planning and analytics capabilities of our product, RapidResponse, create the foundation for managing multiple, interconnected supply chain management processes. By using the single RapidResponse product instead of combining individual disparate software solutions, our customers gain visibility across their supply chains, can respond quickly to changing conditions, and ultimately realize significant operating efficiencies.

    Non-IFRS Measures

    This news release contains non-IFRS measures, specifically Adjusted EBITDA. 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 is not a recognized, defined or standardized measure under IFRS. Our definition of Adjusted EBITDA will likely differ from that used by other companies (including our peers) and therefore comparability may be limited.  Readers should also note that commencing with the results reported for Q3 of FY 2014, we changed the composition of Adjusted EBITDA compared to previously disclosed Adjusted EBITDA, in order to better reflect the definition used by securities analysts.  Commencing with the results reported for Q3 of FY 2014, Adjusted EBITDA now includes a foreign exchange adjustment which is reflected in the "Foreign exchange loss (gain)" line item in the table below.  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.

    We have reconciled Adjusted EBITDA to the most comparable IFRS financial measure as follows:



    Three months ended

     December 31,


    Years ended

    December 31


    2014


    2013


    2014


    2013


    2012




    (In thousands of U.S. dollars)

    Profit (Loss)

    $           584


    $           (840)


    $            (221)


    $       (9,720)


    $        4,944

    Loss due to change in fair value of redeemable preferred shares

    ̶ 


    2,665


    6,760


    17,884


    1,172

    Share-based compensation

    845


    345


    2,658


    1,003


    898


    845


    3,010


    9,418


    18,887


    2,070

    Adjusted profit

    $        1,429


    $         2,170


    $          9,197


    $        9,167


    $        7,014

    Income tax expense

    1,592


    2,068


    4,642


    4,874


    2,181

    Depreciation

    334


    218


    1,151


    834


    677

    Foreign exchange loss (gain)

    465


    8


    599


    168


    (215)

    Net finance (income) expense

    (17)


    13


    490


    (31)


    (46)


    2,374


    2,307


    6,882


    5,845


    2,597

    Adjusted EBITDA

    $        3,803


    $         4,447


    $         16,079


    $      15,012


    $        9,611
















     

    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 subscription revenue, Adjusted EBITDA achievement, and growth in professional services revenue,  in each case looking forward for 2015, 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 2015 subscription revenue, Adjusted EBITDA, and professional services revenue 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 heading "Risks and Uncertainties" in the MD&A dated February 24, 2015 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





    (Expressed in thousands of U.S. dollars)












    2014


    2013






    Assets










    Current assets:






    Cash and cash equivalents

    $

    56,725

    $

    13,804


    Trade and other receivables


    17,023


    12,449


    Investment tax credits receivable


    1,974


    1,330


    Prepaid expenses


    1,926


    1,207



    77,648


    28,790

    Non-current assets:






    Property and equipment


    4,744


    2,408


    Investment tax credits recoverable


    3,091


    2,108


    Deferred tax assets


    5,726


    8,166







    $

    91,209

    $

    41,472






    Liabilities and Shareholders' Equity (Deficiency)










    Current liabilities:






    Trade payables and accrued liabilities

    $

    6,945

    $

    11,062


    Deferred revenue


    35,740


    24,700


    Current portion of long-term debt


     ‒


    4,167



    42,685


    39,929

    Non-current liabilities:






    Lease inducement


    109


    155


    Deferred revenue


    1,778


     ‒


    Long-term debt



    20,833


    Redeemable preferred shares



    54,135



    1,887


    75,123






    Shareholders' equity (deficiency):






    Share capital


    87,219


    9,902


    Contributed surplus


    6,152


    3,948


    Accumulated other comprehensive income loss


    (453)


    (360)


    Deficit


    (46,281)


    (87,070)



    46,637


    (73,580)







    $

    91,209

    $

    41,472

     

     


    Kinaxis Inc.








    Consolidated Statements of Comprehensive Income








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



















     For the three months


    For the year



    ended December 31,


    ended December 31,



    2014


    2013


    2014


    2013










    Revenue

    $

    18,820

    $

    16,319

    $

    70,054

    $

    60,816

    Cost of revenue


    5,433


    4,603


    20,745


    18,016










    Gross profit


    13,387


    11,716


    49,309


    42,800










    Operating expenses:










    Selling and marketing


    5,275


    3,543


    15,296


    15,071


    Research and development


    3,362


    2,447


    13,429


    8,171


    General and administrative


    2,126


    1,812


    8,314


    6,383



    10,763


    7,802


    37,039


    29,625












    2,624


    3,914


    12,270


    13,175

    Other income (expense):










    Loss due to change in fair value of
    redeemable preferred shares


        ̶  


    (2,665)


    (6,760)


    (17,884)


    Foreign exchange loss


    (465)


    (8)


    (599)


    (168)


    Net finance income (expense)


    17


    (13)


    (490)


    31



    (448)


    (2,686)


    (7,849)


    (18,021)










    Profit (loss) before income taxes


    2,176


    1,228


    4,421


    (4,846)










    Income tax expense:










    Current


    193


    8,338


    819


    8,857


    Deferred (recovery)


    1,399


    (6,270)


    3,823


    (3,983)



    1,592


    2,068


    4,642


    4,874










    Profit (Loss)


    584


    (840)


    (221)


    (9,720)










    Other comprehensive loss:









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










    Foreign currency translation
    differences - foreign operations


    (68)


    (39)


    (93)


    (63)










    Total comprehensive income (loss)                                       

    $

    516

    $

    (879)

    $

    (314)

    $

    (9,783)










    Basic earnings (loss) per share                                              

    $

    0.02

    $

    (0.05)

    $

    (0.01)

    $

    (0.59)










    Weighted average number of basic Common Shares


    23,648,402


    15,623,815


    19,076,464


    16,539,070










    Diluted earnings (loss) per share                                          

    $

    0.02

    $

    (0.05)

    $

    (0.01)

    $

    (0.59)










    Weighted average number of diluted Common Shares


    24,891,096


    15,623,815


    19,076,464


    16,539,070

     

     


    Kinaxis Inc.










    Consolidated Statements of Changes in Shareholders' Equity (Deficiency)







    (Expressed in thousands of U.S. dollars)






















    Share
    capital 


       Contributed 
    surplus


    Accumulated 
    other
     comprehensive
     loss


    Deficit


     Total
    equity
    (deficiency)












    Balance, December 31, 2012     

    $

    11,176

    $

    2,923

    $

    (297)

    $

    (29,508)

    $

    (15,706)












    Loss



           ‒


        ‒


    (9,720)


    (9,720)

    Other comprehensive loss


           ‒


        ‒


    (63)


             ‒


    (63)

    Total comprehensive loss


       ‒



    (63)


    (9,720)


    (9,783)












    Repurchase of shares and options


    (2,751)


          ‒


          ‒


    (47,842)


    (50,593)

    Share purchase plan subscriptions


    347


        ‒


        ‒


         ‒


    347

    Share options exercised


    163


        ‒


        ‒


        ‒


    163

    Share based payments


          ‒


    1,003


        ‒


      ‒


    1,003

    Repayment of receivable on share sale


    967


           ‒


      ‒


       ‒


    967

    Interest on receivable for share sale


              ‒


    22


           ‒



    22

    Total shareholder transactions


    (1,274)


    1,025


          ‒


    (47,842)


    (48,091)












    Balance, December 31, 2013    

    $

    9,902

    $

    3,948

    $

    (360)

    $

    (87,070)

    $

    (73,580)












    Loss


           ‒


            ‒


       ‒


    (221)


    (221)

    Other comprehensive loss


       ‒


         ‒


    (93)


    ̶ 


    (93)

    Total comprehensive loss


         ‒


         ‒


    (93)


    (221)


    (314)












    Conversion of Class A preferred











        shares to Common Shares


    60,895


       ‒


         ‒



    60,895

    Shares issued per offering


    59,562


             ‒


            ‒


     ‒


    59,562

    Share issuance costs











        net of tax


    (3,837)


          ‒


          ‒


       ‒


    (3,837)

    Reduction of share capital


    (41,010)


           ‒


       ‒


    41,010


                       ‒  

    Shares issued for cash


    585


             ‒


             ‒


    ‒ 


    585

    Share options exercised


    804


    (136)


                ‒



    668

    Restricted share units vested


    318


    (318)


              ‒



                ‒  

    Share based payments


             ̶ 


    2,658


           ‒


                   ‒  


    2,658

    Total shareholder transactions


    77,317


    2,204


              ‒


    41,010


    120,531












    Balance, December 31, 2014      

    $

    87,219

    $

    6,152

    $

    (453)

    $

    (46,281)

    $

    46,637

     


    Kinaxis Inc.





    Consolidated Statements of Cash Flows





    (Expressed in thousands of U.S. dollars)












    2014


    2013

    Cash flows from operating activities:










    Loss

    $

    (221)

    $

    (9,720)

    Items not affecting cash:






    Depreciation of property and equipment


    1,151


    834


    Loss due to change in fair value of redeemable preferred shares


    6,760


    17,884


    Share-based compensation


    2,658


    1,003


    Amortization of lease inducement


    (46)


    (46)


    Long-term investment tax credits recoverable


    (983)


    2,573


    Income tax expense


    4,642


    4,874


    Changes in operating assets and liabilities


    7,800


    3,379

    Interest paid


    (545)


    (3)

    Income taxes paid


    (4,966)


    (1,149)



    16,250


    19,629






     Cash flows from investing activities:






    Purchase of property and equipment


    (3,487)


    (1,397)






      Cash flows from financing activities:






    Non-Voting Common Shares issued and share subscriptions received


    991


    532


    Common Shares issued


    262



    Common Shares issued per offering


    59,562



    Share issuance costs


    (5,220)


     ‒


    Repayment of receivable for share sale


     ‒ 


    967


    Repurchase of Class A Preferred Shares


      ‒


    (28,469)


    Repurchase of Common and Non-Voting Common Shares


        ‒


    (50,593)


     Issuance of long-term debt


    5,000


    25,000


     Repayment of long-term debt


    (30,000)



     Payment of finance lease obligations


       ‒


    (59)



    30,595


    (52,622)






    Increase (decrease) in cash and cash equivalents


    43,358


    (34,390)






    Cash and cash equivalents, beginning of year


    13,804


    48,801






    Effects of exchange rates on cash and cash equivalents


    (437)


    (607)






    Cash and cash equivalents, end of the year

    $

    56,725

    $

    13,804

     

    SOURCE Kinaxis Inc.

    For further information: Investor Relations: Robert Kelly, TMX Equicom, T: (416) 815-0700 ext. 253, rkelly@tmxequicom.com


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