Kinaxis Inc. Reports Fiscal Third Quarter 2016 Results

- Reports 25% Growth in Subscription Revenue and 23% Adjusted EBITDA Margin, Increases 2016 Financial Guidance -

OTTAWA, Nov. 2, 2016 /CNW/ - Kinaxis® (TSX:KXS), provider of RapidResponse®, delivering cloud-based SCM and S&OP applications, reported results for its fiscal third quarter, which ended September 30, 2016. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

Third Quarter 2016 Highlights
(Comparisons made between fiscal Q3 2016 and fiscal Q3 2015 results, unless otherwise noted)

  • Revenue totaled $29.9 million, up 26%
  • Subscription revenue was $20.8 million, up 25%
  • Gross profit was $20.5 million (68% of total revenue), up 22%
  • Adjusted EBITDA(1) totaled $6.8 million (23% of total revenue)
  • Adjusted diluted earnings per share(1) of $0.17

 

(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.

 

"Strong demand for RapidResponse continues to drive robust growth in subscription revenue which totaled 25% in the third quarter," said John Sicard, CEO of Kinaxis. "Overall revenue increase is fueled by the expansion of our subscription revenue base in addition to a strong contribution from professional services as we and our partners implement new accounts."

Mr. Sicard added, "We will continue to make strategic investments in support of business operations in South Korea, including fully functional datacenters, customer service and support staff, as well as expanding the sales team. In addition, we will continue to expand our growing operations in Europe in support of a major European based global customer win which closed in the quarter. Through RapidResponse, we are revolutionizing the supply chains of some of the world's largest companies and empowering them to make intelligent decisions and proactively react to change."

Fiscal Q3 2016 Financial Results

Total revenue for the three months ending September 30, 2016 (Q3 2016) was $29.9 million, an increase of 26% compared to the same period in 2015.

Subscription revenue was $20.8 million in Q3 2016, an increase of 25% from $16.5 million for the same period in 2015. 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 30% to $8.9 million in Q3 2016, compared to $6.9 million for the same period in 2015. Growth was driven primarily by the initiation of deployment projects for new customers acquired in fiscal 2015 and 2016 as well as supporting the expansion of existing customer configurations. In addition, our partners continue to play an increasing role in supporting new customer deployment.

Gross profit was $20.5 million in Q3 2016, compared to $16.8 million for the same period in 2015. As a percentage of revenue, gross profit was 68% compared to 71% in the prior year quarter. The percentage change in Q3 2016 was due to higher growth in the cost of revenue as a result of planned investments in additional headcount as well as the use of third party providers to support our customer growth.

Adjusted EBITDA was $6.8 million in Q3 2016, compared to $8.0 million in the same period last year. The change in the period was the result of higher sales, marketing and product development costs incurred in the current quarter.

Profit for Q3 2016 was $2.4 million or $0.10 per basic and $0.09 per diluted share compared to a profit of $3.8 million or $0.16 per basic and $0.15 per diluted share for the same period in 2015. The change compared to the prior period was primarily driven by higher sales and marketing and research and development costs which were partially offset by the lower Canadian dollar versus the U.S. dollar which had a positive effect on operating expenses and profitability. 

Cash used by operating activities was $1.5 million for Q3 2016 compared to $5.8 million generated in the same period in 2015. The change was primarily due to an increase in accounts receivables as well as a decrease in profit net of income tax expenses which was partially offset by an increase in share based compensation.

Cash and cash equivalents were $111.7 million as at September 30, 2016 as compared to $99.4 million as at December 31, 2015.

Full Year 2016 Financial Guidance

With today's announcement, the Company is updating its 2016 full-year financial guidance:

  • Annual total revenue to be in the range of $115 million to $116.5 million
  • Annual subscription revenue to grow 24% to 25%
  • Annual Adjusted EBITDA as a percentage of total revenue to be between 23% and 26% of total revenue

This guidance is provided to enhance visibility into the Company's expectations for financial targets for the year ending December 31, 2016.  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, November 3, 2016 to discuss these results. John Sicard, 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: Thursday, November 3, 2016
Time: 8:30 a.m. Eastern time
Dial-In Number: 1 (888) 231-8191
International: 1 (647) 427-7450
Conference ID#: 96091868

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, November 10, 2016.

Toll-Free Replay Number: 1 (855) 859-2056
International Replay Number: 1 (416) 849-0833
Replay PIN: 45854512

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

Webcast will be archived for 90 days

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 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
September 30,


Nine months ended
September 30,


2016


2015


2016


2015

Statement of Operations

(In thousands of U.S. dollars)

Profit......................................................................

$

2,425


$

3,806


$

9,034


$

11,392

Share-based compensation..................................


2,060



1,176



6,190



3,223

Adjusted profit.......................................................

$

4,485


$

4,982


$

15,224


$

14,615

Income tax expense..............................................


1,687



2,128



5,374



6,070

Depreciation...........................................................


683



461



1,746



1,227

Foreign exchange loss (gain)................................


53



497



(25)



1,023

Net finance income................................................


(96)



(30)



(229)



(96)



2,327



3,056



6,866



8,224

Adjusted EBITDA....................................................

$

6,812


$

8,038


$

22,090


$

22,839

 

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, 2016, 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 2016 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 17, 2016, under the heading "Risk Factors" in our Annual Information Form dated March 21, 2016, 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, 2016 and December 31, 2015






(Expressed in thousands of U.S. dollars)






(Unaudited)













September 30,
2016


December 31,
2015







Assets












Current assets:







Cash and cash equivalents

$

111,661


$

99,390


Trade and other receivables


31,843



15,833


Investment tax credits receivable


1,617



1,532


Investment tax credits recoverable


1,142



2,083


Prepaid expenses


3,228



1,906



149,491



120,744

Non-current assets:







Deferred tax asset


237



-


Property and equipment


10,731



7,352








$

160,459


$

128,096







Liabilities and Shareholders' Equity












Current liabilities:







Accounts payable and accrued liabilities

$

10,963


$

6,794


Deferred revenue


49,965



40,442



60,928



47,236

Non-current liabilities:







Lease inducement


30



62


Deferred revenue


14,445



14,191


Deferred tax liability


1,107



1,003



15,582



15,256







Shareholders' Equity







Share capital


95,352



90,808


Contributed surplus


13,486



8,873


Accumulated other comprehensive loss


(320)



(474)


Deficit


(24,569)



(33,603)



83,949



65,604








$

160,459


$

128,096

 

Kinaxis Inc.










Condensed Consolidated Interim Statements of Comprehensive Income











For the three and nine months ended June 30, 2016 and 2015

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

(Unaudited)






















For the three months
ended September 30,

For the nine months
ended September 30,




2016


2015


2016


2015











Revenue 


$

29,921

$

23,665

$

85,687

$

67,080











Cost of revenue



9,466


6,862


26,284


18,954











Gross profit



20,455


16,803


59,403


48,126











Operating expenses:











Selling and marketing



8,085


4,368


21,847


12,089


Research and development



5,684


3,876


15,157


11,502


General and administrative



2,617


2,158


8,245


6,146




16,386


10,402


45,249


29,737














4,069


6,401


14,154


18,389

Other income (expense):











Foreign exchange (loss) gain



(53)


(497)


25


(1,023)


Net finance income



96


30


229


96




43


(467)


254


(927)











Profit before income taxes



4,112


5,934


14,408


17,462











Income tax expense:



1,687


2,128


5,374


6,070











Profit 



2,425


3,806


9,034


11,392











Other comprehensive income (loss)




















Items that are or may be reclassified










subsequently to profit or loss:











Foreign currency translation











differences - foreign operations



20


20


154


(10)











Total comprehensive income


$

2,445

$

3,826

$

9,188

$

11,382











Basic earnings per share


$

0.10

$

0.16

$

0.37

$

0.48











Weighted average number of basic










common shares 



24,739,556


23,957,202


25,585,823


23,851,437











Diluted earnings per share


$

0.09

$

0.15

$

0.35

$

0.45











Weighted average number of diluted










common shares



26,113,401


25,498,758


25,905,597


25,365,629











 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity 












For the nine months ended September 30, 2016 and 2015

(Expressed in thousands of U.S. dollars)




(Unaudited)



























Accumulated










other







Share


Contributed

comprehensive







capital


surplus

loss


Deficit


Total equity












Balance, December 31, 2014

$

87,219

$

6,152

$

(453)

$

(46,281)

$

46,637












Profit


-


-


-


11,392


11,392

Other comprehensive income


-


-


(10)


-


(10)

Total comprehensive income


-


-


(10)


11,392


11,382












Share options exercised


1,414


(424)


-


-


990

Share based payments


-


3,223


-


-


3,223

Total shareholder transactions


1,414


2,799


-


-


4,213












Balance, September 30, 2015

$

88,633

$

8,951

$

(463)

$

(34,889)

$

62,232












Balance, December 31, 2015

$

90,808

$

8,873

$

(474)

$

(33,603)

$

65,604












Profit


-


-


-


9,034


9,034

Other comprehensive income


-


-


154


-


154

Total comprehensive income


-


-


154


9,034


9,188












Share options exercised


4,393


(1,426)


-


-


2,967

Deferred share units vested


151


(151)


-


-


-

Share based payments


-


6,190


-


-


6,190

Total shareholder transactions


4,544


4,613


-


-


9,157












Balance, September 30, 2016

$

95,352

$

13,486

$

(320)

$

(24,569)

$

83,949

 

Kinaxis Inc.









Condensed Consolidated Interim Statements of Cash Flows










For the three and nine months ended September 30, 2016 and 2015

(Expressed in thousands of U.S. dollars)









(Unaudited)



















For the three months
ended September 30,

For the nine months
ended September 30,



2016


2015


2016


2015










Cash flows from (used in) operating activities:


















Profit 

$

2,425

$

3,806

$

9,034

$

11,392

Items not affecting cash:










Depreciation of property and equipment


683


461


1,746


1,227


Share-based payments


2,060


1,176


6,190


3,223


Amortization of lease inducement


(10)


(11)


(32)


(34)


Investment tax credits recoverable


397


(36)


941


(540)


Income tax expense


1,687


2,128


5,374


6,070


Change in operating assets and liabilities


(8,493)


(1,689)


(7,968)


15,888

Income taxes paid


(259)


(36)


(1,248)


(500)



(1,510)


5,799


14,037


36,726










Cash flows used in investing activities:










Purchase of property and equipment


(2,712)


(851)


(5,125)


(3,761)










Cash flows from  financing activities:










Common Shares issued


1,199


437


2,967


990










Increase (decrease) in cash and cash equivalents


(3,023)


5,385


11,879


33,955










Cash and cash equivalents, beginning of period


114,836


85,166


99,390


56,725










Effects of exchange rates on cash and cash equivalents


(152)


75


392


(54)










Cash and cash equivalents, end of period

$

111,661

$

90,626

$

111,661

$

90,626

 

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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