Kinaxis Inc. Reports Fourth Quarter 2016 and Full Year 2016 Results

- Reports 27% growth in annual revenue and annual Adjusted EBITDA of 25% of revenue -

OTTAWA, Feb. 28, 2017 /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, 2016. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

Fiscal 2016 Highlights
(Comparisons made between fiscal 2016 and fiscal 2015 results)

  • Revenue totaled $116.0 million, up 27%
  • Subscription revenue was $81.8 million, up 26%
  • Gross profit was $80.2 million (69% of total revenue), up 22%
  • Profit was $10.7 million or $0.44 per basic and $0.41 per diluted share
  • Adjusted EBITDA(1) totaled $28.5 million (25% of total revenue)
  • Adjusted diluted earnings per share(1) of $0.73

Fourth Quarter 2016 Highlights
(Comparisons made between fiscal Q4 2016 and fiscal Q4 2015 results)

  • Revenue totaled $30.3 million, up 25%
  • Subscription revenue was $22.7 million, up 34%
  • Gross profit was $20.8 million (69% of total revenue), up 19%
  • Profit was $1.7 million or $0.07 per basic and diluted share
  • Adjusted EBITDA(1) totaled $6.4 million (21% of total revenue)
  • Adjusted diluted earnings per share(1) of $0.14

(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.

 

"2016 was another year of strong revenue and new customer growth. We delivered solid bottom line results as we continued to make strategic investments to scale our business," said John Sicard, Chief Executive Officer of Kinaxis. "The world's largest companies have increasingly recognized that concurrent planning represents the future of effective supply chain management. Through RapidResponse we are delivering on this promise and enabling our customers to proactively react to change. Our partner relationships continue to progress well and have supported a number of key wins in 2016.  Our partners work to improve operational and financial performance for their clients by utilizing RapidResponse's capabilities. With a strong platform in place, we enter 2017 in a great position to leverage our technology, customer relationships and strategic partners to continue to produce solid results."

Fiscal Q4 2016 and Full Year 2016 Financial Results

Total revenue for the three months ended December 31, 2016 (Q4 2016) was $30.3 million, an increase of 25% from $24.2 million for the same period in 2015. Total revenue was $116.0 million for the year ended December 31, 2016 (FY 2016), an increase of 27% from $91.3 million in 2015.

Subscription revenue was $22.7 million in Q4 2016, an increase of 34% from $17.0 million for the same period in 2015. Subscription revenue was $81.8 million in FY 2016, an increase of 26% from $65.2 million in 2015. The increases were driven by contracts secured with new customers and expansion of existing customer subscriptions.

Professional services revenue was $7.4 million in Q4 2016, an increase of 5% from $7.0 million for the same period in 2015. Professional services revenue was $33.1 million in FY 2016, an increase of 32% from $25.0 million in 2015. Professional services revenue varies from quarter to quarter due to the size, timing and scheduling of customer engagements and the level of partner engagement. The increase in professional services revenue was primarily driven by the commencement of project engagements for new customers secured in FY 2015 and FY 2016.

Gross profit was $20.8 million in Q4 2016, an increase of 19% from $17.4 million for the same period in 2015. Gross profit was $80.2 million in FY 2016, an increase of 22% from $65.5 million in 2015. As a percentage of revenue, gross profit was 69% in Q4 2016 and FY 2016, compared to 72% for the same periods of 2015. The change in gross profit margin in FY 2016 was due to investments in additional headcount, the use of third party providers, and an increase in global datacenter capability, all to support current and future growth.

Profit for Q4 2016 was $1.7 million or $0.07 per basic and diluted share compared to $1.3 million or $0.05 per basic and diluted share for the same period in 2015. Profit was $10.7 million or $0.44 per basic and $0.41 per diluted share for FY 2016 compared to $12.7 million or $0.53 per basic and $0.50 diluted share for 2015. The decrease in annual profit was primarily driven by investment in sales and marketing, investment in research and development, and an increase in share-based payments.

Adjusted EBITDA was $6.4 million in Q4 2016, a 10% decline from $7.1 million in the same period last year. Adjusted EBITDA was $28.5 million in FY 2016, a 5% decline from $30.0 million in 2015.  The change compared to the prior year period was primarily due to increased investment in sales and marketing and product development.

Cash generated by operating activities was $17.1 million and $31.1 million for Q4 2016 and FY 2016, respectively, compared to $8.5 million and $45.2 million for the corresponding periods in 2014. The quarterly increase was due to a decrease in accounts receivable coupled with an increase in deferred revenue, partially offset by an increase in share-based payments, depreciation and income tax expense. The FY 2016 decrease was due primarily to the receipt of a prepayment of an approximately $20.0 million multi-year subscription arrangement in the first quarter of 2015, and lower profit and higher income taxes paid for the year ended December 31, 2016 compared to the same period in 2015. This was partially offset by an increase in depreciation and share-based payments.

Cash and cash equivalents were $127.9 million as at December 31, 2016 as compared to $99.4 million as at December 31, 2015.

Full Year 2017 Financial Guidance

Kinaxis has set the following 2017 full year financial targets:

  • Annual total revenue to be in the range of $140 million to $144 million
  • Annual subscription revenue to grow 25% to 27%
  • Annual Adjusted EBITDA as a percentage of total revenue to be between 24% 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, 2017.  Please refer to the section regarding forward-looking statements which forms an integral part of this release.

This press release, along with the audited consolidated annual financial statements and the Company's annual 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, March 1, 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:

Wednesday, March 1, 2017

Time:

8:30 a.m. (ET)

Dial In Number:

(647) 427-7450 or (888) 231-8191

Live Webcast:

http://bit.ly/2kzZske


Webcast will be archived for 90 days

Taped Replay:

(416) 849-0833 or (855) 859-2056


Available until 12:00 midnight (ET) Wednesday, March 8, 2017

Reference Number:

68466853

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 March 8, 2017.

Toll-Free Replay Number: 1 (855) 859-2056
International Replay Number: 1 (416) 849-0833
Replay PIN: 68466853

About Kinaxis Inc.
Offering the industry's only concurrent planning solution, Kinaxis is helping organizations around the world revolutionize their supply chain planning. Kinaxis RapidResponse, our cloud-based supply chain management software, connects 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 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.

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


Three months ended

Years ended

 December 31,

 December 31,


2016

2015

2016

2015


(In thousands of U.S. dollars)

Profit 

$1,711

$1,286

$10,745

$12,678

Share-based compensation

1,950

1,229

8,140

4,452

Adjusted profit

$3,661

$2,515

$18,885

$17,130

Income tax expense

1,884

4,146

7,258

10,216

Depreciation

748

499

2,494

1,726

Foreign exchange loss 

223

18

198

1,041

Net finance income

(78)

(32)

(307)

(128)


2,777

4,631

9,643

12,855

Adjusted EBITDA

$6,438

$7,146

$28,528

$29,985

Adjusted EBITDA as a percentage of revenue

21%

30%

25%

33%

 

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 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 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 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.

Consolidated Statements of Finanical Position

As at December 31

(Expressed in thousands of U.S. dollars)







2016

2015




Assets






Current assets:




Cash and cash equivalents

127,910

99,390


Trade and other receivables 

23,820

15,833


Investment tax credits receivable

1,583

1,532


Investment tax credits recoverable

755

2,083


Prepaid expenses

3,333

1,906


157,401

120,744

Non-current assets:




Property and equipment 

10,652

7,352


Deferred tax assets

239

-





168,292

128,096




Liabilities






Current liabilities:




Trade payables and accrued liabilities 

10,495

6,794


Deferred revenue

55,458

40,442


65,953

47,236

Non-current liabilities:




Lease inducement

18

62


Deferred revenue

13,198

14,191


Deferred tax liability

1,412

1,003


14,628

15,256




Shareholders' Equity



Share capital 

97,164

90,808

Contributed surplus

13,924

8,873

Accumulated other comprehensive loss

(519)

(474)

Deficit

(22,858)

(33,603)


87,711

65,604





168,292

128,096

 

Kinaxis Inc.

Consolidated Statements of Comprehensive Income

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

For the three months ended
December 31,

For the year ended
December 31,


2016

2015

2016

2015

Revenue 

30,264

24,191

115,951

91,271






Cost of revenue

9,493

6,789

35,777

25,743


Gross profit

20,771

17,402

80,174

65,528


Operating expenses:







Selling and marketing

8,503

6,175

30,350

18,264



Research and development 

5,495

3,695

20,652

15,197



General and administrative

3,033

2,114

11,278

8,260


17,031

11,984

62,280

41,721







3,740

5,418

17,894

23,807


Other income (expense):







Foreign exchange loss

(223)

(18)

(198)

(1,041)



Finance income

78

32

307

128


(145)

14

109

(913)







Profit before income taxes

3,595

5,432

18,003

22,894







Income tax expense:







Current

1,573

3,143

7,088

3,487



Deferred

311

1,003

170

6,729


1,884

4,146

7,258

10,216







Profit

1,711

1,286

10,745

12,678







Other comprehensive loss






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







Foreign currency translation differences - foreign operations

(199)

(11)

(45)

(21)


Total comprehensive income

1,512

1,275

10,700

12,657






Basic earnings  per share

0.07

0.05

0.44

0.53






Weighted average number of basic common shares 

24,898,361

24,256,793

24,654,369

23,953,609






Diluted earnings  per share

0.07

0.05

0.41

0.50






Weighted average number of diluted common shares

26,234,783

25,719,972

25,977,615

25,465,632

 

 

Kinaxis Inc.

Consolidated Statements of Changes in Shareholders' Equity 

Years ended December 31

(Expressed in thousands of U.S. dollars)









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

-

-

-

12,678

12,678

Other comprehensive loss

-

-

(21)

-

(21)

Total comprehensive income

-

-

(21)

12,678

12,657


Share options exercised

2,721

(863)

-

-

1,858


Restricted Share Units Vested

868

(868)



-


Share based payments

-

4,452

-

-

4,452

Total shareholder transactions

3,589

2,721

-

-

6,310








Balance, December 31, 2015

90,808

8,873

(474)

(33,603)

65,604







Profit

-

-

-

10,745

10,745

Other comprehensive loss

-

-

(45)

-

(45)

Total comprehensive income

-

-

(45)

10,745

10,700








Share options exercised

4,845

(1,578)

-

-

3,267


Restricted Share Units Vested

1,360

(1,360)



-


Deferred share units vested

151

(151)





Share based payments

-

8,140

-

-

8,140

Total shareholder transactions

6,356

5,051

-

-

11,407








Balance, December 31, 2016

97,164

13,924

(519)

(22,858)

87,711

 

 

Kinaxis Inc.

Consolidated Statements of Cash Flows

Years ended December 31

(Expressed in thousands of U.S. dollars)




2016

2015




Cash flows from operating activities:






Profit 

10,745

12,678

Items not affecting cash:




Depreciation of property and equipment

2,494

1,726


Share-based payments

8,140

4,452


Amortization of lease inducement

(44)

(47)


Investment tax credits recoverable

1,328

1,008


Income tax expense

7,258

10,216


Change in operating assets and liabilities

3,408

16,100

Income taxes paid

(2,203)

(885)


31,126

45,248




Cash flows used investing activities:




Purchase of property and equipment

(5,794)

(4,334)




Cash flows from financing activities:




Common Shares issued

3,267

1,858




Increase in cash and cash equivalents

28,599

42,772




Cash and cash equivalents, beginning of period

99,390

56,725




Effects of exchange rates on cash and cash equivalents

(79)

(107)




Cash and cash equivalents, end of year

127,910

99,390

 

 

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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