Kinaxis Inc. Reports Second Quarter 2022 Results

·12 min read
  • SaaS revenue grows 21%; constant currency1 SaaS revenue grows 27%

  • Total revenue grows 35%; constant currency1 total revenue grows 42%

  • Adjusted EBITDA1 margin of 13%; constant currency1 adjusted EBITDA1 margin of 15%

  • ARR grows 21%; constant currency1 ARR grows 25% as company experiences ongoing strength in new customer wins and existing customer expansions

OTTAWA, Ontario, August 09, 2022--(BUSINESS WIRE)--Kinaxis® (TSX:KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, reported results for its second quarter ended June 30, 2022. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"Each quarter we continue to see significant growth in new customers over comparable periods, and the demand environment for supply chain planning continues to strengthen. We remain at the epicenter of a wave of transformation to end-to-end digital supply chains and are the only solution provider to offer real-time visibility, actionability and agility through a unique concurrent planning approach," said John Sicard, President and CEO of Kinaxis. "While foreign exchange fluctuations are a headwind to reported results for North American SaaS companies right now, our constant currency1 results and outlook clearly demonstrate how we are experiencing ongoing momentum in SaaS revenue and ARR growth, and are executing to plan against our profitability goals for the year."

Q2 2022 Highlights

$ USD thousands, except as otherwise indicated

Q2 2022

Q2 2021

Change

Total Revenue

80,800

60,056

35%

(constant currency1)

85,264

42%

SaaS

51,109

42,301

21%

(constant currency1)

53,530

27%

Subscription term licenses

378

620

(39%)

Professional services

25,386

14,001

81%

Maintenance and support

3,927

3,134

25%

Gross profit

49,776

40,273

24%

Margin

62%

67%

Profit

(2,632)

3,088

(185%)

Per diluted share

($0.10)

$0.11

Adjusted EBITDA1

10,376

7,149

45%

Margin

13%

12%

(constant currency1)

13,107

83%

15%

Cash from operating activities

8,415

15,002

(44%)

(1)

"Adjusted EBITDA" and constant currency metrics are non-IFRS measures and are not recognized, defined or standardized measures under IFRS. These measure as well as any other non-IFRS financial measures reported by Kinaxis are defined in the "Non-IFRS Measures" section of this news release.

Key Performance Indicators
The company’s Annual Recurring Revenue2 (ARR), which includes subscription amounts related to both SaaS and on-premise contracts, rose 25% in constant currency1 to $249 million at the end of the quarter.

$USD millions

Q2 2022

Q2 2021

Change

Annual recurring revenue2

241

200

21%

Annual recurring revenue2,
constant currency1

249

200

25%

(2)

Annual Recurring Revenue (ARR) is the total annualized value of recurring subscription amounts (ultimately recognized as SaaS, Subscription term licenses and Maintenance and support revenue) of all subscription contracts at a point in time. Annualized subscription amounts are determined solely by reference to the underlying contracts, normalizing for the varying revenue recognition treatments under IFRS 15 for cloud-based versus on-premise subscription amounts. It excludes one-time fees, such as for non-recurring professional services, and assumes that customers will renew the contractual commitments on a periodic basis as those commitments come up for renewal, unless such renewal is known to be unlikely. We believe that this measure provides a more current indication of our performance in the growth of our subscription business than other metrics.

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 June 30, 2022.

$USD millions

Remainder of
2022

2023

2024 and later

Total

SaaS

101.5

169.4

188.7

459.6

Maintenance and support

7.2

11.1

14.0

32.3

Subscription term licenses

2.8

-

0.1

2.9

Total

111.6

180.5

202.7

494.8

Financial Guidance
Kinaxis is updating its previous fiscal 2022 financial guidance. To date in 2022, Kinaxis has seen an incremental strengthening of the U.S. dollar that has negatively impacted reported results – most notably for SaaS revenue. Removing the impact of these foreign exchange fluctuations, on a constant currency1 basis Kinaxis sees SaaS revenue growth of 25-27% for FY 2022, reflecting the ongoing underlying strength in the business environment.

Previous FY 2022 Guidance

Updated FY 2022 Guidance

Total revenue

$345-355 million

$355-365 million

SaaS

23-25% growth

21-23% growth
(25-27%, constant currency1 basis)

Subscription term license

$32-34 million

$34-36 million

Adjusted EBITDA1 margin

16-19%

16-19%

Guidance in this press release is provided to enhance visibility into Kinaxis’ expectations for financial targets for the periods indicated. Please refer to the section regarding forward-looking statements that forms an integral part of this release. This press release along with the financial statements and MD&A for the three months ended June 30, 2022 are available on Kinaxis’ website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, August 10, 2022, to discuss these results. John Sicard, Chief Executive Officer, and Blaine Fitzgerald, 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. Investors and participants must register for the call in advance. See registration link below. Please call the conference telephone number fifteen minutes prior to the start time.

DATE:

Wednesday, August 10, 2022

TIME:

8:30 a.m. Eastern Time

CALL REGISTRATION:

https://conferencingportals.com/event/eopSfgtI

WEBCAST:

https://events.q4inc.com/attendee/109665882 (available for three months)

REPLAY:

(800)-770-2030 or (647)-362-9199
Available through August 24, 2022
Reference number: 2948803

About Kinaxis Inc.
Everyday volatility and uncertainty demand quick action. Kinaxis® delivers the agility to make fast, confident decisions across integrated business planning and the digital supply chain. People can plan better, live better and change the world. Trusted by innovative brands, we combine human intelligence with AI and concurrent planning to help companies plan for any future, monitor risks and opportunities and respond at the pace of change. Powered by an extensible, cloud-based platform, Kinaxis delivers industry-proven applications so everyone can know sooner, act faster and remove waste. For more Kinaxis news, follow us on LinkedIn or Twitter.

Non-IFRS Measures
Adjusted EBITDA and Adjusted EBITDA Margin
This news release contains non-IFRS measures, specifically Adjusted EBITDA and Adjusted EBITDA margin. 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 and Adjusted EBITDA margins are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted EBITDA and Adjusted EBITDA margin 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 EBITDA to the most comparable IFRS financial measure as follows:

Three months ended June 30,

Six months ended June 30,

2022

2021

2022

2021

(In thousands of USD)

Profit (loss)

$

(2,632

)

$

3,088

$

9,890

$

1,554

Share-based compensation

6,503

5,902

12,506

11,209

Non-recurring item

(7,906

)

(7,906

)

Adjusted profit

$

3,871

$

1,084

$

22,396

$

4,857

Income tax expense

986

916

8,114

984

Depreciation and amortization

6,061

4,598

11,975

9,068

Foreign exchange loss (gain)

(623

)

443

542

911

Net finance expense

81

108

498

370

6,505

6,065

21,129

11,333

Adjusted EBITDA

$

10,376

$

7,149

$

43,525

$

16,190

Adjusted EBITDA as a percentage of revenue

13

%

12

%

24

%

14

%

Constant Currency metrics
We present SaaS revenue, total revenue, adjusted EBITDA, ARR and their related growth rates under constant currency, a non-IFRS measure, to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. Such results for entities reporting in currencies other than U.S. Dollars ("USD") are converted into USD at the average exchange rates in effect during the comparison period (i.e., for Q2 2022, the average exchange rates in effect for Q2 2021), rather than the actual average exchange rates in effect during the current period. The outlook for constant currency SaaS revenue growth rate is derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the guidance period (i.e., for FY 2022 constant currency guidance, the average exchange rates in effect for FY 2021). We believe the presentation of the above metrics and applicable related growth rates adjusted for constant currency facilitates the corresponding year‑over‑year comparisons.

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 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, 2022; and

  • contracted revenue in future periods, including 2022, 2023 and 2024 and later.

This release also includes forward-looking 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 2022 annual total revenue, annual SaaS and Subscription term license revenue and annual Adjusted EBITDA margin, is subject to certain assumptions and associated risks 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 customer retention levels, and specifically, that customers will renew contractual commitments on a periodic basis as those commitments come up for renewal, at rates consistent with our historic experience;

  • fluctuations in the value of foreign currencies relative to the U.S. Dollar; and

  • with respect to Adjusted EBITDA, our ability to contain expense levels while expanding our business.

Our guidance and commentary for achievement of contracted revenue in future periods, including in 2022, 2023 and 2024 and later, is based on assumptions and associated risks including:

  • our ability to satisfy material unperformed obligations under our long-term contracts; and

  • the continued financial capacity and creditworthiness of our customers under long-term contracts.

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 March 1, 2022, under the heading "Risk Factors" in our Annual Information Form dated March 25, 2022 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.

Condensed Consolidated Interim Statements of Financial Position
(Expressed in thousands of USD)
(Unaudited)

June 30,
2022

December 31,
2021

Assets

Current assets:

Cash and cash equivalents

$

227,862

$

203,220

Short-term investments

30,197

30,168

Trade and other receivables

84,582

89,247

Prepaid expenses

11,721

8,502

354,362

331,137

Non-current assets:

Unbilled receivables

2,766

512

Other receivables

967

1,096

Prepaid expenses

2,878

1,780

Investment tax credits recoverable

6,140

3,616

Deferred tax assets

987

6,000

Contract acquisition costs

22,276

19,691

Property and equipment

51,025

52,093

Right-of-use assets

55,142

53,578

Intangible assets

11,215

10,778

Goodwill

42,412

39,988

195,808

189,132

$

550,170

$

520,269

Liabilities and Shareholders’ Equity

Current liabilities:

Trade payables and accrued liabilities

$

37,629

$

43,328

Deferred revenue

102,356

99,239

Provisions

367

716

Lease obligations

7,042

2,526

147,394

145,809

Non-current liabilities:

Lease obligations

53,867

53,233

Deferred tax liabilities

1,021

9

54,888

53,242

Shareholders’ equity:

Share capital

206,298

195,414

Contributed surplus

62,074

54,739

Accumulated other comprehensive loss

(2,036

)

(597

)

Retained earnings

81,552

71,662

347,888

321,218

$

550,170

$

520,269

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(Expressed in thousands of USD, except share and per share data)
(Unaudited)

Three months ended June 30,

Six months ended June 30,

2022

2021

2022

2021

Revenue

$

80,800

$

60,056

$

178,908

$

117,784

Cost of revenue

31,024

19,783

59,490

40,289

Gross profit

49,776

40,273

119,418

77,495

Operating expenses:

Selling and marketing

21,138

14,279

38,264

27,117

Research and development

18,076

11,223

36,233

24,905

General and administrative

12,817

10,323

26,001

21,865

52,031

35,825

100,498

73,887

(2,255

)

4,448

18,920

3,608

Other income (expense):

Foreign exchange gain/(loss)

623

(443

)

(542

)

(911

)

Net finance and other expense

(14

)

(1

)

(374

)

(159

)

609

(444

)

(916

)

(1,070

)

Profit (loss) before income taxes

(1,646

)

4,004

18,004

2,538

Income tax expense

986

916

8,114

984

Profit (loss)

(2,632

)

3,088

9,890

1,554

Other comprehensive loss

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

Foreign currency translation differences - foreign operations

(1,059

)

39

(1,439

)

(230

)

Total comprehensive income (loss)

$

(3,691

)

$

3,127

$

8,451

$

1,324

Basic earnings (loss) per share

$

(0.10

)

$

0.11

$

0.36

$

0.06

Weighted average number of basic Common Shares

27,593,598

27,110,830

27,537,845

27,165,088

Diluted earnings (loss) per share

$

(0.10

)

$

0.11

$

0.35

$

0.05

Weighted average number of diluted Common Shares

27,593,598

28,132,511

28,478,656

28,260,273

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
(Expressed in thousands of USD)
(Unaudited)

Share
capital

Contributed
surplus

Accumulated
other
comprehensive
loss

Retained
earnings

Total equity

Balance, December 31, 2020

$

173,104

$

35,846

$

(20

)

$

72,827

$

281,757

Profit

1,554

1,554

Other comprehensive loss

(230

)

(230

)

Total comprehensive loss

(230

)

1,554

1,324

Share options exercised

6,164

(1,600

)

4,564

Share based payments

11,209

11,209

Total shareholder transactions

6,164

9,609

15,773

Balance, June 30, 2021

$

179,268

$

45,455

$

(250

)

$

74,381

$

298,854

Balance, December 31, 2021

$

195,414

$

54,739

$

(597

)

$

71,662

$

321,218

Profit

9,890

9,890

Other comprehensive loss

(1,439

)

(1,439

)

Total comprehensive income (loss)

(1,439

)

9,890

8,451

Share options exercised

9,869

(2,176

)

7,693

Restricted share units vested

598

(598

)

Performance share units vested

417

(417

)

Share based payments

10,526

10,526

Total shareholder transactions

10,884

7,335

18,219

Balance, June 30, 2022

$

206,298

$

62,074

$

(2,036

)

$

81,552

$

347,888

Condensed Consolidated Interim Statements of Cash Flows
(Expressed in thousands of USD)
(Unaudited)

Three Months Ended June 30,

Six months ended June 30,

2022

2021

2022

2021

Cash flows from operating activities:

Profit (loss)

$

(2,632

)

$

3,088

$

9,890

$

1,554

Items not affecting cash:

Depreciation of property and equipment and right-of-use assets

5,437

4,037

10,768

7,946

Amortization of intangible assets

624

561

1,207

1,122

Share-based payments

6,503

5,902

12,506

11,209

Net finance expense

81

1

498

159

Income tax expense

986

916

8,114

984

Investment tax credits recoverable

(1,482

)

674

(2,524

)

249

Change in operating assets and liabilities

(64

)

70

(7,296

)

13,010

Interest received

372

183

402

206

Interest paid

(475

)

(173

)

(929

)

(357

)

Income taxes paid

(935

)

(257

)

(2,228

)

(431

)

8,415

15,002

30,408

35,651

Cash flows used in investing activities:

Acquisition of business, net of cash acquired

9

(3,019

)

(800

)

Purchase of property and equipment and intangible assets

(1,275

)

(12,489

)

(7,554

)

(16,930

)

Purchase of short-term investments

(15,154

)

(15,154

)

(30,160

)

(30,160

)

Redemption of short-term investments

15,154

15,154

30,160

30,160

(1,266

)

(12,489

)

(10,573

)

(17,730

)

Cash flows from financing activities:

Payment of lease obligations

(1,754

)

(1,185

)

(3,231

)

(2,357

)

Lease incentive received

3,858

3,858

Proceeds from exercise of stock options

516

2,304

7,693

4,564

2,620

1,119

8,320

2,207

Increase in cash and cash equivalents

9,769

3,632

28,155

20,128

Cash and cash equivalents, beginning of period

221,983

199,143

203,220

182,958

Effects of exchange rates on cash and cash equivalents

(3,890

)

(4

)

(3,513

)

(315

)

Cash and cash equivalents, end of period

$

227,862

$

202,771

$

227,862

$

202,771

SOURCE: Kinaxis Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220810005042/en/

Contacts

Investor Relations
Rick Wadsworth | Kinaxis
rwadsworth@kinaxis.com
613-907-7613

Media Relations
Jaime Cook | Kinaxis
jcook@kinaxis.com
289-552-4640