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Media - The Forum on Supply Chain Risk + Compliance Management 2016

Kinaxis Inc. Reports 22% Growth in Subscription Revenue.

OTTAWA, CANADA – August 3, 2016 – Kinaxis® (TSX:KXS), provider of RapidResponse®, delivering cloud-based SCM and S&OP applications, reported results for its fiscal second quarter, which ended June 30, 2016. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

Second Quarter 2016 Highlights 
(Comparisons made between fiscal Q2 2016 and fiscal Q2 2015 results, unless otherwise noted)

Revenue totaled $28.7 million, up 21%
Subscription revenue was $19.9 million, up 22%
Gross profit was $20.0 million (70% of total revenue), up 15%
Adjusted EBITDA(1) totaled $7.3 million (25% of total revenue)
Adjusted diluted earnings per share(1) of $0.20

(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.

“We delivered great results, maintaining consistent topline growth together with both strong EBITDA and profit, while continuing to make key investments that will accelerate our long-term growth,” said John Sicard, CEO of Kinaxis. “Our recent customer announcement with Samsung demonstrates the significant traction RapidResponse is receiving in new markets and the effectiveness of our solution to solve the diverse supply chain problems of the world’s largest companies.  Our positive customer momentum and progress in developing our strategic partner relationships gives us great confidence in our ability to continue to grow both our top and bottom line results while delivering strong cash flow from the business.”

Fiscal Q2 2016 Financial Results

Total revenue for the three months ending June 30, 2016 (Q2 2016) was $28.7 million, an increase of 21% compared to the same period in 2015.

Subscription revenue was $19.9 million in Q2 2016, an increase of 22% from $16.3 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 20% to $8.5 million in Q2 2016, compared to $7.1 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 $20.0 million in Q2 2016, compared to $17.4 million for the same period in 2015. As a percentage of revenue, gross profit was 70% compared to 73% in the prior year quarter. The percentage change in Q2 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.

Adjusted EBITDA was $7.3 million in Q2 2016, compared to $9.2 million in the same period last year. The change in the period was the result of higher sales and marketing costs incurred in the current quarter partially offset by the lower cost of the Canadian dollar versus the U.S. dollar.

Profit for Q2 2016 was $3.2 million or $0.13 per basic and diluted share compared to a profit of $5.2 million or $0.22 per basic and $0.20 per diluted share for the same period in 2015. The change compared to the prior period was primarily driven by higher sales and marketing 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 generated by operating activities was $6.8 million for Q2 2016 compared to $7.3 million in the same period in 2015. The change was primarily due to 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 $114.8 million as at June 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 $112 million to $115 million
Annual subscription revenue to grow 22% to 24%
Annual Adjusted EBITDA as a percentage of total revenue to be between 25% and 29% 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.

Board of Directors Update

Kinaxis also announced today that Jill Denham has been appointed to its Board of Directors.

“With over 20 years’ experience in financial services, Jill brings a diverse skillset to our board,” said Douglas Colbeth, Kinaxis Chairman of the Board. “Jill’s extensive experience in the financial industry and strong business acumen make her an extremely valuable asset to Kinaxis as we continue to grow.”

Among her past roles, Ms. Denham was Vice Chair at CIBC Retail Markets, and a Director of the Ontario Teachers' Pension Plan Board. Prior to being Vice Chair at CIBC Retail Markets, she had responsibility for the European business of CIBC and before that she was President, Merchant Banking. She was also a member of the Task Force on the Future of Securities Regulation in Canada.

“Kinaxis’ unique business model and history of profitable growth set it apart from traditional SaaS software companies,” said Jill Denham. “I am looking forward to working directly with my fellow board members and utilizing my diverse background to contribute to Kinaxis’ next phase of success.”

Ms. Denham is currently a director of several companies, including National Bank of Canada as well as the Chair of the Board of Morneau Shepell. She holds an HBA from the University of Western Ontario School of Business Administration and an MBA from the Harvard Business School.

Source: Kinaxis Inc.

Highlights!

    • Supply Chain RISK + COMPLIANCE MANAGEMENT – What it really means to MANUFACTURERS?
    • Transforming the Supply Chain with National and Global STANDARDS to manage RISK and COMPLIANCE.
    • IMPORTANCE & ROLE of STANDARDS & CERTIFICATIONS in Supply Chain RISK MANAGEMENT + COMPLIANCE.
    • Best Practices Case Studies + Use Cases in Supply Chain Risk + Compliance Management.
    • Securing the Supply Chain ECO-SYSTEM and the role and responsibilities of the STAKEHOLDERS;
      • Manufacturers 
      • Logistics Providers
      • Freight Carriers
      • Law Enforcement Agencies        
      • Government Agencies 
      • Security Professionals   
      • Logistics Professionals  
      • Freight Services Industry Companies
      • Insurance Companies
      • Audit Companies
      • Technology Companies
    • The IMPORTANCE & ROLE of TECHNOLOGY in STANDARDS Development 
      • TELEMATICS for Cargo + Driver Safety and Security 
        • Cargo Safety & Security - Explore how telematics is used for combating hijackings, thefts and robberies
        • Driver Safety & Security - Explore how telematics technologies can help enhance the driver safety and security by real time monitoring of driver behavior and driver fatigue
        • Fleet Performance and Fuel Efficiency - The impact of telematics and fleet management technology on insurance
        • Cold Chain Management - temperature-controlled supply chain: 
        • Life Sciences: Clinical Trials - Hospitals and Blood - Pharmaceuticals - Vaccines, 
        • Fresh and Processed Food - Produce - Seafood - Meat and Poultry - Dairy - Floral
      • Technology Solutions for Warehouse Safety & Security
        • Physical Security Information Management (PSIM) - An Integrated Approach to Warehouse Security for simplifying the command and control - at-a-glance snapshot of all operations, enhancing their situational awareness and increasing their ability to react to any security infringements within the warehouse environment - Witness how a PSIM platform that seamlessly brings together otherwise disparate solutions - Access Control, CCTV, RFID, Intruder detection and Fire systems.
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