KXS Kinaxis Inc

• SaaS revenue grows 18%, adjusted EBITDA1 margin of 19%, annual recurring revenue grows 15%
• Highest number of new customers for a second quarter, second highest quarterly wins ever
• Guidance reflects stronger profitability outlook despite elevated scrutiny in buying environment

Kinaxis® (TSX:KXS), a leading provider of supply chain orchestration solutions, reported results for its second quarter ended June 30, 2024. All amounts are in U.S. dollars. All figures are prepared in accordance with IFRS Accounting Standards unless otherwise indicated.

“We delivered solid financial results in the quarter. Over three-quarters of business won was from new customers, and we are seeing good results from our heightened focused on profitability. For our larger enterprise opportunities, scrutiny around major buying decisions remains elevated and we anticipate that to remain over the short term. We are continuing to build for the long term. Our committed SaaS backlog grew 30% year over year, demand drivers are intensifying, and we are reinvesting in strategic go-to-market initiatives, positioning us for our next wave of strong, highly profitable growth,” said John Sicard, president and chief executive officer at Kinaxis. “Notwithstanding large enterprise deal delays, we closed record new customer wins for a Q2, and had record attendance at Kinexions, our supply chain community conference. At Kinexions, we introduced Maestro, our new AI-infused supply chain orchestration platform that breaks down silos across the entire network so our customers can conduct their supply chain in total harmony as they wrestle with increasing business complexity and disruption. The market is demanding better orchestration solutions and we are creating the path for them to follow.”

Q2 2024 Highlights

$ USD thousands, except as otherwise indicated

Q2 2024

Q2 2023

Change

Total Revenue

118,278

105,772

12%

SaaS

75,395

64,104

18%

Subscription term licenses

1,368

7,086

(81)%

Professional services

36,495

29,991

22%

Maintenance and support

5,020

4,591

9%

Gross profit

70,186

63,670

10%

Margin

59%

60%

 

Profit (loss)

3,434

(2,540)

_

Per diluted share

$0.12

$(0.09)

 

Adjusted EBITDA1

21,930

15,202

44%

Margin

19%

14%

 

Cash from operating activities

13,140

13,943

(6)%

(1) “Adjusted EBITDA” is a non-IFRS measure and is not a recognized, defined or standardized measure under IFRS. This 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 15% to $339 million at the end of the quarter.

$USD millions

Q2 2024

Q2 2023

Change

Annual recurring revenue2

339

293

15%

(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, 2024.

 

$USD millions

Remainder of

2024

 

2025

 

2026 and later

 

Total

SaaS

151.8

235.7

317.3

704.8

Maintenance and support

10.1

15.3

16.4

41.8

Subscription term licenses

1.6

0.1

0.1

1.8

Total

163.5

251.1

333.8

748.4

Financial Guidance Kinaxis is updating its fiscal 2024 guidance, as follows:

 

FY 2024 Guidance

Total revenue

$483-495 million

SaaS

15-17% growth

Subscription term license

$9-11 million

Adjusted EBITDA1 margin

19-21%

“I’m pleased to increase our Adjusted EBITDA guidance for fiscal 2024 for the second consecutive quarter. While elevated scrutiny in the buying environment, particularly for the largest deals, and fluctuations in certain key foreign currencies, have tempered our SaaS revenue outlook for 2024, we're confidently moving towards our 25% Adjusted EBITDA mid-term target. We look forward to a more typical buying environment and seeing the impacts of reinvestment in strategic go-to-market initiatives,” said Blaine Fitzgerald, chief financial officer at Kinaxis.

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 quarter ended June 30, 2024 are available on Kinaxis’ website and on SEDAR at www.sedar.com.

Conference Call Kinaxis will host a conference call tomorrow, August 1, 2024, 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:

Thursday, August 1, 2024

TIME:

8:30 a.m. Eastern Time

CALL REGISTRATION:

https://registrations.events/direct/Q4I914161463

WEBCAST

https://events.q4inc.com/attendee/304263983 (available for three months)

About Kinaxis Inc. Kinaxis is a global leader in modern supply chain orchestration. We serve supply chains and the people who manage them in service of humanity. Our software is trusted by renowned global brands to provide the agility and predictability needed to navigate today’s volatility and disruption. We combine our patented concurrency technique with a human-centered approach to AI to empower businesses of all sizes to orchestrate their end-to-end supply chain network, from multi-year strategic planning through down-to-the-second execution and last-mile delivery. For more news and information, please visit kinaxis.com or follow us on LinkedIn.

Non-IFRS Measures This press release makes reference to Adjusted Profit and Adjusted EBITDA, which are non-IFRS financial measures, as well as Adjusted EBITDA margin which expresses Adjusted EBITDA as a percentage of revenue. Adjusted Profit, Adjusted EBITDA and Adjusted EBITDA margin are not recognized, defined or standardized measures under IFRS. We use these measures to provide investors with supplemental information on our operating performance and to 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, and to determine components of employee compensation.

Adjusted Profit represents profit adjusted to exclude the changes in the fair value of contingent consideration, our equity compensation plans and non-recurring items. Adjusted EBITDA represents profit adjusted to exclude the change in the fair value of contingent consideration, our equity compensation plans, non-recurring items, income tax expense, depreciation and amortization, foreign exchange loss (gain) and net finance (income) expense. Adjusted EBITDA margin expresses Adjusted EBITDA as a percentage of revenue. Our definitions of Adjusted Profit, Adjusted EBITDA and Adjusted EBITDA margin will likely differ from those 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 Profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:

 

 

Three months ended June 30,

 

Six months ended June 30, 2024

 

 

2024

 

 

2023

 

2024

 

 

2023

 

(In thousands of USD)

 

(In thousands of USD)

Profit (loss)

 

3,434

 

 

(2,540)

 

9,621

 

 

(1,351)

Change in fair value of contingent consideration

 

—

 

 

462

 

—

 

 

2,656

Share-based compensation

 

7,702

 

 

9,155

 

16,424

 

 

17,374

Non-recurring item3

 

5,546

 

 

—

 

7,298

 

 

—

Adjusted profit

 

16,682

 

 

7,077

 

33,343

 

 

18,679

Income tax expense

 

2,082

 

 

997

 

4,691

 

 

1,301

Depreciation and amortization

 

6,268

 

 

6,517

 

12,673

 

 

13,404

Foreign exchange gain (loss)

 

(40)

 

 

2,374

 

(166)

 

 

2,109

Net finance income

 

(3,062)

 

 

(1,763)

 

(5,931)

 

 

(3,149)

 

 

5,248

 

 

8,125

 

11,267

 

 

13,665

Adjusted EBITDA

 

21,930

 

 

15,202

 

44,610

 

 

32,344

Adjusted EBITDA Margin

 

19%

 

 

14%

 

19%

 

 

16%

Note:

(3) Costs associated with the restructuring initiative

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, 2024;
• SaaS growth and increased profitability in years beyond 2024; and
• contracted revenue in future periods, including 2024, 2025 and 2026 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 2024 annual total revenue, annual SaaS and Subscription term license revenue and annual Adjusted EBITDA margin, as well as our comments on our expectations for SaaS growth and increased profitability in years beyond 2024, are 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 and profitability, our ability to contain expense levels while expanding our business.

Our guidance and commentary for achievement of contracted revenue in future periods, including in 2024, 2025 and 2026 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 February 28, 2024, under the heading “Risk Factors” in our Annual Information Form dated March 25, 2024 and in our other public documents filed with Canadian securities regulatory authorities, which are available at www.sedarplus.ca. 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.

SOURCE: Kinaxis Inc.

Kinaxis Inc.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of USD)

(Unaudited)

 

June 30,

2024

December 31,

2023

 

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

147,155

$

174,844

Short-term investments

 

135,176

 

118,118

Trade and other receivables

 

145,785

 

156,609

Prepaid expenses

 

17,623

 

14,810

 

 

445,739

 

464,381

Non-current assets:

 

 

Unbilled receivables

 

1,710

 

3,155

Other receivables

 

865

 

972

Prepaid expenses

 

2,406

 

1,130

Investment tax credits recoverable

 

10,371

 

8,362

Deferred tax assets

 

35,088

 

1,184

Contract acquisition costs

 

29,784

 

27,438

Property and equipment

 

35,858

 

40,300

Right-of-use assets

 

47,930

 

47,109

Intangible assets

 

20,343

 

23,394

Goodwill

 

73,613

 

74,556

 

 

257,968

 

227,600

 

 

 

 

$

703,707

$

691,981

 

 

 

Liabilities and Shareholders’ Equity

 

 

Current liabilities:

 

 

Trade payables and accrued liabilities

 

93,537

 

39,700

Provisions

 

875

 

—

Deferred revenue

 

133,909

 

137,598

Lease obligations

 

5,930

 

5,805

 

 

234,251

 

183,103

Non-current liabilities:

 

 

Lease obligations

 

45,664

 

45,985

Deferred tax liabilities

 

7,677

 

8,065

 

 

53,341

 

54,050

Shareholders’ equity:

 

 

Share capital

 

294,878

 

307,327

Contributed surplus

 

11,128

 

44,339

Accumulated other comprehensive income (loss)

 

(1,314)

 

1,360

Retained earnings

 

111,423

 

101,802

 

 

416,115

 

454,828

 

 

 

 

$

703,707

$

691,981

Kinaxis Inc.

Condensed Consolidated Interim Statements of Comprehensive Income

(Expressed in thousands of USD, except share and per share data)

(Unaudited)

 

Three months ended June 30,

Six months ended June 30,

 

2024

2023

2024

2023

Revenue

$

118,278

 

$

105,772

 

$

237,648

 

$

206,902

 

 

 

 

 

 

Cost of revenue

 

48,092

 

 

42,102

 

 

94,532

 

 

82,231

 

 

 

 

 

 

Gross profit

 

70,186

 

 

63,670

 

 

143,116

 

 

124,671

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling and marketing

 

27,341

 

 

28,417

 

 

52,268

 

 

52,581

 

Research and development

 

22,221

 

 

21,002

 

 

45,206

 

 

40,931

 

General and administrative

 

18,263

 

 

14,777

 

 

37,512

 

 

29,568

 

 

 

67,825

 

 

64,196

 

 

134,986

 

 

123,080

 

 

 

 

 

 

 

 

2,361

 

 

(526

)

 

8,130

 

 

1,591

 

 

 

 

 

 

Other income (expense):

 

 

 

 

Foreign exchange gain (loss)

 

40

 

 

(2,374

)

 

166

 

 

(2,109

)

Net finance and other income

 

3,115

 

 

1,819

 

 

6,016

 

 

3,124

 

Change in fair value of contingent consideration

 

—

 

 

(462

)

 

—

 

 

(2,656

)

 

 

3,155

 

 

(1,017

)

 

6,182

 

 

(1,641

)

 

 

 

 

 

Profit (loss) before income taxes

 

5,516

 

 

(1,543

)

 

14,312

 

 

(50

)

 

 

 

 

 

Income tax expense

 

2,082

 

 

997

 

 

4,691

 

 

1,301

 

 

 

 

 

 

Profit (loss)

 

3,434

 

 

(2,540

)

 

9,621

 

 

(1,351

)

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Foreign currency translation differences - foreign operations

 

(621

)

 

(423

)

 

(1,956

)

 

289

 

Change in valuation of cash flow hedges

 

(241

)

 

154

 

 

(718

)

 

231

 

 

 

(862

)

 

(269

)

 

(2,674

)

 

520

 

 

 

 

 

 

Total comprehensive income (loss)

$

2,572

 

$

(2,809

)

$

6,947

 

$

(831

)

 

 

 

 

 

Basic earnings (loss) per share

$

0.12

 

$

(0.09

)

$

0.34

 

$

(0.05

)

Weighted average number of basic Common Shares

 

28,187,236

 

 

28,318,956

 

 

28,232,707

 

 

28,181,727

 

Diluted earnings (loss) per share

$

0.12

 

$

(0.09

)

$

0.33

 

$

(0.05

)

Weighted average number of diluted Common Shares

 

28,787,603

 

 

28,318,956

 

 

28,875,785

 

 

28,181,727

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Expressed in thousands of USD)

(Unaudited)

 

 

Accumulated other comprehensive income (loss)

 

 

Share

capital

Contributed

surplus

Cash flow

hedges

Currency

translation

adjustments

Total

Retained

earnings

Total equity

 

 

 

 

 

 

 

 

Balance, December 31, 2022

$

244,713

 

$

65,129

 

$

—

 

$

(156

)

$

(156

)

$

91,742

$

401,428

 

Profit

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

10,060

 

10,060

 

Other comprehensive income

 

—

 

 

—

 

 

441

 

 

1,075

 

 

1,516

 

 

—

 

1,516

 

Total comprehensive income

 

—

 

 

—

 

 

441

 

 

1,075

 

 

1,516

 

 

10,060

 

11,576

 

 

 

 

 

 

 

 

 

Share options exercised

 

41,545

 

 

(9,991

)

 

—

 

 

—

 

 

—

 

 

—

 

31,554

 

Restricted share units vested

 

10,676

 

 

(10,676

)

 

—

 

 

—

 

 

—

 

 

—

 

—

 

Performance share units vested

 

2,628

 

 

(2,628

)

 

—

 

 

—

 

 

—

 

 

—

 

—

 

Share-based payments

 

—

 

 

35,788

 

 

—

 

 

—

 

 

—

 

 

—

 

35,788

 

Shares issued for contingent consideration

 

11,097

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

11,097

 

Shares repurchased

 

(3,332

)

 

(33,283

)

 

—

 

 

—

 

 

—

 

 

—

 

(36,615

)

Total shareholder transactions

 

62,614

 

 

(20,790

)

 

—

 

 

—

 

 

—

 

 

—

 

41,824

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

$

307,327

 

$

44,339

 

$

441

 

$

919

 

$

1,360

 

$

101,802

$

454,828

 

Profit

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

9,621

 

9,621

 

Other comprehensive loss

 

—

 

 

—

 

 

(718

)

 

(1,956

)

 

(2,674

)

 

—

 

(2,674

)

Total comprehensive income (loss)

 

—

 

 

—

 

 

(718

)

 

(1,956

)

 

(2,674

)

 

9,621

 

6,947

 

 

 

 

 

 

 

 

 

Share options exercised

 

14,824

 

 

(3,516

)

 

—

 

 

—

 

 

—

 

 

—

 

11,308

 

Restricted share units vested

 

7,387

 

 

(7,387

)

 

—

 

 

—

 

 

—

 

 

—

 

—

 

Deferred share units vested

 

1,396

 

 

(1,396

)

 

—

 

 

—

 

 

—

 

 

—

 

—

 

Performance share units vested

 

5,533

 

 

(5,533

)

 

—

 

 

—

 

 

—

 

 

—

 

—

 

Share-based payments

 

—

 

 

16,616

 

 

—

 

 

—

 

 

—

 

 

—

 

16,616

 

Shares repurchased

 

(25,412

)

 

(31,995

)

 

—

 

 

—

 

 

—

 

 

—

 

(57,407

)

Obligation related to share repurchases

 

(16,177

)

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

(16,177

)

Total shareholder transactions

 

(12,449

)

 

(33,211

)

 

—

 

 

—

 

 

—

 

 

—

 

(45,660

)

 

 

 

 

 

 

 

 

Balance, June 30, 2024

$

294,878

 

$

11,128

 

$

(277

)

$

(1,037

)

$

(1,314

)

$

111,423

$

416,115

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of USD)

(Unaudited)

 

Three months ended June 30,

Six months ended June 30,

 

2024

2023

2024

2023

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Profit (loss)

$

3,434

 

$

(2,540

)

$

9,621

 

$

(1,351

)

Items not affecting cash:

 

 

 

 

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

 

4,942

 

 

5,186

 

 

10,018

 

 

10,661

 

Amortization of intangible assets

 

1,326

 

 

1,331

 

 

2,655

 

 

2,743

 

Share-based payments

 

7,702

 

 

9,155

 

 

16,424

 

 

17,374

 

Net finance income

 

(3,062

)

 

(1,763

)

 

(5,931

)

 

(3,149

)

Change in fair value of contingent consideration

 

—

 

 

462

 

 

—

 

 

2,656

 

Income tax expense

 

2,082

 

 

997

 

 

4,691

 

 

1,301

 

Investment tax credits recoverable

 

(1,109

)

 

(494

)

 

(2,009

)

 

(1,409

)

Change in operating assets and liabilities

 

(2,904

)

 

1,587

 

 

6,203

 

 

24,546

 

Interest received

 

3,778

 

 

1,934

 

 

8,188

 

 

3,195

 

Interest paid

 

(459

)

 

(415

)

 

(841

)

 

(848

)

Income taxes paid

 

(2,590

)

 

(1,497

)

 

(3,868

)

 

(2,871

)

 

 

13,140

 

 

13,943

 

 

45,151

 

 

52,848

 

Cash flows from (used in) investing activities:

 

 

 

 

 

 

 

 

 

Purchase of property and equipment and intangible assets

 

(1,893

)

 

(769

)

 

(2,084

)

 

(1,632

)

Purchase of short-term investments

 

(157,512

)

 

(45,588

)

 

(216,869

)

 

(100,671

)

Redemption of short-term investments

 

105,832

 

 

45,154

 

 

198,395

 

 

60,160

 

 

 

(53,573

)

 

(1,203

)

 

(20,558

)

 

(42,143

)

 

 

 

 

 

Cash flows from (used in) financing activities:

 

 

 

 

 

 

 

 

 

Payment of lease obligations

 

(1,786

)

 

(1,737

)

 

(3,526

)

 

(3,556

)

Repurchase of shares

 

(36,125

)

 

—

 

 

(57,407

)

 

—

 

Proceeds from exercise of stock options

 

7,126

 

 

9,133

 

 

11,308

 

 

19,644

 

 

 

(30,785

)

 

7,396

 

 

(49,625

)

 

16,088

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(71,218

)

 

20,136

 

 

(25,032

)

 

26,793

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

219,374

 

 

181,566

 

 

174,844

 

 

175,347

 

 

 

 

 

 

Effects of exchange rates on cash and cash equivalents

$

(1,001

)

$

(94

)

 

(2,657

)

 

(532

)

 

 

 

 

 

Cash and cash equivalents, end of period

 

147,155

 

 

201,608

 

$

147,155

 

$

201,608

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731357178/en/

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

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