News Release

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

“We delivered a solid third quarter with continued strength in customer wins, win rates and financial results that allow us to increase our full-year profitability guidance for the third consecutive quarter,” said John Sicard, president and chief executive officer at Kinaxis . “We recently hit several exciting product milestones, including over 100 customers using our Maestro AI chat agent, and our Enterprise Scheduling product going live at a global consumer products company. I am also particularly proud that Kinaxis was named a 2024 Gartner® Peer Insights™ Customers’ Choice for Supply Chain Planning Solutions, the only vendor to earn that distinction in the report, which highlighted that 93% of customers are willing to recommend Kinaxis. This kind of achievement is only possible through outstanding strategy and execution, company-wide.”

Q3 2024 Highlights

$ USD thousands, except as otherwise indicated	Q3 2024	Q3 2023	Change
Total Revenue	121,528	108,079	12%
SaaS	78,621	67,940	16%
Subscription term licenses	2,250	2,535	(11)%
Professional services	35,471	32,851	8%
Maintenance and support	5,186	4,753	9%
Gross profit Margin	76,365 63%	65,336 60%	17%
Profit (loss) Per diluted share	6,751 $0.23	7,390 $0.25	(9)%
Adjusted EBITDA 1 Margin	30,013 25%	22,801 21%	32%
Cash from operating activities	29,945	(1,460)	_

(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.

“I’m pleased with ongoing progress towards our normalized, mid-term 25% adjusted EBITDA margin target, as well as progress on strategic initiatives to capture even more of the $16 billion supply chain management software market,” said Bob Courteau, executive chair at Kinaxis . “The Board and management have been working very closely over the past six months to review our strategic plan and to assess performance across our operations. That work, with additional input from consultants, has confirmed the strength of Kinaxis’ leading market position and strategy, and highlighted some exciting opportunities ahead, which we’re already acting on.

Courteau concluded : “I’m also thrilled we have added proven industry leader, Mark Morgan, as our new president of commercial operations to drive our go-to-market functions. Incoming leadership, new initiatives, and Kinaxis’ stellar foundation, which John Sicard was instrumental in building, are all key elements to scaling the organization through our next phase of rapid, profitable growth.”

Key Performance Indicators

The company’s Annual Recurring Revenue ² (ARR), which includes subscription amounts related to both SaaS and on-premise contracts, rose 14% to 347 million at the end of the quarter.

$USD millions	Q3 2024	Q3 2023	Change
Annual recurring revenue 2	347	304	14%

(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 September 30, 2024.

$USD millions	Remainder of 2024	2025	2026 and later	Total
SaaS	79.3	253.2	350.3	682.8
Maintenance and support	5.2	15.7	17.2	38.1
Subscription term licenses	—	0.1	0.1	0.2
Total	84.5	269.0	367.6	721.1

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	$11-12 million (Increased)
Adjusted EBITDA 1 margin	20-22% (Increased)

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

Conference Call

Kinaxis will host a conference call tomorrow, October 31, 2024, to discuss these results. John Sicard, chief executive officer, Bob Courteau, executive chair, 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, October 31, 2024
TIME:	8:30 a.m. Eastern Time
CALL REGISTRATION:	https://registrations.events/direct/Q4I91416395
WEBCAST	https://events.q4inc.com/attendee/409878969 (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. Providing these non-IFRS measures provides useful information because they portray the financial results of the Company before certain expenses that do not impact the ongoing operating decisions taken by management. 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, special charges, and non-recurring items. Adjusted EBITDA represents profit adjusted to exclude the change in the fair value of contingent consideration, our equity compensation plans, special charges, 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 September 30,							Nine months ended September 30,
		2024				2023			2024				2023
	(In thousands of USD)								(In thousands of USD)
Profit		6,751				7,390			16,372				6,039
Change in fair value of contingent		—				(705	)		—				1,951
Share-based compensation		12,929				8,745			29,353				26,119
Special charges 1		3,174				—			3,174				—
Non-recurring item 2		22				—			7,320				—
Adjusted profit		22,876				15,430			56,219				34,109
Income tax expense		3,337				3,584			8,028				4,885
Depreciation and amortization		6,209				6,456			18,882				19,860
Foreign exchange gain (loss)		411				(76	)		245				2,033
Net finance and other income		(2,820	)			(2,593	)		(8,751	)			(5,742	)
		7,137				7,371			18,404				21,036
Adjusted EBITDA		30,013				22,801			74,623				55,145
Adjusted EBITDA Margin		25	%			21	%		21	%			18	%
Note:
(1) Costs associated with business transformation activities, financial advice and shareholder communications.
(2) 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)
	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	183,228	$	174,844
Short-term investments		111,402		118,118
Trade and other receivables		137,485		156,609
Prepaid expenses		19,355		14,810
		451,470		464,381
Non-current assets:
Unbilled receivables		1,121		3,155
Other receivables		925		972
Prepaid expenses		2,128		1,130
Investment tax credits recoverable		11,271		8,362
Deferred tax assets		35,092		1,184
Contract acquisition costs		30,186		27,438
Property and equipment		33,342		40,300
Right-of-use assets		46,055		47,109
Intangible assets		19,535		23,394
Goodwill		74,997		74,556
		254,652		227,600
	$	706,122	$	691,981
Liabilities and Shareholders’ Equity
Current liabilities:
Trade payables and accrued liabilities		107,149		39,700
Provisions		605		—
Deferred revenue		126,382		137,598
Lease obligations		5,305		5,805
		239,441		183,103
Non-current liabilities:
Lease obligations		45,016		45,985
Deferred tax liabilities		6,362		8,065
		51,378		54,050
Shareholders’ equity:
Share capital		283,605		307,327
Contributed surplus		11,322		44,339
Accumulated other comprehensive income (loss)		2,202		1,360
Retained earnings		118,174		101,802
		415,303		454,828
	$	706,122	$	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 September 30,						Nine months ended September 30,
		2024			2023			2024			2023
Revenue	$	121,528		$	108,079		$	359,176		$	314,981
Cost of revenue		45,163			42,743			139,695			124,974
Gross profit		76,365			65,336			219,481			190,007
Operating expenses:
Selling and marketing		22,639			23,532			74,907			76,113
Research and development		21,137			20,111			66,343			61,042
General and administrative		24,977			14,098			62,489			43,666
		68,753			57,741			203,739			180,821
		7,612			7,595			15,742			9,186
Other income:
Foreign exchange gain (loss)		(411	)		76			(245	)		(2,033	)
Net finance and other income		2,887			2,598			8,903			5,722
Change in fair value of contingent consideration		—			705			—			(1,951	)
		2,476			3,379			8,658			1,738
Profit before income taxes		10,088			10,974			24,400			10,924
Income tax expense		3,337			3,584			8,028			4,885
Profit		6,751			7,390			16,372			6,039
Other comprehensive income:
Items that are or may be reclassified subsequently to profit (loss):
Foreign currency translation differences - foreign operations		3,053			(1,757	)		1,097			(1,468	)
Change in valuation of cash flow hedges		463			(594	)		(255	)		(364	)
		3,516			(2,351	)		842			(1,832	)
Total comprehensive income	$	10,267		$	5,039		$	17,214		$	4,207
Basic earnings per share	$	0.24		$	0.26		$	0.58		$	0.21
Weighted average number of basic Common Shares		28,226,878			28,428,856			28,286,208			28,250,462
Diluted earnings per share	$	0.23		$	0.25		$	0.57		$	0.21
Weighted average number of diluted Common Shares		28,812,999			29,240,154			28,946,558			29,119,827

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		—			—			—			—			—			16,372		16,372
Other comprehensive loss		—			—			(255	)		1,097			842			—		842
Total comprehensive income (loss)		—			—			(255	)		1,097			842			16,372		17,214
Share options exercised		17,777			(4,193	)		—			—			—			—		13,584
Restricted share units vested		11,841			(11,841	)		—			—			—			—		—
Deferred share units vested		1,396			(1,396	)		—			—			—			—		—
Performance share units vested		5,533			(5,533	)		—			—			—			—		—
Share-based payments		—			29,739			—			—			—			—		29,739
Shares repurchased		(38,489	)		(39,793	)		—			—			—			—		(78,282	)
Obligation related to share repurchases		(21,780	)		—			—			—			—			—		(21,780	)
Total shareholder transactions		(23,722	)		(33,017	)		—			—			—			—		(56,739	)
Balance, September 30, 2024	$	283,605		$	11,322		$	186		$	2,016		$	2,202		$	118,174	$	415,303

Condensed Consolidated Interim Statements of Cash Flows (Expressed in thousands of USD) (Unaudited)
	Three months ended September 30,						Nine months ended September 30,
		2024			2023			2024			2023
Cash flows from operating activities:
Profit	$	6,751		$	7,390		$	16,372		$	6,039
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets		4,870			5,126			14,888			15,787
Amortization of intangible assets		1,339			1,330			3,994			4,073
Share-based payments		12,929			8,745			29,353			26,119
Net finance income		(2,820	)		(2,593	)		(8,751	)		(5,742	)
Change in fair value of contingent consideration		—			(705	)		—			1,951
Income tax expense		3,337			3,584			8,028			4,885
Investment tax credits recoverable		(900	)		(825	)		(2,909	)		(2,234	)
Change in operating assets and liabilities		3,511			(23,810	)		9,714			736
Interest received		2,199			2,150			10,387			5,345
Interest paid		(436	)		(399	)		(1,277	)		(1,247	)
Income taxes paid		(835	)		(1,453	)		(4,703	)		(4,324	)
		29,945			(1,460	)		75,096			51,388
Cash flows from (used in) investing activities:
Purchase of property and equipment and intangible assets		(163	)		(378	)		(2,247	)		(2,010	)
Purchase of short-term investments		(21,891	)		(72,053	)		(238,760	)		(172,724	)
Redemption of short-term investments		46,722			35,005			245,117			95,165
		24,668			(37,426	)		4,110			(79,569	)
Cash flows from (used in) financing activities:
Payment of lease obligations		(1,834	)		(1,689	)		(5,360	)		(5,245	)
Repurchase of shares		(20,875	)		—			(78,282	)		—
Proceeds from exercise of stock options		2,276			1,071			13,584			20,715
		(20,433	)		(618	)		(70,058	)		15,470
Increase (decrease) in cash and cash equivalents		34,180			(39,504	)		9,148			(12,711	)
Cash and cash equivalents, beginning of period		147,155			201,608			174,844			175,347
Effects of exchange rates on cash and cash equivalents	$	1,893		$	(1,801	)		(764	)		(2,333	)
Cash and cash equivalents, end of period		183,228			160,303		$	183,228		$	160,303

 

Source: Kinaxis Inc.