News Release

OTTAWA, Ontario--(BUSINESS WIRE)-- 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 EBITDA 1	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 Revenue ² (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 revenue 2	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 EBITDA 1 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 item 3		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

 

Source: Kinaxis Inc.