Le Lézard
Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

Kinaxis Inc. Reports Third Quarter 2023 Results


Kinaxis® (TSX:KXS), the leading provider of supply chain management solutions, reported results for its third quarter ended September 30, 2023. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

"Despite turbulent conditions globally, Kinaxis is very pleased to deliver another balanced quarter of strong SaaS revenue growth and profitability. The fundamental demand for supply chain management software continues to be robust. Our unique concurrency technique, expanded product vision and market leadership continue to help us land exciting brands of all sizes that are looking to fully orchestrate their global supply chains," said John Sicard, president and CEO of Kinaxis. "We are pleased to be able to update our guidance to reflect higher profitability and subscription term license revenue, while our SaaS revenue growth outlook still represents acceleration over last year. Kinaxis is leading the transformation of supply chains from cost centers to profit centers, with a focus on growing revenue, cash flow, and return on investment for small, medium and large enterprises. We have made supply chain excellence available for everyone."

Q3 2023 Highlights

$ USD thousands, except as otherwise indicated

Q3 2023

 

Q3 2022

 

Change

Total Revenue

108,079

89,498

21%

SaaS

67,940

54,038

26%

Subscription term licenses

2,535

5,827

(56)%

Professional services

32,851

25,613

28%

Maintenance and support

4,753

4,020

18%

Gross profit

65,336

55,103

19%

Margin

60%

62%

Profit

7,390

1,628

354%

Per diluted share

$0.25

$0.06

Adjusted EBITDA1

22,801

14,805

54%

Margin

21%

17%

Cash used in operating activities

(1,460)

(3,563)

59%

(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 18% to $304 million at the end of the quarter.

$USD millions

Q3 2023

Q3 2022

Change

Annual recurring revenue2

$

304

$

259

18

%

(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, 2023.

 

$USD millions

Remainder of 2023

 

2024

 

2025 and later

 

Total

SaaS

67.9

225.1

253.8

546.8

Maintenance and support

4.8

17.0

19.1

40.9

Subscription term licenses

3.0

0.4

-

3.4

Total

75.7

242.5

272.9

591.0

Financial Guidance

Kinaxis is updating its fiscal 2023 financial guidance, as follows.

 

FY 2023 Guidance

Total revenue

$425-435 million

SaaS

24-25% growth

Subscription term license

$18-20 million

Adjusted EBITDA1 margin

16-18%

"Given underlying robust demand in our market and progress on a number of early-stage growth strategies, we will continue to make ongoing strategic investments in go-to-market activities, while benefiting from operating leverage that sharpens our focus on profitability overall. The fourth quarter is typically our strongest for building ARR, and we expect it will be this year, too," said Blaine Fitzgerald, CFO of Kinaxis. "We have instituted a normal course issuer bid for up to 5% of our stock. We believe the investments will be a good use of capital and we intend to execute on the plan as soon as possible."

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, 2023 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Conference Call

Kinaxis will host a conference call tomorrow, November 2, 2023, 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, November 2, 2023

TIME:

8:30 a.m. Eastern Time

CALL REGISTRATION:

https://conferencingportals.com/event/wAzPWobN

WEBCAST

https://events.q4inc.com/attendee/110722924 (available for three months)

REPLAY:

(800)-770-2030 or (647)-362-9199

 

Available through November 16, 2023

 

Reference number: 29488

About Kinaxis Inc.

Kinaxis is the global leader in modern supply chain management. 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

Adjusted EBITDA and Adjusted EBITDA Margin

This press 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 September 30,

 

Nine months ended September 30,

 

 

2023

 

2022

 

2023

 

2022

 

(In thousands of USD)

 

(In thousands of USD)

Profit

 

7,390

 

 

1,628

 

 

6,039

 

 

11,518

 

Change in fair value of contingent consideration

 

(705

)

 

(2,193

)

 

1,951

 

 

(2,193

)

Share-based compensation

 

8,745

 

 

6,174

 

 

26,119

 

 

18,680

 

Adjusted profit

 

15,430

 

 

5,609

 

 

34,109

 

 

28,005

 

Income tax expense

 

3,584

 

 

3,927

 

 

4,885

 

 

12,041

 

Depreciation and amortization

 

6,456

 

 

6,324

 

 

19,860

 

 

18,299

 

Foreign exchange loss (gain)

 

(76

)

 

(393

)

 

2,033

 

 

149

 

Net finance expense (income)

 

(2,593

)

 

(662

)

 

(5,742

)

 

(164

)

 

 

7,371

 

 

9,196

 

 

21,036

 

 

30,325

 

Adjusted EBITDA

 

22,801

 

 

14,805

 

 

55,145

 

 

58,330

 

Adjusted EBITDA as a percentage of revenue

 

21

%

 

17

%

 

18

%

 

22

%

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:

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 2023 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 2023, are subject to certain assumptions and associated risks including:

Our guidance and commentary for achievement of contracted revenue in future periods, including in 2023, 2024 and 2025 and later, is based on assumptions and associated risks including:

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, 2023, under the heading "Risk Factors" in our Annual Information Form dated March 3, 2023 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.

SOURCE: Kinaxis Inc.

Kinaxis Inc.

 

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of USD)

(Unaudited)

 

September 30,
2023

December 31,
2022

 

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

160,303

175,347

Short-term investments

129,679

50,476

Trade and other receivables

126,411

157,657

Prepaid expenses

14,668

13,660

 

431,061

397,140

Non-current assets:

 

 

Unbilled receivables

2,201

7,245

Other receivables

935

971

Prepaid expenses

1,931

2,395

Investment tax credits recoverable

9,825

7,591

Deferred tax assets

663

1,065

Contract acquisition costs

27,500

24,892

Property and equipment

43,097

51,852

Right-of-use assets

47,899

53,537

Intangible assets

24,129

28,271

Goodwill

73,259

73,314

 

231,439

251,133

 

 

 

 

662,500

648,273

 

 

 

Liabilities and Shareholders' Equity

 

 

Current liabilities:

 

 

Trade payables and accrued liabilities

37,444

40,107

Deferred revenue

100,188

133,467

Provisions

?

296

Contingent consideration

?

9,146

Lease obligations

5,703

6,991

 

143,335

190,007

Non-current liabilities:

 

 

Lease obligations

45,755

49,977

Deferred tax liabilities

8,936

6,861

 

54,691

56,838

Shareholders' equity:

 

 

Share capital

288,930

244,713

Contributed surplus

79,751

65,129

Accumulated other comprehensive loss

(1,988)

(156)

Retained earnings

97,781

91,742

 

464,474

401,428

 

 

 

 

662,500

648,273

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,

 

2023

2022

2023

2022

Revenue

$

108,079

 

$

89,498

 

$

314,981

 

$

268,406

 

 

 

 

 

 

Cost of revenue

 

42,743

 

 

34,395

 

 

124,974

 

 

93,885

 

 

 

 

 

 

Gross profit

 

65,336

 

 

55,103

 

 

190,007

 

 

174,521

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling and marketing

 

23,532

 

 

19,969

 

 

76,113

 

 

58,233

 

Research and development

 

20,111

 

 

18,420

 

 

61,042

 

 

54,653

 

General and administrative

 

14,098

 

 

14,468

 

 

43,666

 

 

40,469

 

 

 

57,741

 

 

52,857

 

 

180,821

 

 

153,355

 

 

 

 

 

 

 

 

7,595

 

 

2,246

 

 

9,186

 

 

21,166

 

 

 

 

 

 

Other income:

 

 

 

 

Foreign exchange gain (loss)

 

76

 

 

393

 

 

(2,033

)

 

(149

)

Net finance and other income

 

2,598

 

 

723

 

 

5,722

 

 

349

 

Change in fair value of contingent consideration

 

705

 

 

2,193

 

 

(1,951

)

 

2,193

 

 

 

3,379

 

 

3,309

 

 

1,738

 

 

2,393

 

 

 

 

 

 

Profit before income taxes

 

10,974

 

 

5,555

 

 

10,924

 

 

23,559

 

 

 

 

 

 

Income tax expense

 

3,584

 

 

3,927

 

 

4,885

 

 

12,041

 

 

 

 

 

 

Profit

 

7,390

 

 

1,628

 

 

6,039

 

 

11,518

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

Items that are or may be reclassified subsequently to profit:

 

 

 

 

Foreign currency translation differences - foreign operations

 

(1,757

)

 

(2,659

)

 

(1,468

)

 

(4,098

)

Change in net unrealized loss on cash flow hedges

 

(594

)

 

?

 

 

(364

)

 

?

 

 

 

(2,351

)

 

(2,659

)

 

(1,832

)

 

(4,098

)

 

 

 

 

 

Total comprehensive income (loss)

$

5,039

 

$

(1,031

)

$

4,207

 

$

7,420

 

 

 

 

 

 

Basic earnings per share

$

0.26

 

$

0.06

 

$

0.21

 

$

0.42

 

Weighted average number of basic Common Shares

 

28,428,856

 

 

27,685,391

 

 

28,250,462

 

 

27,587,568

 

Diluted earnings per share

$

0.25

 

$

0.06

 

$

0.21

 

$

0.40

 

Weighted average number of diluted Common Shares

 

29,240,154

 

 

28,653,288

 

 

29,119,827

 

 

28,544,299

 

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, 2021

$

195,414

$

54,739

 

$

?

 

$

(597

)

$

(597

)

$

71,662

$

321,218

 

 

 

 

 

 

 

 

 

Profit

 

?

 

?

 

 

?

 

 

?

 

 

?

 

 

20,080

 

20,080

 

Other comprehensive income

 

?

 

?

 

 

?

 

 

441

 

 

441

 

 

?

 

441

 

Total comprehensive income

 

?

 

?

 

 

?

 

 

441

 

 

441

 

 

20,080

 

20,521

 

 

 

 

 

 

 

 

 

Share options exercised

 

38,791

 

(9,076

)

 

?

 

 

?

 

 

?

 

 

?

 

29,715

 

Restricted share units vested

 

10,091

 

(10,091

)

 

?

 

 

?

 

 

?

 

 

?

 

?

 

Performance share units vested

 

417

 

(417

)

 

?

 

 

?

 

 

?

 

 

?

 

?

 

Share based payments

 

?

 

29,974

 

 

?

 

 

?

 

 

?

 

 

?

 

29,974

 

Total shareholder transactions

 

49,299

 

10,390

 

 

?

 

 

?

 

 

?

 

 

?

 

59,689

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

244,713

 

65,129

 

 

?

 

 

(156

)

 

(156

)

 

91,742

 

401,428

 

 

 

 

 

 

 

 

 

Profit

 

?

 

?

 

 

?

 

 

?

 

 

?

 

 

6,039

 

6,039

 

Other comprehensive loss

 

?

 

?

 

 

(364

)

 

(1,468

)

 

(1,832

)

 

?

 

(1,832

)

Total comprehensive income (loss)

 

?

 

?

 

 

(364

)

 

(1,468

)

 

(1,832

)

 

6,039

 

4,207

 

 

 

 

 

 

 

 

 

Share options exercised

 

27,114

 

(6,399

)

 

?

 

 

?

 

 

?

 

 

?

 

20,715

 

Restricted share units vested

 

3,709

 

(3,709

)

 

?

 

 

?

 

 

?

 

 

?

 

?

 

Performance share units vested

 

2,297

 

(2,297

)

 

?

 

 

?

 

 

?

 

 

?

 

?

 

Share based payments

 

?

 

27,027

 

 

?

 

 

?

 

 

?

 

 

?

 

27,027

 

Shares issued for contingent consideration

 

11,097

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

11,097

 

Total shareholder transactions

 

44,217

 

14,622

 

 

?

 

 

?

 

 

?

 

 

?

 

58,839

 

 

 

 

 

 

 

 

 

Balance, September 30, 2023

 

288,930

 

79,751

 

 

(364

)

 

(1,624

)

 

(1,988

)

 

97,781

 

464,474

 

Kinaxis Inc.

    

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of USD)

(Unaudited)

 

 

Three months ended
September 30,

Nine months ended
September 30,

 

2023

2022

2023

2022

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Profit

$

7,390

 

$

1,628

 

$

6,039

 

$

11,518

 

Items not affecting cash:

 

 

 

 

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

 

5,126

 

 

5,365

 

 

15,787

 

 

16,133

 

Amortization of intangible assets

 

1,330

 

 

959

 

 

4,073

 

 

2,166

 

Share-based payments

 

8,745

 

 

6,174

 

 

26,119

 

 

18,680

 

Net finance income

 

(2,593

)

 

(662

)

 

(5,742

)

 

(164

)

Change in fair value of contingent consideration

 

(705

)

 

(2,193

)

 

1,951

 

 

(2,193

)

Income tax expense

 

3,584

 

 

3,927

 

 

4,885

 

 

12,041

 

Investment tax credits recoverable

 

(825

)

 

(850

)

 

(2,234

)

 

(3,374

)

Change in operating assets and liabilities

 

(23,810

)

 

(17,763

)

 

736

 

 

(25,059

)

Interest received

 

2,150

 

 

1,057

 

 

5,345

 

 

1,459

 

Interest paid

 

(399

)

 

(468

)

 

(1,247

)

 

(1,397

)

Income taxes paid

 

(1,453

)

 

(737

)

 

(4,324

)

 

(2,965

)

 

 

(1,460

)

 

(3,563

)

 

51,388

 

 

26,845

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

 

 

Acquisition of business, net of cash acquired

 

?

 

 

(33,643

)

 

?

 

 

(36,662

)

Purchase of property and equipment and intangible assets

 

(378

)

 

(2,526

)

 

(2,010

)

 

(10,080

)

Purchase of short-term investments

 

(72,053

)

 

(15,005

)

 

(172,724

)

 

(45,165

)

Redemption of short-term investments

 

35,005

 

 

15,005

 

 

95,165

 

 

45,165

 

 

 

(37,426

)

 

(36,169

)

 

(79,569

)

 

(46,742

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Payment of lease obligations

 

(1,689

)

 

(1,732

)

 

(5,245

)

 

(4,963

)

Lease incentives received

 

?

 

 

?

 

 

?

 

 

3,858

 

Proceeds from exercise of stock options

 

1,071

 

 

15,677

 

 

20,715

 

 

23,370

 

 

 

(618

)

 

13,945

 

 

15,470

 

 

22,265

 

 

 

 

 

 

(Decrease)/increase in cash and cash equivalents

 

(39,504

)

 

(25,787

)

 

(12,711

)

 

2,368

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

201,608

 

 

227,862

 

 

175,347

 

 

203,220

 

 

 

 

 

 

Effects of exchange rates on cash and cash equivalents

$

(1,801

)

$

689

 

$

(2,333

)

$

(2,824

)

 

 

 

 

 

Cash and cash equivalents, end of period

 

160,303

 

 

202,764

 

 

160,303

 

 

202,764

 

 


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"Operation Medic Bag" is a focused effort to respond to community expectations and improve PAYDAY 3. The initiative covers a range of sought-after features and improvements to gameplay, stability, matchmaking, content and enhanced features. The first...



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