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

Kinaxis Inc. Reports First Quarter 2024 Results


Kinaxis® (TSX:KXS), a leading provider of supply chain orchestration solutions, reported results for its first quarter ended March 31, 2024. All amounts are in U.S. dollars. All figures are prepared in accordance with IFRS Accounting Standards unless otherwise indicated.

"During the first quarter, Kinaxis continued to add exciting new brands to our customer base while delivering solid financial results. We were once again named a Leader in the 2024 Gartner® Magic Quadranttm for Supply Chain Planning Solutions, with recognition for our strong product vision and the highest positioning on Ability to Execute," said John Sicard, president and chief executive officer at Kinaxis. "The supply chain markets continue to evolve rapidly and we are reshaping the organization to ensure we capitalize on the best opportunities ahead. With our ongoing product leadership, we are in a better position than ever to transform the world's supply chains through AI-powered end-to-end orchestration."

Q1 2024 Highlights

$ USD thousands, except as otherwise indicated

Q1 2024 Q1 2023 Change

Total Revenue

119,370

101,130

18%

SaaS

73,371

63,145

16%

Subscription term licenses

6,741

7,028

(4)%

Professional services

34,443

26,568

30%

Maintenance and support

4,815

4,389

10%

Gross profit

72,930

61,001

20%

Margin

61%

60%

 

Profit

6,187

1,189

420%

Per diluted share

$0.21

$0.04

 

Adjusted EBITDA1

22,680

17,142

32%

Margin

19%

17%

Cash from operating activities

32,011

38,905

(18)%

(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.

In the first quarter of 2024, Kinaxis initiated a restructuring of its organization to focus on its next wave of growth, eliminating approximately 6% of its workforce across functions and geographical regions. Some restructuring charges have been incurred in the first quarter of 2024, and the company expects that the majority of related charges will be incurred in the second quarter, by the end of which the initiative will be substantially complete. Kinaxis intends to reinvest a portion of savings into key product innovations and go-to-market priorities throughout the remainder of the year and into 2025.

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 $327 million at the end of the quarter.

$USD millions

Q1 2024

Q1 2023

Change

Annual recurring revenue2

$

327

$

285

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 March 31, 2024.

 

$USD millions

Remainder of

2024

 

2025

 

2026 and later

 

Total

SaaS

215.7

215.6

258.4

689.7

Maintenance and support

14.8

14.7

12.3

41.8

Subscription term licenses

2.0

0.1

?

2.1

Total

232.5

230.4

270.7

733.6

Financial Guidance
Kinaxis is increasing its fiscal 2024 Adjusted EBITDA margin guidance, while maintaining all other elements of guidance, as follows:

 

FY 2024 Guidance

Total revenue

$483-495 million

SaaS

17-19% growth

Subscription term license

$9-11 million

Adjusted EBITDA1 margin

18-20%

"I'm pleased to be able to increase our Adjusted EBITDA guidance for fiscal 2024, which reflects both the cost savings from our restructuring initiative and some anticipated reinvestment in the year. We have taken a major step forward in our progress towards achieving our target of consistently achieving 25% Adjusted EBITDA in the mid-term, and have enhanced our focus on the best growth opportunities ahead," said Blaine Fitzgerald, chief financial officer at Kinaxis. "Financial results in the first quarter were solid, while our ARR continued to reflect caution in the economic environment, particularly among the largest deals where we typically generate most of our growth. Also, for the first time in over a year, ARR growth was notably impacted by foreign exchange fluctuations."

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 March 31, 2024 are available on Kinaxis' website and on SEDAR at www.sedar.com.

Changes to the Board
Our long-standing Chair of the board of directors, John (Ian) Giffen, will be leaving the board of directors after Kinaxis' upcoming annual meeting, having served as a director of Kinaxis since 2010. Ian became lead independent director of the board at the time of Kinaxis' IPO in 2014, and Chair in 2018. Our new Chair will be Robert (Bob) Courteau. Ian has guided the board in developing our successful strategy and building shareholder value, including growing our market capitalization by over Cdn$4 billion since Kinaxis' IPO. Ian's achievements in business and governance are renowned in Canada, and most recently he has been recognized as a recipient of the 2024 ICD Fellowship Award. Only 105 directors across Canada have received this recognition over the lifetime of the award. Ian is also widely applauded for his charitable and philanthropic efforts for the Stratford Festival and other organizations. We thank Ian for his countless contributions as Chair.

Conference Call
Kinaxis will host a conference call tomorrow, May 9, 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, May 9, 2024

TIME:

8:30 a.m. Eastern Time

CALL REGISTRATION:

https://registrations.events/direct/Q4I9141617384

WEBCAST

https://events.q4inc.com/attendee/189167848 (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 March 31,

 

 

2024

 

 

2023

 

 

(In thousands of USD)

Profit

 

6,187

 

 

 

1,189

 

Change in fair value of contingent consideration

 

?

 

 

 

2,194

 

Share-based compensation

 

8,722

 

 

 

8,219

 

Non-recurring item

 

1,752

 

 

 

?

 

Adjusted profit

 

16,661

 

 

 

11,602

 

Income tax expense

 

2,609

 

 

 

304

 

Depreciation and amortization

 

6,405

 

 

 

6,887

 

Foreign exchange gain

 

(126

)

 

 

(265

)

Net finance income

 

(2,869

)

 

 

(1,386

)

 

 

6,019

 

 

 

5,540

 

Adjusted EBITDA

 

22,680

 

 

 

17,142

 

Adjusted EBITDA Margin

 

19

%

 

 

17

%

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 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 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:

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)

 

 

March 31,

2024

December 31,

2023

 

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

219,374

 

$

174,844

Short-term investments

 

83,753

 

 

118,118

Trade and other receivables

 

134,297

 

 

156,609

Prepaid expenses

 

20,654

 

 

14,810

 

 

458,078

 

 

464,381

Non-current assets:

 

 

Unbilled receivables

 

3,933

 

 

3,155

Other receivables

 

917

 

 

972

Prepaid expenses

 

1,020

 

 

1,130

Investment tax credits recoverable

 

9,262

 

 

8,362

Deferred tax assets

 

1,260

 

 

1,184

Contract acquisition costs

 

29,486

 

 

27,438

Property and equipment

 

37,073

 

 

40,300

Right-of-use assets

 

49,921

 

 

47,109

Intangible assets

 

21,761

 

 

23,394

Goodwill

 

73,873

 

 

74,556

 

 

228,506

 

 

227,600

 

 

 

 

$

686,584

 

$

691,981

 

 

 

Liabilities and Shareholders' Equity

 

 

Current liabilities:

 

 

Trade payables and accrued liabilities

 

39,086

 

 

39,700

Deferred revenue

 

135,382

 

 

137,598

Lease obligations

 

6,616

 

 

5,805

 

 

181,084

 

 

183,103

Non-current liabilities:

 

 

Lease obligations

 

47,147

 

 

45,985

Deferred tax liabilities

 

7,117

 

 

8,065

 

 

54,264

 

 

54,050

Shareholders' equity:

 

 

Share capital

 

323,260

 

 

307,327

Contributed surplus

 

20,438

 

 

44,339

Accumulated other comprehensive income (loss)

 

(451

)

 

1,360

Retained earnings

 

107,989

 

 

101,802

 

 

451,236

 

 

454,828

 

 

 

 

$

686,584

 

$

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 March 31,

 

2024

2023

Revenue

$

119,370

 

$

101,130

 

 

 

 

Cost of revenue

 

46,440

 

 

40,129

 

 

 

 

Gross profit

 

72,930

 

 

61,001

 

 

 

 

Operating expenses:

 

 

Selling and marketing

 

24,927

 

 

24,164

 

Research and development

 

22,985

 

 

19,929

 

General and administrative

 

19,249

 

 

14,791

 

 

 

67,161

 

 

58,884

 

 

 

 

 

 

5,769

 

 

2,117

 

 

 

 

Other income (expense):

 

 

Foreign exchange gain

 

126

 

 

265

 

Net finance and other income

 

2,901

 

 

1,305

 

Change in fair value of contingent consideration

 

?

 

 

(2,194

)

 

 

3,027

 

 

(624

)

 

 

 

Profit before income taxes

 

8,796

 

 

1,493

 

 

 

 

Income tax expense

 

2,609

 

 

304

 

 

 

 

Profit

 

6,187

 

 

1,189

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

Items that are or may be reclassified subsequently to profit:

 

 

Foreign currency translation differences - foreign operations

 

(1,334

)

 

712

 

Change in net unrealized loss on cash flow hedges

 

(477

)

 

77

 

 

 

(1,811

)

 

789

 

 

 

 

Total comprehensive income

$

4,376

 

$

1,978

 

 

 

 

Basic earnings per share

$

0.22

 

$

0.04

 

Weighted average number of basic Common Shares

 

28,262,317

 

 

28,086,983

 

Diluted earnings per share

$

0.21

 

$

0.04

 

Weighted average number of diluted Common Shares

 

28,953,287

 

 

28,941,335

 

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

 

?

 

 

?

 

 

?

 

 

?

 

 

?

 

 

6,187

 

6,187

 

Other comprehensive loss

 

?

 

 

?

 

 

(477

)

 

(1,334

)

 

(1,811

)

 

?

 

(1,811

)

Total comprehensive income (loss)

 

?

 

 

?

 

 

(477

)

 

(1,334

)

 

(1,811

)

 

6,187

 

4,376

 

 

 

 

 

 

 

 

 

Share options exercised

 

5,408

 

 

(1,226

)

 

?

 

 

?

 

 

?

 

 

?

 

4,182

 

Restricted share units vested

 

6,981

 

 

(6,981

)

 

?

 

 

?

 

 

?

 

 

?

 

?

 

Performance share units vested

 

5,533

 

 

(5,533

)

 

?

 

 

?

 

 

?

 

 

?

 

?

 

Share-based payments

 

?

 

 

9,132

 

 

?

 

 

?

 

 

?

 

 

?

 

9,132

 

Shares repurchased

 

(1,989

)

 

(19,293

)

 

?

 

 

?

 

 

?

 

 

?

 

(21,282

)

Total shareholder transactions

 

15,933

 

 

(23,901

)

 

?

 

 

?

 

 

?

 

 

?

 

(7,968

)

 

 

 

 

 

 

 

 

Balance, March 31, 2024

$

323,260

 

$

20,438

 

$

(36

)

$

(415

)

$

(451

)

$

107,989

$

451,236

 

Kinaxis Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in thousands of USD)

(Unaudited)

 

 

Three months ended March 31,

 

2024

2023

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Profit

$

6,187

 

$

1,189

 

Items not affecting cash:

 

 

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

 

5,076

 

 

5,475

 

Amortization of intangible assets

 

1,329

 

 

1,412

 

Share-based payments

 

8,722

 

 

8,219

 

Net finance income

 

(2,869

)

 

(1,386

)

Change in fair value of contingent consideration

 

?

 

 

2,194

 

Income tax expense

 

2,609

 

 

304

 

Investment tax credits recoverable

 

(900

)

 

(915

)

Change in operating assets and liabilities

 

9,107

 

 

22,959

 

Interest received

 

4,410

 

 

1,261

 

Interest paid

 

(382

)

 

(433

)

Income taxes paid

 

(1,278

)

 

(1,374

)

 

 

32,011

 

 

38,905

 

Cash flows from (used in) investing activities:

 

 

 

 

 

Purchase of property and equipment and intangible assets

 

(191

)

 

(863

)

Purchase of short-term investments

 

(59,357

)

 

(55,083

)

Redemption of short-term investments

 

92,563

 

 

15,006

 

 

 

33,015

 

 

(40,940

)

 

 

 

Cash flows from (used in) financing activities:

 

 

 

 

 

Payment of lease obligations

 

(1,740

)

 

(1,819

)

Repurchase of shares

 

(21,282

)

 

?

 

Proceeds from exercise of stock options

 

4,182

 

 

10,511

 

 

 

(18,840

)

 

8,692

 

 

 

 

Increase in cash and cash equivalents

 

46,186

 

 

6,657

 

 

 

 

Cash and cash equivalents, beginning of period

 

174,844

 

 

175,347

 

 

 

 

Effects of exchange rates on cash and cash equivalents

 

(1,656

)

 

(438

)

 

 

 

Cash and cash equivalents, end of period

$

219,374

 

$

181,566

 

 


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