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- Q1 SaaS revenue grows 16%, adjusted EBITDA 1 margin of 19%, annual recurring revenue grows 15%
- Increases FY 2024 adjusted EBITDA 1 guidance as key initiative heightens focus on profitability
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 Quadrant™ 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 EBITDA 1 | 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 Revenue 2 (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 revenue 2 | $ | 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 EBITDA 1 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: | ||
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:
- 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.sedar plus.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.
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 | ||
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 | ||||
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 | |||
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 | ||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508888180/en/
Investor Relations
Rick Wadsworth | Kinaxis
rwadsworth@kinaxis.com
613-907-7613
Media Relations
Jaime Cook | Kinaxis
jcook@kinaxis.com
289-552-4640
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