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Kinaxis Inc. Reports Fourth Quarter 2023 Results

  • FY 2023 delivers 24% SaaS revenue growth and 18% adjusted EBITDA1 margin
  • Q4 SaaS revenue grows 19%, adjusted EBITDA1 margin of 18%, annual recurring revenue2 grows 18%
  • Record RPO and free cash flow reflects strength of business and focus on profitability
  • Repurchased approximately 329,000 common shares for $36.6 million

Kinaxis® (TSX:KXS), the leading provider of supply chain management solutions, reported results for its fourth quarter and year ended December 31, 2023. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

“We finished the year with a record number of customer wins, a record backlog that provides strong visibility into 2024 and beyond, and record free cash flow. These achievements were won through a persistently high win rate against key competitors, ongoing progress penetrating all tiers of our markets, strong renewals and expansions, ongoing enhancement of the value we offer, and a focus on balancing rapid growth with profitability,” said John Sicard, president and chief executive officer at Kinaxis. “More and more, we are seeing siloed, legacy methods giving way to end-to-end supply chain orchestration, where Kinaxis is the acknowledged leader. We have made strong investments over the past few years that have put us in excellent position to capture even more share in our markets while we make steady progress towards our mid-term profitability goals.”

Q4 2023 Highlights

$ USD thousands, except as otherwise indicated

Q4 2023

 

Q4 2022

 

Change

Total Revenue

111,990

 

98,483

 

14%

SaaS

69,891

 

58,839

 

19%

Subscription term licenses

2,899

 

9,131

 

(68)%

Professional services

34,318

 

26,156

 

31%

Maintenance and support

4,882

 

4,357

 

12%

Gross profit

68,890

 

61,266

 

12%

Margin

62%

 

62%

 

 

Profit

4,021

 

8,562

 

(53)%

Per diluted share

$0.14

 

$0.30

 

 

Adjusted EBITDA1

19,727

 

21,116

 

(7)%

Margin

18%

 

21%

 

 

Cash from (used in) operating activities

27,969

 

(2,327)

 

1,302%

(1) “Adjusted EBITDA” is a non-IFRS measures that 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.

FY 2023 Highlights

$ USD thousands, except as otherwise indicated

FY 2023

 

FY 2022

 

Change

Total Revenue

426,971

 

366,889

 

16%

SaaS Revenue

265,080

 

213,306

 

24%

Adjusted EBITDA1

74,872

 

79,446

 

(6)%

Margin

18%

 

22%

 

 

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 $322 million at the end of the quarter.

$USD millions

Q4 2023

Q4 2022

Change

Annual recurring revenue2

$

322

$

274

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 December 31, 2023.

$USD millions

2024

2025

2026 and later

Total

SaaS

274.0

197.7

228.9

700.6

Maintenance and support

17.5

12.4

8.3

38.2

Subscription term licenses

2.2

0.1

2.3

Total

293.7

210.2

237.2

741.1

Financial Guidance

Kinaxis is introducing its fiscal 2024 financial guidance, as follows.

 

FY 2024 Guidance

Total revenue

$483-495 million

SaaS

17-19% growth

Subscription term license

$9-11 million

Adjusted EBITDA1 margin

16-18%

"We are steadily marching towards our baseline mid-term Adjusted EBITDA margin target of 25%. Our 2024 guidance reflects the current ARR growth level, ongoing operating leverage, but also the impacts of being at the low point in our normal cycle for our high-margin subscription term license revenue and our current transition to public cloud, which involves some duplicative costs. Normalizing for these two items better demonstrates our steady progress,” said Blaine Fitzgerald, chief financial officer at Kinaxis. "I am particularly pleased to have generated a record $77.1 million in free cash flow in 2023, which is over 70% higher than in any other year. It's another data point that demonstrates our focus on balancing strong growth and profitability."

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 December 31, 2023 are available on Kinaxis’ website and on SEDAR at www.sedar.com.

Conference Call

Kinaxis will host a conference call tomorrow, February 29, 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, February 29, 2024

TIME:

8:30 a.m. Eastern Time

CALL REGISTRATION:

https://registrations.events/direct/Q4I914168

WEBCAST

https://events.q4inc.com/attendee/409673001 (available for three months)

REPLAY:

(800)-770-2030 or (609) 800-9909

 

Available through March 14, 2024

 

Reference number: 91416

About Kinaxis Inc.

Kinaxis is a 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 December 31,

 

Year ended December 31,

 

2023

 

2022

 

2023

 

2022

 

(In thousands of USD)

 

(In thousands of USD)

Profit

4,021

 

8,562

 

10,060

 

20,080

 

Change in fair value of contingent consideration

 

1,367

 

1,951

 

(826

)

Share-based compensation

8,388

 

7,558

 

34,507

 

26,238

 

Adjusted profit

12,409

 

17,487

 

46,518

 

45,492

 

Income tax expense (recovery)

4,791

 

(635

)

9,676

 

11,406

 

Depreciation and amortization

6,424

 

6,761

 

26,284

 

25,060

 

Foreign exchange loss (gain)

(797

)

(1,648

)

1,236

 

(1,499

)

Net finance income

(3,100

)

(849

)

(8,842

)

(1,013

)

 

7,318

 

3,629

 

28,354

 

33,954

 

Adjusted EBITDA

19,727

 

21,116

 

74,872

 

79,446

 

Adjusted EBITDA as a percentage of revenue

17.6

%

21.4

%

17.5

%

21.7

%

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 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.

Consolidated Statements of Financial Position

(Expressed in thousands of USD)

 

 

December 31,

2023

December 31,

2022

 

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

174,844

175,347

 

Short-term investments

118,118

50,476

 

Trade and other receivables

156,609

157,657

 

Prepaid expenses

14,810

13,660

 

 

464,381

397,140

 

Non-current assets:

 

 

Unbilled receivables

3,155

7,245

 

Other receivables

972

971

 

Prepaid expenses

1,130

2,395

 

Investment tax credits recoverable

8,362

7,591

 

Deferred tax assets

1,184

1,065

 

Contract acquisition costs

27,438

24,892

 

Property and equipment

40,300

51,852

 

Right-of-use assets

47,109

53,537

 

Intangible assets

23,394

28,271

 

Goodwill

74,556

73,314

 

 

227,600

251,133

 

 

 

 

 

691,981

648,273

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

Current liabilities:

 

 

Trade payables and accrued liabilities

39,700

40,107

 

Deferred revenue

137,598

133,467

 

Provisions

296

 

Contingent consideration

9,146

 

Lease obligations

5,805

6,991

 

 

183,103

190,007

 

Non-current liabilities:

 

 

Lease obligations

45,985

49,977

 

Deferred tax liabilities

8,065

6,861

 

 

54,050

56,838

 

Shareholders’ equity:

 

 

Share capital

307,327

244,713

 

Contributed surplus

44,339

65,129

 

Accumulated other comprehensive gain (loss)

1,360

(156

)

Retained earnings

101,802

91,742

 

 

454,828

401,428

 

 

 

 

 

691,981

648,273

 

Kinaxis Inc.

Consolidated Statements of Comprehensive Income

(Expressed in thousands of USD, except share and per share data)

 

Three months ended December 31,

 

Year ended December 31,

 

2023

 

 

2022

 

 

 

2023

 

 

2022

Revenue

$

111,990

$

98,483

 

$

426,971

 

$

366,889

 

 

 

 

 

Cost of revenue

 

43,100

 

37,217

 

 

168,074

 

 

131,102

 

 

 

 

 

Gross profit

 

68,890

 

61,266

 

 

258,897

 

 

235,787

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling and marketing

 

26,606

 

21,213

 

 

102,719

 

 

79,446

Research and development

 

20,665

 

19,494

 

 

81,707

 

 

74,147

General and administrative

 

16,703

 

13,804

 

 

60,369

 

 

54,273

 

 

63,974

 

54,511

 

 

244,795

 

 

207,866

 

 

 

 

 

 

 

4,916

 

6,755

 

 

14,102

 

 

27,921

Other income:

 

 

 

 

Foreign exchange gain (loss)

 

797

 

1,648

 

 

(1,236

)

 

1,499

Net finance and other income

 

3,099

 

891

 

 

8,821

 

 

1,240

Change in fair value of contingent consideration

 

 

(1,367

)

 

(1,951

)

 

826

 

 

3,896

 

1,172

 

 

5,634

 

 

3,565

 

 

 

 

 

Profit before income taxes

 

8,812

 

7,927

 

 

19,736

 

 

31,486

 

 

 

 

 

Income tax expense (recovery):

 

4,791

 

(635

)

 

9,676

 

 

11,406

 

 

 

 

 

Profit

 

4,021

 

8,562

 

 

10,060

 

 

20,080

Other comprehensive income:

 

 

 

 

Items that are or may be reclassified subsequently to profit:

 

 

 

 

Foreign currency translation differences - foreign operations

 

2,543

 

4,539

 

 

1,075

 

 

441

Change in net unrealized gain on cash flow hedges

 

804

 

 

 

441

 

 

 

 

3,347

 

4,539

 

 

1,516

 

 

441

 

 

 

 

 

Total comprehensive income

$

7,368

$

13,101

 

$

11,576

 

$

20,521

 

 

 

 

 

Basic earnings per share

$

0.14

$

0.31

 

$

0.36

 

$

0.73

Weighted average number of basic Common Shares

 

28,114,987

 

27,903,102

 

 

28,321,874

 

 

27,667,100

Diluted earnings per share

$

0.14

$

0.30

 

$

0.35

 

$

0.70

Weighted average number of diluted Common Shares

 

28,863,575

 

28,790,951

 

 

29,149,535

 

 

28,609,603

Kinaxis Inc.

Consolidated Statements of Changes in Shareholders’ Equity

(Expressed in thousands of USD)

 

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

 

 

 

 

 

 

 

 

 

 

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 re-purchased

 

(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

 

Kinaxis Inc.

Consolidated Statements of Cash Flows

(Expressed in thousands of USD)

 

Three months ended December 31,

Year ended December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

Cash flows from (used in) operating activities:

 

 

 

 

Profit

$

4,021

 

$

8,562

 

$

10,060

 

$

20,080

 

Items not affecting cash:

 

 

 

 

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

 

5,093

 

 

5,363

 

 

20,880

 

 

21,496

 

Amortization of intangible assets

 

1,331

 

 

1,398

 

 

5,404

 

 

3,564

 

Share-based payments

 

8,388

 

 

7,558

 

 

34,507

 

 

26,238

 

Net finance income

 

(3,100

)

 

(849

)

 

(8,842

)

 

(1,013

)

Change in fair value of contingent consideration

 

 

 

1,367

 

 

1,951

 

 

(826

)

Income tax expense (recovery)

 

4,791

 

 

(635

)

 

9,676

 

 

11,406

 

Investment tax credits recoverable

 

1,463

 

 

(601

)

 

(771

)

 

(3,975

)

Change in operating assets and liabilities

 

4,633

 

 

(24,064

)

 

5,369

 

 

(49,123

)

Interest received

 

2,508

 

 

1,087

 

 

7,853

 

 

2,546

 

Interest paid

 

(393

)

 

(444

)

 

(1,640

)

 

(1,841

)

Income taxes paid

 

(766

)

 

(1,069

)

 

(5,090

)

 

(4,034

)

 

 

27,969

 

 

(2,327

)

 

79,357

 

 

24,518

 

Cash flows from (used in) investing activities:

 

 

 

 

Acquisition of business, net of cash acquired

 

 

 

(76

)

 

 

 

(36,738

)

Purchase of property and equipment and intangible assets

 

(289

)

 

(8,169

)

 

(2,299

)

 

(18,249

)

Purchase of short-term investments

 

(32,955

)

 

(35,149

)

 

(205,679

)

 

(80,314

)

Redemption of short-term investments

 

45,501

 

 

15,149

 

 

140,666

 

 

60,314

 

 

 

12,257

 

 

(28,245

)

 

(67,312

)

 

(74,987

)

Cash flows from (used in) financing activities:

 

 

 

 

Payment of lease obligations

 

(1,729

)

 

(1,770

)

 

(6,974

)

 

(6,733

)

Lease incentives received

 

 

 

 

 

 

 

3,858

 

Repurchase of shares

 

(36,615

)

 

 

 

(36,615

)

 

 

Proceeds from exercise of stock options

 

10,839

 

 

6,345

 

 

31,554

 

 

29,715

 

 

 

(27,505

)

 

4,575

 

 

(12,035

)

 

26,840

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

12,721

 

 

(25,997

)

 

10

 

 

(23,629

)

 

 

 

 

 

Cash and cash equivalents, beginning of year

 

160,303

 

 

202,764

 

 

175,347

 

 

203,220

 

 

 

 

 

 

Effects of exchange rates on cash and cash equivalents

$

1,820

 

$

(1,420

)

$

(513

)

$

(4,244

)

Cash and cash equivalents, end of year

 

174,844

 

 

175,347

 

 

174,844

 

 

175,347

 

 

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