Kinaxis Inc. Reports Fourth Quarter 2016 and Full Year 2016 Results

- Reports 27% growth in annual revenue and annual Adjusted EBITDA of 25% of revenue -

OTTAWA, Feb. 28, 2017 /CNW/ - Kinaxis ^® (TSX:KXS), provider of RapidResponse ^®, delivering cloud-based SCM and S&OP applications, reported results for its fiscal fourth quarter and year ended December 31, 2016. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

Fiscal 2016 Highlights
(Comparisons made between fiscal 2016 and fiscal 2015 results)

• Revenue totaled $116.0 million, up 27%
• Subscription revenue was $81.8 million, up 26%
• Gross profit was $80.2 million (69% of total revenue), up 22%
• Profit was $10.7 million or $0.44 per basic and $0.41 per diluted share
• Adjusted EBITDA⁽¹⁾ totaled $28.5 million (25% of total revenue)
• Adjusted diluted earnings per share⁽¹⁾ of $0.73

Fourth Quarter 2016 Highlights
(Comparisons made between fiscal Q4 2016 and fiscal Q4 2015 results)

• Revenue totaled $30.3 million, up 25%
• Subscription revenue was $22.7 million, up 34%
• Gross profit was $20.8 million (69% of total revenue), up 19%
• Profit was $1.7 million or $0.07 per basic and diluted share
• Adjusted EBITDA⁽¹⁾ totaled $6.4 million (21% of total revenue)
• Adjusted diluted earnings per share⁽¹⁾ of $0.14

"2016 was another year of strong revenue and new customer growth. We delivered solid bottom line results as we continued to make strategic investments to scale our business," said John Sicard, Chief Executive Officer of Kinaxis. "The world's largest companies have increasingly recognized that concurrent planning represents the future of effective supply chain management. Through RapidResponse we are delivering on this promise and enabling our customers to proactively react to change. Our partner relationships continue to progress well and have supported a number of key wins in 2016.  Our partners work to improve operational and financial performance for their clients by utilizing RapidResponse's capabilities. With a strong platform in place, we enter 2017 in a great position to leverage our technology, customer relationships and strategic partners to continue to produce solid results."

Fiscal Q4 2016 and Full Year 2016 Financial Results

Total revenue for the three months ended December 31, 2016 (Q4 2016) was $30.3 million, an increase of 25% from $24.2 million for the same period in 2015. Total revenue was $116.0 million for the year ended December 31, 2016 (FY 2016), an increase of 27% from $91.3 million in 2015.

Subscription revenue was $22.7 million in Q4 2016, an increase of 34% from $17.0 million for the same period in 2015. Subscription revenue was $81.8 million in FY 2016, an increase of 26% from $65.2 million in 2015. The increases were driven by contracts secured with new customers and expansion of existing customer subscriptions.

Professional services revenue was $7.4 million in Q4 2016, an increase of 5% from $7.0 million for the same period in 2015. Professional services revenue was $33.1 million in FY 2016, an increase of 32% from $25.0 million in 2015. Professional services revenue varies from quarter to quarter due to the size, timing and scheduling of customer engagements and the level of partner engagement. The increase in professional services revenue was primarily driven by the commencement of project engagements for new customers secured in FY 2015 and FY 2016.

Gross profit was $20.8 million in Q4 2016, an increase of 19% from $17.4 million for the same period in 2015. Gross profit was $80.2 million in FY 2016, an increase of 22% from $65.5 million in 2015. As a percentage of revenue, gross profit was 69% in Q4 2016 and FY 2016, compared to 72% for the same periods of 2015. The change in gross profit margin in FY 2016 was due to investments in additional headcount, the use of third party providers, and an increase in global datacenter capability, all to support current and future growth.

Profit for Q4 2016 was $1.7 million or $0.07 per basic and diluted share compared to $1.3 million or $0.05 per basic and diluted share for the same period in 2015. Profit was $10.7 million or $0.44 per basic and $0.41 per diluted share for FY 2016 compared to $12.7 million or $0.53 per basic and $0.50 diluted share for 2015. The decrease in annual profit was primarily driven by investment in sales and marketing, investment in research and development, and an increase in share-based payments.

Adjusted EBITDA was $6.4 million in Q4 2016, a 10% decline from $7.1 million in the same period last year. Adjusted EBITDA was $28.5 million in FY 2016, a 5% decline from $30.0 million in 2015.  The change compared to the prior year period was primarily due to increased investment in sales and marketing and product development.

Cash generated by operating activities was $17.1 million and $31.1 million for Q4 2016 and FY 2016, respectively, compared to $8.5 million and $45.2 million for the corresponding periods in 2014. The quarterly increase was due to a decrease in accounts receivable coupled with an increase in deferred revenue, partially offset by an increase in share-based payments, depreciation and income tax expense. The FY 2016 decrease was due primarily to the receipt of a prepayment of an approximately $20.0 million multi-year subscription arrangement in the first quarter of 2015, and lower profit and higher income taxes paid for the year ended December 31, 2016 compared to the same period in 2015. This was partially offset by an increase in depreciation and share-based payments.

Cash and cash equivalents were $127.9 million as at December 31, 2016 as compared to $99.4 million as at December 31, 2015.

Full Year 2017 Financial Guidance

Kinaxis has set the following 2017 full year financial targets:

• Annual total revenue to be in the range of $140 million to $144 million
• Annual subscription revenue to grow 25% to 27%
• Annual Adjusted EBITDA as a percentage of total revenue to be between 24% and 26% of total revenue

This guidance is provided to enhance visibility into the Company's expectations for financial targets for the year ending December 31, 2017.  Please refer to the section regarding forward-looking statements which forms an integral part of this release.

This press release, along with the audited consolidated annual financial statements and the Company's annual MD&A, are available on the Company's website at www.kinaxis.com and on SEDAR at www.sedar.com.

Conference Call

The Company will host a conference call tomorrow, March 1, 2017 to discuss these results. John Sicard, Chief Executive Officer, and Richard Monkman, 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.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

A replay of the call will be available until 12:00 midnight Eastern Time on March 8, 2017.

Toll-Free Replay Number: 1 (855) 859-2056
International Replay Number: 1 (416) 849-0833
Replay PIN: 68466853

About Kinaxis Inc.
Offering the industry's only concurrent planning solution, Kinaxis is helping organizations around the world revolutionize their supply chain planning. Kinaxis RapidResponse, our cloud-based supply chain management software, connects your data, processes and people into a single harmonious environment. With a consolidated view of the entire supply chain, you can plan expected performance, monitor progress and respond to disconnects when reality hits. RapidResponse lets you know sooner and act faster, leading to reduced decision latency, and improved operational and financial performance. We can prove it. From implementation to expansion, we're here to help our customers with every step of their supply chain journey.

Non-IFRS Measures
This news release contains non-IFRS measures, specifically, Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA.  We use Adjusted profit and Adjusted diluted earnings per share, which remove the impact of our redeemable preferred shares and share based compensation plans, to measure our performance as these measurements better align the reporting of our results and improve comparability against our peers. 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 work capital requirements. Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted profit, Adjusted diluted earnings per share and Adjusted EBITDA 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.

The Company has reconciled Adjusted profit and Adjusted EBITDA to the most comparable IFRS financial measure as follows:

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 subscription revenue, and our expectations for Adjusted EBITDA achievement, in each case looking forward for the balance of our fiscal year ending December 31, 2017, as well as 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 2017 annual total revenue, annual subscription revenue and annual Adjusted EBITDA, is subject to certain assumptions, 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 current customer retention levels; and
• with respect to Adjusted EBITDA, our ability to contain expense levels while expanding our business.   

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, 2017, under the heading "Risk Factors" in our Annual Information Form dated March 21, 2016, 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.

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