Kinaxis Inc. Reports Fourth Quarter 2017 and Full Year 2017 Results

- Reports 23% growth in annual subscription revenue and annual Adjusted EBITDA of 30% of revenue -

OTTAWA, Feb. 28, 2018 /CNW/ - Kinaxis^® (TSX:KXS), provider of RapidResponse®, the leading cloud-based supply chain management solution based on concurrent planning, today reported results for its fiscal fourth quarter and year ended December 31, 2017. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise indicated.

"Today's results reflect both strong top line and bottom line growth. We continue to win exciting new customer contracts as a result of our global expansion investments, including Toyota, recently announced. Customers continue to expand their subscriptions as they look to broaden the value they receive from our products. Our success is driven by the strength of our internal team combined with our ever-expanding partner network supported by the launch of our Partner Enablement Program this past quarter," said John Sicard, Chief Executive Officer of Kinaxis. "We are the only company in our industry uniquely focused on concurrent planning, and that commitment continues to deliver breakthrough business outcomes for our growing global customer list."

Mr. Sicard added, "The strength of our financial results coupled with the long-term revenue visibility of our business model gives us the confidence to accelerate our investments to expand our salesforce, continue our product innovation and further build our global operations in Europe and Asia.  We believe that these key investments will enable future revenue growth while supporting our growing customer base and partnerships."

Fiscal 2017 Highlights

Q4 2017 Highlights

Analysis of Fiscal Q4 2017 and Full Year 2017 Financial Highlights

Subscription revenue increases of 19% and 23% in the respective periods were driven by contracts secured with new customers and expansion of existing customer subscriptions, while total revenue grew at slightly lower rates due to significant increases in Kinaxis' partners assuming deployment activity and the related professional services revenue in 2017.

Growth in gross profit as a percentage of revenue to 72% and 70% in the respective periods reflected the higher growth rate of revenue in the period. Growth in profit of 221% and 90% in the respective periods was primarily driven by an increase in overall subscription revenue, partially offset by investments in professional service and data center capacity, research and development and an increase in share-based payments.

Growth in adjusted EBITDA of 73% and 40% in the respective periods was a result of the higher growth of revenue compared to operating expenses excluding share-based compensation in the current periods.  The 27% decrease in cash from operating activities for Q4 2017 resulted from an increase in trade and other receivables during the fourth quarter of 2017 compared to a decrease in trade and other receivables during the same period in 2016, partially offset by an increase in profit. The 8% increase in cash from operating activities in FY 2017 was due to an increase in profit, partially offset by a smaller increase in deferred revenue during fiscal 2017 compared to the same period in 2016.

Cash and cash equivalents were $158.4 million as at December 31, 2017 as compared to $127.9 million as at December 31, 2016.

Full Year 2018 Financial Guidance

Kinaxis has set the following 2018 full year financial targets:

• Annual total revenue to be in the range of $158 million to $163 million
• Annual subscription revenue to grow 23% to 26%
• Annual Adjusted EBITDA as a percentage of total revenue to be between 23% and 26% of total revenue, reflecting enhanced investments in the direct salesforce and marketing programs to support both direct sales and our partners together with continued investment in R&D as well as new data centre investments.

This guidance is provided to enhance visibility into the Company's expectations for financial targets for the year ending December 31, 2018 under IFRS standards as applicable at December 31, 2017. The Company will provide revised guidance following the implementation of IFRS 15 & 16 accounting standards as part of the Q1 2018 earnings announcement.  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^st, 2018 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.

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, 2018, 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 2018 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, 2018, under the heading "Risk Factors" in our Annual Information Form dated March 27, 2017, 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.