Kinaxis Inc. Reports Fourth Quarter 2022 Results

• Q4 SaaS revenue grows 26% (32% cc¹), total revenue grows 44% (51% cc¹), ARR grows 24% (26% cc¹), and adjusted EBITDA¹ margin hits 21% (22% cc¹)
• For FY 2022, Company adds record number of new customers and exceeds initial targets for total revenue and adjusted EBITDA margin
• FY 2023 guidance reflects ongoing SaaS revenue growth acceleration, to 25-27%

OTTAWA, Ontario--(BUSINESS WIRE)--Kinaxis^® (TSX:KXS) , the authority in driving agility for fast, confident decision-making in an unpredictable world, reported results for its fourth quarter and year ended December 31, 2022. All amounts are in U.S. dollars. All figures are prepared in accordance with International Financial Reporting Standards (IFRS) unless otherwise indicated.

“Kinaxis finished the year with clear signs of momentum in the business. We exceeded our initial total revenue and adjusted EBITDA targets despite currency headwinds, grew our customer base by 40%, and achieved Rule of 40² performance. From a constant currency perspective, we reported SaaS revenue growth of 28%, and a 23% Adjusted EBITDA margin. I couldn’t be prouder of the Kinaxis team,” said John Sicard, President and CEO of Kinaxis. “Our unique concurrent planning technique, which combines heuristics, optimization and state-of-the art machine learning/AI, puts us in a leadership position to take advantage of the very strong demand backdrop in our markets, and will be key to driving a successful 2023, including another year of accelerated SaaS revenue growth. We will continue to invest for the long-term to cement our leadership position and in anticipation of even faster SaaS growth and increased profitability in coming years.”

Q4 2022 Highlights

$ USD thousands, except as otherwise indicated	Q4 2022	Q4 2021	Change
Total Revenue	98,483	68,506	44%
(constant currency^1)	103,528		51%
SaaS	58,839	46,855	26%
(constant currency^1)	61,777		32%
Subscription term licenses	9,131	1,442	533%
Professional services	26,156	17,036	54%
Maintenance and support	4,357	3,173	37%
Gross profit	61,266	43,887	40%
Margin	62%	64%
Profit	8,562	(2,919)	nm
Per diluted share	$0.30	$(0.11)
Adjusted EBITDA^1	21,116	11,277	87%
Margin	21%	17%
(constant currency^1)	22,913		103%
	22%
Cash (used in) from operating activities	(2,327)	3,238	(172%)

(1)	“Adjusted EBITDA” and constant currency (or “cc”) metrics are non-IFRS measures and are not recognized, defined or standardized measures under IFRS. These 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.
(2)	Rule of 40 calculated as the sum of SaaS revenue growth and adjusted EBITDA margin results.

FY 2022 Highlights

$ USD thousands, except as otherwise indicated	FY 2022	FY 2021	Change
Total Revenue	366,889	250,726	46%
(constant currency^1)	384,926		54%
SaaS Revenue	213,306	174,463	22%
(constant currency^1)	223,299		28%
Adjusted EBITDA^1	79,446	39,851	99%
Margin	22%	16%
(constant currency^1)	88,528		122%
	23%

Key Performance Indicators
The company’s Annual Recurring Revenue³ (ARR), which includes subscription amounts related to both SaaS and on-premise contracts, rose 26% in constant currency¹ to $279 million at the end of the quarter.

$USD millions	Q4 2022	Q4 2021	Change
Annual recurring revenue^3	274	221	24%
Annual recurring revenue^3, constant currency^1	279		26%

(3)

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, 2022.

$USD millions	Remainder of 2023	2024	2025 and later	Total
SaaS	230.1	173.7	145.9	549.7
Maintenance and support	16.2	14.0	12.1	42.3
Subscription term licenses	6.1	0.2	-	6.3
Total	252.4	187.9	158.0	598.3

Financial Guidance
Kinaxis is introducing fiscal 2023 financial guidance, as follows.

	FY 2023 Guidance
Total revenue	$420-430 million
SaaS	25-27% growth
Subscription term license	$12-14 million
Adjusted EBITDA^1 margin	13-15%

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 year ended December 31, 2022 are available on Kinaxis’ website and on SEDAR at www.sedar.com.

Conference Call
Kinaxis will host a conference call tomorrow, March 2, 2023, 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, March 2, 2023
TIME:	8:30 a.m. Eastern Time
CALL REGISTRATION:	https://conferencingportals.com/event/eopSfgtI
WEBCAST:	https://events.q4inc.com/attendee/549598293 (available for three months)
REPLAY:	(800)-770-2030 or (647)-362-9199
	Available through March 16, 2023
	Reference number: 29488

About Kinaxis Inc.
Everyday volatility and uncertainty demand quick action. Kinaxis^® delivers the agility to make fast, confident decisions across integrated business planning and the digital supply chain. People can plan better, live better and change the world. Trusted by innovative brands, we combine human intelligence with AI and concurrent planning to help companies plan for any future, monitor risks and opportunities and respond at the pace of change. Powered by an extensible, cloud-based platform, Kinaxis delivers industry-proven applications so everyone can know sooner, act faster and remove waste. For more Kinaxis news, follow us on LinkedIn or Twitter.

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,
	2022			2021			2022			2021
	(In thousands of USD)
Profit (loss)	$	8,562		$	(2,919	)	$	20,080		$	(1,165	)
Change in fair value of contingent consideration		1,367			—			(826	)		—
Share-based compensation		7,558			6,633			26,238			24,343
Non-recurring other items		—			716			—			(7,190	)
Adjusted profit	$	17,487		$	4,430		$	45,492		$	15,988
Income tax expense (recovery)		(635	)		(32	)		11,406			2,262
Depreciation and amortization		6,761			6,557			25,060			20,409
Foreign exchange loss (gain)		(1,648	)		194			(1,499	)		558
Net finance expense (income)		(849	)		128			(1,013	)		634
		3,629			6,847			33,954			23,863
Adjusted EBITDA	$	21,116		$	11,277		$	79,446		$	39,851
Adjusted EBITDA as a percentage of revenue		21.4	%		16.5	%		21.7	%		15.9	%

Constant Currency metrics
We present SaaS revenue, total revenue, adjusted EBITDA, ARR and their related growth rates under constant currency, a non-IFRS measure, to provide a framework for assessing estimates of how our business would have performed excluding the effect of foreign currency rate fluctuations. For SaaS revenue, total revenue and adjusted EBITDA under constant currency, results for entities reporting in currencies other than U.S. Dollars (“USD”) are converted into USD at the average exchange rates in effect during the comparison period (i.e., for Q4 2022, the average exchange rates in effect for Q4 2021), rather than the actual average exchange rates in effect during the current period. For constant currency ARR, we convert all non-US-dollar-denominated recurring subscription amounts at the exchange rates in effect at the end of the comparison period, rather than the exchange rates in effect at the end of the current period.

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, 2023; and
• SaaS growth and increased profitability in years beyond 2023; and
• contracted revenue in future periods, including 2023, 2024 and 2025 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 2023 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 2023, 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 2023, 2024 and 2025 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 March 1, 2023, under the heading “Risk Factors” in our Annual Information Form dated March 25, 2022 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.

Consolidated Statements of Financial Position (Expressed in thousands of USD)
	December 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	175,347		$	203,220
Short-term investments		50,476			30,168
Trade and other receivables		157,657			89,247
Prepaid expenses		13,660			8,502
		397,140			331,137
Non-current assets:
Unbilled receivables		7,245			512
Other receivables		971			1,096
Prepaid expenses		2,395			1,780
Investment tax credits recoverable		7,591			3,616
Deferred tax assets		1,065			6,000
Contract acquisition costs		24,892			19,691
Property and equipment		51,852			52,093
Right-of-use assets		53,537			53,578
Intangible assets		28,271			10,778
Goodwill		73,314			39,988
		251,133			189,132
	$	648,273		$	520,269
Liabilities and Shareholders’ Equity
Current liabilities:
Trade payables and accrued liabilities	$	40,107		$	43,328
Deferred revenue		133,467			99,239
Provisions		296			716
Contingent consideration		9,146			—
Lease obligations		6,991			2,526
		190,007			145,809
Non-current liabilities:
Lease obligations		49,977			53,233
Deferred tax liabilities		6,861			9
		56,838			53,242
Shareholders’ equity:
Share capital		244,713			195,414
Contributed surplus		65,129			54,739
Accumulated other comprehensive loss		(156	)		(597	)
Retained earnings		91,742			71,662
		401,428			321,218
	$	648,273		$	520,269

Consolidated Statements of Comprehensive Income (Loss) (Expressed in thousands of USD, except share and per share data)
	Three months ended December 31,						Year ended December 31,
	2022			2021			2022		2021
Revenue	$	98,483		$	68,506		$	366,889	$	250,726
Cost of revenue		37,217			24,619			131,102		86,755
Gross profit		61,266			43,887			235,787		163,971
Operating expenses:
Selling and marketing		21,213			16,960			79,446		59,078
Research and development		19,494			16,465			74,147		57,424
General and administrative		13,804			13,183			54,273		45,550
		54,511			46,608			207,866		162,052
		6,755			(2,721	)		27,921		1,919
Other income (expense):
Foreign exchange gain (loss)		1,648			(194	)		1,499		(558	)
Net finance and other income (expense)		891			(36	)		1,240		(264	)
Change in fair value of contingent consideration		(1,367	)		—			826		—
		1,172			(230	)		3,565		(822	)
Profit before income taxes		7,927			(2,951	)		31,486		1,097
Income Tax Expense (recovery):		(635	)		(32	)		11,406		2,262
Profit (loss)		8,562			(2,919	)		20,080		(1,165	)
Other comprehensive income (loss):
Items that are or may be reclassified subsequently to profit:
Foreign currency translation differences - foreign operations		4,539			(124	)		441		(577	)
Total comprehensive income (loss)	$	13,101		$	(3,043	)	$	20,521	$	(1,742	)
Basic earnings (loss) per share	$	0.31		$	(0.11	)	$	0.73	$	(0.04	)
Weighted average number of basic Common Shares		27,903,102			27,372,618			27,667,100		27,248,193
Diluted earnings (loss) per share	$	0.30		$	(0.11	)	$	0.70	$	(0.04	)
Weighted average number of diluted Common Shares		28,790,951			27,372,618			28,609,603		27,248,193

Consolidated Statements of Changes in Shareholders’ Equity (Expressed in thousands of USD)
	Share capital		Contributed surplus			Accumulated other comprehensive loss			Retained earnings			Total equity
Balance, December 31, 2020	$	173,104	$	35,846		$	(20	)	$	72,827		$	281,757
Loss		—		—			—			(1,165	)		(1,165	)
Other comprehensive loss		—		—			(577	)		—			(577	)
Total comprehensive loss		—		—			(577	)		(1,165	)		(1,742	)
Share options exercised		14,221		(3,459	)		—			—			10,762
Restricted share units vested		8,089		(8,089	)		—			—			—
Share based payments		—		30,441			—			—			30,441
Total shareholder transactions		22,310		18,893			—			—			41,203
Balance, December 31, 2021		195,414		54,739			(597	)		71,662			321,218
Profit		—		—			—			20,080			20,080
Other comprehensive income		—		—			441			—			441
Total comprehensive income		—		—			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	)	$	91,742		$	401,428

Consolidated Statements of Cash Flows (Expressed in thousands of USD)
	Three Months Ended December 31,						Year ended December 31,
	2022			2021			2022			2021
Cash flows from operating activities:
Profit (loss)	$	8,562		$	(2,919	)	$	20,080		$	(1,165	)
Items not affecting cash:
Depreciation of property and equipment and right-of-use assets		5,363			5,995			21,496			18,164
Amortization of intangible assets		1,398			562			3,564			2,245
Share-based payments		7,558			6,633			26,238			24,343
Net finance expense (income)		(849	)		406			(1,013	)		634
Change in fair value of contingent consideration		1,367			—			(826	)		—
Income tax expense (recovery)		(635	)		(32	)		11,406			2,262
Investment tax credits recoverable		(601	)		(1,356	)		(3,975	)		(1,527	)
Change in operating assets and liabilities		(24,064	)		(5,846	)		(49,123	)		5,523
Interest received		1,087			37			2,546			428
Interest paid		(444	)		(442	)		(1,841	)		(1,050	)
Income taxes received (paid)		(1,519	)		200			(4,484	)		281
		(2,327	)		3,238			24,518			50,138
Cash flows used in investing activities:
Acquisition of business, net of cash acquired		(76	)		—			(36,738	)		(800	)
Purchase of property and equipment and intangible assets		(8,169	)		(11,464	)		(18,249	)		(33,833	)
Purchase of short-term investments		(35,149	)		(26,434	)		(80,314	)		(71,599	)
Redemption of short-term investments		15,149			26,434			60,314			71,599
		(28,245	)		(11,464	)		(74,987	)		(34,633	)
Cash flows from financing activities:
Payment of lease obligations		(1,770	)		(1,411	)		(6,733	)		(4,911	)
Lease incentive received		—			—			3,858			—
Proceeds from exercise of stock options		6,345			2,577			29,715			10,762
		4,575			1,166			26,840			5,851
Increase (decrease) in cash and cash equivalents		(25,997	)		(7,060	)		(23,629	)		21,356
Cash and cash equivalents, beginning of year		202,764			210,382			203,220			182,958
Effects of exchange rates on cash and cash equivalents		(1,420	)		(102	)		(4,244	)		(1,094	)
Cash and cash equivalents, end of year	$	175,347		$	203,220		$	175,347		$	203,220