Kinaxis Inc.

Good morning, ladies and gentlemen, and welcome to the Connexus Inc. Fiscal 2022 Fourth Quarter Results Conference Call. Currently, all participants are in a listen-only mode, and following the presentation, we will conduct a question-and-answer session. Instructions will be provided for you at that time to queue up for questions. I'd like to remind everyone that this call is being recorded today, Thursday, March 2, 2023, and I will now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Connexus Inc. Please go ahead, Mr. Watford.

Thanks, Operator. Good morning and welcome to the Connexus Earnings Call. Today we will be discussing our fourth quarter and year-end results, which we issued after closing markets yesterday. With me on the call are John Sicard, our President and Chief Executive Officer, and Blaine Fitzgerald, our Chief Financial Officer. Before we get started, I want to emphasize that some of the information discussed in this call is based on information as of today, March 2, 2023, They contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release as well as in our CDAR filings. During this call, we will discuss IFRS results and non-IFRS financial measures, including adjusted EBITDA and certain constant currency results and metrics. The reconciliation between adjusted EBITDA and the corresponding IFRS result is available in our earnings press release and in our MD&A, both of which can be found on the IR section of our website, canaxis.com, and on CDAR. Participants are advised that the webcast is live and is also being recorded for playback purposes. An archive of the webcast will remain available on the investor relations section of our website. Neither this call nor the webcast archive may be re-recorded or otherwise reproduced or distributed. without prior written permission from Kinaxis. To begin our call, John will discuss the highlights of our quarter, as well as recent business developments, followed by Blaine, who will review our financial results and outcome. Finally, John will make some closing remarks before opening up the line for questions. We have a presentation to accompany today's call, which can be downloaded from the IR homepage of our website, Kinaxis.com. We will let you know when to change slides. I'll now turn the call over to John.

Thank you, Rick. Good morning, and thank you all for joining us today. Starting with slide four, the strong momentum in our business continued in the fourth quarter as reflected in key results, including fast revenue growth of 26% or 32% in constant currency, total revenue growth of 44% or 51% in constant currency, and adjusted EBITDA margin of 21% or 22% in constant currency. Moving to slide five. Quite simply, 2022 was a phenomenal year for Kinaxis. Total SaaS revenue grew 22% or 28% in constant currency. Total revenue grew 46% or 54% in constant currency, and we have achieved a year-end adjusted EBITDA margin of 22% or 23% in constant currency. If you consider our constant currency results, you will see that across all metrics, we dramatically outperformed our initial guidance for the year. I couldn't be prouder of the team for their remarkable efforts in 2022 and their commitment to working towards another stellar year in 2023. Turning to slide six, Key metrics we monitor not only highlight significant success in 2022, they give us great confidence and optimism for the year ahead. Specifically, we won approximately 25% more new customers than in 2021 and roughly 40% of our new wins coming from mid-market customers, a part of our TAM that we've only just begun to address. Including acquisitions, we grew our total customer base by 40% over the year, giving us a solid foundation for future expansion. Constant currency annual recurring revenue growth accelerated to 26% compared to 21% in 2021 and continues to point to opportunities for accelerated SaaS revenue growth in the years ahead. I consider this a clear sign of inflection for our business. As of December 31, 2022, roughly 86% of our SAS revenue guidance for 2023 is in RPO, or Committed Backlog. We typically aim for a result closer to 80%. So 86% provides us with exceptionally strong visibility. Blaine will share more details in a few moments. Our 12-month rolling pipeline continues to grow at a pace that suggests sustained, strong market momentum ahead. We began accelerating investments in our sales team during the second half of 2022. And to ensure we have adequate coverage to capture the full potential we see ahead of us, we are continuing to prioritize investments in sales and marketing in 2023. I continue to believe we are in the early days of what I believe is a global transformation for supply chain management solutions. All these achievements have been won while simultaneously moving our ESG program forward. I'm thrilled with our AAA ESG rating from MSCI and our inclusion in the recently released Sustainalytics 2023 top rated ESG companies list for the software category. Moving to slide seven, building on this success, We are in the very early stages of several exciting growth strategies that have increased our total addressable market by a factor of nearly 10 compared to less than just three years ago. As you know, we've penetrated deeper in our verticals with our mid-market strategy where we're having great success. And now, we are also beginning to penetrate smaller companies through our relationships with over 25 value-added resellers. We are excited to see how they will perform in 2023 and beyond. We've also expanded our vertical market reach through the addition of retail. After substantial product work, we are providing ourselves in early bellwether global counts and will continue to take a focused approach to new opportunities in this market through 2023. Finally, and significantly, we are no longer only a supply chain planning company. Thanks to our recent acquisition of supply chain execution product innovator, MPO, we are now in the position to offer an end-to-end supply chain management solution. The planning and execution markets are broadly seen by industry analysts as being of similar size. we see substantial opportunities to sell our supply chain execution products both standalone and as expansion to existing and new rapid response customers. Of course, all of these opportunities complement existing growth factors through our own R&D innovations, including our recently announced machine learning AI-based solution planning AI, growth from our solution extension partners, and growth through future potential acquisitions. We're also thrilled to be able to offer our supply chain management platform in more ways than through our private data centers and now through public cloud with Microsoft Azure and Google Cloud Platform. This will ultimately enhance both the efficiency and effectiveness of product delivery and potentially offer new expansion opportunities down the road. While we acknowledge that the omnipresent uncertainty and disruption in the world increases risk to any outlook, we remain overwhelmingly positive about 2023. We are accelerating our SaaS revenue growth outlook compared to 2022, while simultaneously continuing to invest where most appropriate, with a priority on sales and marketing. These investments are necessary to solidify our position as a leader in the flourishing supply chain management space. With this balanced approach, and despite entering a low period in the normal cycle of our subscription term license revenue, we're anticipating yet another Rule of 40 performance for 2023. As Blaine will soon explain, starting 2024 and over the midterm, We anticipate achieving higher profitability margins with even faster SaaS growth. These are very exciting times. With that, I'll turn the call over to Blaine.