July 12, 2024 11:13 PM EDT
banner

News Release Details

Kneat Announces Record Revenue for First Quarter 2024

May 8, 2024
Annual Recurring Revenue Growth Accelerates to 57%

LIMERICK, Ireland, May 08, 2024 (GLOBE NEWSWIRE) -- kneat.com, inc. (TSX: KSI, OTC: KSIOF) (“Kneat” or the “Company”) a leader in digitizing and automating validation and quality processes, today announced financial results for the three-month period ended March 31, 2024. All dollar amounts are presented in Canadian dollars unless otherwise stated.

  • First-quarter 2024 total revenue reaches $10.8 million, an increase of 35% year over year
  • Annual Recurring Revenue (ARR)1 at March 31, 2024 grows 57% year over year, to $42.1 million
  • SaaS ARR1 at March 31, 2024 reaches $41.8 million, an increase of 59% year over year

“Kneat is off to a solid start to what we expect to be another excellent year. Thousands of new licenses went to customers in the quarter, as many extended Kneat Gx to more sites and processes, and as new customers were added. Our pipeline is as strong as ever, after expanding and developing our sales team. And our team is making strides building Kneat Gx to make it the gold standard across all validation use cases for life science.”

-said Eddie Ryan, Chief Executive Officer of Kneat.

Q1 2024 Highlights

  • Total revenues increased 35% to $10.8 million in the first quarter of 2024, compared to $8.0 million for the first quarter of 2023.
  • SaaS revenue for the first quarter of 2024 grew 52% to $9.7 million, versus $6.4 million for the first quarter of 2023.
  • First-quarter 2024 gross profit was $7.9 million, up 48% from $5.4 million in gross profit for the first quarter of 2023.
  • Gross margin in the first quarter of 2024 was 74%, compared to 67% for the first quarter of 2023.
  • EBITDAin the first quarter of 2024 was ($0.5) million, compared with ($0.6) million for the first quarter of 2023.
  • Adjusted EBITDA1 in the first quarter of 2024 was $0.6 million, compared with ($1.1) million for the first quarter of 2023.
  • Net loss for the first quarter of 2024 was ($3.3) million, compared with ($2.5) million for the first quarter of 2023.
  • Total ARR1, which includes SaaS license and recurring maintenance fees, was $42.1 million at March 31, 2024, an increase of 57% from $26.9 million at March 31, 2023.
  • SaaS ARR1, the proportion of ARR attributable to SaaS licenses, was $41.8 million at the end of the first quarter of 2024, an increase of 59% from $26.3 million at March 31, 2023.
  • In January 2024, Kneat announced that it signed a three-year Master Services Agreement with a global manufacturer of consumer health and wellness products. Headquartered in Europe, with over 35,000 employees and operations in more than 50 countries, the company's goal is to digitize and harmonize their equipment and computer systems validation processes across their North America, European and the Asia-Pacific manufacturing sites. Implementation is ongoing at lead sites in the UK and the US, with initial go-live expected in Q2 2024.
  • In February 2024, Kneat announced that it signed a Master Services Agreement with a global provider of critical care products. Headquartered in the United States, with over 50,000 employees and operations in more than 20 countries, the company will leverage Kneat Gx beginning with its equipment validation processes. Implementation has begun at its lead site, and will follow at two additional sites, with initial go-live expected in Q3 2024.
  • Also in February 2024, Kneat completed an equity financing through an agreement with a syndicate of investment dealers led by Cormark Securities for aggregate gross proceeds of approximately $20 million in exchange for 6,153,880 common shares from the treasury of the Company.

“With our recent financing and solid performance in the first quarter, we are in a strong financial position to continue doing what we do best, that is, executing on our growth strategy.”

-said Hugh Kavanagh, Chief Financial Officer of Kneat. 

Quarterly Conference Call

Eddie Ryan, Chief Executive Officer of Kneat, and Hugh Kavanagh, Chief Financial Officer of Kneat, will host a conference call to discuss Kneat’s first-quarter results and hold a Q&A for analysts and investors via webcast on Thursday, May 9, 2024, at 9:00 a.m. ET.

Interested parties can register for the live webcast via the following link:

Register here

Supplementary and Non-IFRS Financial Measures

The Company uses supplementary financial measures as key performance indicators in its MD&A and other communications. Management uses both IFRS measures and supplementary, non-IFRS financial measures as key performance indicators when planning, monitoring and evaluating the Company’s performance.

Annual Recurring Revenue (“ARR”)

ARR is used by Kneat to assess the expected recurring annual revenues from the customers that are live on the Kneat Gx platform at the end of the period. ARR is calculated using the licenses delivered to customers at the period end, multiplied by the expected customer retention rate of 100% and multiplied by the full agreed annual SaaS license or maintenance fee. Since many of the customer contracts are in currencies other than the Canadian dollar, the Canadian dollar equivalent is calculated using the related period end exchange rate multiplied by the contracted currency amount.

Software-as-a-Service Annual Recurring Revenue (“SaaS ARR”)

SaaS ARR is a component of ARR that is used by Kneat to assess the expected recurring revenues exclusively from license subscriptions to the Kneat Gx platform at the end of the period. SaaS ARR is calculated as the SaaS licenses delivered to customers at the period end, multiplied by the expected customer retention rate of 100% and multiplied by the full agreed SaaS license fee. Since many of the customer contracts are in currencies other than the Canadian dollar, the Canadian dollar equivalent is calculated using the related period end exchange rate multiplied by the contracted currency amount.

Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”)

EBITDA is calculated as net income (loss) attributable to kneat.com excluding interest income (expense), provision for income taxes, depreciation and amortization. We provide and use this non-IFRS measure of our operating performance to highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. A reconciliation of EBITDA to IFRS financial measures is provided in the financial statements accompanying this press release.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)

Adjusted EBITDA is calculated as net income (loss) attributable to kneat.com excluding interest income (expense), provision for income taxes, depreciation and amortization, foreign exchange gain or loss and stock-based compensation expense. We provide and use this non-IFRS measure of our operating performance to highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures and to inform financial comparisons with other companies. A reconciliation of Adjusted EBITDA to IFRS financial measures is provided in the financial statements accompanying this press release.

About Kneat

Kneat Solutions provides leading companies in highly regulated industries with unparalleled efficiency in validation and compliance through its digital validation platform Kneat Gx. We lead the industry in customer satisfaction with an unblemished record for implementation, powered by our user-friendly design, expert support, and on-demand training academy. Kneat Gx is an industry-leading digital validation platform that enables highly regulated companies to manage any validation discipline from end-to-end. Kneat Gx is fully ISO 9001 and ISO 27001 certified, fully validated, and 21 CFR Part 11/Annex 11 compliant. Multiple independent customer studies show a 40% or more reduction in validation cycle times, nearly 20% faster speed to market, and 80% reduced changeover time.

Cautionary and Forward-Looking Statements

Except for the statements of historical fact contained herein, certain information presented constitutes "forward-looking information" within the meaning of applicable Canadian securities laws. Such forward-looking information includes, but is not limited to, the relationship between Kneat and the customer, Kneat's business development activities, the use and implementation timelines of Kneat's software within the customer's validation processes, the ability and intent of the customer to scale the use of Kneat's software within the customer's organization, our ability to win business from new customers and expand business from existing customers, our expected use of the net proceeds from the IPF Facility and/or any future offering, the anticipated effects of the IPF Facility and/or any future offering on our business and operations, and the compliance of Kneat's platform under regulatory audit and inspection. These and other assumptions, risks and uncertainties may cause Kneat's 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 "Cautionary Note Regarding Forward-Looking Statements and Information" and "Risk Factors" in our annual MD&A dated February 21, 2024, under the heading "Risk Factors" in our Annual Information Form dated February 21, 2024 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. Kneat 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. Investors should not assume that any lack of update to a previously issued forward-looking statement constitutes a reaffirmation of that statement. Continued reliance on forward-looking statements is at an investor's own risk.

For further information:

Katie Keita, Kneat Investor Relations
P: + 1 902-706-9074
E: katie.keita@kneat.com

 

kneat.com, inc.
Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(expressed in Canadian dollars)
    Three-month period ended
    Mar 31, 2024 Mar 31, 2023
Revenue    
  SaaS License fees   9,718,501     6,387,635  
  On-premise license fees   -     436,126  
  Maintenance fees   70,589     151,094  
  Professional services and other   977,910     990,053  
Total Revenue   10,767,000     7,964,908  
       
Cost of Revenue   (2,834,015 )   (2,591,609 )
Gross Profit   7,932,985     5,373,299  
Gross Margin   74 %   67 %
       
Expenses    
Research and development   (4,045,548 )   (3,863,685 )
Sales and marketing   (4,031,684 )   (2,954,740 )
General and administrative   (2,105,589 )   (1,905,882 )
Total Expenses   (10,182,821 )   (8,724,307 )
       
Operating Loss   (2,249,836 )   (3,351,008 )
Interest expense   (867,451 )   (54,945 )
Interest income   35,076     1,933  
Foreign exchange gain (loss)   (238,763 )   938,213  
       
Loss before income taxes   (3,320,974 )   (2,465,807 )
Income taxes   (15,887 )   (8,550 )
       
Net loss for period   (3,336,861 )   (2,474,357 )
       
Other comprehensive (loss) / income    
Foreign currency translation adjustment to presentation currency   190,894     (565,416 )
       
Comprehensive loss for the period   (3,145,967 )   (3,039,773 )
       
Loss per share - basic and diluted $ (0.04 ) $ (0.03 )
       
Weighted Average Number of Common Shares Outstanding    
Basic and diluted   81,005,029     77,686,689  
       
Reconciliation:    
  Total loss for the period   (3,336,861 )   (2,474,357 )
  Interest expense   867,451     54,945  
  Interest income   (35,076 )   (1,933 )
  Income taxes   15,887     8,550  
  Depreciation expense   191,221     203,616  
  Amortization expense   1,834,211     1,564,303  
  EBITDA Loss   (463,167 )   (644,876 )
       
  Adjustments to EBITDA    
  Foreign exchange loss (gain)   238,763     (938,213 )
  Stock-based compensation expense   812,173     489,399  
  Adjusted EBITDA Loss   587,769     (1,093,690 )
       


 

  kneat.com, inc.
  Unaudited Condensed Interim Consolidated Statements of Financial Position
  (expressed in Canadian dollars)
  as at
    March 31,     Dec 31,  
    2024     2023  
  Assets          
             
  Current assets          
  Cash 37,507,949     15,252,526  
  Accounts receivable 15,557,613     11,601,558  
  Prepayments 1,100,664     1,138,382  
    54,166,226     27,992,466  
             
  Non-current assets          
  Accounts receivable 2,352,759     1,650,795  
  Property and equipment 6,992,503     7,209,953  
  Intangible assets 29,471,354     27,642,752  
             
  Total assets 92,982,842     64,495,966  
             
  Liabilities          
             
  Current liabilities          
  Accounts payable and accrued liabilities 7,853,756     7,874,332  
  Contract liabilities 25,457,756     13,647,071  
  Lease liabilities 537,305     535,832  
  Loan payable 728,950     -  
             
    34,577,767     22,057,235  
             
  Non-current liabilities          
  Contract liabilities 99,891     41,084  
  Lease liabilities 5,810,715     5,976,380  
  Loan payable and accrued interest 21,048,866     21,657,423  
             
  Total Liabilities 61,537,239     49,732,122  
             
  Equity          
  Shareholders' equity 31,445,603     14,763,844  
             
  Total liabilities and equity 92,982,842     64,495,966  
             


 

kneat.com, inc.
Unaudited Condensed Interim Consolidated Statement of Cash Flows
(expressed in Canadian dollars)
For the period ended
  3 months   3 months
  March 31,   March 31,
  2024     2023  
Operating activities      
Net loss for the period (3,336,861 )   (2,474,357 )
Charges to loss not involving cash:      
Depreciation of property and equipment 191,221     203,616  
Share-based compensation expense 812,173     489,399  
Interest expense 867,451     54,945  
Tax expense 15,887     8,550  
Amortization of the intangible asset 1,834,211     1,564,303  
Amortization of loan issuance costs 36,957     -  
Write-off of property and equipment -     764  
Foreign exchange loss/(gain) 238,763     (938,213 )
Increase/(Decrease) in non-current contract liabilities 58,319     (274,257 )
Net change in non-cash working capital related to operations 7,684,397     3,968,242  
       
Net cash provided by operating activities 8,402,518     2,602,992  
       
Financing activities      
Proceeds received from public equity financing 20,000,110     -  
Share issuance costs associated with equity financings (1,626,257 )   -  
Payment of principal and interest on the loan payable (621,996 )   -  
Proceeds from the exercise of stock options 641,700     24,000  
Repayment of lease liabilities (181,158 )   (203,457 )
       
Net cash provided by/(used in) financing activities 18,212,399     (179,457 )
       
Investing activities      
Additions to the intangible asset (4,515,850 )   (4,099,009 )
Additions to property and equipment (8,163 )   (11,294 )
       
Net cash used in investing activities (4,524,013 )   (4,110,303 )
       
Effects of exchange rates on cash 164,519     12,728  
       
Net change in cash during the period 22,255,423     (1,674,040 )
       
Cash - Beginning of period 15,252,526     12,282,478  
       
Cash - End of period 37,507,949     10,608,438  
       

______________________

1 ARR and SaaS ARR are supplementary measures. EBITDA and Adjusted EBITDA are non-IFRS measures and are not recognized, defined or standardized measures under IFRS. These measures are defined in the “Supplementary and Non-IFRS Measures” section of this news release.


Primary Logo

Source: kneat.com