Kronos Incorporated today announced financial results, company advancements, and customer successes for the third quarter of Fiscal 2015. Kronos recognized revenue for the quarter increased to $274.2 million. Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased to $88.8 million1.
"Kronos continues to operate like a start-up company even after nearly 38 years in business with exciting momentum, expansion, and agility," said Aron Ain, Kronos chief executive officer. "Among the many highlights of our third quarter include: 84 percent of new customer product bookings were from an array of Kronos Cloud offerings; our largest-ever SaaS transaction; a major new release of our flagship Workforce Central platform; shipment of our one-millionth time clock; and yet more external recognition of our inspiring work culture. I am so proud of our accomplishments, all of which ultimately help organisations around the globe to best manage their most strategic asset - their workforces."
Third-Quarter News Facts
Kronos Cloud expansion - More than 15,000 organisations now run in the Kronos Cloud, representing the majority of Kronos' global customer base. During the quarter, Kronos software-as-a-service (SaaS) bookings increased 74 percent and workforce management cloud revenue increased 58 percent as new customers deploy in the cloud and existing customers move their on-premise instances to the cloud at an accelerating pace.
- New customer bookings in the quarter were from an array of Kronos Cloud offerings, including almost all of the largest transactions. Kronos secured its largest-ever new SaaS transaction during the quarter, representing $22 million over a multi-year period. Additional new Kronos Cloud customers announced during the quarter include Crayole LLC; Mercy Hospital, Iowa City; Murray-Calloway County Hospital; Smoothie King; Willamette Dental Group and YMCA of Greater Boston.
- The pace of existing customers converting from on-premise instances to a Kronos Cloud offering is exceeding Kronos' high expectations. Due to this continued high demand, Kronos announced a Kronos Cloud Readiness assessment service to help new and existing customers maximise the value of migrating to the Kronos Cloud, which allows customers to rely on Kronos to maintain their workforce management solution, freeing up IT resources to focus on other aspects of the business.
· Employer of choice - Kronos has become widely recognised as an employer of choice according to its employee engagement survey results and external recognition such as:
- Boston Business Journal named Kronos a Best Place to Work as well as one of the region's healthiest employers;
- The Boston Globe named Kronos the most admired large employer in its annual Top Places to Work ranking;
- Forbes named Kronos one of America's Best Employers and one of America's top places to work in IT, Internet, Software, and Services; and
- The Globe and Mail named Kronos a top place to work in its Best Workplaces in Canada ranking of the most admired workplaces.
· Growth through innovation - Kronos software bookings increased 17 percent year over year1.
- Kronos not only announced the latest release of its Workforce Ready suite for small and midsise businesses (SMBs), it also reimagined workforce management with the release of Workforce Central 8. This latest release of the company's flagship product suite combines a reimagined user experience with unmatched industry-specific functionality, powerful analytics, comprehensive global capabilities, and proven cloud delivery for a complete, uncompromised solution that allows organisations to control labour costs, minimise compliance risk, improve workforce productivity, and increase employee engagement - regardless of an organisation's industry or where they do business.
- While Kronos revenues are primarily derived from software and services, during the quarter the company also achieved a hardware milestone by shipping its one-millionth time clock.
· Global successes - Kronos international product bookings increased 21 percent year over year2.
- Kronos continues to invest in regions where it sees strong growth potential. Soon after the opening of its new Latin America headquarters in Mexico City, Kronos relocated its Delhi/Noida, India operations to a new 93,000 square-foot space to support its growing software development, Kronos Cloud, professional services, finance, and information technology functions. In the coming weeks, Kronos will unveil its new and expanded UK headquarters in Bracknell, England.
· Recognition of customer service excellence - Kronos was again recognised by Omega Management Group Corp. as one of only two companies to earn aNorthFace ScoreBoard Award for 15 consecutive years. This award is presented annually to organisations that consistently exceed customer expectations, as rated by their customers.
· Market adoption in the SMB sector - Momentum in the SMB sector was driven by sales of the Kronos Workforce Ready and Kronos Workforce Central suites, and included sales to new customers as well as the migration of existing Kronos customers to Workforce Ready. Kronos also continues to experience significant traction in the Kronos SaaShr partner channel.
- The latest release of Workforce Ready includes a powerful new scheduling application to deliver even more enterprise-class workforce management solutions in the cloud to SMBs.
- The Kronos Workforce Ready suite now integrates with the NetSuite SuiteCloud Computing Platform to combine the strengths of NetSuite's cloud enterprise resource planning (ERP) solution with workforce management solutions from Kronos.
· Expansion in the enterprise and within targeted industry segments - The largest transactions during the quarter included new and existing customers, such as one of the largest cities in Canada, which selected a Kronos solution for use by approximately 12,000 employees to complement its SAP HR implementation; a leading waste management company that migrated its Kronos solution to the Kronos Cloud for use by approximately 34,000 employees; a global technology and industrial leader that extended its use of Kronos to accommodate an additional 10,000 employees in the Kronos Cloud; a world-class entertainment and hospitality company that selected a Kronos solution for approximately 8,000 employees; and a major financial institution that purchased a Kronos solution for use by its entire 30,000-employee population in the Kronos Cloud.
- Kronos experienced one of its best-ever quarters in the company's history in its healthcare vertical, with bookings well beyond expectations. During the quarter,Kronos also acquired physician scheduling vendor Productive Scheduling Solutions to further extend its leadership in helping healthcare organisations manage their workforces by leveraging a complete, enterprise-wide workforce management solution. Additionally, according to a new global study published by IHS Technology, Kronos ranked as the market share leader in the medical human capital management market.
- All other targeted vertical markets performed well, with momentum across retail and hospitality, manufacturing, public sector, and services and distribution.
Customer success around the globe - In the third quarter of Fiscal 2015, Kronos signed agreements with organisations around the world, including: Alave Soluciones Aéreas, a provider of comprehensive aviation services to airports in various Mexican cities; Con-Way Inc., a leader in the transportation and logistics industry;Dallas/Fort Worth International Airport, the primary international airport serving the Dallas/Fort Worth area in Texas; Deer Park ISD, a public school district in Deer Park, Texas; Golden Gate Bridge, Highway & Transportation District, operator of the Golden Gate Bridge, Golden Gate Transit buses, and Golden Gate Ferry; Hsu Fu ChiInternational, a leading Chinese manufacturer of confectionary products; Lafarge India Pvt Ltd., a world leader in building materials and a major player in the cement, aggregates, and concrete businesses; Lutheran Homes Society Inc., a not-for-profit provider of senior living, youth, and outpatient services in northwest Ohio and southeast Michigan; Montefiore Medicine Academic Health System Inc., a premier academic health system and the university hospital for the Albert Einstein College of Medicine; Munson Healthcare, an nine-hospital, not-for-profit system serving all of northern Michigan; Red Hawk Casino, a casino in northern California;Saputo, producer, marketer, and distributor of a wide array of dairy products;Start People, a specialised HR and recruitment company based in Belgium; United Breweries Limited, a market leader in the beer business in India with more than 50 percent market share and a portfolio of winning brands, including its flagship Kingfisher, a leading Indian beer brand around the world; University Hospitals, serving patients through an integrated network of hospitals, outpatient health centers, and physician offices in northeast Ohio; The University of Texas MD Anderson Cancer Center, an academic treatment and research center located in Houston; Wowprime, a food and beverage company with 300 locations in Taiwan, China, and South Asia;Vancouver Airport Authority, a community-based, not-for-profit organisation that manages Vancouver International Airport (YVR); and Zeus Industrial Products, a leading manufacturer of industrial tubing.
Footnote 1: All financial information within this press release is presented using non-GAAP financial measures. Kronos believes that non-GAAP measures of financial results provide useful information regarding certain financial and business trends relating to Kronos’ results of operations. Non-GAAP revenue consists of GAAP revenue excluding the effect of the write-down of deferred revenue associated with purchase accounting for certain acquisitions and includes timing adjustments related to international product deliveries which management includes when evaluating operating results. Product bookings represent gross product value of product orders and the product equivalent value of SaaS orders. EBITDA consists of GAAP income from operations excluding: (1) share-based compensation expense for stock options and stock awards in accordance with ASC 718 and compensation expenses related to ordinary dividends; (2) amortization of capitalized software development costs; (3) depreciation of property, plant, and equipment; (4) amortization of acquired intangible assets; (5) acquisition-related expenses including advisory, legal, accounting, acquired employee-related costs, and integration costs; and (6) consulting and other financing-related expenses that are excluded from the definition of EBITDA under the terms of the company’s Credit Agreement.
Footnote 2: Constant currency.