Kronos Continues Stellar Growth Trajectory; Shift to SaaS Drives Impressive Recurring Revenue Growth; Footprint Rapidly Expanding in Human Capital Management
CHELMSFORD, Mass., April 26, 2016 - Kronos Incorporated today announced financial results, company advancements, and customer successes for the second quarter of Fiscal 2016. Kronos recognized revenue for the quarter increased to $291.2 million. Earnings before interest, tax, depreciation, and amortization (EBITDA) was $83.2 million.1 Annual Recurring Revenue (ARR) now represents more than 60 percent of total revenues and is the fastest-growing part of the business.
"As a result of tremendous performance throughout every corner of our company, we continue to lead the industry's shift from on-premise software to the cloud," said Aron Ain, Kronos chief executive officer. "We are investing heavily back into our business with the goal of continuously delighting our customers around the world. With a record pipeline across our entire product portfolio - from our Workforce Central workforce management suite for large enterprises and our Workforce Ready human capital management suite for small and midsize businesses - we anticipate again exceeding our projections for this fiscal year. Thank you to Kronites around the world for the role they play and the inspiration they bring to Kronos every day. As I often say, 'Engaged Kronites equals an exceptional customer experience!'"
SaaS Driving Recurring Revenue Growth
In an ongoing trend, Kronos again delivered strong growth in the cloud, with subscription revenue accelerating, increasing by 57 percent.
- Nearly 82 percent of new customer bookings came from an array of Kronos Cloud offerings, which marks the fifth-consecutive quarter that cloud bookings accounted for at least 80 percent of new orders.
- More than 17,000 organizations around the globe now run in the Kronos Cloud, representing the majority of the company's global customer base.
Adoption Accelerating Among Small and Midsize Businesses (SMB) in Human Capital Management (HCM)
Kronos - long known as the global leader in workforce management - is rapidly expanding its footprint in the HCM market.
Continuing on its previously announced growth in SMB, Kronos installed a record number of Workforce Ready applications in the second quarter, with a nearly 55 percent year-over-year increase in implementations. Total ARR bookings for both direct and indirect customers increased 74 percent, as organizations recognize the value of supporting the entire employee lifecycle with a single-source solution to attract, engage, and retain talent.
- Workforce Ready subscription revenue increased 74 percent year-over-year.
Kronos and Google for Work continue to integrate Google Apps for Work with the Kronos Workforce Ready cloud suite to help SMBs manage their workforce with innovative, intuitive, and familiar cloud and mobile tools to boost productivity, increase employee engagement, and improve workplace efficiency. Joint customers will be able to seamlessly integrate Google Apps with Workforce Ready to enhance mobile, collaboration, data collection, storage, and reporting capabilities with tools employees use every day - such as Gmail, Drive, Sheets, Forms, Sites, and Calendar.
Kronos Workforce Management: Vendor of Choice for Large Employers
Kronos secured many $1+ million contracts such as a multinational manufacturer of automotive parts; a health system in Florida with more than 1 million patient interactions per year; a global pharmaceutical and consumer packaged goods corporation operating in more than 50 countries with more than 250 subsidiaries; and an operator of major car rental services in the U.S. with more than 85,000 employees. These transactions added to an already robust enterprise customer community that includes more than half of Fortune 1000® companies. Some of these organizations expanded their use of Kronos solutions to accommodate growth or add additional applications; some chose Kronos to replace competitive workforce management applications; and others automated manual processes for the first time or replaced legacy homegrown applications.
- All vertical sectors over performed during the quarter, with strong demand for applications such as time and attendance, scheduling, absence management, and analytics.
- Kronos acquired Empower Software Solutions, a leading provider of human capital management and workforce management solutions. Acquiring Empower Software extends Kronos' leadership within the enterprise segment with some of the world's largest retailers, manufacturers, and financial services organizations, adding nearly 1,000 organizations to the Kronos customer community and giving Kronos access to additional unique and innovative retail scheduling functionality.
Kronos Products and Services Revolutionizing Workforce Management
Kronos constant currency total product bookings increased 18 percent compared to last year, with sales increasing across all deal sizes.
Workforce Central 8 continues to be the fastest-adopted product release in company history, with nearly 1,400 shipments and downloads since the latest version was released.
- Kronos shipped an all-time record number of Kronos InTouch time clocks, as organizations increasingly seize the benefits of automating the collection of time-worked data.
- As a result of increasing customer demand for workforce analytics applications and insight, the Kronos Big Data for Workforce Management team has doubled in size since inception 16 months ago. Comprised of data scientists, strategic consultants, and business intelligence designers with doctorate degrees and professional backgrounds in computer science, machine learning, and neural networks, this team is charged with mining and analyzing data to help Kronos customers uncover value from workforce data.
Global Momentum Accelerates
Revenue generated outside North America increased 18 percent and product bookings increased 33 percent year over year (both percentages in constant currency). Significant contracts included a major department store with more than 180 locations in Australia; a large global furniture retailer with locations in China; a luxury fashion retailer based in France with more than 450 locations around the world; a global high-end fashion brand headquartered in Germany; and a major theme park complex in China with more than 15 million visitors per year. All regions exceeded expectations, and China closed its third-consecutive $1 million quarter.
Kronos WorkInspired Culture
- Kronos secured an America's Best Employers ranking with Forbes, featured among America's top 10 places to work in IT, Internet, Software and Services on the organization's inaugural America's Best Midsize Employers list, following closely on the heels of: Kronos again being named a Top Place to Work by The Boston Globe; Workforce magazine recognizing the Kronos wellness program in its annual Optimas Awards; The New England Employee Benefits Council honoring Kronos with a Best Practice award in the Total Reward Strategies category; and SHRM India awarding Kronos with the Excellence in HR-MSME category in its Numero Uno awards.
- Kronos announced a series of new benefits to enhance the lives of Kronites and their families. New benefits (varied by region) include student loan repayment assistance; childcare financial assistance; a scholarship program for children of Kronos employees; an increase in matching contributions for retirement/savings plans; a child adoption assistance program; and enhanced parental leave programs.
- In addition to recently investing in significant renovations of its India, Mexico, and U.K. facilities, Kronos announced plans to relocate its global headquarters.
- Kronos has become widely recognized for its corporate culture, which emphasizes a focus on caring for customers, as featured in its Kronos Culture of Inspiration and Caring for Customers video.
- Kronos, with nearly 4,800 employees worldwide, is actively hiring and currently has more than 300 job openings.
Second-Quarter Customer Success Around the Globe
In the second quarter of Fiscal 2016, Kronos signed agreements with organizations around the world, such as: 7-Eleven Australia, a privately held chain licensing the U.S. brand with 620 stores in Australia; Capital Senior Living Corporation, a provider of home care services, independent living, and assisted living for senior adults; Chimelong, an operator of parks and hotels in China; City of Denton, a city in Texas; City of McAllen, a city in Texas; County of La Crosse, a county in Wisconsin; Johnson Controls Automotive U.K., a leading manufacturer of automotive seat systems; Maxim's, one of the largest dining chains with 900 stores throughout China; Oakland County Sheriff, a sheriff's office in Michigan; Pankoo, a dining chain with more than 160 stores in China; Sitel Operating Corporation, an outsourcing provider of customer experience management; Spinx Company Inc., an operator of more than 80 convenience stores in South Carolina; SupplyOne, a premier packaging services and solutions company;Wellstar Health System, a not-for-profit health system based in Georgia; Woods Services, a service organization for people with exceptional challenges and disabilities; Upson Medical Center, a 75-bed regional medical center in central Georgia.
About Kronos Incorporated
Kronos is the global leader in delivering workforce management solutions in the cloud. Tens of thousands of organizations in more than 100 countries - including more than half of the Fortune 1000® - use Kronos to control labor costs, minimize compliance risk, and improve workforce productivity. Learn more about Kronos industry-specific time and attendance, scheduling, absence management, HR and payroll, hiring, and labor analytics applications at www.kronos.com. Kronos: Workforce Innovation That Works™.
© 2016 Kronos Incorporated. All rights reserved. Kronos and the Kronos logo are registered trademarks and Workforce Innovation That Works is a trademark of Kronos Incorporated or a related company. See a complete list of Kronos trademarks. All other trademarks, if any, are property of their respective owners.
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.