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Kronos Announces Another Exceptional Quarter; Record Number of Existing On-Premise Customers Migrate to the Kronos Cloud

CHELMSFORD, Mass., July 27, 2016 - Kronos Incorporated today announced financial results, company advancements, and customer successes for the third quarter of Fiscal 2016. Kronos recognized revenue for the quarter increased to $309.7 million. Earnings before interest, tax, depreciation, and amortization (EBITDA) was $94.7 million.1 Annual Recurring Revenue (ARR) now represents more than 60 percent of total revenues and is the fastest-growing part of the business.

"Kronites around the world are working together to take our amazing company to new heights.  Innovation, a customer-first mentality, and an engaged and inspired place to work continue to set an energetic pace," said Aron Ain, Kronos chief executive officer. "With another exciting quarter for company performance and a record global pipeline, Kronos is on pace to exceed expectations for the year as we eye $1.2 billion. While leading the charge to SaaS-first workforce management and human capital management, we remain focused on our people, processes, products, and our global reach while continuing to delight customers around the world."

SaaS Driving Recurring Revenue Growth
Kronos again delivered strong growth in the cloud, with subscription revenue accelerating, increasing by 57 percent.

  • Nearly 90 percent of new customer bookings came from an array of Kronos Cloud offerings, which marks the six-consecutive quarter that cloud bookings accounted for at least 80 percent of new orders.
  • More than 19,000 organizations around the world now run in the Kronos Cloud, representing the majority of the company's global customer base.
  • In one of the company's largest-ever one-time cloud rollouts, a global leader of international food services and facilities management went live with nearly 120,000 employees in the Kronos Cloud.
  • As the company continues to convert its install base of long-standing, on-premise customers to software-as-a-service (SaaS), Kronos had its largest-ever quarter for migrating existing customers to the Kronos Cloud. Total Kronos Cloud migrations through the third quarter of 2016 have already surpassed total Fiscal 2015 figures, and the number of existing on-premise customers who migrated to the Kronos Cloud in the third quarter more than doubled year-over-year.
  • SaaS migration momentum continues across the world and in all verticals, with the majority of customers electing to expand their Kronos solution at the same time as moving to SaaS, including:
    • A leading manufacturer of innovative medical solutions that improve the health of patients around the world; one of the largest natural food grocery retailers with more than 80,000 employees across the U.S., Canada, and the U.K.; a U.S.-based integrated healthcare delivery system providing a full continuum of healthcare services; a board of education that overseas nearly 50 public school campuses and more than 30,000 students in the U.S.; a U.S. leader in the insurance and financial services marketplace; and a leading third-party logistics and supply chain solutions provider in the U.K. and Ireland.

Adoption Rapidly Accelerating for Workforce Ready Human Capital Management (HCM) Suite
Kronos - long known as the global leader in workforce management - is rapidly expanding its footprint in the HCM market.

  • Kronos installed a record number of Workforce Ready applications in the third quarter. Total ARR bookings increased 43 percent, as organizations recognize the value of leveraging a unified platform with a full suite of applications for managing and nurturing the entire workforce from pre-hire to retire.
  • Workforce Ready subscription revenue increased 77 percent year-over-year.
  • In a strategic move that will deliver more scheduling and forecasting functionality to Workforce Ready customers, Kronos acquired substantially all intellectual property assets of EmLogis, Inc. The EmLogis SmartRules Scheduler application will be integrated into the Kronos Workforce Ready HCM suite to help organizations match the availability and skills of employees with business demand to create efficient and effective schedules.

Kronos Workforce Management: Vendor of Choice for Large Employers
Kronos topped its all-time record for large deals in the quarter, including $1+ million contracts such as:

  • An academic hospital in Ohio with more than 6 million patient visits per year; a multinational tire manufacturer with several plants and more than 20,000 employees in North America; a public school division with more than 85,000 students enrolled across the U.S.; a leading health and beauty retailer and pharmacy in the United Kingdom; a transit system operator serving more than 4 million people in a major U.S. metro area; an operator of one of the busiest convention centers in the U.S., hosting more than 30,000 companies each year; a full-service sales and marketing agency with more than 35,000 employees; one of the largest global apparel companies with an array of popular brands and operations in more than 40 countries; a U.S. healthcare system with more than 170 locations and more than 35,000 employees; and a multinational food and beverage manufacturer with more than 105,000 employees around the world.
  • 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 performed strongly in the quarter, with demand driven by time and attendance, scheduling, absence management, and analytics applications.

Global Momentum, Large Multinational Deals Accelerate
Revenue and bookings generated outside North America both increased, and Kronos had one if its best quarters ever among multinational organizations.

  • Several of the company's largest customers - especially existing customers that have recognized the value of Kronos solutions deployed domestically - have leveraged Kronos' technology, market reach, and unrivaled knowledge of complex work and pay rules that vary country by country to deploy workforce solutions on a global scale and address specific challenges faced by multinational organizations. Significant multinational contracts included a major internet retailer with operations around the world; a major biopharmaceutical company with more than 30,000 employees; a large consumer products company with well-known brands sold in more than 200 countries; a world-leading logistics provider serving more than 210 countries; one of the largest food manufacturers in the world; a major apparel and home goods retailer with more than 3,500 worldwide locations; and a global diversified technology and industrial products leader with more than 170,000 employees worldwide.
  • All regions experienced strong growth, as significant international wins driven by Kronos regional offices included an electricity infrastructure company delivering services to more than 1.5 million people in Australia; a network of more than 200 retail co-operatives in Canada; a major mechanical manufacturer in India; an operator of major theme parks and entertainment resorts in Dubai; a large aerospace and defense manufacturing plant in Spain; and a major beverage manufacturer serving more than 80 million customers with operations in Mexico.

Kronos Products Revolutionizing Workforce Management
Kronos continued its investment in delivering exceptional products, including:

  • Significant enhancements to Workforce Mobile and Workforce Tablet applications further empower employees around the world to increase ownership of their work schedules with powerful and convenient self-service functionality.
  • A new Kronos Attestation Tool Kit helps retailers navigate the complex regulatory landscape by providing a way for associates, managers, and corporate employees to be engaged in the timecard review and documentation process by reviewing, approving, and rejecting timecards using various Kronos data collection methods such as time clocks, mobile and tablet applications, and web platforms.

Customer-First Focus Delivering Superior Experiences

  • A newly released Kronos Workforce Analytics as a Service offering allows organizations to visualize workforce data using interactive visualization technology to understand how labor hours are being spent as well as gain insight into overall workforce management processes.
  • The Kronos Paragon implementation methodology expedites time to value for cloud customers by as much as 30 percent, using innovative technology and decades of Kronos knowledge from thousands of workforce management implementations to accelerate the building, configuration, and testing of countless organization-specific work rules and complex compliance regulations that vary by industry, country, state, region, and locality.
  • For the 16th consecutive year, Kronos received a NorthFace ScoreBoard AwardSM from the Omega Management Group Corp. for excellence in customer satisfaction. Kronos is one of just two organizations to receive this award every year since the program's inception, and the only cloud company to receive this honor.

Accolades for the Kronos WorkInspired Culture Continue to Roll in

Human Capital Management Thought Leadership

Third-Quarter Customer Success Around the Globe
In the third quarter of Fiscal 2016, Kronos signed agreements with organizations around the world, such as:  Barbeques Galore, an iconic Australian barbeque retailer; Borg Manufacturing, a leading manufacturer of melamine panels and components headquartered in Australia; Brookdale Senior Living, a provider of assisted and independent living, skilled nursing, and home health services; Central Freight Lines, a provider of logistics solutions for more than 91 years; Child Protection Services,a provider of emergency care for children in Australia; EE, a U.K. mobile network operator with more than 550 retail stores; Estratégica, a B2B and B2C marketing agency in Mexico with a comprehensive services module; Foursquare Healthcare, a healthcare provider serving communities throughout Texas; Gate Gourmet, a leading independent provider of airline catering and provisioning services; General Pants, an Australian fashion retailer specializing in street wear, denim, skate clothing, and surf wear; Indian River Memorial Hospital, a 332-bed not-for-profit hospital in Florida; interface rehab, inc., a provider of comprehensive physical rehabilitation and consultation services serving the California medical community; Monash College, a college owned by Australia's largest international university; New Seasons Market, a privately-owned chain of grocery stores based in Oregon; RealPage Philippines, a leading provider of comprehensive property management software solutions in the rental housing industry; Robert Wood Johnson University Hospital, a 965-bed hospital with campuses in central New Jersey; Silver Heritage, an experienced regional gaming operator in Asia; St. Francis Health Services of Morris, a not-for-profit health services provider for seniors located in Minnesota; Telerx, a business process outsourcer and operator of global contact centers handling more than 35 million interactions each year; The Tachi Palace Hotel & Casino, a hotel with a casino, spa, and entertainment located in California; Valley Medical Center, a 321-bed acute care hospital and clinic network in Washington; and Yale New Haven Health Services, the largest and most comprehensive healthcare system in Connecticut.

Supporting Resources

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™.

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© 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.

Contact
Domenic Locapo
Kronos Incorporated
+1 978.947.4777
domenic.locapo@kronos.com

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