Kronos Incorporated today announced financial results, company advancements, and customer successes for the first quarter of Fiscal 2017. Kronos recognized revenue for the quarter increased 14 percent to $312.6 million. Earnings before interest, tax, depreciation, and amortization (EBITDA) increased 17 percent to $91.1 million.1
“Kronos is off to a fantastic start in Fiscal 2017, with financial results exceeding our expectations,” said Aron Ain, Kronos chief executive officer. “Our SaaS business is growing by leaps and bounds; we are rapidly expanding our offerings and market position beyond workforce management to include a full, end-to-end suite of human capital management solutions; and we experienced our best-ever first quarter in terms of transactions that exceeded $1 million. All of this momentum – coupled with our steadfast focus on global expansion and being a great place to work – will ultimately bring even more value to our customers and the tens of millions of people around the world who work for organizations that use Kronos solutions.”
SaaS Continues to Surge with Banner Quarter for Migrations, Driving Recurring Revenue Growth
Kronos again delivered strong growth in the cloud, with subscription revenue increasing 51 percent.
- Nearly 85 percent of new customer bookings came from an array of Kronos Cloud offerings, which marks the 8th consecutive quarter that cloud bookings accounted for at least 80 percent of new deals.
- More than 21,000 organizations around the globe now run in the Kronos Cloud, representing the majority of the company’s global customer base.
- The pace of conversions of long-standing, on-premise customers migrating to software-as-a-service continues to rapidly increase. Significant on-premise to SaaS conversions included: a top-ranked academic medical center serving more than 1.5 million patients each year; a fast-growing discount retailer with more than 500 stores across 30 states; a leading provider of technology and supplies for correctional facilities across the U.S.; an international retailer with more than 1,000 locations; a manufacturer of meat products with more than 6,000 employees; a large operator of casinos and entertainment headquartered in Nevada; a large healthcare organization with more than 20,000 employees; a chain of convenience stores employing more than 18,000 associates; and the Australian operations for a global leader in logistics and relocation services.
- Significant new Kronos Cloud deployments include: a large transportation patrol department in the Western U.S.; an iconic luxury fashion brand; the school district of a major U.S. city with more than 80,000 students; an Australian distribution center for a major energy services provider; an operator of brand name retail stores throughout Mexico; a financial services company among the largest banks in the U.S.; a nationally recognized higher education organization in California; a retailer with more than 400 stores in the UK; a home décor retailer with locations in 30 states; a global life sciences distributor and manufacturer of more than 50,000 products; and a leading provider of home alarm security systems.
Rapidly Establishing Leadership Position in Human Capital Management
Long known as the global leader in workforce management, Kronos is rapidly expanding its footprint in the human capital management (HCM) market as customers leverage the Kronos HCM suite to engage employees, from pre-hire to retire, with insight and data to help drive performance. Recent HCM highlights include:
- Customers are increasingly leveraging the full potential of Workforce Ready, with more new customers purchasing a full suite of HCM applications, including payroll and human resources applications.
- Subscription revenue for the Kronos Workforce Ready suite increased 57 percent year-over-year.
- Providing an opportunity for Kronos to further extend its comprehensive HCM suite to additional customers, Kronos acquired Datamatics Management Services, Inc., a provider of time and labor management services and solutions.
- Industry analysts and bloggers attended KronosWorks in November with rave reviews of the company’s momentum in HCM:
- “Kronos has been investing heavily in its Workforce Ready product (through the 2012 acquisition of SaaShr). It also continues to position this product for organizations needing a full HCM suite. Kronos believes that Workforce Ready has the right combination of features, simplicity, and price to penetrate the HCM market.” (KronosWorks: Understanding the Kronos Way, IDC)
- “Kronos has been investing in Workforce Ready for some time, now with the recent additions in functional footprint, it has taken off more than would expect, reaching a triple digit million amount for the first time.” (KronosWorks – Solid Progress and Big Things Loom, Constellation Research)
- “Kronos has continued to add new functionality to Workforce Ready since the SaaShr acquisition. Workforce Ready has grown its customer base 45 percent and increased international customer adoption by 110 percent over the past 12 months. Workforce Ready is now a $100 million-a-year business for Kronos, and the vendor believes that it has plenty of headroom to grow. SMB Group agrees.” (Workforce Ready Mission for SMBs, The SMB Group)
- “Kronos reports it (HCM solution) as the industry’s fastest selling end-to-end solution for HR, getting to $100 million in sales in five years.” (Who is the Fifth-Largest HCM Vendor?, Human Resource Executive)
Record-breaking Quarter for Large Workforce Management Deals Globally
In a 50 percent increase over any previous first quarter, Kronos closed a record number of transactions over $1 million last quarter, representing an array of vertical markets.
- Some of these organizations expanded their use of Kronos 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. This included an agreement with an industry-leading supermarket chain with more than 80,000 employees; a large school district in Texas serving more than 70,000 students; a multinational provider of enterprise IT infrastructure and services with more than 100,000 employees; one of the largest law enforcement organizations in the world; a restaurant franchisee in Mexico with more than 90,000 employees; and a global hospitality company with nearly 6,000 properties.
- Kronos and NGA Human Resources formed a strategic global alliance to further simplify the delivery of workforce management, HR, and payroll services to organizations with complex global workforces. The alliance creates a deep integration between the Kronos Workforce Central suite and NGA Payroll Exchange, which supports payroll engines in more than 145 countries.
Kronos Innovation Revolutionizes Workforce Management for Customers Large and Small
Kronos total product bookings increased 19 percent, with sales increasing across all deal sizes and regions. International constant FX product bookings increased 32 percent. Kronos continues to invest in product development and services enablement, delivering enhancements and new innovations across its entire product and services portfolio, including:
- The latest version of the Kronos InTouch delivers the most powerful and responsive model of the Kronos InTouch time clock series, a device which is already used by more than 4 million workers around the world every day. Orders for time clocks were at record levels.
- Kronos Paragon, a unique and revolutionary implementation methodology for Workforce Central cloud customers, helps organizations accelerate their time to value by significantly reducing implementation times and bringing customers live sooner than ever before.
- New enhancements in the latest version of Workforce TeleStaff, an automated public safety scheduling and notification solution, further empowers first responders to succeed in their mission-critical jobs by gaining more control over their schedules; accessing greater means to communicate with each other; and make changes to their shifts with minimal supervisor involvement.
- An enhanced version of the Kronos EZCall automated physician scheduling solution includes functionality to help healthcare organizations better align physician and clinician schedules with patient care needs.
Award-winning WorkInspired Culture and Expansion of Corporate Headquarters
Kronos has become widely recognized for its corporate culture, which emphasizes a focus on caring colleagues and for customers.
- Kronos announced the results of its most recent Global Employee Engagement Survey, which revealed that 92 percent of Kronos employees are proud to work at Kronos. This statistic is one in a range of proof points about exceptionally high employee engagement at Kronos stemming from a survey conducted by CEB, which was completed by 90 percent of Kronos employees worldwide.
- Great Place to Work again placed Kronos on its list of the 50 Best Information Technology Companies to work for in India.
- The Boston Globe named Kronos a Top Place to Work, with the company ranking again as one of the top places to work in Massachusetts in the Largest Employers category.
- Beginning in February, Kronos will begin relocating its Chelmsford, Mass. worldwide corporate headquarters to a completely renovated 500,000 square feet of state-of-the-art space in Lowell, Mass., marking one of the area’s largest real estate transactions in recent history in Massachusetts.
- Kronos, with more than 5,000 employees worldwide, is actively hiring and currently has nearly 300 job openings.
First Quarter Customer Success Around the Globe
In the first quarter of Fiscal 2017, Kronos signed agreements with organizations around the world, such as: Action, one of Europe’s largest non-food discount retailers; Aramark China, a provider of professional facility and food services to customers in healthcare, business, and education throughout China; Axo, a leading multi-brand company in Mexico for apparel, footwear, beauty, body care, accessories, and furniture; Beaumont Health, the largest healthcare system in Michigan in terms of inpatient admission and net patient revenue; Catholic Medical Center, an acute care hospital and one of the largest healthcare organizations in New Hampshire; Chemist Warehouse, Australia’s leading online pharmacy; City of Fort Worth, a city in Texas; City of Flagstaff, a city in Arizona; City of Santa Fe, a city in New Mexico; Corporate Protection Australia Group, the largest Australian-owned private emergency services company, delivering health and medical/rescue/security/education and risk services to critical infrastructure; Greencross, Australasia’s largest integrated pet care company; Harford County, a county in Maryland; Koelsch Communities, a leader in independent and assisted living and memory care headquartered in Washington; Kum & Go, a gas station and convenience store chain with more than 400 locations in 11 states; R&F Ocean World, a theme park in the Hainan Province in China; Temple University, a top-ranked research university in Philadelphia, Penn.; University of Mississippi Medical Center, an academic health science center and one of the largest employers in Mississippi; Valero Services, Inc., a subsidiary of the Valero Energy enterprise, an international manufacturer and marketer of transportation fuels, petrochemical products and power; Vigor, a leader in ship building, ship repair, and complex metals fabrication; and Wellmont Health System, a leading healthcare provider serving Northeast Tennessee and Southwest Virginia.
- Connect with Kronos via Facebook, Twitter, LinkedIn, Instagram, and YouTube.
- Take a look at the lighter side of workforce management in our Time Well Spent cartoons.
- Follow The Workforce Institute at Kronos for insight, research, blogs, and podcasts on how organizations can manage today’s modern workforce to drive engagement and performance.
- Learn about the Kronos WorkInspired culture and check out Kronos job openings.
About Kronos Incorporated
Kronos is a leading provider of workforce management and human capital management cloud solutions. Kronos industry-centric workforce applications are purpose-built for businesses, healthcare providers, educational institutions, and government agencies of all sizes. Tens of thousands of organizations — including half of the Fortune 1000® — and more than 40 million people in over 100 countries use Kronos every day. Visit www.kronos.com. Kronos: Workforce Innovation That Works.
© 2017 Kronos Incorporated. All rights reserved. Kronos, the Kronos logo, Kronos Workforce Ready, Workforce Central, Kronos InTouch, and EZCall are registered trademarks and Kronos Paragon, Workforce TeleStaff, Workforce Institute, and Time Well Spent, and Workforce Innovation That Works are trademarks 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 deferred revenue write-downs and 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.