[February 04, 2019]

Kronos Enjoys Strong First Quarter Results Led by HCM Momentum and Stellar Workforce Dimensions Adoption

Kronos Incorporated today announced financial results, company advancements, and customer successes for the first quarter of Fiscal 2019. Annual recurring revenue (ARR) bookings increased 24 percent with total revenue for the quarter approaching $350 million.

"Following the strong momentum of closing the best quarter in the best year in company history, we had an exciting start to Fiscal 2019," said Aron Ain, Kronos (News - Alert) chief executive officer. "We continue to heavily invest in our future - from aggressively growing our human capital management (HCM) presence and riding the wave of Workforce Dimensions adoption, to investing in the customer experience and further extending our deep focus on being a great place to work - Kronos is on track to continue growing our business in multiple dimensions. Following a strong close to the first quarter, we're eyeing another record-breaking Fiscal 2019."

ARR Bookings Increased 24 Percent as HCM and Workforce Management SaaS (News - Alert) Deals Surge
ARR bookings continued to grow across HCM and workforce management solutions, fueling a strong start to 2019.

• With essentially all new Kronos customers opting for a cloud solution, more than 29,000 organizations worldwide are in the Kronos Cloud today.
• Subscription revenue, which is now the company's largest revenue stream, grew 25 percent in the quarter and has exceeded maintenance revenue for the first time in company history.
• Continued investments in enhancing the world-class Kronos customer experience fueled SaaS growth, as the company remains focused on converting thousands of its long-standing, on-premise customers worldwide to a modern Kronos Cloud solution.

Rapid Adoption of Kronos HCM Driven by Human Resources (HR) and Payroll Enhancements
Driven by market demand for an HCM provider with deep industry expertise and the ability to deliver HCM for the modern workforce - whether hourly or salaried, part-time, full-time, or contractor - Kronos HCM bookings rose 57 percent in the first quarter and 38 percent over the last 12 months.

• Kronos ushered in a new era for HCM with the launch of Workforce Dimensions HCM in November, unifying talent acquisition and onboarding, core HR, talent and performance management, workforce management, and payroll in a single next-generation solution.
• Approximately one-third of Workforce Dimensions deals in the quarter included full-suite HCM.
• More than 23,000 organizations use a Kronos HCM solution with employee records in 85 countries.
• Enhancements to the Kronos Workforce Ready HCM cloud suite included a new user experience with fully responsive design; powerful predictive analytics that help recruit, hire, manage, pay, and retain a thriving and engaged workforce; and the introduction of Kronos Benefits Center to streamline and automate benefits enrollment.
• Employee Perspectives was named a 2018 Gold Stevie Award winner for best new talent management solution.
• In November, Kronos held its largest payroll provider event with the 11^th annual Workforce Ready Partner Community Workshop.
• Significant Kronos HCM deals in the quarter included: one of the largest and most complex commuter rail systems in North America; a global distributor of raw material for equipment to the oil and gas industry; one of the largest school districts in the nation serving more than 100,000 students; a large non-profit organization focused on youth development, charitable activities, and humanitarian work; a care management and home healthcare provider; and a provider of home-delivered refrigerated foods.

Workforce Dimensions, AIMEE, and Innovations Built on Kronos D5 Reshape the Future of Work
After Workforce Dimensions out-performed the company's most aggressive estimates in the first year of availability, Kronos added more than a quarter million additional hourly and salaried employee licenses in the first quarter of Fiscal 2019.

• Kronos introduced AIMEE, an artificial intelligence (AI) engine specifically built for managers and employees that analyzes massive amounts of data in real time to provide a variety of next-generation insights and automation to improve engagement, retention, scheduling, and performance while driving more informed decisions that support organizational success.
• The Workforce Dimensions Technology Partner Program features dozens of global technology and HCM partners developing innovative applications, product extensions, and integrations leveraging the Kronos D5 platform, including:
  • A scheduling chatbot in Workplace by Facebook;
  • Collaboration with IBM Watson to improve engagement, performance, career development, retention, and overall management of hourly workers; and
  • Integration with Microsoft Teams, Microsoft Outlook, and Microsoft Power BI.

• MarketSource, an organization delivering brand advocacy and retail sales support to more than 30,000 unique stores, selected Workforce Dimensions to deploy its employee engagement portal on the Kronos D5 platform, integrating leading communication, workforce management, and routing applications into one solution.
• On top of organizations like LondonEnergy that are revolutionizing the manager and employee experience with Workforce Dimensions, significant first quarter deals included: a supercenter chain with hundreds of locations across the U.S.; a global biotechnology company with 20,000+ employees serving more than 60 countries; one of the leading steel manufacturers in Europe; a retailer with hundreds of stores across Canada, Europe, and the U.S.; an advanced medical center serving more than 3 million people; a global provider of personal care items serving consumers in more than 50 countries; and a non-profit organization providing loans and financial services to customers in Latin America.

• Recent Workforce Central enhancements that help organizations engage and empower their employees, control labor costs, minimize compliance risk, and improve productivity, include:
  • Mobile self-service that empowers employees to take control of their work-life balance, allowing access to schedules and the ability to request time off, swap or pick up shifts, and view payroll information from anywhere, at any time;
  • An unrelenting focus on complex and ever-changing labor requirements around the world that ensures Workforce Central meets the needs of customers in all markets; and
  • Workforce Central 8 going completely flash-free.
• Workforce Central helped bring the employee experience to life at Dave & Buster's, managing all 15,000 employees across 110 locations in Canada, Puerto Rico, and the U.S.
• Customers using Workforce Central have a clear path to migrate to Workforce Dimensions, with the majority of an existing Kronos customer's current configuration easily migrated to Workforce Dimensions, providing a jump-start for an accelerated implementation.

Verticalization Continues to be a Key Differentiator in the Kronos Customer Experience
Kronos vertical success is driven by deep industry knowledge and continued investments.

• To celebrate Manufacturing Day in September, Kronos and Hypertherm joined forces to engage and inspire the future workforce as a Kronos study found that many parents undervalue manufacturing as a career for their children.
• During the holiday shopping season, Kronos released a two-part Global Retail Absence survey that found that unplanned absences have a corrosive impact on operations and engagement.
• In healthcare, ProHealth Care optimized on-call physician scheduling using the Kronos EZCall Enterprise Portal.

Kronos Proves Employee Engagement is Good for Business as "WorkInspired" Hits Shelves

• Kronos continues to prioritize employee engagement as a growth strategy for its 5,600+ Kronite employees worldwide:
• Kronos CEO Aron Ain, a three-time winner of Glassdoor's Top CEOs honor, provides insights into the company's award-winning culture in the new book, "WorkInspired: How to Build an Organization Where Everyone Loves to Work."
• Kronos was again named a Glassdoor Employees' Choice Award as a Best Place to Work, jumping up 19 spots to #44 on the 2019 list.
• The Boston Globe named Kronos the #1 Best Place to Work in Massachusetts, where the company is headquartered.
• Adding to its growing list of global workplace culture accolades, Great Place to Work^® Canada again named Kronos one of the Best Workplaces in Technology.

First Quarter Customer Success Around the Globe
In the first quarter of Fiscal 2019, Kronos signed agreements with organizations around the world, including: Bluetree Group, the fastest-growing print business in the U.K.; Burneys, artisan bread maker for Warburtons, the largest bakery brand in the U.K.; Carinity, a non-profit healthcare organization in Australia; City Beach, Australia's biggest surf, skate, and fashion retailer; Elior Spain, one of the leading operators in catering, concession catering, and support services in Europe; El Paso County, one of the most populous counties in Texas with more than 800,000 residents; Fletcher Building, a New Zealand manufacturer and distributor of building materials and residential and commercial construction with 20,000 employees in 40 countries; General Atomics Aeronautical Systems, Inc., a provider of unmanned aerial vehicles and radar solutions for the U.S. military and commercial applications worldwide; The Hongkong and Shanghai Hotels, a hotel group in China with 10,000+ employees globally; Les Ambassadeurs Club, one of London's most exclusive and distinguished gaming establishments; Oji Fibres Solutions, a leading producer of market pulp, paper, and fibre-based packaging in New Zealand; SummitCare, a residential aged care, dementia-specific residential care, and other aged care services provider in Australia; Sunac China, a top real estate company listed on the Hong Kong Stock Exchange; Villa Healthcare, a post-acute and long-term provider with 35 facilities in Illinois, Michigan, Minnesota, Ohio, and Wisconsin.

Supporting Resources

• Connect with Kronos via Facebook, Twitter, LinkedIn, Instagram, and YouTube.
• Take a look at the lighter side of the workforce in our Time Well Spent cartoons.
• Kronos CEO Aron Ain shares how to transform employee engagement into a growth strategy in his new book, "WorkInspired: How to Build an Organization Where Everyone Loves to Work."
• Subscribe to 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.
• Visit the Kronos Corporate Social Responsibility (CSR (News - Alert)) page to learn how we strive to be great people every day.

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.

© 2019 Kronos Incorporated. All rights reserved. Kronos and the Kronos logo are registered trademarks and Workforce Innovation That Works is a registered 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. EBITDA consists of GAAP income from operations excluding: (1) share-based compensation expense for stock options and stock awards in accordance with ASC (News - Alert) 718 and compensation expenses related to ordinary dividends; (2) depreciation of property, plant, and equipment; (3) amortization of intangible assets; (4) acquisition-related deferred revenue write-downs and expenses including advisory, legal, accounting, acquired employee-related costs, and integration costs; and (5) unusual costs or one-time expenses that are excluded from the definition of EBITDA under the terms of the company's Credit Agreement.

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