Press release

Kronos Announces Second Quarter Results as Subscription Revenue and HCM Growth Continue to Surge

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Kronos
Incorporated
today announced financial results, company
advancements, and customer successes for the second quarter of Fiscal
2019. Subscription revenue increased 29% in the quarter with total
company revenue reaching $354 million.

“Strategic investments in our products, people, and customer success
have driven growth each quarter and positioned Kronos for an exciting
future full of unlimited potential,” said Aron Ain, Kronos chief
executive officer. “Workforce Dimensions continues to surpass
expectations; Kronos HCM solutions – including payroll services – is on
an exciting trajectory; and international growth excelled in the
quarter. Our success continues to be fueled by great people, with
Kronite employee engagement at an all-time high worldwide. Kronos is a
special place today and, with our continued investments into the
business, we will excel well into the future.”

Subscription Revenue Grows Incredibly Fast Across SaaS Solutions

Subscription revenue was up 29% in the quarter and now represents the
largest revenue category.

  • More than 30,000 organizations worldwide are now in the Kronos Cloud,
    with native cloud-suites Workforce Dimensions and Workforce Ready
    driving the majority of SaaS success.
  • Customer retention across Workforce Dimensions, Workforce Ready, and
    Workforce Central SaaS solutions remains strong at nearly 95%.

Workforce Dimensions Drives the Future of Work – and the Future of
Kronos – with Highly Diversified, Rapid Adoption

Workforce Dimensions continues to out-perform company expectations as
adoption has spread across every global region and industry vertical
with second-quarter deals seeing nearly an even split between existing
customer migrations and new Kronos customers.

  • Kronos
    announced a global agreement for SAP to resell Workforce Dimensions

    as its workforce management solution for customers with complex
    requirements under the name “SAP Time Management by Kronos.”
  • Kronos launched powerful Workforce Dimensions enhancements that help
    attract, retain, and develop a highly engaged workforce while
    streamlining operational execution for retail, hospitality, and food
    service organizations by combining
    advanced labor volume forecasting, predictive scheduling, and task
    management
    .
  • Nearly one in every four Workforce Dimensions deals have included a
    Workforce Dimensions Technology Partner integration or solution
    extension to help customers solve specific business challenges across
    a variety of industries. The Workforce Dimensions Technology Partner
    Program also continues to grow rapidly, including many new
    healthcare-specific partners and integrations
    .
  • Significant Workforce Dimensions deals in the second quarter included:
    a west coast National Basketball Association team; a leading energy
    utilities company in Asia Pacific; one of the largest insurance
    providers in the U.S.; a global wholesaler serving hardware stores
    worldwide; a Mexican manufacturer of innovative components systems to
    the commercial vehicle and heavy equipment markets; one of the world’s
    largest privately held hospitality and food service companies; one of
    the largest public university systems in New England; an integrated
    health system serving more than 1 million residents; a large
    Australian waste management company; and a Canadian value retailer
    with hundreds of locations nationwide.

Award-winning Kronos HCM Cloud Solutions Propel Success for
Organizations of All Sizes

Kronos HCM bookings rose 32% in the second quarter and 42% over the last
12 months.

  • Since the launch
    of Workforce Dimensions with HCM
    capabilities, nearly one out of
    every four Workforce Dimensions deals have included Kronos HR or
    payroll solutions.
  • Kronos Workforce Ready garnered a trio
    of award honors for excellence in HR and payroll
    , including being
    named by Constellation Research to the Constellation ShortListTM
    for Payroll for North American small and midsize businesses.
  • Significant Kronos HCM deals in the quarter included: a leading
    agricultural cooperative specializing in canned fruits and tomatoes; a
    provider of concrete construction services to the commercial and
    residential sectors and municipalities; one of the oldest and largest
    non-profit transfusion medicine organizations; one of the world’s
    largest producers of oil-filled distribution transformers and
    transformer components; a casino hotel located in the midwestern U.S.;
    a public school district with more than 75,000 students; and one of
    the leading U.S. hotel and resort management companies.

Customer Experience Leadership, Kronite Engagement Help Spark
International Growth

International regions grew by 43% in the quarter – led by Latin America
at 48% and Europe, Middle East, and Africa at 42% – as Kronos continues
its focus on customer experience innovation and employee engagement
around the world.

  • Kicking off in London in February, Kronos announced the 2019
    KronosLIVE Customer Conference World Tour
    with additional events
    across Canada, China, India, Mexico, and South America.
  • Kronos Community – a fast-growing online community where customers,
    partners, and product experts across all industries ask questions,
    share ideas, and provide product insight in real time – won the top
    award for “Innovation in Customer Service”
    by the Stevie Awards.
  • Kronos Vice President of Customer Engagement Lisa Pratt was named a Top
    10 “Innovator of the Year”
    by Great Place to Work.
  • With global Kronite employee engagement at an all-time high of 87%,
    Kronos added more employer of choice award wins to its name worldwide,
    including being named a:

Second Quarter Customer Success Around the Globe

In the second quarter of Fiscal 2019, Kronos signed agreements with
organizations around the world, including: ArrowXL, the U.K.’s
leading two-person delivery company that delivers to 200,000 households
across the U.K. and Ireland each month on behalf of e-tailers and
retailers; INTEGRIS Health, Oklahoma’s largest non-profit health
system; Iron Mountain Services Private Limited, the global
delivery center for Iron Mountain, a global business dedicated to
storing, protecting, and managing information and assets; ISS,
one of the world’s leading facility services companies located in Hong
Kong; Melba Support Services, a disability services and support
organization in Australia; Owensboro Health, a regional
healthcare system serving 15 counties in Western Kentucky and Southern
Indiana and one of the largest employers in Kentucky; Perekrestok,
Russia’s largest supermarket chain; R&F Group, one of the top
real estate development enterprises in China; Rencol, part of the
Saint-Gobain Group, a U.K. manufacturer of high-quality tolerance rings; St.
Elizabeth Healthcare
, which operates five facilities throughout
Northern Kentucky and more than 115 primary care and specialty offices
in Indiana, Kentucky, and Ohio; Temple University, a top-ranked
research university with 40,000 students located in Philadelphia,
Pennsylvania; Tutera Senior Living & Health Care, one of the
nation’s premier providers of independent living, assisted living,
skilled nursing, and home health and hospice care; and The
Wilburn Company
, a provider of premier cleaning services to
businesses and facilities across the state of Maryland.

Supporting Resources

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 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.