Nov 1, 2019
Operator
Good morning, ladies and gentlemen. Welcome to the Kinaxis, Inc.
Fiscal 2019 Third Quarter Conference Call. At this time, all participants are in a listen-only mode.
Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions.
I'd like to remind everyone that this call is being recorded today, Friday, November 01, 2019. I'll now turn the call over to Rick Wadsworth, Vice President of Investor Relations at Kinaxis, Inc.
Please go ahead Mr. Wadsworth.
Rick Wadsworth
Thanks very much James. Good morning, and welcome to the Kinaxis' earnings call.
Today we will be discussing our third quarter results, which we issued after close of markets yesterday. With me on the call are John Sicard, our President and Chief Executive Officer; and Richard Monkman, our Chief Financial Officer.
Before we get started, I want to emphasize that some of the information discussed on this call is based on information as of today, November 1, 2019, and contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements.
For a discussion of these risks and uncertainties you should review the forward-looking statements disclosure in the earnings press release as well as in our SEDAR filings. During this call, we will discuss IFRS results and non-IFRS financial measures.
A reconciliation between the two is available in our earnings press release and in our MD&A both of which can be found in the IR section of our website, kinaxis.com and on SEDAR. Participants are advised that the webcast is live and is also being recorded for playback purposes.
An archive of the webcast will be made available on the Investor Relations section of our website. Neither this call nor the webcast archive may be rerecorded or otherwise reproduced or distributed without prior written permission from Kinaxis.
To begin our call, John will discuss the highlights of our quarter as well as recent business developments, followed by Richard who will review our financial results. Finally, John will make some closing statements before opening up the line for questions.
I'll now turn the call over to John.
John Sicard
Thank you, Rick. Good morning and thank you for joining us today.
I'm very pleased to report our third quarter results, which includes SaaS revenue growth of 28% to $31.2 million, total revenue growth of 29% to $47.1 million and adjusted EBITDA of 26% of revenue, which includes a $2.5 million one-time charge we took following the amicable resolution of our previously disclosed arbitration with the former Asian customer. Adjusted EBITDA was 31% prior to this charge.
Our strong results in Q3 were driven by several new customers we closed in the second quarter, including British American Tobacco, Honda, Yamaha Motors, and Teva Pharmaceuticals to name a few. Additional net new customers and expansions in Q3 have been instrumental and further driving our backlog to new heights, which provides exceptional visibility into the remainder of 2019.
Based on this success, we are increasing all aspects of our guidance with higher expectations for subscription revenue, term license and total revenue as well as our higher EBITDA target for the year. Richard will provide these details in a few minutes.
Our business performance demonstrates traction from our strategy to expand our global sales team in 2018 and again earlier this year. Momentum in digital supply chain transformations continues and I believe Kinaxis holds a unique leadership position using RapidResponse, our powerful concurrent planning platform as a vehicle to solve modern day supply chain planning challenges.
Since our last call, we also announced several new strategic partnerships designed to both scale our implementation capabilities and advise new prospects when they are considering their own digital supply chain transformation. We recently announced a very unique partnership with one of our long-term customers Flex.
They are demonstrating the power of RapidResponse to their extended customer base from their global Flex Pulse Centers. We've already had a couple of initial wins.
Thanks in part to their support of referrals. We also announced the JFE Systems of Japan, the subsidiary of one of the world's largest steel companies joined our partnership enablement program to accelerate opportunities in that region.
We have worked closely with JFE over the past decade and have joined customers in high-tech, automotive and consumer products industries. Crimson & Co, who are specialists in global supply chain management consultant were added to our growing partner ecosystem this past quarter.
They serve clients in a number of vertical markets we share including consumer products, high-tech and electronics, industrial equipment and life sciences. While we are thrilled with our growing customer base and partners, I am equally excited by the increased pace and depth of our product innovation.
Within the first half of 2020, we will dramatically increase the extensibility of RapidResponse with the launch of our development platform. Partners and customers will be able to harness the power of concurrency by building new capabilities and applications that are tailored for their specific needs.
These extensions will plug directly into and leverage all the power of RapidResponse's unique always on concurrent planning engine, all without customization of the core RapidResponse code. For customers and partners, the benefits are obvious.
For Kinaxis, it means that we can better position to offer our leading SaaS-based supply chain platform to a broader market. As part of our latest product announcement, we also introduced the compelling new data visualizations, including a unique interactive supply chain network, Visualizer, with a patented way to present performance data on different screen formats, ranging from desktops to mobile devices.
These innovations will enable planners to shrink the time it takes to gain insight from hours to seconds. These innovations were extremely well received by customers, prospects and partners when we announced them at our recent and record breaking Kinexions User Conference.
Our success this quarter and to-date is driven by our focus on investing for sustained long-term growth. Expanding sales teams, leveraging partnerships, and accelerating product innovation, all takes significant time, investment and focus.
As shareholders of Kinaxis, we appreciate you supporting our long-term view. With that, I'll turn the call over to Richard for an overview of the financials for the quarter.
Richard?
Richard Monkman
Thank you, John, and good morning. As a reminder, unless otherwise noted, all figures reported on today's call are in U.S.
dollars under IFRS. On a comparative basis, total revenue in the third quarter increased 29% to $47.1 million, driven primarily by SaaS revenue, which grew 28% to $31.2 million.
This growth was due to contracts secured with new customers as well as the expansion of existing customer subscriptions. We recorded $3.3 million of subscription term license revenue in Q3, consistent with our previous comments regarding the expected cadence of this year's customer-hosted subscription renewals.
As we have previously noted, subscription term license will vary quarter-to-quarter in line with the timing of the individual customer renewal terms. Professional services grew by 8% to $9.3 million compared to Q3 2018.
Professional services revenue is driven by a number of factors including the number, size and timing of customer projects as well as the level of deployment engagements supported by our partner network. Overall, we remained pleased with the diversity and strength of our revenue base.
On a year-to-date basis, our 10 largest customers accounted for 33% of our total revenues with no individual customer accounting for greater than 10% of total revenues. Gross profit grew 36% to $33.3 million or 71% of revenue, compared to 67% in Q3 2018.
This increase resulted from the growth in SaaS revenue and other revenue partially offset by an increase in cost of revenue such as the related headcount, partner, third-party costs and expanded data center capacity. Profit grew by 70% during the quarter to $4.5 million or $0.17 per diluted share compared to $0.10 per share in Q3 2018.
Adjusted EBITDA for the third quarter grew 29% to $12.1 million or 26% of revenue in line with Q3 2018. These results were due to an increase in revenue and gross profit, partially offset by an increase in operating expenses including investments to support the company's long-term strategic growth initiatives.
Included in the third quarter G&A expense was the write-off of $2.5 million in receivables booked in 2017 related to the resolution of the arbitration proceeding with the former Asian customer. Excluding this charge, adjusted EBITDA was $14.6 million or 31% of revenue and profit was $6.3 million or $0.23 per diluted share.
This matter is now fully resolved. While up 34% on a year-to-date basis, Q3 cash from operating activities of $1.1 million was 41% lower than Q3 2018, largely due to fluctuations in operating assets and liabilities.
As of September 30, 2019 cash, cash equivalence and short-term investments totaled $202.2 million, an increase of $20.7 million from the $181.5 million as at December 31, 2018. Our minimum contracted revenue backlog continued to strengthen.
As of September 30, 2019 it was $289.7 million as detailed in note 12 to our financials. This amount is driven by the $246.9 million of future contracted SaaS revenue as well as bookings from maintenance support and subscription term license revenue.
The backlog will be recognized over the following periods. $46.6 million will be recognized in the fourth quarter of 2019 of which $31.2 million relates to SaaS business, and $12.1 million relates to subscription term license.
$111.9 million will be recognized in 2020, of which $97.4 million relates to SaaS business, and $131.2 million will be recognized in fiscal 2020, and thereafter of which $118.3 million relates to SaaS business. Total bookings in Q3 were $80.2 million of which SaaS bookings were $48.9 million.
We are very pleased with this performance. As you know, bookings will vary between periods as they dependent upon the timing of the closing of the underlying subscription and other contracts.
Based on these results and our business outlook, we are pleased to increase our revenue and adjusted EBITDA guidance for fiscal 2019. We now expect total revenue will be $188 million to $190 million.
SaaS revenue will grow approximately 22% over fiscal 2018. Full-year subscription term license revenue will be approximately $26 million.
With our ongoing accelerated investments in sales and marketing, we now expect sales and marketing will be between 23% to 25% of total revenue. Continuing our product team expansion and new product innovation investments, we expect that research and development will be in the range of 18% to 19% of total revenue.
Based on these revenue and investment expectations, we now expect full-year adjusted EBITDA margin between 27% and 29% of revenue. Finally, our business model with supported capital expenditures in the range of $11 million to $12 million, the majority of which we have already invested in Q2 on planned data center expansion in R&D investments.
Thank you for your continued support of Kinaxis, and with that, I will turn the call back over to John.
John Sicard
Thank you, Richard. In summary, we are pleased with our meaningful progress so far in 2019 and believe that we are well positioned to deliver on our increased full-year targets.
I am encouraged by market conditions and ongoing sales activity, the growth in our stable of top tier partners and their level of engagement and our accelerating product innovations. Most of all, I am humbled and encouraged by the top quality brands will continue to trust Kinaxis with their supply chain transformation initiatives.
On behalf of Kinaxis, I would like to thank you for your support and as always for taking the time to join us on the call today. With that, I'll turn the line over to the operator for Q&A.
Operator
[Operator Instructions] And your first question comes from the line of Richard Tse from National Bank Financial. Go ahead, please.
Your line is open.
Richard Tse
Yes, thank you. Are you guys being very conservative here with guidance because your implied Q4 numbers on revenue pretty much seem like they're already in backlog.
So maybe you can kind of give us a bit of commentary on that please?
Richard Monkman
Thank you, Rich for the question. We are very confident with regards to the guidance that we have provided.
The nature of the subscription does provide the long-term visibility. And thank you, I appreciate Richard.
Sometimes it's the timing within a year that can vary. And so while our model has really been predicated for many years and still is on that 80% of the forward visibility of the next 12 months, with regards to within the next three months, it's traditionally been in the very high 90% range.
So this guidance is consistent with that type of model. As we now disclose the backlog, you as a reader have greater insight.
So I'll just say that we're very confident and our goal is to continue to not only secure business, but to secure it on a timely basis within the quarter. And any of that performance will impact ultimate results.
Richard Tse
Okay. And John, you guys had some great product announcements at Kinexions recently.
I'm kind of curious to see whether you can kind of give us some post conference feedback in terms of the reception. Obviously it's been good, but I'm more curious to see your sense that that interest level of cascades into incremental revenue in 2020 from those new products here?
John Sicard
Yes. We’re thrilled, obviously I think at Kinexions, at least in recent memory, I can't remember another Kinexions that was that successful.
And I can't remember ever announcing that many innovations at one event like we did. And that was – obviously the work we've done around self-healing and machine learning, auto ML, and other elements related to those math functions as well as the new user experience and obviously, I've been talking over the past couple of years about preparing for RapidResponse as a platform.
So these are all slated for, I'd say general availability inside of the first half of 2020, and obviously, everything we do in R&D gets monetized in some way. On the RapidResponse as a platform initiative, we have early adopters, I will say in a beta program working with us already and working on customer initiated applications.
And so that is absolutely thrilling to me. It's exactly what I had always dreamt of if you will, having that kind of mass runtime configurability.
So it's no longer just the visualizations, but the ability to build customer specific IP safely in a SaaS environment, something that is safe from upgrades. The upgrade safely in – even though you have those extension.
So the adoption has been very strong. Obviously, we had the demo booth at the event and they were very highly busy I would say.
So we're really excited with what we've launched.
Richard Tse
Okay. And just the last one for me in terms of the partner channel.
You've got a bunch of partners that kind of use a baseball analogy. What inning would you say you're in with the broad partner group when it comes to that groups are reaching critical mass here for Kinaxis?
And that's it for me. Thanks.
John Sicard
Yes. So I consistently say the same words, we're in chapter one, book one.
At the event itself, we announced and we showed we had 25 partnerships now, all at varying stages of maturity. And so for me, it's not so much about the quantity, it's about their maturity as they continue to work with us.
And so frankly, I don't look at it as, okay, we're done. We can slow down the partnership initiative there.
Some of our greatest partners are boutiques and in different parts of the world in Europe. And so we're thrilled with the uptake in that space where we continue to see more and more consultants get certified and badged as consultants ready for implementation services.
And so I don't look at it as us being deep in the game whatsoever. It's still early days for us.
Richard Tse
That's great. Thanks.
Congrats on a great quarter.
John Sicard
Thank you.
Operator
Your next question comes from the line of Thanos Moschopoulos from BMO Capital Markets. Go ahead please.
Your line is open.
Thanos Moschopoulos
Hi. Good morning.
John, can you update us on what you're seeing, with respect to spending environments? I mean, clearly it didn't seem like there were any macro issues this quarter, but as you talk to customers currently, are there any concerns that might be affecting pipelines and sales cycles or not at this point?
John Sicard
I'm not seeing any negative effect. The pipeline remains very, very strong.
The pipeline is very diverse, continues to be – I said the same words at the last earnings call, but we're looking at the pipeline today, very strong, very diverse, both in geography, Europe, Asia, North America, all very, very healthy. And then a great distribution across the market segments we serve as well.
We're seeing particular increased interest in the CPG, in the consumer packaged goods arena. And so, yes, we're not seeing a negative effect whatsoever at this point.
Thanos Moschopoulos
Maybe in terms of Asia, I mean clearly you've had some wins there. If you could provide some more color, is it the cadence of sales cycles in Asia comparable to other regions?
Are the industries that you're targeting there – that you're having traction there similar to the other geographies and how is that pipeline progressing?
John Sicard
Yes. So I would say, there's a slight acceleration, if you will in Asia and Europe.
Predominantly, we're investing heavily in those regions. And we talked about that a year-ago, putting our foot on the gas.
And so we're seeing the fruits of that labor as a result. And obviously, we can't announce every single account we win, obviously thrilled to be able to announce Honda and Yamaha in Japan, almost back-to-back.
This is very, very significant for us in the automotive space in Japan. And again the work that we've done in Europe around CPG with BAT and others is really strengthening those verticals in that region as well.
So we're continuing our investments in those regions. And again as a color, I would say we're seeing perhaps a slight acceleration in Europe and Asia, predominantly.
But I think it's reflective of our investment in those regions.
Thanos Moschopoulos
Great. And two quick ones for Richard.
You raised your term license guidance for 2019. Did that reflect the extension of existing on-premise customers or did you sign a new one?
Richard Monkman
Yes. With the subscription terms that they have been on a renewal basis and it's not uncommon to see expansion and growth on renewal.
And so that really was the driver for the higher than anticipated performance.
Thanos Moschopoulos
And then finally, you'd previously given us term license guidance for 2020, it just sounds like those in the – you have $11 million term licenses for next year. Is that still your expectation?
Richard Monkman
Well, with regards just to guidance in general, we're still going through our development plan and initiatives. And so we're going to be providing that when we comment on Q4.
But in terms of the broad range, yes, that holds because that is – those would be renewals that we would look forward to completing throughout 2020 and then obviously in the out year 2021.
Thanos Moschopoulos
Okay. Thanks, guys.
I'll echo Richard's congratulation on the quarter.
John Sicard
Thank you.
Operator
Your next question comes from the line of Daniel Chan with TD Securities. Go ahead please.
Your line is open.
Daniel Chan
Hi. Good morning, guys.
So you saw a nice acceleration in the backlog building up there. Can you provide some color on the seasonality of the deal closures and should we expect the backlog to continue to accelerate as we get through Q4?
Richard Monkman
Well, our goal – thank you, Dan. Our goal is absolutely to see sustained growth in the backlog.
Now it's – as you – I think, appreciate the timing of the deals and others, what goes into that amortization schedule that that long-term subscription revenue is going to be depended upon the timing of the arrangement. We don't really see seasonality so much with regards to the subscription side of things.
It just continues to be building. It is fair – I would say more than common that those transactions occur later in the quarter, and hence my earlier comments about contribution within the quarter or within the – sometimes with fiscal year.
But as John commented to the health of the funnel is very strong, the investment we've made in sales and marketing is considerable and continues, and so that our coverage of representatives both not only in sales, but in marketing and the related support globally continues to expand. So our expectation and focus is just to continue to drive that backlog.
Daniel Chan
Okay, great. And then for the large deals that will take multiple years to deploy such as the BAT three year deployment.
Are those deals fully reflected in the backlog or do you add it in phases as you complete parts of the deployment?
Richard Monkman
Well, our backlog – just to clarify, is the minimum firm contracted revenue. And it is – it follows as disclose the corresponding revenue type, so albeit subscription or the on-premise subscription term license.
It is not common for professional services to be really committed in the long-term and in fact that most of our arrangements and deployments are at a much shorter period of time and – on a time and material basis. So they're not reflected in the backlog.
They are reflected in our broader guidance, but not in the backlog. So really the focus is the ongoing subscription license revenue is as noted, and that is the driver for as we noted, the $80 million bookings in total and $48 million related to SaaS.
Daniel Chan
Great. Thank you.
Operator
Your next question comes from the line of Deepak Kaushal from GMP Securities. Go ahead please.
Your line is open.
Deepak Kaushal
Hi. Good morning, guys.
Thanks for taking my question. I have a quick follow-up on Thanos' question on the term licenses.
So did you guys say that you're expecting it to drop next year and kind of what's the intuitive sense of growth on the term license versus…
Richard Monkman
Yes. So in broad ranges, our arrangements are longer-term as you can appreciate Deepak.
And generally speaking, the most of them average around three years. And so subscription arrangements, a number of whom we actually have been working with well over 10 years in some cases even converted to subscription when we went to subscription model in 2005, continued to be deployed and continue in a number of cases to expand on a customer-hosted basis, and those are the agreements, even though they will pay us in annual installments over three years under IFRS.
We do have to bifurcate and present that revenue as subscription term license and the maintenance support. And it just happens that the cadence is really higher in this year and would also be higher on our expectation in 2022.
And as we have indicated previously that level is going down to about 50% level in 2020. And then going down further in 2021 and our goal is then to be on the renewal cycle, so that would again increase.
Cash, the business, everything else remains consistent throughout that period. We just have that bit of a curve.
And obviously it depends upon a number of factors to extent to which customers renew and expand. And it's not – we have in number of cases actually worked with the customer to help them understand the additional benefit of us hosting them in the cloud.
And we've converted their customer premise arrangements to that cloud, in which case then they follow into that broader SaaS model that you can see as just the sequential revenue growth.
Deepak Kaushal
Okay. Excellent.
Richard, that's very helpful. Thank you.
So I have a couple of questions for John. John, Flextronics, so I asked them a couple of years ago if they were seeing a network effect with their downstream supply chain partners by using RapidResponse.
They kind of smiled, but they didn't say, yes, or they didn't say, no. Clearly, if they're a partner now, they're seeing some kind of benefit.
Can you give us a sense of what the benefit to – maybe not in specific terms, but what's the benefit to a major company to push RapidResponse to its partners? What do the partners see?
What is the main customers see?
John Sicard
Great question. Thank you, Deepak.
When you think about the macro level value that we're providing, we're essentially collapsing time, the cycle time, the speed to detect, the speed to correct. It's really one of the core tenants of RapidResponse.
It's one of the core tenants of what we call concurrency and concurrent planning. And obviously our customers focus inside their walls first and the speed at which they can connect, demand forecasting, demand planning to their master schedule and capacity planning and inventory and so on is where they achieve tremendous, tremendous value.
It's not uncommon for them to say, hey, what used to take two weeks, now it takes less than two hours, or what used to take two hours, now takes 30 seconds. It is a giant leap forward.
Now when you start thinking about extending that speed, that concurrency outside your four walls, there in lies a level of indirection value, if you will, so the speed at which either the customers or suppliers of a contract manufacturer could be connected, right. So if there's a demand change from one of Flex's customers for example, the speeds that Flex can absorb that having been connected, having a rapid response to RapidResponse connected environment collapses tremendously, right.
You eliminate a lot of that lead time. And the same is true the other way around, right.
So if you're a brand owner leveraging a contract manufacturer, the speed at which you can see downstream affects of the supply chain is directly correlated to the speed at which you can course correct when those adverse conditions occur. And so it's all about speed and time, the speed at which you can connect learning.
And there in lies the network effect, if you will. And so Flex has been a great customer of ours for many, many years, well past the decade, maybe even closing it on 20 years.
We know them extremely well. They're wildly mature, especially in the world of concurrency.
And so I think they obviously benefit internally through the use of concurrency. But they see the potential of extending that concurrency beyond their own four walls to include their partners.
And the same is true for the partners themselves, their customers. It's extremely valuable to have that absolute transparency and high speed visibility up and down the supply chain.
Deepak Kaushal
Thanks John. That's great insight.
Just on that network effect, in the past what I'd heard is that there was some concerns around data sharing and data privacy and there's general hesitancy of the broader supply chain, external supply chains to do that. Did you guys solve the problem or do the benefits that we got problem and customers or are over it, which path kind of have you gone?
John Sicard
Yes, it's a funny thing. The technology is never the burden, if you will or the friction, connecting these partners, the technology doesn't really get in the way.
The relationships are what needs to get solved and the trust between partners is what needs to get solved. So I would say, that in terms of the ultimate decisions, if you will of having that network effect occur.
It's a funny thing. When you're a brand owner, you still own a number to the street.
You still own quality, you still own every promise you've made to every customer. Even if you don't manufacture your goods, you own all of that.
You own quality, you own brand, you own promises, and if you're public, then you certainly own a number to the streets. So there's a terrific need to have that transparency and visibility downstream.
There's an absolute terrific need for it. And so I don't think it is uncommon and it's not an uncommon occurrence today to have that visibility through subcontractors.
We're seeing a lot of what we call the glass factory effect as more commonplace. And the result is really – the reason is really that they need that transparency in order to maintain the promises they've made to the street, the promises they've made to the customers, and to understand everything from on time in full and inventory disposition and other elements like that.
Deepak Kaushal
Okay. Excellent.
I appreciate the detailed answers. Thanks for taking the time.
I'll jump back in the queue to give some time to others. Thanks.
Operator
Your next question comes from the line of Robert Young with Canaccord Genuity. Go ahead, please.
Your line is open.
Robert Young
Hi. Good morning.
You reported very strong EBITDA margin and raised your EBITDA guidance for the year. So it looks like Q4 will also have strong margins.
And so without giving guidance to 2020, how should investors think about your margin structure going forward or the initiatives that you have planned going to hold margins back or should we be thinking about operating leverage going forward? And then maybe if you could weave into your answer, how does the dropdown in subscription term license impact that?
Richard Monkman
Lots of questions there, Rob. But thank you for those questions.
And first and foremost, it is with regards to the subscription, we are very pleased by not only the success of the recent quarters, but as John said by what our future holds. And as I sort of touched on very briefly, we are as a management team right now reviewing a number of additional growth initiatives and activities.
And we're in the process of completing our appropriate budget cycle and our longer term investment. And so we look forward to providing that wholesome guidance of not only from a future revenue perspective, but also the margin perspective in when we provide our Q4 call.
Absolutely from an income statement perspective, the change in subscription term license revenue being lower will have an impact on the margins. But we are quite unique in that we consistently drive out very, very strong margins while we drive out that growth.
And so directionally yes, as most as your and other analysts' model are projecting. We'll see still strong margins, but at a lower level, that macro trend would be there.
But then as I noted with regards to that subscription term cycle on really on a three-year basis, one would also expect seeing through to 2022 that you'll also see expansions in margins. So for us, it's really all about the long-term.
It's all about continuing this growth and initiatives to actually further accelerate the core business, which is the SaaS subscription growth and continue to drive out cash. So that's about the directional statement that we can provide.
And again, when we complete our year end call, we'll provide that broader guidance.
Robert Young
Okay. I guess, we'll have to wait for that.
The $12 million in the backlog for term license in Q4, like you said, that's firm contracted. Could you just talk about, are there any scenarios where that could push beyond the year or is your confidence there very high that that will come through in Q4?
Richard Monkman
Well, because it's – we’re disclosing backlog, Robert it’s contracted. And so, again, in terms of subscription – well for the customer hosted arrangements, once again, we’re required to break that into two components.
One, the right to use, which is a subscription term license, which will recognize on the commencement of the renewal term. And then the residual, which is the maintenance support will recognize over, say that three-year term basis.
So in a number of cases is within the quarter. So in other words, they'll sign the renewal, maybe they sign a renewal on a – hypothetically on July 2 and the term starts in September, so it's all within the quarter.
So you won't see that in backlog. But in other cases, maybe you sign on September 15 for November 1 start, in which case it would be as we've disclosed in the backlog.
In fact the $26 million number that we provided is simply the year-to-date number plus that $12 million. So I would say we're extremely confident.
I mean it's contracted and loaded. I don't know what else I can say in that renewal terms, again three-year terms or they're going to start.
They do not want to interrupt their use of RapidResponse.
Robert Young
Okay. That's great.
And then like is there any hesitation that you think might happen in front of the – you announced a lot of new products and a new Gen 3 of the software, and is there – is it realistic to think that there would be hesitation from customers waiting to see how this turns out to make sure that there's no issues with that? Or is your funnel moving just as normally as it would without that?
John Sicard
Yes. It's a great question.
And we have a pretty robust alpha beta program with customers well in advance. So by the time we hit GA of any product, it has seen its paces.
So we've been at quite a long time, and again it's SaaS-based software. So obviously the burden is on Kinaxis' upgrades, not the customer.
And so they're excited to take up new releases as they come out. Now certainly we're on a monthly cycle of releases which is common in SaaS.
It doesn't mean every customer takes every release every month. But we do have a pretty strong upgrade program that keeps our customers up-to-date.
And so, yes, I wouldn't say there's any friction there whatsoever. And the relationships that we have with our customers bring a lot of confidence to the releases that when they hit GA.
Robert Young
Okay. Last question, just maybe a broader one and like you said the Kinexions was very well attended and it seems as though Kinaxis has a profile that's growing, the reference ability is maturing, a lot of great companies using their products and so, are you seeing any change in buyer behavior?
I always asked about an update on sales cycle. Is that changing?
Is there more functionality being taken upfront? Is there less pushback on price?
Is there anything you can talk about buyer behavior as Kinaxis matures as a company? And I'll pass the line.
John Sicard
Yes. Thanks, Rob.
So yes, it was great seeing you at the event. It's great for you to witness what we witnessed at Kinexions and for sure it was definitely a record breaker across the Board.
And so I would say we're seeing a lot more maturity in our prospects as it relates to what concurrency means. And I think some of this is – there's a lot of discussion around it, there's peers.
And so I would say there's a lot of maturity around the potency of concurrency and when we – and so the conversations when we meet a prospect, I would say much more fluid. I'd say there's a bit of an acceleration in terms of understanding what does it mean for me to transform into a concurrent type of a model for my supply chain.
And as it relates to shrinking sales cycles, and I think we started that discussion probably five years ago. We've been monitoring that closely and these are still generational decisions that these customers are making.
They're literally changing the business fabric of their process. And so we're still seeing in that 18 months type of a sales like plus or minus, some have been faster, but some quite frankly take longer.
And so I wouldn't be prepared to necessarily say that deal cycles are shrinking. I will say that the pipeline is quite healthy and quite broad.
Something I study every week and it's great to see activity in every vertical we serve. And so I'd say there's a – if I were to put some color on it, I'd say there's a maturity around what concurrency means.
There's a – I think people are becoming awake to what that there's a new way to solve supply chain problems. And you're right, and we just being able to announce these great customer names.
Last year we announced, as you know Unilever and others you saw P&G speak at our conference. It lends a lot of credibility to what it means to join the concurrency approach.
So we're thrilled with where we are obviously, and if and when we start seeing deal cycles shrink that will certainly manifest in guidance.
Robert Young
Thanks.
Operator
And your next question comes from the line of Stephanie Price with CIBC. Go ahead please.
Your line is open.
Stephanie Price
Good morning. Can you talk a bit about where you are in the rollout of the sales team and kind of what inning you’re in, in terms of fully ramping that sales team?
John Sicard
Yes. So we announced last year as we said 2018, we announced an acceleration on that team and, and in marketing quite frankly.
And that again in Q1 of this year, we made that announcement that we were going to further accelerate even beyond what we had thought just three months prior. We have open headcount in sales and marketing.
Today, we're continuing that acceleration to give us the coverage that we see in the pipeline. And so with, I'd say an emphasis on Asia and Europe, but as well as North America, I mean all regions are growing.
We're hiring in all regions and I wouldn't say that there's a line in the sand somewhere in the future where I'm going to say that the Salesforce is now at capacity. Every quarter I see a healthier and healthier pipeline, and so as the quarters manifest, we're going to grow to make sure we have appropriate coverage in sales.
Stephanie Price
Okay, great. And then can you talk a bit about the implementation process for recent client wins?
How has it changed versus a year-ago? And can you talk a little bit about that timeline for implementation?
John Sicard
Yes. So we continue to see a lot of partner involvement.
So this is where we talked earlier. We now have 25 partners, formal partner arrangements.
These aren't just marketing arrangements. And so we continue to see the vast majority of our net new wins coming in through partner influence.
And we're also seeing more and more partners pick up the prime position for professional services, which is exactly what we had hoped to see. And so that is becoming more commonplace.
It's not – certainly not every single deal where a partner is prime, but I'd say the majority of them were starting to see that behavior, where we're playing a supporting role. I will also say and this is – I just think its best practice.
One of the things we tell every single customer is not to boil the ocean, okay. And so the project plans that we look out, that we work on their journeys, it's not uncommon to have multiple phases of rollout because again, this is transforming business fabric and business process.
And so the way we look at things is, there has to be what I would say a go live stage inside of that six to nine months window. It's not uncommon.
It doesn't mean that you're done the full transformation for these large, large corporations. But they are experiencing a concurrent environment with significant value accretion of the solution right inside of that window and then they build it from there.
That's how I would characterize the way deployments traditionally rollout.
Stephanie Price
Great, thank you.
Operator
Your next question comes from the line of Paul Treiber with RBC Capital Markets. Go ahead please.
Your line is open.
Paul Treiber
Thanks very much and good morning. The first question for John, earlier in your prepared remarks you mentioned that you're encouraged by the macro conditions or environment.
Previously tariff uncertainties delayed – delays this last year, and that was still obviously through environment in terms of tariffs. But just given the customer momentum that you're seeing as shown in the backlog, what's changed from a customer perspective in terms of how they're trying to address the changes in their environment?
Richard Monkman
Yes. So at the event, we had one of our CPG customers obviously talking about what – how large scale global manufacturers absorb catastrophe, like a global weather condition, a weather event that is impending.
And without concurrency, you generally run out of time to absorb those types of unexpected events. Now that's a weather condition, but I would say that the tariff situations that occur, the regulatory adjustments that occur in life sciences, et cetera can happen at a moments notice.
And so I would say – just drawing on what I previously stated about the maturity of concurrency and the potency of that approach versus the cascaded planning that people suffer today. I would say that it's the recognition of the importance of time.
I've made statements like this before where the last 20 years, manufacturers have been attempting to optimize their things and not optimize time. And to me, I think time is the new oil.
It's incredibly valuable. The speed to detect is directly related to the speed you can correct.
And so I'd say there's definitely a maturity related to that. People are open to looking at the problem in a very, very different way.
Paul Treiber
Good. Thank you.
Question for Richard, just in regards to increasing backlog, can you clarify, if there was a customer that was disproportionate driver that increase or the increase was relatively evenly spread across a number of customers or if the average win was in line with the historical trends that you've seen?
Richard Monkman
Well, yes, just on the SaaS side, again, it was the past quarter $48 million in booking, but that was across a number of customers, the combination of new and quite frankly, expansion activities. As we noted, we do not have customer concentration situations.
But deals will vary in size. Sometimes its multimillion dollars a year or sometimes it's several hundred thousand a year.
So individual deals will continue to vary. But we're pleased to report that that backlog was a number of transactions across all our key geographies and verticals.
Paul Treiber
Great. Thanks for taking my questions.
Operator
Your next question comes from the line of Paul Steep with Scotia Capital. Go ahead, please.
Your line is open.
Paul Steep
Great, thanks. Could you chat a little more about hiring trends, maybe where the number of staff is today?
And then just what the trajectory looks like in the 2019 and 2020? And then finally, where do we think about you adding those staff and maybe some of the opportunities that you're seeing in terms of getting people to join Kinaxis as you continue to gain scale?
Thanks.
Richard Monkman
Thank you, Paul. We are very, very pleased with the team and both our 30-year employees as well as our 30-day employees.
The way we've been able to continue to expand. In fact, I think as John noted, about a year-ago that we had a milestone whereby the number of new roles created in the company were actually in aggregate higher outside of Canada than within Canada.
And that's primarily because of the sales, the support, and other professional services groups that we've hired. We continue to attract very, very strong candidates.
They welcome the ability to contribute to the concurrent planning model. We currently are with a very strong co-op program about 700 individuals and we expect to continue to grow that, primarily in Europe and Asia as well as throughout to continue to expand in the States.
The exact level though Paul, again, as part of that mid and longer-term planning that the management team is currently working through, and so that type of information will be disclosed again when we provide our full-year results.
Paul Steep
Great. One final follow-up.
John, could you talk maybe about how you and Paul are thinking about the sales structure in terms of not only driving a number of the new wins that you've secured, but maybe the existing clients? And how should we think about the expansion in those accounts, not only in terms of numbers of seats, but maybe in terms of module adoption as well?
Thanks.
John Sicard
Yes. That's a great question.
Obviously, we've been scaling up pretty dramatically over the last 18 months. The entire sales engine and with that by the way is a commensurate scale up of marketing.
And so both functions have actually been growing quite a healthy pace. And obviously that's fueling a lot of great activity.
And as I said, some degree of momentum in Asia and in Europe as a result. As it relates to what I would say, the separation between selling net new and expanding into the base.
That is an area that Paul and I have been working on as we achieve scale and sales. It starts to make sense to have a dedicated focus on the base itself and ensuring a very, very strong relationship continues well past the initial deal.
So we are looking at sales structure if you will, as well as marketing support by looking at it with that kind of a separation, looking at it from a net new account versus the base itself. Obviously, we have leadership in every geography, and so we have sales leadership in Asia, sales leadership in Europe and specific sales leadership in North America.
So that's the way we're looking at it as we scale up.
Paul Steep
Thank you.
Operator
Your next question comes from the line of Gus Papageorgiou from PI Financial. Go ahead, please.
Your line is open.
Gus Papageorgiou
Hi, thanks, and congrats on the nice quarter. Just on the customer concentration.
I wonder if you can give us an update on your customer count. You used to say you have around 100 customers.
I'm wondering, kind of if you could give us a sense of a year-over-year what has the customer count done? And on the customer concentrations, you're saying your top 10 is 33% of revenue.
I'm wondering if you remove professional services, which I assume is heavily biased towards the new customers, and so we looking at revenue X professional services, could you give us a sense of what the top 10 would account for in terms of revenue, not a specific number, just how much higher or lower than the 33%?
Richard Monkman
Yes. So Gus thanks.
Thanks for the question. So yes, the model is and what we're falling under IFRS is the disclosure of the total revenue and total revenue, as you rightly noted, consists of a number of elements.
So that would be professional services and say the SaaS subscription fee. And our engagement with that customer in year-one, if we're the prime on the professional services rather than one of our partners will actually probably be higher in year-one than in year-two.
And in some instances, they may come in at the top 10 because of that, and then move out of the top 10 in the second year. So you do have that variance.
We are not disclosing sort of the sub components of that. And so I can't really address your part two question other than just comment on that general trend.
We have seen that percentage continue to decrease as we've pulled on and secure the confidence of new customers. So directionally, yes, our customer count is increasing.
And we can appreciate the value of sub metrics. But with the current customer level, it's difficult to truly regress sort of the future trends.
And so we're not going to be providing guidance into the actual customer counts other than to say that it continues to grow and we're very pleased with the names that of new customers as well as our long-term experience with the existing customers.
Gus Papageorgiou
Okay. Would it be fair to say that though, if you remove professional services that your top 10 customers would account for less than 33% of revenue?
Richard Monkman
Well, this year one of the key drivers is subscription term license revenue. So if you were to remove that then you would see – if that was the old model, I think you would see a little bit of a different trend.
But the reality is that's what it is. So that is not a customer concentration.
It's not a customer concentration in any geography. It's not a customer concentration in any vertical.
And so I think the main takeaway that investors should take is that this is a very robust and growing customer base.
Gus Papageorgiou
Great. Thank you.
Operator
Your next question comes from the line of Suthan Sukumar from Eight Capital. Go ahead please.
Your line is open.
Suthan Sukumar
Good morning, guys, and congrats on the strong quarter. Just want to touch on the backlog.
What was the makeup of the backlog increase quarter-to-quarter by vertical? And how does that kind of compare to what you're seeing in the pipeline today in terms of strength?
Richard Monkman
So again, thanks for the kind comments on the quarter and thank you for noticing the growth and the backlog. The bookings again, total in aggregate were $80 million, $48 million on SaaS.
What you can see is the growth in overall backlog. And in fact it's stronger than what appear if you just simply looked at the June 30 to September 30 growth because obviously, June 30 would have had Q3 numbers in it, which have now been clearly recognized.
So our focus has always been on the incremental growth in the go-forward periods. We're not at this juncture contemplating, breaking that out into a geo basis.
We are pleased to see the increased growth though, and as you will read as well in Europe and in Asia, and that continues to be a very strong growth. And as to verticals, the growth in automotive and CPG is very strong.
But right now it's a high-tech and life sciences that are still the two strongest verticals. But again there's not a concentration there because individually they're both sort of in that 30% range.
So a very good dynamics overall, very pleased with the broad distribution. I think it's just really reinforcing the message that RapidResponse is so applicable across the supply chain in this concurrent planning, the same customer code can be used in different geographies, different verticals.
Suthan Sukumar
Okay, great. Thank you.
That's helpful. And just one quick one for me on RapidResponse platform, what new markets or verticals do you see the biggest opportunity in?
And given that obviously partners would be leading the charge here. How much of a role do you guys expect to play from a, I guess a sales and a support perspective?
Richard Monkman
Well, I'm going to let John comment further on the platform initiatives and the broader base. But again it's great that Unilever, P&G are using the same RapidResponse code as Ford or Merck or any other of – for Flex or any of our other great customers.
It is – when we do go into a new vertical, it has generally been with the support of a marquee customer and to develop those unique analytics and with the platform, it's going to be increasingly easier for customers as well as our partners to take those in unique embedded analytics and really extend the use of RapidResponse as we move forward. John?
John Sicard
Yes. Certainly, our partners – when I think about the platform – I think the greatest way to describe it is to think about what happened when Salesforce.com announced Force.com, which is a platform in which you can build extensions to Salesforce.
And it opened up the market to extend Salesforce into applications and new areas. And so I like in what we're doing – it's not like we invented the model.
It's a great model. And as Richard said already, RapidResponse is being used to support six different verticals plus a few because there's always some that we're experimenting with.
We haven't yet announced, but as it relates to extending RapidResponse into new market verticals, this platform initiative will be key. This is sort of in combination and in concert with our partners.
We're not in every vertical that matters, but our partners are. And so with RapidResponse as a platform as their disposal, my opinion is, at least like thesis is that it will accelerate our entry into new market verticals over time.
And that obviously is very exciting for our partners, very exciting for us. For existing customers, especially the larger ones that have unique IP in their business process, RapidResponse as a platform will allow us to codify that unique IP safely in a SaaS environment, safe with upgrades.
And so again, the value to our customers is obvious and for our partners it gives them the opportunity to develop that unique IP for specific customers in a very safe, fast manner. And so we've been at this a long, long time.
RapidResponse has always operated as a platform. Our latest announcement at Kinexions was around the ability to extend the brain function if you will, of RapidResponse with total analytics, and essentially that is what is going to fuel more and more partner engagement as we go forward.
Operator
And with that, that concludes today's Q&A portion of the call. I'd like to turn the call back over to Mr.
Wadsworth for some closing remarks.
Rick Wadsworth
Thank you. I understand some of you may have more questions yet and please reach out to me with those and I'll get them answered for you.
But we appreciate your questions on the call. They're good as always and your ongoing interest and support of Kinaxis.
We look forward to speaking with you again when we report our Q4 results. So good-bye for now.
Operator
This concludes today's conference call. We thank you for your participation.
You may now disconnect.