Kenexa Corp. (KNXA, Financial) filed Quarterly Report for the period ended 2010-06-30.
Kenexa Corp. has a market cap of $294.9 million; its shares were traded at around $13.05 with a P/E ratio of 42.1 and P/S ratio of 1.9. Kenexa Corp. had an annual average earning growth of 8.1% over the past 5 years.KNXA is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Jim Simons of Renaissance Technologies LLC.
On January 20, 2009, we entered into an ownership interest transfer agreement with Shanghai Runjie Management Consulting Company, (“R and J”) in Shanghai, China for $1.3 million. The initial investment provided us with a 46% ownership in the new entity, Shanghai Kenexa Human Resources Consulting Co., Ltd., (the “variable interest entity”), and a presence in China s human capital management market. The agreement with R and J also provided for a 1% annual ownership increase based upon adjusted EBITDA, as defined, for each of the years ended 2008, 2009 and 2010. In the third and fourth quarter of 2009, based upon the 2008 operating results for R and J, we paid an additional $0.2 million for an additional 1% ownership interest in the variable interest entity. The variable interest entity was financed with $0.3 million in initial equity contributions from Kenexa and R and J, and has no borrowings for which its assets would be used as collateral. On September 30, 2009, we provided $0.2 million of financing for the variable interest entity. The creditors of the variable interest entity do not have recourse to our other assets.
Our customers primarily purchase renewable subscriptions for our solutions. The typical term is one to three years, with some terms extending up to five years. The majority of our subscription agreements are not cancelable for convenience although our customers have the right to terminate their contracts for cause if we fail to provide the agreed upon services or otherwise breach the agreement. A customer does not generally have a right to a refund of any advance payments if the contract is cancelled. Recently as economic conditions have improved, contract renewals have increased. During the six months ended June 30, 2010 and year ended December 31, 2009 our customers renewed over 80% of the aggregate value of multi-year subscriptions for our on-demand talent acquisition and performance management solution contracts subject to renewal during the period rather than our historical renewal rate of approximately 90%. As the business environment improves, we expect renewal rates to improve to the 90% range.
For the three months ended June 30, 2010, approximately 73.0% of our total revenue was derived from sales in the United States. Revenue that we generated from customers in the United Kingdom, Germany, China and Canada, was approximately 8.0%, 3.7%, 2.9% and 2.2%, respectively, for the six months ended June 30, 2010. Revenue for all other countries amounted to an aggregate of 10.2%. Other than the countries listed, no other country represented more than 2.0% of our total revenue for the six months ended June 30, 2010.
For the six months ended June 30, 2010, approximately 75.2% of our total revenue was derived from sales in the United States. Revenue that we generated from customers in the United Kingdom, Germany and China was approximately 7.4%, 3.2% and 2.6%, respectively, for the six months ended June 30, 2010. Revenue for all other countries amounted to an aggregate of 11.6%. Other than the countries listed, no other country represented more than 2.0% of our total revenue for the six months ended June 30, 2010.
Subscription revenue as a percentage of total revenue. Subscription revenue as a percentage of total revenue can be derived from our consolidated statements of operations. This performance indicator illustrates the evolution of our business towards subscription-based solutions, which provides us with a recurring revenue stream and which we believe to be a more compelling revenue growth and profitability opportunity. We expect that the percentage of subscription revenue will be within a target range of 78% to 82% of our total revenues in 2010.
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Kenexa Corp. has a market cap of $294.9 million; its shares were traded at around $13.05 with a P/E ratio of 42.1 and P/S ratio of 1.9. Kenexa Corp. had an annual average earning growth of 8.1% over the past 5 years.KNXA is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Our customers typically purchase multi-year subscriptions which provide us with a recurring revenue stream. During the six months ended June 30, 2010 and year ended December 31, 2009, our customers renewed over 80% of the aggregate value of multi-year subscriptions for our on-demand talent acquisition and performance management solution contracts subject to renewal. This renewal rate provides us with a strong base of recurring revenue. We believe that our strong customer relationships provide us with a meaningful opportunity to cross-sell additional solutions to our existing customers and to achieve greater penetration within an organization. As the business environment improves we expect renewal rates to improve to our historical renewal rate in excess of approximately 90%.On January 20, 2009, we entered into an ownership interest transfer agreement with Shanghai Runjie Management Consulting Company, (“R and J”) in Shanghai, China for $1.3 million. The initial investment provided us with a 46% ownership in the new entity, Shanghai Kenexa Human Resources Consulting Co., Ltd., (the “variable interest entity”), and a presence in China s human capital management market. The agreement with R and J also provided for a 1% annual ownership increase based upon adjusted EBITDA, as defined, for each of the years ended 2008, 2009 and 2010. In the third and fourth quarter of 2009, based upon the 2008 operating results for R and J, we paid an additional $0.2 million for an additional 1% ownership interest in the variable interest entity. The variable interest entity was financed with $0.3 million in initial equity contributions from Kenexa and R and J, and has no borrowings for which its assets would be used as collateral. On September 30, 2009, we provided $0.2 million of financing for the variable interest entity. The creditors of the variable interest entity do not have recourse to our other assets.
Our customers primarily purchase renewable subscriptions for our solutions. The typical term is one to three years, with some terms extending up to five years. The majority of our subscription agreements are not cancelable for convenience although our customers have the right to terminate their contracts for cause if we fail to provide the agreed upon services or otherwise breach the agreement. A customer does not generally have a right to a refund of any advance payments if the contract is cancelled. Recently as economic conditions have improved, contract renewals have increased. During the six months ended June 30, 2010 and year ended December 31, 2009 our customers renewed over 80% of the aggregate value of multi-year subscriptions for our on-demand talent acquisition and performance management solution contracts subject to renewal during the period rather than our historical renewal rate of approximately 90%. As the business environment improves, we expect renewal rates to improve to the 90% range.
For the three months ended June 30, 2010, approximately 73.0% of our total revenue was derived from sales in the United States. Revenue that we generated from customers in the United Kingdom, Germany, China and Canada, was approximately 8.0%, 3.7%, 2.9% and 2.2%, respectively, for the six months ended June 30, 2010. Revenue for all other countries amounted to an aggregate of 10.2%. Other than the countries listed, no other country represented more than 2.0% of our total revenue for the six months ended June 30, 2010.
For the six months ended June 30, 2010, approximately 75.2% of our total revenue was derived from sales in the United States. Revenue that we generated from customers in the United Kingdom, Germany and China was approximately 7.4%, 3.2% and 2.6%, respectively, for the six months ended June 30, 2010. Revenue for all other countries amounted to an aggregate of 11.6%. Other than the countries listed, no other country represented more than 2.0% of our total revenue for the six months ended June 30, 2010.
Subscription revenue as a percentage of total revenue. Subscription revenue as a percentage of total revenue can be derived from our consolidated statements of operations. This performance indicator illustrates the evolution of our business towards subscription-based solutions, which provides us with a recurring revenue stream and which we believe to be a more compelling revenue growth and profitability opportunity. We expect that the percentage of subscription revenue will be within a target range of 78% to 82% of our total revenues in 2010.
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