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[Audio Gap]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 our SEDAR filings.During this call, we will discuss IFRS results and non-IFRS financial measures. A reconciliation between IFRS results and non-IFRS financial measures is available in our earnings press release and in our MD&A, both of which can be found on the Investor Relations 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 IR section of our website. Neither this call nor the webcast archive may be rerecorded or otherwise reproduced or distributed without permission from Kinaxis.To begin our call, John will discuss the highlights of the quarter as well as recent business developments, followed by Richard, who will review our financial results and outlook. Finally, John will make some closing statements before opening up the line for questions.While we do apologize for the late start here today, we're still targeting a 9:30 AM conclusion. [Operator Instructions]I'll now turn the call over to John.
Thank you, Rick. Good morning, and thank you for joining us today. First, as always, I hope you and yours have remained healthy during this very unusual time. Nothing is more important. We continue to extend our deepest thanks to frontline workers everywhere, and to all of you who are doing your part to contain the spread of COVID-19, often at great financial and personal cost. Progress is being made, but no doubt, more patience is needed before we can declare victory over this pandemic.I am pleased to report that our second quarter results were very strong across the board, including SaaS revenue growth of 26% to $35.7 million, total revenue growth of 45% to $61.4 million and adjusted EBITDA margin of 37%.Our team continues to respond well to the restrictions imposed by COVID. We won new customers in the quarter and renewed important customers, including France-based transportation systems provider, Alstom. Our sales pipeline continues to expand, and we were successful in delivering record-setting levels of professional services revenue in the second quarter.Earlier this week, we were pleased to announce that Fujifilm's Medical Systems division joined Kinaxis as a customer earlier this year. While their products include equipments related to X-ray diagnostics, imaging, endoscopy and in vitro diagnostics, Fujifilm will leverage RapidResponse supply and demand planning, sales and operations planning and inventory management to connect more than 15 global sales and manufacturing facilities in order to gain the visibility and agility needed to run their supply chain intelligently and efficiently. We are honored to add yet another world-class brand to the Kinaxis family of customers.Since our last call, we announced some key strategic developments, the most significant being our acquisition of Rubikloud, an AI-based demand planning software provider. Rubikloud brings us advanced AI-based demand forecasting, pricing and assortment optimization and promotion planning capabilities, which are immediately applicable to the consumer packaged goods market and over time, to other industries such as life sciences.The acquisition also creates an important entry point for us into the enterprise retail industry, our seventh target market. And finally, Rubikloud brings a new team with leading AI and data scientist skill sets applicable to the entire RapidResponse platform. We couldn't be happier to welcome Kerry Liu and the Rubikloud crew to the Kinaxis family.We also announced RapidValue, a way for customers to accelerate their journey towards concurrent planning and achieve meaningful value from a prescribed RapidResponse deployment in as little as 6 weeks. Often, manufacturers know that their supply chain is in peril, but they don't know where or how to start the healing process. RapidValue will drive immediate benefits to the health of these supply chains, and creates the solid foundation for hyperagility, which is necessary during times of unprecedented disruption and uncertainty.I am also pleased to report that our Global Alliance initiatives continue to expand with the announcement of Wipro as a signed strategic partner. They have several trained RapidResponse consultants today with aggressive plans to grow in their practice.Overall, it is truly phenomenal that all of these achievements occurred, among others, while the entire Kinaxis team continued to work-from-home. On the strength of our backlog and current sales pipeline, we are able to reiterate our fiscal 2020 guidance for SaaS revenue growth and adjusted EBITDA margin while increasing other aspects of guidance. Due to COVID-19, we have seen some customers and prospects expand their contract approval processes, which has, in some cases, delayed the signing of new deals.However, we remain confident in our ability to close these opportunities. And interest and engagement from the market remains extremely high and well-balanced across all geographies and verticals. We are full steam ahead on our planning -- planned hiring investments for 2020, and all of which were initially committed to based on their long-term value of Kinaxis.We are pushing forward to ensure we are ready for the strong demand that we fully anticipate ahead. Kinaxis has quite simply never been more relevant. There has never been more attention on global supply chain resilience and the power of concurrent planning to provide the agility needed to respond to daily disruptions. With that, I will turn the call over to Richard to provide further commentary on the financials for the quarter and our outlook.
Thank you, John, and good morning. As a reminder, unless noted otherwise, all figures reported on today's call are in U.S. dollars under IFRS. Total revenue in the second quarter increased 45% to $61.4 million. SaaS revenue grew 26% to $35.7 million, driven by recent new customer wins as well as the expansion of existing customer subscriptions.Subscription term license revenue grew over 300% to $10 million. This was higher than expected as certain of these customer-hosted subscription contracts renewed at the expected annual subscription level, but for longer terms than initially anticipated. Under IFRS 15, we are required to recognize the right to use component of the full contract upon commencement of the related subscription term.The extended contract terms will slightly change the cadence of future subscription term license revenue, primarily for 2021. Based on the current renewal schedule, we now anticipate 2021 subscription license -- term license revenue will be in the range of $3 million to $5 million and will return to the mid-$20 million range in 2022. These amounts may be higher should we sign any new customer-hosted subscriptions or lower if a contract is not renewed.Our professional services revenue grew 48% to $12.4 million as this group continues to be very active, remotely supporting both existing customers and new deployments. We also increased our capacity in the professional services team through both recruitment and the acquisition of Prana in Q1. As we have noted in the past, professional services revenue will vary from quarter to quarter based on the number, size and timing of customer projects underway as well as the amount of work being assumed by our partner community.We remain pleased with the diversity and strength in our revenue base. For the year-to-date, our 10 largest customers accounted for 31% of total revenue, with no individual customer accounting for greater than 10% of total revenues.Profit grew 56% to $45.7 million or 75% of revenue compared to 69% in Q2 2019. The increase was driven by the growth in all revenue components, most notably, subscription term license, which essentially has a dollar for dollar contribution to gross profit. We have continued to expand our delivery capabilities across the board with increased investments in our delivery and support personnel as well as our data centers.Profit increased 125% during the quarter to $9 million or $0.32 per diluted share compared to $0.15 per share in Q2 2019. Adjusted EBITDA for the second quarter was up 94% to $22.5 million or 37% of revenue compared to 27% in Q2 2019. The growth in these items primarily relates to the significant growth in total revenue and gross margin, as I just discussed, partially offset by higher operating expenses.While COVID-19 has resulted in lower cost for travel and certain events, our investment in people continue. We have continued to hire across the globe in all functions in line with targeted investment levels we discussed during our initial 2020 guidance.Q1 cash flow from operating activities was up 252% to $30.8 million from $8.8 million for the second quarter of 2019. As of June 30, 2020, cash, cash equivalents and short-term investments totaled $260.6 million compared to $212.6 million at the end of 2019. Approximately $60 million of these funds were subsequently used to fund our acquisition of Rubikloud.Our contracted revenue backlog remains strong. As of June 30, it was $333 million as detailed in Note 13 to our financials. This amount includes $302.7 million of SaaS revenue backlog. This backlog will be recognized over the following periods: $78.3 million will be recognized in the remainder of 2020, of which $71.2 million relates to SaaS business; $117.4 million that we recognized in 2020, of which $105.9 million relates to SaaS business; and $137.4 million will be recognized in fiscal 2022 and thereafter, of which $125.7 million relates to SaaS business.Total bookings in Q2 were $37.1 million, of which SaaS bookings were $27.7 million. Given the nature of our enterprise business, bookings typically vary quarter to quarter and were higher in Q1. As John noted, COVID-19 has delayed the closing of certain opportunities as some prospects have implemented more rigorous processes for securing contract approvals.Regarding our Rubikloud acquisition, we have already begun to integrate their capabilities into our CPG and now retail sales campaigns. Given our sales cycles, we expect the SaaS contribution to be modest in 2020, and will be a contributor to revenue in 2021 and forward.Based on our strong backlog, our assessment of current market conditions and the business outlook, we are pleased to reiterate our strong SaaS revenue growth of 23% to 25% for fiscal 2020. Given the strong subscription term license revenue booked to date, we are increasing our guidance for that item to $16 million to $17 million for fiscal 2020. While we expect professional services will continue to be strong, we do believe it will be closer to the $9 million per quarter range for Q3 and Q4, putting us on track to exceed our guidance of 20% growth for professional services.Overall, these developments support increasing our full year total revenue guidance to a range of $216 million to $220 million. With respect to adjusted EBITDA margin guidance, with sustained recruitment, continued global expansion and addition of the full Rubikloud team into the Kinaxis organization, our overall investment level is higher than originally anticipated.At the same time, travel restrictions and other limitations imposed by COVID have resulted in certain cost savings throughout the year. Taking these factors together as a percentage of revenue, we expect sales and marketing expense to be a little lower than originally anticipated and general and administrative expenses to be a little higher and our gross margin to be towards the bottom-end of the 69% to 71% range originally communicated.Overall, we continue to anticipate adjusted EBITDA margin will be in the range of 20% to 23% of revenue for the full year. This has been an unusual year, and we continue to monitor and respond to conditions as they unfold. Overall, we are extremely pleased with our performance in Q2 and our ability to maintain or increase all aspects of our 2020 guidance. I share John's enthusiasm regarding the long-term outlook for our market, for Kinaxis and for a unique concurrent filing techniques.Thank you for your continued support. And with that, I turn the call back over to John.
Thank you, Richard. Last year, we told you about some very exciting product innovations we were working on, and I'd like to give you a brief update. First, the initial release of our expanded platform is ready, and we have signed a couple of early development partners. The first, we'll be creating a solution for transportation optimization, driving our concurrent engine beyond the dock and into optimizing truckloads for the delivery of finished goods.Another partner is developing an innovative solution in the area of the circular economy. They are building algorithms to ensure that recyclable materials and finished goods can be brought back into the supply chain as inputs into manufacturing. This is just another way Kinaxis can help remove waste and help people plan better, live better and ultimately change the world. We will expand on the details of these new relationships and ultimately, many others through announcements ahead.Overall, we are very excited about the opportunity that the extended RapidResponse platform offers. We can leverage the innovations of others to more quickly add value for our customers and to further enhance the potency of rapid response.Secondly, we have released the initial version of our demand sensing capabilities, which uses machine learning and AI to hone short-term demand forecasts, using analysis of key signals outside of corporate ERP systems, like competitive promotions, holidays and weather patterns, to name a few.Lastly, progress on our next-generation web-based user interface and exciting new data visualizations remain on track for release this year. Feedback to date has been tremendous. The interface is both dazzling to the eye, and allows for much more intuitive and contact sensitive investigation of key supply chain data and trends.Naturally, we have many more exciting developments underway. I'm incredibly proud of our product team. They've been able to hit important milestones while operating under all the limitations of COVID-19. Our product is our differentiator and ultimately represents the biggest driver of our market leadership and rapid growth.I'm equally proud of how well every group within the Kinaxis family has responded to the new environment. We are continuing to get the job done for our customers and for you, our shareholders.As always, thank you for taking the time to join us on the call. With that, I'll turn the line over to the operator for a Q&A.
[Operator Instructions] Your first question comes from Thanos Moschopoulos of BMO Capital Markets.
John, in terms of the customers that you alluded to that are expanding the approval process, are there any themes there as far as geographies or verticals? Or is it just kind of more customer-specific case by case?
Yes. No themes whatsoever from a geography or a vertical. And it is case by case, and it's not all of them. I'll also say that our start to Q3 is significantly stronger than our start to Q2. So we're making great progress on some of those delays already.I would characterize Q2 almost as being the low point of the deceleration as most manufacturers were feverishly absorbing the net effects of COVID-19.
Yes, that's helpful. And I know it's still early days with the Rubikloud, but now that you've owned it for a month, can you comment on what you're seeing as far as the pipeline and your ability to leverage that to penetrate the retail vertical?
Sure. Like we're a month in, so it's still quite fresh for both parties. And as I reflect, acquiring a company during COVID protocols is difficult integrating, can be even more challenging as you try to work to establish strong bonds and relationships with the new employee base. We've been working really hard at that. The sales team is now fully integrated. We've started a retail arm, if you will, under Paul Carreiro. We're thrilled with the prospects, quite frankly, and the campaigns that they walked into the door with, both in retail and in some cases, CPG.So those will continue to be nurtured as a joint team. We're also really pleased with the talent. I have spent time during the second quarter meeting every single employee. I've met every single employee of Rubikloud since -- in the past month.But I will say during this COVID protocol, we're expecting some challenge, if you will, as part of the integration. Nobody is traveling. And it's a living in 2 dimensions. Well it's a little more challenging to establish those relationships.The other thing I will say about Rubikloud, and one of the things that really excited me about this union and this joining of forces is that it's rare enough to find enterprise-class supply chain software providers, let alone finding one in our backyard in Toronto. And it's -- I'm just thrilled to see what they have done. They've built a tremendous platform, very scalable, supporting enterprise-class retail and CPG.And so with that comes a very strong affinity with RapidResponse. But I will also remind everyone that with that comes at a typical 18-month sales cycle. They are no different than we are in that's respect.
Your next question comes from Paul Steep of Scotia Capital.
John, just on Rubikloud, maybe talk about your approach to integration of both products. And you gave a quick comment to Thanos there earlier about sales, but just how we should think about that? And then I've got a fast follow-up for Richard.
Yes. Sure. First, I will say that our intention is to integrate technologies to basically fuse the technology from Rubikloud into our platform. The intent is not to run it as a stand-alone business.And so this has always been the thesis since the beginning. And so from a product integration standpoint, that is the philosophy. And we're obviously early days in inspecting exactly how that fusion will occur, but that is the philosophy behind the integration.It's great in terms of cultural fit that we were so close in proximity, Kerry Liu ran Rubikloud with very similar affinities as it relates to culture. So far, it's gone exceptionally well from a teaming perspective.
Great. And Richard, can you just go back over your commentary about the extended contract terms? There's no real-time transcript that caught the fact that things moved out. Is this in relation to an existing client? Or just if you could recap that really quickly, it would be helpful.
Sure. Yes. So dealing with subscription term license, so what we do is even though that subscription is, say for instance, still look very similar to a cloud base, it's because it's customer-hosted, and so it's over 3 years. What we have to do is split that 3-year payment into 2 elements from a revenue recognition perspective, the right to use, which is subscription term license and then the maintenance and support.And what happened was the confidence of more than 1 customer who was renewing during the period of the customer hosted, they just -- we just agreed to a longer term. And as we agree to a longer term, the quantum, the overall booking was larger, and that just drives a larger component into subscription term license as well. Then it also does provide that longer-term tail, if you will, the recurring revenue on the amazing support component.
Great. Is it a trend or just a one-off, and I'll pass the line?
Well we -- it was dealing primarily with customers that had mortgage shorter term. So they've just extended for longer term. And that's why I specifically wanted to comment with regards to the cadence for 2021, whereby 2021, as you may recall, is really the low point of that 3-year cycle. We've talked about sort of the way our legacy customers are going in that overall 3-year cycle. But this doesn't really impact the 2022, where we see it moving up into the mid-$20 million range again.
Your next question comes from Richard Tse of National Bank Financial.
Yes. Given the potential upside that could come from Rubikloud here, which it sounds like it could be meaningful, should we expect that you may pursue more tuck-in technology acquisitions, like Rubikloud, to take advantage of your substantial base?
Thanks for that question, Richard. I would characterize our approach now as being far more thoughtful where we might have been a little more opportunistic based on the strength of the pipeline. And I'd say the acknowledgment and the acceptance, the concurrency, the concurrent planning, is the breakthrough people have been waiting for. We have begun, if you will, a more thoughtful process. So I wouldn't say there's anything imminent, but I will say that our composure around acquisitions has shifted.
Okay. And then just the last one for me. And it's sort of related to Paul's question on the term license and the upside there. So are we to read the sort of increase as extending or expanding the term? Or -- I'm just trying to understand whether it's actually coming from increasing penetration within the base. And if that's the case, is that customer or customers turning on new modules? Or are they adding new site licenses or seats?
Yes, there were some expenses, but the primary driver, Richard, was just by going for a longer term. And so really trying to lock-in. And it was in the interest of both parties to secure a longer term relationship.
Okay. And just to quickly clarify, was that existing customer sort of being recognized formally under a term license?
Sorry, it was more than 1 customer, but this was where -- our focus is clearly SaaS, and the community, the market is absolutely focused on SaaS. There aren't going to be -- we anticipate in the future, there are going to be certain times when a customer is precluded from going into the cloud. So for instance, maybe in aerospace, there are restrictions. But customers' prospects fully understand the value of SaaS.And quite frankly, we believe it's a better experience for them. We can more actively -- we've got a very strong customer support care team. We can make sure they remain current and so on. So there's very many positive development. But we also have customers that have been with us 15, 20 years and longer. And in some instances, because back then, it was not as a focus. We were an early adopter in 2005 going to the cloud. And there are some customers that just want to continue that long-term relationship with us, and we respect that. And so this is some situation of more than one of these customers saying, "Hey, it's been going great. Let's just continue to grow great for -- and quite frankly, let's lock-in for a longer term." So it's -- that's really the view. So this is a longer term relationship, longer-term cash flow, and I think speaks to the confidence and can access on his team.
Your next question comes from Stephanie Price of CIBC.
Services revenue this quarter was strong again. I was hoping you could kind of talk about the scenarios in which you could see PS outperforming the current guidance. And maybe related, can you talk a bit about the implementation time lines in the current environment?
Yes. It's a great question. And it's remarkable to have hit that milestone this quarter while everyone -- I mean, no one was on airplanes. And so all of this happened remotely. I will say that in most instances, customers with active deployments were looking for us to accelerate their value. And so the team worked very, very hard diligently to accelerate milestones within their projects. If anything, just to absorb the conditions that the planet is in right now.As we look out into the future, especially in Q3, the summer months, where we often see vacation schedules, the European schedules that can affect it, this is what's applying our -- this is the information that's informing our guidance around the remainder of the year. And naturally, ways that we might improve on that, obviously, is the speed at which our net new customers wish to drive their deployments.
And if I may, just to expand. So at this point in time, I think, Stephanie, you can see that between what we've booked in the first 6 months and then the $71 million of subscription backlog for the last 2 quarters of the year, that puts us around 95% of the consensus number for the full year, which is why we're very comfortable on that range.And as John noted that depending upon the timing of new deals and so on, which, quite frankly, depending upon when they're closed this year, we'll have more of a toggle point. It's really about focused on '21 and forward deals. And the level of participation of Rubikloud in the early days is going to be modest this year. Again, we anticipate a much larger contribution in 2021.So all told, that is the basis for our confidence. And absolutely, depending on how things go this quarter, we'll review it as is our custom on the next quarterly call.
Okay. Great. Maybe I could sneak one more in around the time line on the retail vertical. Just wondering if you have an anchor customer already for the vertical or if you're looking at capitalizing on Rubikloud's customer base and cross-selling into it?
Well I guess the answer is both. They stepped into Kinaxis with existing customers in the retail segment. Obviously, we're hoping to be able to publish those enterprise customers at some point in the future. And also, again, the thesis behind the acquisition was that they were relevant not only in retail, that was one of the key motivators, an entry point into the seventh vertical, but also, they're relevant in CPG and life sciences. We've seen use cases in both of those segments. And we've done exceptionally well. Certainly, in life sciences and CPG, the momentum is growing for us. And so we see some cross-selling opportunity into our own base on those 2 verticals. And obviously, the reciprocal is true as well. We're learning the lexicon and the use cases of retail through Rubikloud's intellect.
Your next question comes from Daniel Chan of TD Securities.
Just wanted to talk about the EBITDA margin guidance. It's stayed the same despite delivering pretty strong results in the first half coming at 33%. So coming back into H2, at the midpoint, it's only above EBITDA about 9%, and I don't think we've ever seen margins that low in the second half versus your public company.So are there any material expenses coming in H2? I know you talked about Rubikloud and expanding, but are you accelerating some of these investments you're making into your team? Or how are you thinking about managing margins versus expanding your growth?
Well thank you, Dan. I mean, our view has always been about driving growth and driving growth over the long-term period. And we are absolutely continuing to hire individuals on a number of cases, we're hiring for new roles that we had not originally identified in our budget planning, just because some excellent candidates have become available or we've been able to expand sort of global reach.And then absolutely, we are incorporating. So what's important is, and you can appreciate what the state is that Rubikloud team is in, and that they have great technology, great product. But you're investing at a higher level than your revenue. And so there is a net cost to that part on a -- from a period perspective. And so we're absorbing that within. We do anticipate continued savings in travel or some of the events just given COVID. But we are seeing areas starting to open up, in particular, in Japan and others, and so we factored that in.So it's just really been a matter of reflecting the accelerated pace of investment with the strong revenue. The remaining subscription term license revenue is not as significant for Q3 and Q4. So we don't have that level of direct same period contribution in that. So it's our reading. And again, depending upon that scale of that investment as appropriate. Next call, we'll update the guidance.
Okay. That's helpful. And then I just want to touch on the delayed deals that you're seeing or the longer procurement processes. You said it's been improving as you're exiting the quarter. You have a view on how long -- how much longer some of these processes are taking? We're talking about like quarter's delay or something longer than that?
Yes. In some cases, these are being escalated right to board-level decisions. As you would imagine, step 1 was absorbing the implications of COVID-19. And we saw that deceleration in Q2. All of our customers and prospects' energy were around that absorbing what I'll call shock, and that's what I've witnessed. It's basically supply chains that are in shock. And now we're starting to see a reacceleration, if you will, in the activity. But at the same time, we're seeing more diligence being applied to the signing process that we hadn't seen before. And as noted, we started Q3 very strong, and in many cases, making great progress on those delays.And so in terms of how long they will last, well these are protocols being put in place by some of the largest companies in the world. So as COVID unrolls, we'll adjust accordingly, of course. But at the same time, we're seeing a strengthening pipeline. Pipeline today is larger than it was same time last quarter. That's just a fact. It's very well balanced.Our productivity in running demonstrations has nearly doubled because nobody is on airplanes. And so we're seeing -- and in many cases, demonstration is occurring with 50 people on the line. And things like that were more difficult to do in person. But under Zoom meetings or Teams meetings or Skype or whatever, those types of media, we're seeing a lot of productivity gains there. So we're obviously confident in our guidance for this fiscal year. And as Richard noted, we're going to continue to invest based on the demand that we're witnessing. We're going to continue to grow headcount. We had -- I previously suggested that we were going to grow headcount by nearly 40%. I wouldn't be surprised if we beat that number by the end of the year.
Your next question comes from Deepak Kaushal of Stifel GMP.
I've got a couple of follow-ups, I'll try to be quick. Just a follow-up on Dan's question on the rigorous -- more rigorous equipment process. John, you mentioned decisions moving up to the board. I'm more curious as to what or why the procurement process is different. Obviously, COVID is an impact, but are companies evolving more vendors? Are they juggling internal priorities? Is it more scrutiny on budget here? Why is some of the stuff getting more scrutiny at high levels?
Yes. I think it's quite natural to recognize that a lot of businesses are in a state of shock as they absorb the implications of a global pandemic. And as a result, more scrutiny is being applied to investment and there's triage of projects. There's always more projects than there are dollars to support them.And so I think the scrutiny and the -- I'll say the scrutiny level has gone up from a Board perspective to ensure that cash is being well invested and the investments are going to return are going to yield value under these current conditions. I think it's nothing more than that. It's just good governance. Some companies are -- you might consider to be in crisis. And so when in crisis, you apply more scrutiny and tighter governance and tighter controls. And I think that is -- that's all we're seeing.I don't measure this in months, by the way. We were being very purposeful in describing this in terms of the signing protocols. It's the tail end of the deals that we're seeing this protraction. At this juncture, though, I can't really comment. I don't know how long this will last, but we're obviously aware of it now and planning accordingly.
Okay. That's helpful. And just a follow-up question on pricing trends. What are you seeing in terms of pricing? Richard mentioned the term license renewal was at the same price for longer term. Is there a price term trade-off going on here? Is there competitive pressures on pricing? What are you kind of seeing from that perspective?
I think as more and more companies understand the value of the market and are coming into the market, there are some natural price pressure. But we provide some unique value. And so I think we can be more creative in our pricing, and we look at the long term. So I wouldn't characterize it, Deepak, as overall broad pressure right now.
Your next question comes from Paul Treiber of RBC Capital Markets.
In regards to Rubikloud, you indicated that the contribution should be modest this year and then higher next. What's the magnitude of the expected contribution next year? If you could put some rough sort of indicators around it? And then given the expected ramp in the revenue, do you either have good visibility to new deals? Or does the company have a sizable backlog at the current time?
Thanks, Paul. The -- so what John noted was we are going to be blending in and integrating. And so there's a couple of opportunities. One is on the -- now supporting the vertical in retail and certain elements of retail, but also strengthening our CPG offering. And so it's really a number of things. It's not just simply a vector of additional new customer wins, but it's also increasing the likelihood of closing wins and CP space and so on.Now these are vertical -- sorry, these are enterprise-class customers. So the sales cycle is -- continues to be long. John noted that Rubikloud has had success, and is working with customers, I would say, more at the early stage. And what we're really going to see is its leverage and expansion. That's going to be in the out years. We will provide more specifics as we go through this journey together, and that would be part of our 2021 guidance. But we remain very confident in our sustained SaaS growth in that mid-20% range and in line with our targets for 2022.
And you announced RapidValue in the quarter. Did that program -- did it have any impact on professional services or the timing of revenue recognition in terms of subscription in the quarter?
Yes. So we announced that this quarter and launched that program. I can tell you that we have prospects that are in the pipe looking at that. We're close to closing some net new business as a result of that program.As it reflects Q2, however, there was no immediate impact, more so just a great opportunity for prospects to engage with us with a much lower risk, higher value. And really, it's -- I think about it as the speed to pain relief kind of a program. As I mentioned, a lot of manufacturers know their hill. And step 1 is to feel better. Of course, you want to be cured, but step 1 is to feel better. Can you lower my fever in 6 weeks? I'll feel better, I'll be stronger, and then I can focus on a cure. That's really the focus behind RapidValue.
And do you see RapidValue is helping offset some of the delays in the approval side? Does that come up in terms of tons of value as one of the things that's getting more scrutiny now?
I think it's too early to tell. We don't have enough data points on that. Of course, the thesis here is that even large -- and this is true, by the way, of our business. We have extremely large customers that start small and grow. And we have small customers that start large. That happens.In this case, obviously, we're trying to provide a path for manufacturers to get more immediate relief for the pain that they're in right now, for their suffering. And that's really the motive. As it relates to affecting any of the delays, I think it's too early to tell. Ultimately, people are going to do this because they know they need a cure. They ultimately work with us because they believe in concurrent planning and they want to transform the way their supply chains are being governed.
Your next question comes from Gus Papageorgiou of PI.
When I talk to your customers, they are very complementary on how RapidResponse has kind of helped them help their supply chains through this COVID crisis. The one interesting comment that came out was that even within organizations that use RapidResponse, some parts of the organization use it, some don't, and it was very apparent to the ones that didn't. So I'm just wondering, within your installed base, given what's happened with all the chaos in supply chains, do you think there's a much bigger opportunity to increase the seats within your -- some of your -- even amongst your biggest customers?
Well we've always had a land and expand strategy for sure. And as I mentioned earlier, I think Q2, we saw a lot of, what I'll call, absorption activity. People were absorbing this new normal and establishing new protocols. One conversation I'll recall in Q2 was one of the chief supply chain practitioners. He mentioned to me that every day is a box of chocolates, to quote the famous movie. You never know what you're going to get. Things that are absolutely known and factual, one day, failed the next and then come back the following day. So there was a lot of efforts in the second quarter absorbing. I would tell you that part of the professional services -- the record-breaking professional services revenue was the result of an acceleration of existing projects and people really driving hard to hit milestones so that they could reap the benefits of concurrency during COVID.As it relates to our future, I think that a global pandemic is really -- I think it will serve as a catalyst. It's a bit of a wake-up call that supply chain practitioners are recognizing that status quo doesn't work, it just doesn't. And ultimately, I think that our prognosis of the business is going to strengthen basically as a result as manufacturers recognize the power of agility. The potency of hyperagility over focusing entirely and only on accuracy, right? It's -- I -- like in COVID, you can't mask your way out of this. You've got to respond your way out. And it's not a reflection on the -- on how poor math models are. That's not the point. The point is how quickly can you detect, sense and respond to being outside of your planning parameters.
Your next question comes from Robert Young of Canaccord Genuity.
You said that you had delays like everyone's talked about that. You said that a few of them are at the tail end of the process, at the altar, so to speak. And so I was curious how you think about those as it relates to your guidance. Do you include those in guidance on a probability that they would fall within the year? Or would those be upside to the guidance that you're providing?
Well thank you, Rob, for that question. So things -- all these things are factored into the guide. So I mean just to recap at the beginning of the year, or at least for SaaS -- for SaaS metric, we look to about 80% rule and 80% being in backlog. So it's a minimum committed backlog. And then the remaining 20% comes from renewals that are scheduled, new name wins and expansions. And so this juncture, if you look at it mathematically, it's about 95% of the full year guidance between the backlog, and recognized to date as is there. And so that further 5% is coming from basically renewals, expansions and new wins for the next 6 months. So we take that into consideration when we're looking at the funnel and so on.And so sometimes deals -- a deal that starts October 1 versus the deal that starts on December 31. That deal on October 1 has 3 months of revenue in the current year. And obviously, there's no revenue for the other deal, but they both contribute to 2021. And so we just have a bit of a leeway factor that we have to recognize and consider and that's in our guidance.So again, Rob, what we'll do is, depending upon how we progress, collectively with our customers and prospects through this process, we'll revisit the guidance on our Q3 call.
Okay. So it sounds if I understand that correctly, conservative 5% would be on $200-plus million top line, would be maybe $10 million at the beginning of the year for expansion. And so it would seem if they're large that those wouldn't be included in the guidance as you look forward into the second half. Is that the wrong way to think about that?
I think you need to -- I mean, we're going to let our guidance down on its own because as we move through the year, it's only natural that, that percentage moves from 80% up. I mean ultimately, in the third quarter, we should be almost at the full year number just because the deals tend to -- John did note, we've had deals close to the beginning of the quarter. But in some cases, deals will be later in the quarter. So their contribution to the current quarter is limited there. Obviously, typically a 3-year deal. So that does bode well for the out years.
There are no further questions at this time. I turn the call back over to Mr. Wadsworth.
Thank you, operator, and thank you, everyone, for participating on today's call. We appreciate your questions as well as your ongoing interest in and support of Kinaxis. We look forward to speaking with you again when we report our Q3 results. Bye for now.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.