[July 31, 2017]

22,000 Customers Now in the Kronos Cloud as Shift to SaaS Surges

Kronos Incorporated today announced financial results, company advancements, and customer successes for the third quarter of Fiscal 2017. Kronos (News - Alert) recognized revenue for the quarter was $332.8 million. Earnings before interest, tax, depreciation, and amortization (EBITDA) was $101.6 million.¹

"As we celebrate the 10^th anniversary of the transition from being a public to a private company, our acceleration and pace of innovation continues," said Aron Ain, Kronos chief executive officer, who was again named to Glassdoor's prestigious Highest Rated CEOs list. "We had a strong third quarter, including capitalizing on our commitment to drive our industry's shift to SaaS (News - Alert), record quarters for our healthcare- and manufacturing-focused teams, and our best-ever quarter for large human capital management orders. I'm excited for our momentum to continue through our final quarter as we close in on our 40^th anniversary."

Kronos Cloud, Shift to SaaS Continues to Transform the Business
Kronos, having successfully transitioned to a pure software-as-a-service (SaaS) provider, again delivered strong growth in the Kronos Cloud, with subscription revenue increasing 45 percent.

• Kronos continues to add hundreds of customers each quarter to the Kronos Cloud - both net-new customers and current customers that migrated from their on-premise instances - as more than 22,000 organizations around the globe now leverage a Kronos Cloud solution.
• In the quarter, 90 percent of new customer bookings came from an array of Kronos Cloud offerings.
• Kronos had one of its best quarters ever for converting existing Workforce Central on-premise customers to a SaaS solution. Significant on-premise to SaaS conversions included: a family of non-profit hospitals and healthcare organizations in the Midwest U.S.; a large shared services organization serving the health sector in New Zealand; a global food services company that supplies frozen protein products to customers worldwide; an American holding company that offers vehicle rental, sales and sharing, and fleet management; a U.S. manufacturer of bearings and mechanical power transmission components; a large non-profit organization in Minneapolis-Saint Paul focused on youth development, charitable activities, and humanitarian work; a logistics and supply chain organization based in Australia; and one of the most prestigious academic medical centers in the U.S.
• Significant new $1 million+ Kronos Cloud SaaS deployments included: a multinational oil and gas corporation with more than 70,000 employees; the central procurement division for one of the most populous states in the U.S.; the owner and operator of a U.S. chain of discount grocery stores; and a Fortune 100 multinational organization that produces a range of commercial and consumer products.

Workforce Ready Human Capital Management (HCM) Cloud Suite Scales to Record Heights
Workforce Ready, which combines the power of workforce management and HCM into one unified cloud platform, had a record quarter - which included multiple new orders valued at more than $1 million in annual recurring revenue (ARR) - as the company continues to scale its HCM solution.

• Subscription revenue for the Workforce Ready suite increased 57 percent year-over-year as customers large and small increasingly opt for a full-suite solution.
• In the last 12 months, half of all new Workforce Ready bookings included HR and payroll applications.
• Significant HCM deals included: one of the largest poultry producers in the U.S. that will manage more than 14,000 employees with the Workforce Ready suite; a U.S. gaming and entertainment complex; a professional staffing and search firm that specializes in contract, contract-to-hire, and direct hire positions; a company that grows, packs, and ships fruit throughout the U.S.; and an American food producer that is also one of the largest privately held companies in the U.S.
• Kronos announced two Workforce Ready add-on modules in the third quarter - Workforce Ready Talent Acquisition and Workforce Ready Performance Management - and enhanced its scheduling engine to help customers better attract, develop, and retain an engaged workforce.
• HfS Research ranked Kronos a "High Performer" in its Blueprint Guide for Predictive Capabilities in HCM, which highlights Kronos' commitment to execution and innovation in predictive HCM.

Large, Global Workforce Management Momentum Continues, Powered by Paragon Methodology
Kronos strengthened its position as the worldwide leader in workforce management, as momentum for complex global implementations continued with customers realizing increasingly faster time-to-value.

• The Kronos Paragon implementation methodology is now supported in more than 50 countries to help organizations accelerate and simplify complex, global workforce management deployments by achieving up to 40 percent faster time-to-value.
• Kronos workforce management success around the world - driven by exceptionally-strong quarters in North America, Latin America, and Asia-Pacific - was highlighted by large deals, including: a healthcare system with more than a dozen hospitals across California; a leading retailer in the Baltic states based in Latvia; a large international grocery store chain with an extensive retail presence in Australia and New Zealand; a provider of IT, sales, e-commerce, and marketing support for one of the world's most recognizable courier delivery services companies; and a non-profit healthcare system with more than 90 hospitals in nearly two dozen U.S. states.
• To provide organizations in every region with maximum value and an exceptional experience, Kronos built on the continued success of its global partner infrastructure network with a cloud collaboration relationship with Oracle HCM and by driving ongoing momentum of its alliance with NGA Human Resources, which led to several significant deals in the quarter, including a large SaaS solution for a multinational chemicals and biotechnology company based in Switzerland.
• Kronos InTouch remains a critical component to a comprehensive, global workforce management solution, with hardware bookings increasing nearly 30 percent. Simultaneously, organizations worldwide are providing employees with more control, as about 8 million workers now have access to a Kronos mobile or tablet solution.

Workforce Solutions for All: Kronos Small and Midsize Business (SMB) Success Surges
Deals with small and midsize customers (under 2,500 employees) remain one of the companies' fastest-growing and significant growth opportunities.

• North American product bookings for HCM and workforce management solutions at SMB organizations increased 22 percent in the quarter over last year.
• Kronos celebrated five years of explosive partner network growth and small business success by transforming Kronos SaaShr into the Kronos Workforce Ready Partner Network. Since its acquisition by Kronos in 2012, SaaShr has grown from a $5 million business to what today exceeds $100 million in annual revenue.

• The healthcare vertical set an all-time high for success with 27 percent growth, including Foundation Health Partners deploying in the Kronos Cloud, and manufacturing also had its best-ever quarter for product bookings, growing by nearly 17 percent year-over-year.
• For the 17^th consecutive year, Omega Management Group Corp (News - Alert). presented Kronos with the NorthFace ScoreBoard Award^® for delivering exceptional customer service supporting HCM and workforce management solutions.

Employee Engagement Climbs to Record Heights, Inspired by Great Leaders
Kronites around the world are more inspired and energized than ever before, as employee engagement at Kronos climbed to new heights - up to 87 percent - while the remarkable momentum of employer of choice and leadership accolades continued to grow for the company's culture of caring.

• Beyond landing on Glassdoor's Highest Rated CEOs list for the second consecutive year, CEO Aron Ain was honored with the inaugural Ray Stata Leadership and Innovation Award by the Massachusetts High Technology Council.
• Kronos Chief People Officer David Almeda was named Chief Human Resources Officer (CHRO) of the Year by HRO Today.
• Kronos was awarded four more distinctions for its WorkInspired culture in the third quarter, as Forbes named Kronos a Best Employer for the 3^rd consecutive year; The Globe and Mail ranked Kronos the 8^th best place to work in all of Canada; the Boston Business Journal listed Kronos as a top-three Best Place to Work for the 3^rd year in-a-row; and the Montreal Gazette honored Kronos as part of the annual Canada's Top 100 Employers competition.
• Kronos celebrated the 5^th anniversary of opening its Indianapolis Technology Center of Excellence, now the company's global hub for professional services and software implementation.

Kronos Experts Show Employee Engagement, Evidence-Based HR are Strategic Weapons
Kronos thought leaders continue to provide organizations with resources, research, and insights to help create and manage an engaged workforce for stronger business success.

• Gregg Gordon, vice president of the Data Science Practice Group at Kronos, launched his new book, Your Last Differentiator: Human Capital, at the Society for Human Resources Management (SHRM) Annual Conference & Expo, providing organizations with advice on holistically developing their workforces and improving the employee experience to drive better business outcomes.
• Also at SHRM's conference, Kronos Chief People Officer David Almeda and Vice President of Global Talent Acquisition Kristen Brown were featured speakers in the accredited session, "Make HR a Strategic Weapon for Your Organization: An Evidence-Based Approach."
• Kronos released three additional pieces of research in the quarter to help organizations, HR leaders, and people managers further understand that high employee engagement and high performance are not mutually exclusive:
  • "Employee Engagement in Nursing" found nurses love what they do but fatigue is pervasive;
  • A study with Future Workplace^® showed the critical importance of employee engagement in the financial industry, as banking, insurance, and asset management organizations struggle to attract, engage, and retain employees in the current hyper-competitive environment; and
  • The Workforce Institute at Kronos found that issues with payroll could have a far more negative impact on engagement than previously thought, as about half of Americans would begin searching for a new job after just two issues with their paycheck.

Third Quarter Customer Success Around the Globe
In the third quarter of Fiscal 2017, Kronos signed agreements with organizations around the world, including: Allied Mills, one of Australia's largest manufacturers and distributors of bakery premixes, flour, and semi-finished products; Army Fleet Support LLC, a provider of quality aviation maintenance support to the U.S. Army Aviation Center of Excellence and U.S. Air Force; Austin ISD, an independent school district in Texas serving 84,000 students in 130 school communities; CR Land, a subsidiary of China Resource Group, one of the most influential real estate developers in mainland China; East Carolina University, which strives to improve teaching, research, learning, and productivity for faculty, students, and staff through the use of IT; G2 (News - Alert) Secure Staff LLC, a provider of aviation services and security solutions employing 7,000+ professionals; Harlandale ISD, a public school district in Texas serving 15,000 students at 24 school locations; Jet Airways, one of the largest premium private airlines in India; LKQ Corporation, a leading provider of alternative and specialty parts to repair and accessorize vehicles with operations in North America, Europe, and Taiwan; Midwest Health, Inc., one of the largest senior care providers in the Great Plains with active communities in five U.S. states; Nationex, a major player in the Canadian courier industry; Nelson Mandela Children's Hospital, a state-of-the-art, specialist pediatric facility in Johannesburg, serving the children in Southern Africa; NFI Industries, a leading third-party logistics provider of domestic and international supply chain solutions; OCH Regional Medical Center, a medical and surgical hospital in Mississippi; Partners HealthCare System, a Boston-based non-profit hospital and physicians network including Brigham and Women's Hospital and Massachusetts General Hospital, two of the most prestigious teaching institutions in the U.S.; Prestera Center for Mental Health, a leading provider of quality support and professional services for people with behavioral health and substance abuse needs in West Virginia; University of Florida Department of Housing, responsible for maintaining facilities and programming for the university's 7,600+ residence hall students and 1,900+ graduate and family housing village residents; Vita Group, the largest mobile retailer in Queensland, Australia; Wyman-Gordon Co., a worldwide supplier to the aerospace and industrial gas turbine markets; Zhejiang Dahua Technology, China's leading solutions provider in the video surveillance industry.

Supporting Resources

• Connect with Kronos via Facebook, Twitter, LinkedIn, Instagram, and YouTube.
• Take a look at the lighter side of the workforce in our Time Well Spent cartoons.
• Follow The Workforce Institute at Kronos for insight, research, blogs, and podcasts on how organizations can manage today's modern workforce to drive engagement and performance.
• Learn about the Kronos WorkInspired culture and check out Kronos job openings.

About Kronos Incorporated
Kronos is a leading provider of workforce management and human capital management cloud solutions. Kronos industry-centric workforce applications are purpose-built for businesses, healthcare providers, educational institutions, and government agencies of all sizes. Tens of thousands of organizations - including half of the Fortune 1000^® - and more than 40 million people in over 100 countries use Kronos every day. Visit www.kronos.com. Kronos: Workforce Innovation That Works.

© 2017 Kronos Incorporated. All rights reserved. Kronos, the Kronos logo, Workforce Central, and Workforce Ready are registered trademarks and Workforce Innovation That Works is a trademark of Kronos Incorporated or a related company. See a complete list of Kronos trademarks. All other trademarks, if any, are property of their respective owners.

Footnote 1: All financial information within this press release is presented using non-GAAP financial measures. Kronos believes that non-GAAP measures of financial results provide useful information regarding certain financial and business trends relating to Kronos' results of operations. Non-GAAP revenue consists of GAAP revenue excluding the effect of the write-down of deferred revenue associated with purchase accounting for certain acquisitions and includes timing adjustments related to international product deliveries which management includes when evaluating operating results. Product bookings represent gross product value of product orders and the product equivalent value of SaaS orders. EBITDA consists of GAAP income from operations excluding: (1) share-based compensation expense for stock options and stock awards in accordance with ASC (News - Alert) 718 and compensation expenses related to ordinary dividends; (2) amortization of capitalized software development costs; (3) depreciation of property, plant, and equipment; (4) amortization of acquired intangible assets; (5) acquisition-related deferred revenue write-downs and expenses including advisory, legal, accounting, acquired employee-related costs, and integration costs; and (6) unusual costs related to relocation of corporate HQ and certain consulting and financing-related expenses that are excluded from the definition of EBITDA under the terms of the company's Credit Agreement.

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