QAD Reports Fiscal 2014 Third Quarter Financial Results
SANTA BARBARA, Calif. — November 26, 2013 — QAD Inc. (NASDAQ: QADA) (NASDAQ: QADB), a leading provider of enterprise business software and services for global manufacturers, today reported financial results for the fiscal 2014 third quarter ended October 31, 2013.
Total revenue grew to $65.7 million for the fiscal 2014 third quarter, up from $61.7 million for the same quarter last year. License revenue was $6.8 million for the third quarter of fiscal 2014, down from $7.0 million for the third quarter of fiscal 2013. Maintenance and other revenue rose to $35.6 million, up from $34.8 million for last year’s third quarter. Subscription revenue, which includes QAD’s On Demand deployment option, grew to $5.1 million, up from $3.8 million for last year’s third fiscal quarter. Professional services revenue equaled $18.2 million, an increase from $16.1 million for the third quarter of fiscal 2013. Revenue related to CEBOS, which was acquired by QAD in December 2012, totaled $700,000 for the fiscal 2014 third quarter.
Net income for the fiscal 2014 third quarter was $2.0 million, or $0.13 per diluted Class A share and $0.11 per diluted Class B share. Net income for the fiscal 2013 third quarter totaled $1.8 million, or $0.12 per diluted Class A share and $0.10 per diluted Class B share.
“We achieved better than expected revenue and earnings in our third quarter. Strong year-to-date bookings of our On Demand offering are reflected in the growth of our subscription revenue,” said Karl Lopker, Chief Executive Officer of QAD Inc. “Stabilizing market conditions in global manufacturing, and our competitive position in the cloud ERP space for manufacturing companies, contributed to our performance.”
Gross profit for the fiscal 2014 third quarter totaled $36.8 million, or 56 percent of total revenue, compared with $35.2 million, or 57 percent of total revenue, for the fiscal 2013 third quarter.
Total operating expenses amounted to $33.0 million, or 50 percent of total revenue, for the fiscal 2014 third quarter, versus $32.1 million, or 52 percent of total revenue, for the same quarter last year. Expenses related to CEBOS totaled $1.1 million for the fiscal 2014 third quarter.
Operating income for the third quarter of fiscal 2014 was $3.8 million, which included $1.2 million in stock compensation expense. For the third quarter of fiscal 2013, operating income was $3.1 million, which included $1.1 million in stock compensation expense.
For the fiscal 2014 year-to-date nine month period, total revenue rose to $192.8 million, up from $186.4 million for the first nine months of fiscal 2013. Net income for the nine months ended October 31, 2013 totaled $2.0 million, or $0.13 per diluted Class A share and $0.11 per diluted Class B share. Net income for the fiscal 2013 year-to-date period was $4.6 million, or $0.29 per diluted Class A share and $0.25 per diluted Class B share.
During the fiscal 2014 third quarter, QAD paid quarterly cash dividends totaling $1.1 million.
QAD’s cash and equivalents balance increased to $65.8 million at October 31, 2013, from $65.0 million at January 31, 2013. Cash provided by operations for the first nine months of fiscal 2014 was $11.6 million, compared with $10.7 million for the first nine months of fiscal 2013.
2014 Third Quarter Highlights:
- Received orders from 21 customers representing more than $500,000 each in combined license, maintenance, subscription and professional services billings, including six orders in excess of $1.0 million;
- Received license or On Demand orders from companies across QAD’s six vertical markets, including: ANCA Pty Ltd., Arthrex, Inc., Aunt Bessie’s Limited, Boots Contract Manufacturing, Energizer Holdings, Inc., Imperial Tobacco Group, International Paint Ltd., Mitek Industries Inc., Nexteer Automotive Corporation, Takata, and Vitatech Nutritional Sciences;
- Released QAD Enterprise Applications 2013.1, the latest version of the company’s enterprise applications suite;
- Selected by the Automotive Industry Action Group to provide Materials Management Operations Guidelines/Logistics Evaluation (MMOG/LE) training in Spanish to suppliers in Mexico;
- Announced QAD On Demand Automotive Edition, which delivers the benefits of the company’s cloud enterprise resource planning solution to global automotive suppliers;
- Held several user conferences around the world including in the United States, United Kingdom and China.
For the fourth quarter of fiscal 2014, QAD anticipates total revenue of approximately $69 million and earnings of approximately $0.16 per diluted Class A share and $0.13 per diluted Class B share.
Calculation of Earnings Per Share
EPS is reported based on the company’s dual-class share structure, and includes a calculation for both Class A and Class B shares. Since Class A shares have rights to 120% of dividends paid on Class B shares, net income is apportioned so that earnings per share attributable to a Class A share are 120% of earnings per share attributable to a Class B share.
Investor Conference Call
QAD management will host an investor conference call today at 2:00 p.m. PT (5:00 p.m. ET) to review the company’s financial results and operations for the fiscal 2014 third quarter. The conference call will be webcast live and is accessible through the investor relations section of QAD’s web site at www.qad.com, where it will be available for approximately one year. Interested parties may participate in the call by dialing 800-230-1059 (domestic) or 612-234-9959 (international). A replay of the call will be accessible through December 4, 2013 by dialing 800-475-6701 (domestic) or 320-365-3844 (international), passcode 299497.
QAD Inc. (Nasdaq: QADA) (Nasdaq: QADB), is a leading provider of enterprise software and services designed for global manufacturing companies. For more than 30 years, QAD has provided global manufacturing companies with an enterprise resource planning (ERP) system that supports operational requirements; including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD offers flexible deployment options like QAD On Premise software and QAD On Demand software-as-a-service. Customers can operate in a blended environment where some users can be deployed On Premise and some users deployed via On Demand while offering the same end-user experience. With QAD, customers and partners in the automotive, consumer products, food and beverage, high technology, industrial products and life sciences industries can better align daily operations with their strategic goals to meet their vision of becoming more Effective Enterprises.
For more information about QAD, telephone +1 805-566-6000 or visit www.qad.com.
"QAD" is a registered trademark of QAD Inc. All other products or company names herein may be trademarks of their respective owners.
For additional information, contact:
QAD Sr. Vice President & Treasurer
+1 805 566 5117
|Laurie Berman/Matt Sheldon
+1 310 279 5980
Note to Investors: This press release contains certain forward-looking statements made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Words such as “expects”, “believes”, “anticipates”, “could”, “will likely result”, “estimates”, “intends”, “may”, “projects”, “should”, and variations of these words and similar expressions are intended to identify these forward looking statements. Forward-looking statements are based on the company’s current expectations and assumptions regarding its business, the economy and future conditions. A number of risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. These risks include, but are not limited to, evolving demand for the company's software products and products that operate with the company's products; the company's ability to sustain license and service demand; the company's ability to leverage changes in technology; the company's ability to sustain customer renewal rates at current levels; the publication of opinions by industry and financial analysts about the company, its products and technology; the reliability of estimates of transaction and integration costs and benefits; the entry of new competitors or new offerings by existing competitors and the associated announcement of new products and technological advances by them; delays in localizing the company's products for new or existing markets; the ability to recruit and retain key personnel; delays in sales as a result of lengthy sales cycles; changes in operating expenses, pricing, timing of new product releases, the method of product distribution or product mix; timely and effective integration of newly acquired businesses; general economic conditions; exchange rate fluctuations; and, the global political environment. In addition, revenue and earnings in the enterprise resource planning (ERP) software industry are subject to fluctuations. Software license revenue, in particular, is subject to variability with a significant proportion of revenue earned in the last month of each quarter. Given the high margins associated with license revenue, modest fluctuations can have a substantial impact on net income. Investors should not use any one quarter's results as a benchmark for future performance. For a more detailed description of the risk factors associated with the company and the industries in which it operates, please refer to the company's Annual Report on Form 10-K for fiscal 2013 ended January 31, 2013, and in particular, the section entitled “Risk Factors” therein, and in other periodic reports the company files with the Securities and Exchange Commission.