SANTA BARBARA, Calif. – November 22, 2011 – QAD Inc. (Nasdaq: QADA, QADB), a leading provider of enterprise business software and services for global manufacturing companies, today reported financial results for the fiscal 2012 third quarter ended October 31, 2011.
Total revenue grew 10 percent to $60.7 million for the third quarter of fiscal 2012, compared with $55.4 million for the third quarter of fiscal 2011.
License revenue totaled $7.2 million for the fiscal 2012 third quarter, versus $6.1 million for the fiscal 2011 third quarter. Maintenance and other revenue was $34.0 million, compared with $33.8 million for last year’s third fiscal quarter. Professional services revenue was $17.2 million, versus $14.0 million for the third quarter of fiscal 2011. Subscription revenue, which includes QAD’s On Demand deployment option, was $2.3 million, compared with $1.6 million for last fiscal year's third quarter. For comparative purposes, revenue results by category for the prior year period have been recast to enable the presentation of subscription revenue in that period.
Net income for the fiscal 2012 third quarter grew to $3.0 million, or $0.19 per diluted Class A share and $0.15 per diluted Class B share, versus net income of $1.7 million, or $0.10 per diluted Class A share and $0.09 per diluted Class B share, for the fiscal 2011 third quarter.
“We are pleased with our solid revenue performance and our continuing improved profitability, and are also encouraged by the increasing interest in our On Demand offering,” said Karl F. Lopker, CEO of QAD Inc. “At the same time, we are closely watching the impact of the uncertain economic environment on our global customers’ businesses.”
Gross margin for the fiscal 2012 third quarter was $34.6 million, or 57 percent of total revenue, compared with $32.5 million, or 59 percent of total revenue, for the fiscal 2011 third quarter.
Total operating expenses amounted to $30.3 million, or 50 percent of total revenue, for the fiscal 2012 third quarter, compared with $28.6 million, or 52 percent of total revenue, for the same period last year.
Operating income for the fiscal 2012 third quarter was $4.3 million, which included $1.2 million in stock compensation expense, compared with operating income of $3.8 million, which included $1.4 million in stock compensation expense, for the third quarter of the prior fiscal year.
For the first nine months of fiscal 2012, revenue equaled $182.1 million, compared with $157.6 million for the first nine months of fiscal 2011. Net income for the year-to-date period of fiscal 2012 was $7.1 million, or $0.44 per diluted Class A share and $0.37 per diluted Class B share, versus net income of $0.8 million, or $0.05 per Class A share and $0.04 per Class B share, for the same period last year.
QAD’s cash and equivalents balance was $75.1 million at October 31, 2011, up from $67.3 million at the end of fiscal 2011. Cash used by operations was $0.3 million for the third quarter of fiscal 2012, versus cash provided by operations of $2.4 million for the fiscal 2011 third quarter. For the first nine months of fiscal 2012, cash provided by operations was $13.1 million, compared with $16.1 million in the prior-year nine-month period.
Fiscal 2012 Third Quarter Highlights:
- Received orders from 20 customers representing more than $500,000 each in combined license, support, subscription and services billings, including three orders in excess of $1.0 million;
- Received license and On Demand orders from companies across QAD’s six vertical markets, including DRI Relays Inc., Medline Industries, Inc., Tech Group North America, Inc., Watts Water Technologies, Visteon Corporation, and Zodiac SA, among others;
- Unveiled the latest release of the company’s enterprise resource planning (ERP) suite, QAD Enterprise Applications 2011.1 Enterprise Edition, and announced its availability in a series of user events in the U.S., China and Mexico;
- Launched QAD Business Intelligence (BI) 3.5 featuring new mobile computing compatibility for faster, more convenient access to critical decision-making data; and
- Announced a 20 percent increase in the company’s quarterly dividend to $0.072 per share of Class A common stock and $0.060 per share of Class B common stock, as well as a one million share repurchase program of Class A and/or Class B shares of QAD’s common stock.
For the fourth quarter of fiscal 2012, QAD expects total revenue of approximately $63 million and earnings per diluted share of approximately $0.22 per diluted Class A share and $0.18 per diluted Class B share.
Calculation of Earnings Per Share
EPS is being 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 now apportioned so that earnings per share attributable to a Class A share are 120% of earnings per share attributable to a Class B share. For comparison purposes, prior period earnings per share calculations have been recast so as to incorporate the dual-class capital structure.
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 2012 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 800-230-1092. A replay of the call will be accessible through November 30 by dialing 800-475-6701, access code 220922.
QAD is a leading provider of enterprise applications for global manufacturing companies specializing in automotive, consumer products, electronics, food and beverage, industrial and life science products. QAD applications provide critical functionality for managing manufacturing resources and operations within and beyond the enterprise, enabling global manufacturers to collaborate with their customers, suppliers and partners to make and deliver the right product, at the right cost and at the right time. For more information about QAD, telephone +1 805-566-6000, or visit the QAD web site at http://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.
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 curren 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 prop tion 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 2011 ended January 31, 2011, and in particular, the section entitled “Risk Factors” therein, and in other periodic reports the company files with the Securities and Exchange Commission.