QAD Reports Fiscal 2014 First Quarter Financial Results
SANTA BARBARA, Calif.--(BUSINESS WIRE)-- QAD Inc. (NAS: QADA) (NAS: QADB) , a leading provider of enterprise business software and services for global manufacturers, today reported financial results for the fiscal 2014 first quarter ended April 30, 2013.
Total revenue was $61.9 million for the fiscal 2014 first quarter, compared with $63.7 million for the fiscal 2013 first quarter. Revenue was lower than expected and was impacted by higher than anticipated On Demand transactions, which typically do not produce revenue in the quarter in which they are closed, as well as accounting related to the timing of revenue recognition.
License revenue totaled $6.2 million for the first quarter of fiscal 2014, versus $7.9 million last year. Maintenance and other revenue rose to $35.2 million, from $34.5 million for the same period last year. Subscription revenue, which includes QAD's On Demand deployment option, grew to $4.0 million, up from $3.2 million for last year's first fiscal quarter. Professional services revenue equaled $16.5 million, versus $18.1 million for the first quarter of fiscal 2013; last year's results included the one-time recognition of $1.3 million of professional services related to one customer. Revenue related to DynaSys and CEBOS, which were acquired in fiscal 2013, totaled $2.0 million.
Net loss for the fiscal 2014 first quarter was $1.3 million, or $0.08 per Class A share and $0.07 per Class B share. Net income for the fiscal 2013 first quarter was $1.8 million, or $0.12 per diluted Class A share and $0.10 per diluted Class B share.
"We made important progress during the quarter signing new On Demand deals, a continuing strategic focus. We also reinforced customer engagement at our recent Explore customer conference," said Karl Lopker, Chief Executive Officer of QAD. "We are continuing to focus on our strategic initiatives while maintaining stringent cost controls given our first quarter results."
Gross profit for the fiscal 2014 first quarter equaled $33.3 million, or 54 percent of total revenue, compared with $37.1 million, or 58 percent of total revenue, for the fiscal 2013 first quarter.
Total operating expenses were $35.0 million, or 57 percent of total revenue, for the fiscal 2014 first quarter, versus $33.1 million, or 52 percent of total revenue, for the same quarter last year. Cost of revenue and operating expenses related to DynaSys and CEBOS totaled $3.3 million.
Operating loss for the first quarter of fiscal 2014 was $1.7 million, which included $900,000 in stock compensation expense. For the first quarter of fiscal 2013, operating income was $4.0 million, including $1.0 million in stock compensation expense.
QAD's cash and equivalents balance increased to $73.8 million at April 30, 2013, from $65.0 million at January 31, 2013. Cash provided by operations was $12.3 million for the first quarter of fiscal 2014, versus $5.1 million for the same quarter last year.
During the first quarter of fiscal 2014, QAD purchased 45,000 Class A shares of its common stock at an average price of $13.34 per share, and 8,000 Class B shares at an average price of $12.02 per share, for a total expenditure of approximately $700,000. The previously authorized one million share repurchase program has been concluded.
During the fiscal 2014 first quarter, QAD paid quarterly dividends totaling $1.1 million, of which $900,000 was paid in cash and the remainder in common stock.
2014 First Quarter Highlights:
Received orders from 17 customers representing more than $500,000 each in combined license, maintenance, subscription and professional services billings, including two orders in excess of $1.0 million;
Received license or On Demand orders from companies across QAD's six vertical markets, including: Bosch Group, Dana Corporation, DS Smith Plc, Energizer Holdings, Inc., Honeywell, Kuhn SA, Laerdal Medical A/S, Mauser-Werke GmBH, PFD Food Service Pty Ltd and Saft;
Launched QAD Enterprise Applications 2013, the latest release of the company's core product;
Introduced QAD Managed EDI, a new cloud-based managed service to address the needs of companies transacting via Electronic Data Interchange (EDI);
Augmented the company's mobile offerings and expanded the QAD Mobile Framework; and
Subsequent to the end of the quarter, QAD held its annual customer conference, Explore 2013, in San Antonio, Texas, hosting more than 650 attendees.
For the second quarter of fiscal 2014, QAD anticipates total revenue of approximately $64 million and earnings of approximately breakeven.
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 first 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 June 6, 2013 by dialing 800-475-6701 (domestic) or 320-365-3844 (international), passcode 282807.
QAD is a leading provider of enterprise applications for global manufacturing companies specializing in automotive, consumer products, electronics, food and beverage, industrial and life sciences 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 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 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.
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