FOR IMMEDIATE RELEASE
For More Information, Contact:
| John Neale | | Laurie Berman/Matt Sheldon |
| QAD Senior Vice President and Treasurer | | PondelWilkinson Inc. |
| 805.566.5117 | | 310.279.5980 |
| investor@qad.com | | pwinvestor@pondel.com |
QAD REPORTS RECORD SECOND QUARTER AND FIRST HALF REVENUE
SANTA BARBARA, Calif. – August 26, 2014 – QAD Inc. (NASDAQ: QADA) (NASDAQ: QADB), a leading provider of enterprise business software and services for global manufacturing companies, today reported financial results for the fiscal 2015 second quarter ended July 31, 2014, including record second quarter and first half revenue.
Total revenue grew 12 percent to a second quarter record of $73.1 million for the fiscal 2015 second quarter, up from $65.2 million for the same period in fiscal 2014. License revenue increased to $9.0 million for the second quarter of fiscal 2015, up from $8.6 million for the same quarter last year. Subscription revenue grew to $6.4 million, up from $4.5 million for last year’s fiscal second quarter, driven by continued growth of QAD Enterprise Cloud sales. Maintenance and other revenue rose to $36.1 million, up from $34.3 million for last year’s fiscal second quarter. Professional services revenue increased to $21.5 million, up from $17.9 million for the second quarter of fiscal 2014.
Net income for the fiscal 2015 second quarter was $985,000, or $0.06 per diluted Class A share and $0.05 per diluted Class B share, compared with $1.3 million, or $0.08 per diluted Class A share and $0.07 per diluted Class B share, last year.
“We are very pleased with our performance for the second quarter and first half of the year, delivering record revenues for these periods. Continued impressive growth in our cloud business was led by a strong performance from our European region,” said Karl Lopker, Chief Executive Officer of QAD Inc. “QAD is well positioned to benefit from the strength in the global manufacturing economy through our robust Cloud ERP solution.”
Gross profit for the fiscal 2015 second quarter equaled $39.8 million, or 55 percent of total revenue, compared with $36.4 million, or 56 percent of total revenue, for the fiscal 2014 second quarter.
Total operating expenses amounted to $37.8 million, or 52 percent of total revenue, for the fiscal 2015 second quarter, versus $34.9 million, or 54 percent of total revenue, for the same quarter last year. The increase includes expenses related to the company’s cloud business, where revenue was not yet recognized, as well as increased personnel and travel.
Operating income for the second quarter of fiscal 2015 was $2.1 million, which included $1.7 million in stock compensation expense. For the second quarter of fiscal 2014, operating income was $1.5 million, which included $1.6 million in stock compensation expense.
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For the first six months of fiscal 2015, total revenue rose 11 percent to $141.5 million, up from $127.1 million for the first six months of fiscal 2014. The company reported net income of $909,000, or $0.06 per diluted Class A share and $0.05 per diluted Class B share, for the fiscal 2015 year-to-date period, compared with breakeven performance for the fiscal 2014 year-to-date period.
QAD’s cash and equivalents balance was $75.3 million at July 31, 2014, compared with $76.0 million at January 31, 2014. Cash provided by operations for the first six months of fiscal 2015 was $5.5 million, compared with $13.0 million for the first six months of fiscal 2014.
Fiscal 2015 Second Quarter Highlights:
| · | Received orders from 18 customers representing more than $500,000 each in combined license, maintenance, subscription and professional services billings, including seven orders in excess of $1.0 million, of which one order was in excess of $2.0 million; |
| · | Received license or cloud orders from companies across QAD’s six vertical markets, including: Alliance Boots GmbH, Amcor Limited, Autoliv Inc., CooperStandard Holdings, Inc., Cummins Inc., DS Smith Plc, Eaton Corporation, Esterline Technologies, Harada Industry Co Ltd, Johnson Controls, Inc, Kitagawa Industries Co., Ltd, Konica Minolta, Inc, Laerdal Medical AS, Medline Industries, Inc., Saint Gobain SA and Sunrise Medical GmbH; |
| · | Announced the latest release of its flagship enterprise resource planning solution, QAD Enterprise Applications 2014, introducing a broad range of new capabilities with a focus on quality management and control, user experience and simpler international deployments; and |
| · | Added Leslie Stretch, Chief Executive Officer of CallidusCloud to QAD’s Board of Directors. |
Business Outlook
For the third quarter of fiscal 2015, QAD anticipates total revenue of approximately $71 million and earnings of approximately $0.12 per diluted Class A share and $0.10 per diluted Class B share. QAD is raising its fiscal 2015 revenue growth guidance to approximately 8 percent from fiscal 2014. The company continues to expect earnings to be approximately equal to fiscal 2014.
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 2015 second 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 612-288-0329 (international). A replay of the call will be accessible through midnight September 3, 2014 by dialing 800-475-6701 (domestic) or 320-365-3844 (international), passcode 332168.
About QAD
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 QAD Enterprise Applications, 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 Enterprise Applications is offered in flexible deployment models as on-premise software, in the cloud with QAD Cloud ERP or in a blended environment. 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.
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For more information about QAD, call +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.
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, including, but not limited to, statements regarding projections of revenue, income and loss, capital expenditures, plans and objectives of management regarding the Company’s business, future economic performance or any of the assumptions underlying or relating to any of the foregoing. Forward-looking statements are based on the company’s current expectations. Words such as “expects”, “believes”, “anticipates”, “could”, “will likely result”, “estimates”, “intends”, “may”, “projects”, “should”, “would”, “might”, “plan” and variations of these words and similar expressions are intended to identify these forward looking statements. 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 products and companion products; the ability to sustain license and service demand; fluctuation in revenue and earnings in the software industry; the ability to leverage changes in technology; the ability to sustain customer renewal rates at current levels; third party opinions about the company; the reliability of estimates of transaction and integration costs and benefits; competition in our industry; delays in localizing the company's products for new or existing markets; the ability to recruit and retain key personnel; delays in sales; 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. For a more detailed description of the risk factors associated with the company, please refer to the company's latest Annual Report on Form 10-K, and in particular, the section entitled “Risk Factors” therein, and in other periodic reports the company files with the Securities and Exchange Commission thereafter. Management does not undertake to update these forward-looking statements except as required by law.
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