QADA - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the QAD Fiscal 2020 First Quarter Financial Results Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] And as a reminder, the conference is being recorded. to Officer. conference like Bellamy, to now Accounting Chief would turn over the Kara I ahead. go Please

Kara Bellamy

Hello, everybody, to and welcome today’s call.

are contain Before ensure we statements statements of are statements may uncertainties undertakes to risks revise Such that date to certain that forward-looking everybody understands subject and or could begin, results that our forward-looking differ call. to I’d analyses. after based on like and expectations to obligation that this events materially from circumstances these no forward-looking to cause actual those reflect or anticipated. QAD update the discussion

discussing of non-GAAP For in note pretax a by also Securities directly complete which please risks the income, description press with to G. Exchange measure and SEC financial and these this included a that most is XX-K of during on to which financial XX-Q the Company’s defined non-GAAP is Regulation filings today’s refer non-GAAP be measure QAD’s as website. this Please reconciliation A uncertainties, the call measure posted release, Commission. comparable GAAP is and will we

I Now, turn like to call Chilton. Anton would our CEO, over to the

Anton Chilton

XXXX Good you discuss fiscal today’s for first quarter call afternoon QAD’s results. to joining thank and

Lender Officer. Pam are our me the on Joining call President; Chief and Lopker, Daniel Financial

The I’ll customers end, over from results. changes conversion solutions. was sense, of for to in Our user the QAD solutions turn we help a global Applications to conference, their Shortly the guidance very quarter increasing to on-premise to of first act saw existing how positive manufacturing. plan QAD’s in showed financial analysts. now total of held we focus and swiftly industries We levels momentum change our Adaptive annual that our at Explore customers the event, in Explore, Daniel and year both quarter strong launched discuss revenue. quarter in this and models. our subscription on cloud meet business companies receiving disruption QAD reception and response after discussed the we the also To it and end where

Daniel Lender

Thank Anton. you,

revenue small total and both quarter all with exceeded non-GAAP small – decreases met guidance and First our categories. our across subscription guidance pretax increase expense GAAP and with results revenue

investment marketing customer remains on to and in planned Our sales new acquisitions drive track.

For quarter, negligible the a impact negatively revenue currency compared last total prior $X.X year, the sequential first with million, had impacted quarter. compared with but by

My on currency bottom-line are Our negatively $XXX,XXX comments impacted rates constant was versus year. about a by noted. otherwise unless given growth about last today basis

last $XX of annualized providing a XX% was with in which revenue in was was million revenue I which a grew XX% statistics. of subscription quarter for Subscription result began quarter, Last XXXX. moment. predominantly compared Services we the million, year, $XX.X of first growth our address as billings quarter will declines First Professional business, business and our expected

Over quarter billings three XX% XX% XX%. up the last XX the XX%, Subscription year grew ago. were a for with at from by billings subscription year margins months, growth our subscription CAGR

at stay of to infrastructure, of small expect remainder throughout level make improvement in current the result and year. a growth subscription investment continued cloud we As or margins a this

basis, on million. goal On medium-term. $XX.X $XXX,XXX. down Our the revenues constant by Maintenance over maintenance and by subscription per points to were X down year were from $XX.X to to million revenues X remains percentage improve slightly other quarter-over-quarter margins a a currency basis

million with our first of continue Professional effects line. expect see million quarter. to revenue from revenue was compared on the $XX.X $XX.X the conversions year’s last We cloud to Services to maintenance

complete expected, that in QX. decline global As primarily project the from resulted implementation large substantially multi-site a was

services we the to improvement first year. million was last quarters this the our than underway. year. and will quarter, consumer quarter and $X.X We XX% negative initiatives Total have of challenges the XX% our total $X.X of and this customers. and to year. the for recent revenue compared for we business By million America expect have came other first million, full discussed vertical Services EMEA and were EMEA geography, and for from continue levels in margins and We majority the existing and to was: in with XX%. first greater expect hi-tech there one industrial for be revenue anticipated and Asia North margins In revenue $X services and X%. half deal margin XXXX similar addressed second X% our License with quarter, the automotive, XX% fiscal recognized quarter breakeven beverage last the the as revenue sciences QX and XX%, plans revenue was first XX%, quarter we Latin life license quarter, products Pacific by XX%, America facing food were from

implementing. $XX.X progress, will and made the changes While from are good we take several full XX% expense versus Gross XX% million $XX.X it to year. improved the for total XX%. million or total we XX% margin of last the of have quarter in we quarters were results of Sales revenue marketing before see or revenue

in generation activities and expense Our lead sales R&D increase. development, personnel $XX for was for million the business both was investment responsible periods.

the year. first XX% the $X.X periods pretax $X.X income last expense million first for this first last million year totaled revenue pretax quarter last of year. XX% versus last compared XX% and was million GAAP expense million both GAAP $X.X R&D We revenue, expense to $X.X year’s brings with General This year's non-GAAP million income quarter. Stock breakeven total loss XXXX our or of percentage year. pretax administrative last with total of this quarter. achieved and compensation for was from fiscal a $X.X for and compared million $X.X As year XX%

$X.XX per GAAP million quarter net compared B in diluted last was GAAP share. quarter, per or $X.XX and per fiscal Our and year. of the share. $X.X last million per Income Class income was first $X.XX loss XXXX million B expense $X.XX Class first with diluted Class Class $XXX,XXX A share In or totaled A net year’s $X.X $X.X tax

million. For $XXX million expect XXXX. continue fiscal equivalents, of the ended we approximately with the million at end $XXX of We and April $X in expense with compared cash full a year, to tax

Our with from year operations million $X.X million the was cash quarter, for $XX.X first XXXX a fiscal compared ago. flow

Our fiscal services same was method versus the accounts days the back $XX outstanding million receivable XX and using year at compared Day XX million days first April a lower for $XX sales XX quarter year. period count correlates was for XXXX last ago to the with decrease billings.

and million it at $X.X of million of million, Our versus $XXX.X deferred XX deferred short-term other April year includes million versus $XXX.X $XXX,XXX million $XX.X of maintenance subscription million of versus was $XX.X versus $X.X versus $XX.X deferred revenue deferred a $XX.X balance fees ago deferred $XXX,XXX. and professional million million,

quarter reminder, remarks a contracts I’ll second with revenue are our the not solid annually being quarterly. our bookings our does which growth billed expect. or as a impacted be might built finish strong quarter-over-quarter appear cloud As annually, Despite subscription by services my anticipated maintenance is subscription while contracts guidance quarter, you can business. as

significant of Therefore, benefited deals QX, QX the deals not those over of early a an impact revenue. quarter. the significant in closed prior During to increase the of quarter, QX is which a portion

a that effect, our guidance our to QX impact anticipate we flows. subscription QX now While included similar deal

of bit a goals we were from QX deals some performance QX. short of bookings, mentioned, in despite In addition, strong internal our and Anthon a moved the to as cloud

our are maintaining slipped anticipate have QX closed. we deals year We full will as the that guidance be from

level our this full However, revenue. year risk has of introduced an to increased

to follows: income to we expecting income $XXX million as $XX made are and loss between subscription million. quarter, including $XXX of we revenue to On million. subscription breakeven $XX $XX full of million, of you, second For to $X pretax non-GAAP GAAP GAAP non-GAAP income million the pretax to million. pretax turn loss our revenue Anton. of XXXX $XXX,XXX. pretax back call year including million guidance and $XXX some million pretax With million that, change $XX.X $XX million $XXX and non-GAAP I'll the revenue of of of to million million $XX $XXX,XXX $X revenue between

Anton Chilton

Daniel. you, Thank

As development year pipeline This is investing increasing. with is already last sales marketing our on and solid lead a building generating call, in substantial we this capabilities. discussed a focus funnel investment generation business new on our are and and

longer of those ten seeing are five a We deals we new with bookings and new of customers taking bit close. had to existing XX little However, conversions quarter new this customers. cloud

conversions. Although basis, heavily between an we mix conversions was weighted continue see more XX-XX and to on about towards this customers new quarter annual

the quite emphasis we we Looking reach slipping year. we substantial cloud see increase due our first and quarter to customers last said, didn’t That goals biggest deals from our has opportunity away will there. our bookings to is some next on winning This quarter. ever did been what competitors forward, result our we into as internal continue double new

last funnel cloud is time remains and Our year. same strong XX% this over from

As expected, services we complete. is drop multiyear substantially significant in implementation revenue now that a a saw professional large

at from of the a percentage strong Looking period a as bookings America a same had down bringing proportion of North EMEA the perspective, bookings. geographic last significant performance quarter very in a the was year. over

we quarters. discussed to funnel call next see However, being over in few addressed in and improvements challenges and are expect our results the last the

without caution sector, real compared to of A Latin had likely in in performance when our and breakdown also year. America drop Pacific vehicle production last market reflection automotive volumes in globally. virtual our that quarters Asia increased general quiet to for down a

our deal industrial and electronics the including change of quarter. sector and Life and no in had steady stellar major sciences CP this quarter verticals. bringing food largest Our beverage and performance in remained

chain with very more all caused global transportation demand quarter Indeed geopolitical world-class we solutions. demand uncertainties, expect Our global our its ongoing to execution trade continuing and and see as did planning QAD in for supply supply trade chains division another Precision QAD with disruption managing DynaSys the solutions by division effectively. with had and our tariffs strong

On the in months. as going we customers now in adaptive known working have the of the business, few the XX QAD next Channel with solution more with live process than of Islands, LIBOR XX formally ERP side

customers prospects adapt the In adapt capabilities solution. expand near ERP – growing the the term. our have shop solutions of a We adopt continue pipeline QAD expect to to and Labs, the that or in floor we – execution of

warehousing robotic the initiative automation in capabilities and are an advanced launched We have process adding space.

efficient hand and and technologies I’ll to manufacturing support advanced continue invest to effective processes. in the now of transformation will Pam. over to R&D application digital We effort

Pam Lopker

Great. like QAD another Thanks, cloud for give I to summary of QX. would Anton.

in conversions, and a QX nine in So conversion new customers. saw QX we could after conversions which pickup somewhat QX XX net had is we five

ever Anton As cloud was All North our contributed cloud best America bookings leading. bookings. it with for QX indicated, regions

deal This all new Italian order Fortune some the an a standardization customers, received highlight by corporation This customer. segment which segments. manufactures the of To machinery. American this from quarter we led of industrial represents industrial new an the subsidiary continued QAD of XXX

We corporation French construction and an high-performance order variety of a a also received from multinational that produces materials.

based we from steel addition, sprinklers, a fire In order an and U.S. company protection manufactures that smaller pipes. received

As give with challenges a as conversion conversion ERP, customers the And deal the the of industries, course to geopolitical have of with I hard the which believe Explore all increasing to also greatest regarding face was do and levels customers’ the QAD look with particularly purchase their a to to cloud a applications of a changing adaptive like has today, It our color way key little well environment the don��t uncertainty. Explore played – our reason on the change I’d uncertainty highest to for a ever perspective. lot and in economy operate for is as Conference, our to-date. they of which the more to tariffs. We product cloud. disruption address adaptive release that the rated manufacture they to in from QAD find availability designed manufacture's event in

May respond than Now the Vegas, XX% follow-ups. Thanks, interest demonstrated and the looking visited them in would next to able we through need be to of ever, customers in Anton. conference to XX% The recommend Explore colleagues our are of manufacturers forward requested they a production customers our in XX year said you. XX. to adaptive our Back application. attendees new to strong rapidly execution and to Las more session changes. hands-on seeing

Anton Chilton

Thank you, Pam.

in So are sales terms earlier, looking starting forward, marketing our to payoff lead investments as I of and generation. in said

generation Technology also is to changes. businesses marketing We're to when and to manufacturing targets drive applications that volume In and these around and world. Legacy ERP change respond rapidly same markets to lead geopolitics lead last we the teams. in the flow XX% the set year. the don’t QX react up continue our period and compared ahead of in uncertainty agility for flexibility provide needed and fact,

customers solutions see replacing QAD As of source increasing. for our this prospects business. in Pam the support runway lot market our said, with access response. be rapid a that the launch will cloud and have will growth for addressable applications a Applications, cloud This key cloud in to legacy and our ERP ongoing of of is Adaptive total solutions We

However, we and longer geopolitical is an to around do negotiations deals some point situations in risk around this at think short-term longer the some close. this to we not do We and see increase this with world tariffs and though affect expect term goals. taking

take Operator, the give questions? please instructions live. questions you We can will now for

Operator

at to [Operator will we And for William Please Instructions] Bhavan go Suri Blair. ahead. the go first question,

Bhavan Suri

the I region, is seeing to businesses that. to tracking is it and your last the tariffs, it to my you’ve I taking of Europe you you you the sort this a questions. to is specific Chicago, guess, tariffs Thanks macro, a Head a into I'll to little just, and think seeing And in how specific guess, are about is a Sales sort I of you as year of new with just get some guys. specific what couple you exactly slowdown made, vis-à-vis brought last then, Hey changes a may in between as just color in broad quarter. on saw you dive want of whole, Dublin the macro raise and sort comments based challenges some the from about it bit are China business areas. office talk a pressure any be oversee of U.S? for

understand you. just So how Thank out. to that’s playing

Anton Chilton

of little there us Thanks, would Bhavan. in Yes, quarter we just bookings did a bit is biggest remind so I’d say, ever. QX while there the caution that

see it. at not are on that So, I customers little we responses closing bit seeing what’s negotiations are on macro and being that’s a What and are of level, some uncertainty we seeing there. say uncertainties what’s We philosophies the business broad that of the going management businesses is specific some the would around is we their generally the say to their would Brexit and that on. happened I we tariff so believe there plus are that political cautious more selective on. based of some and do with

across aware one of it’s seeing. would It’s range are be segments as segment. example, spots we slowdown there bright to that it a So, of But say there right but automotive, is not very of. an very And we less. that vehicle completely production customers some in customers is that and specific are that a yes, that some some still everybody are active in is got still that

some bit that I’d question, just to not in general it’s So, in little a a response trend, more caution spots. say

addressing, in the In terms the business plan of on issues I how that lot there. that’s organization. more and are more we to how plans made working We recruitment we impacting the got still We we We identified the are EMEA. discussed underway few We’ve to of We’ve few a there. go. the call. last changes got around hires a made a think

our new our a of organization so marketing example, organization, and For on. VP services

and So, in resource to boost help that some track. being and changes, some on that us organizationally we adding see more

we are not in comfortable are set flow against at. to targets where all are But later with the results year. certainly through probably until You internally the the going we see we where

I think grow. the business, the overall continues condition for QAD funnel the to

go QX. As up it’s We’ve the seen same the year. lead I period flow up XX% in last said from over

the can So, for guidance get remain we on Daniel confident we and are discussed. that year as track

Bhavan Suri

I on guess, helpful. That’s one more. it. I’ll Got it. touch Got

that, break to you existing XX-XX now or things to about you to for would years think the the get think you well of and expect cloud about like being look a incentive. do three how talking little and are and over can’t the in given we process? two forward of new I of move business, customers it be, more the expect color from through logos business look revenue cloud talking as at how if about shift and out customers, are new about you to track we existing that sort focus the sort of you if it One I'd pipeline on that force

Anton Chilton

think create there obviously, to time going that in them for expect got runway as I and as big proportion, would a of over is competitors. we we going XX-XX because our there. to less share customers short-term, the our new of greater business base, we and Yes, of will legacy ERP converted still I see the grab well have as runway big from go. more go be We installed a more a market can that,

so, five think we of to started in are of kind over to year. timeframe about before to But a we new talking And shift we model three kind out see proportion that I business. it’s that significant the

Bhavan Suri

Got – customers business, think at at or something year, is the to there for it. cloud, But it. one you to or some is number they and or about and the be if that going a the touch at But some hardware something hockey move converted been Got point I more. pretty going obvious because XX to be we wonder on a it’s but stick you that’s a software come whatever I customers a that steady a should that refresh point. the up refresh a to the either got cloud

that timeframes, maintenance of out, years for acceleration paying think have on-premise from move would that to about J about of think idea were to you years five customers out, on that sort some cloud? where think and you is If curve about how do are like you you happens ten existing that

Anton Chilton

capabilities and both are think sales as generation we I that and in well installed as the are force business. as doing we our the new increasing base, lead yes, So,

looks around we installed fact, have specifically up lead In in that team a conversions. set have we the at that base generation

and be catalysts burning into will more effort very one platforms from people around conversions heavily. putting more hardware We on-premise. converting away those. very, of we could and So, for different pushing see a the number be of Certainly, support

competitors where technology has on the models on common and management with Another leveraging And a operating getting folks change versus factor and some their necessarily of really and systems competitive some up that conversely the the been lightest running. on current side, will to migration IT path a there the drive to the end keeping of and are bringing some versions focused think in see the offering and we focus of stuff. isn’t life technology new then, we business business that

big in spaces. we see both runway So, really those

Bhavan Suri

One you. they for job And numbers. quarter the Thank are replacements on big sort Any last me. this billing guys? one of who and nice

Anton Chilton

Yes, consolidate highlighted one the provider Pam continuing to from that’s platform. I away to its on to the ERP think so, customer and – to continue QAD legacy move

The indeed organization too. is one other away competitors of referred have from adopting moving of our French and and biggest one shown the as to QAD signs the you platform they more

So, for there ones us. significant yes, of definitely a couple

Pam Lopker

have are paid previously that of Those over so. companies SAP worldwide both committed platform, to an kind

Bhavan Suri

Thanks a lot.

Anton Chilton

Thank you.

Operator

our from Brad come will you. next Stifel. ahead. at Please Thank go question And Ryback

Brad Ryback

little I I Thanks confused. very am Great. much. guess a

outside of of the environment, back half overall impacting Given many why that there are reduce issues take year? subscription opportunity Thanks. your for to the the expectations demand the not so control

Anton Chilton

more that a QX did of of us around and so, Brad, think that’s little to we’ve deals giving a on. I introduce continues caution slipped that some said close I lead funnel there bit confidence the best had. note the to the and earlier, have quarter is we have deals ever We are and did bookings up grow flow as the so and So,

not all now, a close on eye So, or right guidance. But revise we keeping be magnitude to that. sufficient in will sufficient the for us that’s

Brad Ryback

revenue Thanks. customer Okay. a moves in from adaptive see Thanks. And do customer? switching the what apps, gears, when to of type that you uplift

Anton Chilton

get are the to adaptive the they they access cloud, they So from applications. – in if –

to However, access there now even popular already also in modules get they are earlier additional their in that our lifecycle. proving

is example have production execution that. an that we of module the So

QAD be module to that will expect that enterprise our a And introduced see we applications coming. You purchased of need more applications model is should we of with subscription more advantage of around applications, as on that see more extend to that’s we take and of to lighter have we say the and adaptive those and or more that. platform I subscription versions things through

capabilities subscription the itself a So, chargeable have adaptive platform to that that and around but the won’t money, be move generate we’ll necessarily additional basis. will modules on

Pam Lopker

think several management have to capabilities, instance ties these of there more that and analytics for I think I embedded users. – the are

good typically more moving XX% drive an the med-device about We really approval in users. half of enterprise, in the XX% we capabilities have type into percentage App that are of component if a again about end really, that and at products, look to requisition mobile of Today up users ask employees. area product, it’s QAD specifically of the

built our is we the already releasing So, user we move course, release product our timeframe our the seeing that conference. that on further. of up and on CRM tremendous first are from interest September In goal will platform the even of to be

are really we bigger a of users looking at using percentage our So product. generating

Brad Ryback

very much. Excellent, you thank

Pam Lopker

Thanks.

Anton Chilton

Brad. Thanks,

Operator

with go And we to Please go Zach now Riley. B. Cummins ahead.

Zach Cummins

Thanks for afternoon. taking questions. good Hi, my

in sales well is pretty it the your of marketing hiring expectations. like off in group starting and pace sounds Just with line

this should on there anticipate quarters? are we still some that next trends few quarters? planning in the how doing really Is additional hiring you So, over upcoming the

Anton Chilton

is. there Yes,

we group a ran last quarter in done to we’ve get Santa to Indeed new portion the and it. speed. them of people organization in the up substantial marketing here a and welcome Barbara camp sales So, large

mid July. We are so in another late running of one those - it’s to

to ultimately here. where through start close see we And in to marketing second lead-gen tail kind half of of to off that the out expect to year that’s and leads the So, flow then, results of opportunities there then, another be bunch will deals. people from the will leads sales and to

year. funnel to terms both back of deal towards in the again, end and the expect from visibility a start terms to see that, perspective So,

Zach Cummins

timeline you Understood. in of full new is the that to them on sort to to reps, the productivity? putting regards are get what And

Anton Chilton

we productivity exclude we them expect allowed measure six be philosophies, our us them, in selling for to they doesn’t their with to customer to message way we mean just solutions, that metrics need onboard. first don’t exposure period. after a, but the to the within call it, months let’s productive, So, That internal them the we sales from base and give six else. and training a them the And everything fully then expect be productive month them that,

Zach Cummins

Understood. And final But like customers are done side question to a with in generation of you lead generating sounds new these go close needs your your for to quarters? me, be doing these able the next through really of as deals it the job what you be good coming to really opportunities. mind

Anton Chilton

the and to it’s follow-up execution. obviously Yes,

real deal. rapid marketing convert and that new is the messages ERP the place, stodgy and on the fact to is to to away getting focused the generating the – that’s from and and We to interest kind you more creating we hard incentive those in of creating rightly So, follow-up opportunity for agile. organization a that. that expensive compelling leads put say, and real that’s into like change then and that as to on, all more the going and of more disruption that’s move with people one structure change an the those executives sales into now into It’s ultimately

message really and respond at don’t platform for is for your with come customers are we driving that agile an change prospects wait and door. And the to you it so home on Get that’s quickly. be to allows that ready

just people move. that’s so, pushing And are of the out core to get and that kind to there message try we

Zach Cummins

and Understood. quarters. coming you questions best thank taking in Well, for luck the of my

Anton Chilton

you, Zach. Thank

Operator

Thank does conclude remarks. and today you. That will session to for Anton we for Q&A our turn closing back

Anton Chilton

we you for updating appreciate future. today’s you Okay. our QX results it to Well, and call. We with the in look forward thank everybody

Operator

gentlemen, conference this available Xth. replay p.m. midnight and June for X:XX on will today after Thursday, through Ladies be

X-XXX-XXX-XXXX system for for access X-XXX-XXX-XXXX AT&T our access International and by participation conclude you executive again the dialing today. XXXXXX. Thank using XXXXXX. access your at That Those dial Code AT&T and XXX-XXX-XXXX. time replay XXX-XXX-XXXX, the does conference are any entering may You participants numbers teleconference. for code and

You may now disconnect.

Qad (QADA) 29 May 192020 Q1 Earnings call transcript