QAD Inc. (Nasdaq:QADI), a global provider of enterprise software
and services, today reported financial results for the fiscal 2011
second quarter ended July 31, 2010.
Total revenue was $51.3 million for the fiscal 2011 second
quarter, compared with $51.3 million for the same period last year.
License revenue equaled $6.5 million, versus $6.7 million for the
fiscal 2010 second quarter. Maintenance and other revenue totaled
$32.0 million, compared with $32.1 million for the second quarter
of fiscal 2010. Services revenue was $12.8 million, versus $12.5
million for last year’s fiscal second quarter.
Net income for the fiscal 2011 second quarter was $0.3 million,
or $0.01 per diluted share, compared with a net loss of $1.4
million, or $0.05 per diluted share, for the fiscal 2010 second
quarter.
“Profitability this quarter reflected gross margin improvements
and continued focus on enhancing operating efficiencies,” said Karl
Lopker, chief executive officer of QAD. “Our On Demand business was
strong, most noticeably in the automotive and life sciences
sectors. Although some companies remain reticent to start new
projects, we believe our newest software launch, QAD Enterprise
Applications 2010, will help drive our business in the future. With
a strong cash position and a solid balance sheet, QAD is well
positioned to meet the demands of global manufacturers.”
Gross margin for the fiscal 2011 second quarter was 58 percent,
compared with 57 percent for the fiscal 2010 second quarter. The
change mainly reflects an improvement in services cost of
revenue.
Total operating expenses were $28.7 million, or 56 percent of
total revenue, for the fiscal 2011 second quarter, versus $31.2
million, or 61 percent of total revenue, for the second quarter of
fiscal 2010.
Operating income for the fiscal 2011 second quarter was $1.1
million, including $1.3 million in stock compensation expense. This
compares with an operating loss of $2.1 million, including $1.3
million in stock compensation expense, for the second quarter of
the prior fiscal year.
For the first half of fiscal 2011, revenue totaled $102.1
million, versus $106.3 million for the first half of fiscal 2010.
Net loss for the first six months of fiscal 2011 was $0.9 million,
or $0.03 per share. This compares with a net loss for the first six
months of fiscal 2010 of $4.1 million, or $0.13 per share.
QAD's cash and equivalents balance grew to $55.8 million at July
31, 2010 from $44.7 million at January 31, 2010. Cash provided by
operations was $0.5 million for the second quarter of fiscal 2011,
versus cash provided by operations of $5.0 million for the second
quarter of fiscal 2010. For the first six months of fiscal 2011,
cash provided by operations was $13.7 million, compared with $12.3
million in the prior year period.
Fiscal 2011 Second Quarter Highlights:
- Received orders from 13
customers representing more than $500,000 each in combined license,
support and services billings, including two orders in excess of
$1.0 million;
- Received license orders from
companies across QAD’s six vertical markets, including, among
others: Alcoa, Inc., Ford Motor Company, Genzyme Corporation,
Imperial Tobacco Group, Jay Electronique, LS Cable Ltd., Renolit
AG, Topcon Europe B.V. and Zodiac SA;
- Launched QAD Enterprise
Applications 2010, the latest edition of the company’s core
enterprise applications suite;
- Introduced Ready Now!, a program
that improves productivity, reduces training time and ensures
greater compliance through the company’s newest .NET user
interface, QAD .NET UI; and
- Began offering a solution for
multi-carrier package tracking and tracing (Precision Package
Exception Management) through the company’s Precision Software
division.
Business Outlook
For the third quarter of fiscal 2011, QAD currently expects
total revenue of approximately $52.0 million and earnings per share
of approximately breakeven.
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 2011 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 800-230-1096. A replay of
the call will be accessible through September 2 by dialing
800-475-6701, access code 165125.
About QAD
QAD is a leading provider of enterprise applications for global
manufacturing companies. 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. Manufacturers of automotive, consumer products, electronics,
food and beverage, industrial and life science products use QAD
applications in more than 90 countries and in as many as 27
languages. 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.
This press release contains certain forward-looking statements
made under the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. 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 2010 ended January 31,
2010.
QAD
Inc. Condensed Consolidated Statements of Operations
(In thousands, except per share data) (unaudited)
Three Months Ended
July 31,
Six Months Ended
July 31,
2010 2009 2010 2009 Revenue: License
fees $ 6,512 $ 6,658 $ 12,958 $ 12,909 Maintenance and other 32,033
32,136 64,085 64,953 Services 12,760 12,516
25,103 28,446 Total revenue
51,305 51,310 102,146 106,308 Cost of revenue: Cost of license fees
1,476 1,769 3,020 3,538 Cost of maintenance, service and other
revenue 20,012 20,457 41,120
44,460 Total cost of revenue 21,488
22,226 44,140 47,998
Gross profit 29,817 29,084 58,006 58,310 Operating expenses:
Sales and marketing 12,183 12,674 25,689 26,563 Research and
development 8,819 9,345 18,146 19,671 General and administrative
7,714 9,011 15,141 16,391 Amortization of intangibles from
acquisitions 13 174 27
347 Total operating expenses 28,729
31,204 59,003 62,972
Operating income (loss) 1,088 (2,120 ) (997 ) (4,662 ) Other
(income) expense: Interest income (111 ) (147 ) (244 ) (308 )
Interest expense 309 324 607 627 Other (income) expense, net
(99 ) (347 ) (122 ) (98 ) Total other (income)
expense 99 (170 ) 241 221
Income (loss) before income taxes 989 (1,950 ) (1,238 )
(4,883 ) Income tax expense (benefit) 674 (525
) (333 ) (793 ) Net income (loss) $ 315 $
(1,425 ) $ (905 ) $ (4,090 ) Basic net income (loss) per
share $ 0.01 $ (0.05 ) $ (0.03 ) $ (0.13 ) Diluted net income
(loss) per share $ 0.01 $ (0.05 ) $ (0.03 ) $ (0.13 ) Basic
weighted shares 31,473 30,897 31,418 30,826 Diluted weighted shares
33,487 30,897 31,418 30,826
QAD Inc. Condensed Consolidated Balance Sheets (In
thousands) (unaudited) July 31, January
31, 2010 2010 Assets Current assets: Cash
and equivalents $ 55,763 $ 44,678 Accounts receivable, net 42,738
61,089 Deferred tax assets, net 3,549 3,548 Other current assets
14,732 13,680
Total current assets
116,782 122,995 Property and equipment, net 35,174 37,219
Capitalized software costs, net 1,269 2,446 Goodwill 6,394 6,348
Long-term deferred tax assets, net 19,759 19,411 Other assets, net
2,541 2,755 Total assets $
181,919 $ 191,174
Liabilities and
stockholders' equity Current liabilities: Current portion of
long-term debt $ 294 $ 285 Accounts payable and other current
liabilities 29,949 32,787 Deferred revenue 79,651
85,745
Total current liabilities
109,894 118,817 Long-term debt 16,291 16,443 Other
liabilities 5,122 6,363 Stockholders' equity: Common stock
35 35 Additional paid-in capital 144,859 143,121 Treasury stock
(30,892 ) (32,275 ) Accumulated deficit (55,206 ) (52,480 )
Accumulated other comprehensive loss (8,184 ) (8,850
)
Total stockholders' equity
50,612 49,551 Total liabilities
and stockholders' equity $ 181,919 $ 191,174
QAD Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
(unaudited) Six Months Ended July 31,
2010 2009 Net cash provided by operating
activities $ 13,693 $ 12,282 Cash flows from investing
activities: Purchase of property and equipment (681 ) (474 )
Capitalized software costs (247 ) (299 ) Acquisitions of
businesses, net of cash acquired - (12 ) Proceeds from sale of
property and equipment 2 41 Net cash
used in investing activities (926 ) (744 ) Cash flows from
financing activities: Repayments of debt (143 ) (130 ) Proceeds
from issuance of common stock 56 14 Tax payments related to net
share settlements of restricted stock awards (226 ) - Changes in
book overdraft - (2,476 ) Dividends paid (1,277 )
(986 ) Net cash used in financing activities (1,590 ) (3,578 )
Effect of exchange rates on cash and equivalents (92
) 1,207 Net increase in cash and equivalents 11,085
9,167 Cash and equivalents at beginning of period 44,678
31,467 Cash and equivalents at end of period $
55,763 $ 40,634
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