In both its fourth quarter and full fiscal year, ERP provider QAD recorded healthy growth in revenue, logging what company officials said were record performances.
For the fiscal 2008 fourth quarter, ended Jan. 31, total revenue increased 13% to $75.3 million, from $66.5 million in the like period last year. License revenue increased 14% to $22.4 million, from $19.7 million in last year's fourth quarter, while revenue from maintenance and other sources rose 7% to $33.1 million. Services revenue, meanwhile, saw the biggest jump, to $19.8 million, from $15.9 million in last year's fourth quarter, an increase of 24%.
Net income improved to $5.2 million ($0.16 per diluted share) in the quarter, up from $3.8 million ($0.12 per diluted share) in Q4 of fiscal 2007, even as QAD saw a rise in operating expenses to $39.5 million, from $35.4 million in the like period last year, due primarily to investments in personnel, officials said.
For the full year, revenue increased 12%, to $262.7 million, from $235.6 million in fiscal 2007. That figure was in line with QAD's original guidance of $254 million to $266 million in revenue, but above subsequent predictions of slower growth. Approximately $13.8 million of the year's total came from acquired products, compared with $3.2 million in the prior year, officials said.
Net income for fiscal 2008 was $5.4 million ($0.17 per diluted share), down from $7.3 million ($0.22 per diluted share) in 2007, due to higher operating expenses, including sales and marketing costs, higher commissions and sales agent fees, and unfavorable foreign exchange rates.
On a conference call with investors last night, QAD CFO Daniel Lender attributed the company's fourth-quarter results to "continued improvements in execution" as well as contributions from businesses acquired in the prior year. Those purchases included Precision Software, a transportation management software vendor, in September 2006, and enterprise asset management (EAM) specialist FBO Systems in November 2006.
Lender said QAD received orders in excess of $500,000 from 38 customers during the quarter. Sixteen of those orders exceeded $1 million, while six totaled more than $2 million and two topped $4 million, the company said.
"We're continuing to gain momentum for the new products we've built and acquired over the past couple of years," QAD CEO Karl Lopker said on Thursday's conference call. "We're especially gaining traction from our transportation management and enterprise asset management modules," he said, adding that interest in the products has come primarily from larger companies, "whose investments are not as affected by the weak economy."
Lopker said that the current economic downturn has not yet had any negative effect on the company, but, in response to an analyst's question, he said QAD will keep a close eye out for signs of weakness in the global manufacturing market, including drops in its sales leads and the total size of its pipeline across geographies and target vertical industries.
Revenue from QAD's new on-demand offerings "continues to increase," Lopker said, with most of the volume coming from individual modules, as opposed to full ERP deployments. The number of customers using the company's Supply Visualization module, for example, has doubled in the past year, Lopker said. Revenue from on-demand products currently accounts for approximately 5% of QAD's total revenue, he said.
QAD president Pam Lopker was optimistic about the general interest in the software-as-a-service products. "I think people are feeling much more comfortable with on-demand applications than they were a few years ago, so we do see that as a good growth driver," she said.
Looking ahead, QAD expects revenue of $63 million to $65 million for its first quarter of fiscal 2009, which will end April 30. For the full year, the company anticipates revenue of $275 million to $285 million.
On the on-premises front, QAD is in the process of rolling out a new enterprise financials package for multinational companies that is built on a services-oriented architecture, officials said.