| Abstract: | The manufacturing-focused ERP provider reports a slight increase in sales but swings to a loss, as customers hunker down and defer purchases. |
| Keywords: | QAD quarter, QAS sales, QAD revenue |
ERP software purveyor QAD Inc. on Tuesday reported a sizeable loss in its fiscal 2009 third quarter, and only a slight rise in revenue, all of which executives blame on the economic climate and the negative impact of foreign currency rates.
For the quarter ended Oct. 31st, QAD reported a net loss of $1.8 million, or $0.06 per share on revenue of $67.8 million. While revenue was up 2% over the $66.6 million reported in the fiscal 2008 third quarter, the loss stood in marked contrast to net income of $1.5 million reported in last year’s quarter.
Foreign currency negatively impacted QAD’s revenue by approximately $600,000, officials said. Operating expenses of $37. 1 million — a slight increase over $35.5 million in last year’s third quarter — reflected higher personnel costs and additional expense related to acquisitions, the company said.
Headcount in sales and services was up 8% year-over-year, QAD CEO Karl Lopker said on a conference call to announce the results. And in May, QAD acquired FullTilt, a maker of product information management software.
While the Q3 numbers could not match the performances of quarters past, QAD did grow 9% organically this year, Lopker said, and in the quarter the company received orders from 24 customers that spent more than $500,000 each in combined license, support and services. Five of those orders exceeded $1 million, and one topped $2 million, the company said. But, despite the sizeable deals, some licensing revenue has been deferred due to the effects of the financial crisis.
“There are headwinds associated with the industries we serve,” Lopker told analysts during yesterday’s call. “Manufacturers bear much of the brunt of the financial crisis, especially automotive and durable goods,” he said, which is where QAD maintains a reasonable amount of business. “As the automotive consolidation continues, we are often selected [as the vendor of choice]…but we are watching with interest what is happening at the Big Three automotives.”
Much of QAD’s work going forward will focus on helping the existing customer base — which represents about 76% of its revenue — use technology more efficiently. The company is also focused on upgrading customers to its new .NET user interface (UI), which is customized for roles (shop floor user, field user, Web user, and office user), to improve the user experience.
QAD is also looking to the on-demand versions of its ERP software as a potential source of revenue in the future, particularly for small to medium-sized manufacturers. Today, “there’s not much revenue [from SaaS], but it is becoming a larger part of our funnel,” Lopker said.
In order to brace itself for 2009, QAD will tighten its spending, curbing travel, hiring, and other costs, the company said.
Given the current economic backdrop, QAD now expects revenue in the range of $274 million to $278 million for the full 2009 fiscal year, which would compare to fiscal 2008 total revenue of $262.2 million. Earnings for fiscal 2009 are expected to be between break even and a loss of approximately $0.10 per share.
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