A strong increase in service revenue couldn’t mask QAD’s struggles against the flagging economy in its second quarter, the manufacturing ERP specialist’s balance sheet revealed on Thursday.
Riding the benefits of currency fluctuations that accounted for half of its top-line growth, QAD reported an 8% jump in total revenue to $69.5 million for the second quarter of fiscal 2009, which ended July 31. A pillar of that growth was the company’s services offerings, which garnered $23.6 million, 34% higher than the year-earlier $17.6 million. Maintenance sales managed an 8% jump to $34.5 million, but license revenue acted as a counterweight, dropping 23% to $11.4 million from $14.8 million in the like period last year.
The slump contributed to a $1.4 million net loss for QAD, which in the year-earlier period recorded income of $544,000.
While QAD CEO Karl Lopker, on a conference call with analysts yesterday, praised the company’s performance in growing service revenue, he noted, “license revenue and profit building were not where we wanted them to be.”