Manufacturing enterprise software provider QAD this week announced disappointing, but not surprising, financial results for both its fourth quarter and fiscal year 2009, ended Jan. 31.
Total revenue dropped 21% to $59.3 million from $75.3 million in the fourth quarter of 2008. License revenue showed the biggest falloff; plummeting 54% to $10.2 million from $22.4 million in the like period last year. Services revenue was $16.7 million, versus $19.8 million last year, while maintenance revenue was $32.4 million, compared with $33.1 million a year ago.
On a conference call with analysts Thursday, officials pulled no punches. “Our fourth quarter was even more difficult than we expected,” said QAD Chief Executive Karl Lopker. “The economic crisis spread from the U.S. to include manufacturing firms worldwide, especially those in the automotive supply area.”
The automotive sector normally accounts for approximately one-third of the company’s business.
QAD’s net loss in the fourth quarter was $17.4 million, compared with net income of $5.2 million in the fourth quarter of 2008.
On Feb. 9, the company revised its guidance for fiscal year 2009 from its initial expectation of $274 million to $278 million to $261 million to $263 million. The company slightly beat this revised yearly guidance, with revenue for fiscal 2009 totaling $263.4 million, essentially flat with 2008’s $262.7 million. Net loss for the year was $21.4 million ($0.70 per share), compared with net income of $5.4 million ($0.17 per share) last year.
Lopker said the company was taking steps to “operate as efficiently as possible,” including a 125-person, or 8%, workforce reduction expected to result in annual savings of $14 million.
In addition, QAD officials said that after incurring a $400,000 loss on the cancellation of its annual user conference, the company instead plans to hold a virtual, Internet-based conference in the coming year, as well as a series of live regional conferences.
Declining to provide specific guidance for fiscal 2010, QAD said it will focus primarily on returning to profitability at lower revenue levels. Officials said they expect first-quarter revenue to drop 10% from the fourth quarter.
“The selling environment has been very difficult for both new business and even current projects,” Lopker said. “It’s no surprise that there are few new projects coming up for bid in manufacturing companies, but also some projects that are already started are being delayed or canceled.”