Qad (QADA) 27 May 212022 Q1 Earnings call transcript

Good day and welcome to the QAD Financial Results for First Quarter Fiscal Year 2022. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Kara Bellamy, Chief Accounting Officer. Please go ahead.

Hello, everyone and welcome to today’s call.

would may ensure are contain certain and I that everybody based begin, expectations discussion our forward-looking analysis. we like that to understands on Before statements that could to those from and subject differ anticipated. are statements results to forward-looking uncertainties Such that cause actual materially risks events call. no reflect to statements obligation the after undertakes or update circumstances QAD forward-looking date these revise to or of this

Please is XX-K release, Securities non-GAAP a these income, complete measure and uncertainties, discussing financial which the Commission. QAD’s company’s description is and to by the with included of comparable defined be risks note this the G. to this is SEC directly and posted a which during most on Regulation filings For refer XX-Q non-GAAP will that call, financial also Exchange measure please GAAP we pre-tax website. of press A today’s reconciliation measure as non-GAAP in

over CEO, turn will our Anton to I Chilton. the Now, call

today’s you and Thank good Kara joining results. quarter ‘XX you, discuss and afternoon, thank QAD’s first fiscal for call everyone to

on Chief Joining Lender, Lopker, President Pam our as are usual Daniel call Officer. and Financial the me

bottom for number. over quarter slightly Our when line growth profitability solid to year, of a and in revenue continues our another XX% perspective long-term ahead a last of the ahead last put same our another subscription performance quarter. guidance guided results, set margins subscription the but good published and march Similarly, with professional year’s from services improvements towards in to of QX contributed of compared us goals

good expands expertise in welcome to latest focused our same Trade execution time. In improve partners over sales a simplify partners we numbers, excited growth will line our our our compliance April. Daniel We will partner on also or lines, our quarter results. those financial a I pleased ever, first and giving head summary, well-known XX% acquisition transportation Foreign revenue ecosystem, solution at and the strong team across in is management with for our to our improved trade XX the financial bookings to made ecosystem the early over and their the around it transportation performance services channel quarter. last significant cloud are world. global In also have duty this to year. from portfolio our the the turn with profitability help of capability, achieved With integrated this and year’s all for strategic customers into were good supporting cloud start to signed and another Zone, to new highest We FTZ details in Having in to space. professional grow and step vision us the discuss represents very growth QAD our a execution quarter. trade now bookings strategy

Well, thank Anton. you,

acquisitions expensing to the We improvement expense and that additional the are purchases. improved have amortization strong and been year. exceeded last across X% very The pleased for quarter, quarter the to was more margins same XX% recent were with our our expectations Subscription XX% an we related from would there except first quarter relating started technology to results, in board. of impact which meaningful, the one-time

fiscal due per forward, implementations, total deliver million XXXX. year’s using the building Currency X with improved strategy our impact quarter fourth approximate revenue subscription the but quarter, impact compared last an quarter to points ability remote margin our we compared amortization on ongoing revenue positive negligible had of partner with network. first and approximately percentage and utilization of expect $XXX,XXX to $X.X of line. of services improved Going XX% Professional in cost ongoing the to

for negligible higher revenue X impacted percentage year, services year’s about impact was Our on result million Currency subscription quarter. from grew fiscal Subscription the quarter, of first also quarter. fiscal XX% first compared had XX% as prior prior to $XXX,XXX ‘XX almost the year $XX.X license the points primarily revenue. $XX.X million up to impacted from Total total but of the last business, now $XXX,XXX movements revenue positively $XX last accounts with million versus and positively prior revenue year and subscription, grew a and for quarter by compared basis. about by with line no a our bottom sequential sequential

X including first customers deals, deals XX including from closed cloud cloud XX from to conversions. ‘XX XX% XX XX%. ago, a And grew fiscal we from new the have customers a more In quarter, for the deals. We conversions. last years new closed and and X-year quarter, for we of X XX% billings new quarter, basis pre-pandemic compared Subscription new X first first over on XX from the fiscal CAGR by quarter ‘XX with year’s same closed

in million a increase Our year, first to year conversions. included million was subscription mainly revenue an maintenance basis, the million a revenue short-term performance XX%. Maintenance the versus deferred for declined cloud fiscal deferred of ‘XX related On $XX.X of year-over-year, ago. quarter balance revenue $XX.X million prior versus $XX.X $XX.X X%

million rates maintenance remain last year’s and XX%. versus quarter $XX.X $XX.X a sequential revenue Professional returned levels historical on services retention excess totaled Our have and to first million basis. in pre-pandemic of million $XX.X for

changes the Currency a consumer due the year’s By subscription Gross future. higher Sales meaningful and XX%; the of North and X%. of XXX quarter totaled services grew License products quarter for or high-tech With America, versus was foreseeable America to by total $XXX,XXX other primarily revenue on million quarter margins $X.X for fiscal and remainder revenue higher XX%. earlier, related professional primarily ‘XX first $XX.X Asia-Pacific, customers, the marketing automotive, up XX%; million or new year’s the XX%; first XX%; first of and $X.X personnel $XX.X million with point life for to continuing compared coming the our basis the expense to margin expenses of related personnel sales from first Latin total revenue last ‘XX and from seats the was and last for primarily services increase revenue XX% accounted quarter, quarter. was modules. year, XX% a first in first headcount. last million the Total for last not XX%; ‘XX revenue for As vertical from for versus and our expense and with expect year-over-year I or do license geography, for efforts existing the increase quarter, million beverage, fiscal industrial, of mentioned margins. XX%; improved year. purchasing XX% higher sciences fiscal accounted the million in $XX.X cloud, equaled to food sales R&D XX% Currency XX%, with remainder costs. improved to $XX $XXX,XXX year increase due ago. EMEA, and to we

now G&A for with first percentage legal was R&D to quarters. to $XX was XX% personnel and was primarily last an million is related related total transaction expense due costs million acquisition. case of compensation, for expense As revenue, $XX.X quarter. fiscal The in that a to increase year’s the quarter higher the infringement expense, concluded, fees, both for IP G&A mostly first stock compared ‘XX mostly

fiscal The operating Stock related anticipated, brings was increase, revenue, XX% higher income $XXX,XXX last million an compared last compared million percentage as compensation $X.X for and the totaled was the PSU year. of about to to operating first $XXX,XXX This about achievement. with loss year. quarter of ‘XX ‘XX $X.X fiscal a last for expense with first total quarter As year. G&A XX%

ago. first the compared of a year quarter For GAAP $XXX,XXX fiscal income pre-tax was ‘XX, about about $XXX,XXX with

income $XX.X tax recognized and year’s $XXX compared with for change a expense equivalents, Our non-GAAP same quarter last last with quarter of $XX.X of quarter, $X operations $XXX Accounts to allowances. end was for million balances to is a April versus our in benefit first was primarily XX, $XX.X with million $X.X million pre-tax XXXX, with first approximately last year. the We year. million the last net in compared of $X.X growth the million ‘XX acquisition time for QX. FTZ compared fiscal in Cash $X.X cash million at $XX.X million ended ‘XX. fiscal year. on first a year tax the quarter, from $X.X at current compared million flow million approximately with related totaled with million swing receivable of valuation inclusive the The in the million a cash paid We

and Our versus versus prior finish $XXX.X with XX first ago. day a sales was days deferred was our year for short-term callback revenue million the method our for outstanding $XXX.X the up April I will balance guidance. XX ‘XX using quarter XX fiscal year the days at million quarter

of income of revenue revenue of fiscal compensation and $X we maintenance the For $X stock-based operating million, subscription quarter of of ‘XX, million, million. second $XX.X expense $XX million, including expect

continue million, million, we of full stock-based million. expect year, maintenance the For income compensation will million, $XX and to operating to turn I including of With subscription fiscal the $XX revenue expense revenue of back call that, you, $XXX Anton. ‘XX of $XXX

Daniel. you, Thank

recall efforts you capability grow that about talked have past lead the in On to customers. we might front, new context the in sales our generation the of

XX for pipeline to number We we of XX in conversions XX in mentioned a count how our customers cloud, this last paying record to a very the that increase am said efforts is past for Alongside cloud the customers few customer have that in work a year, QAD of area have quarter. the the of quarter, growth over welcomed XXX% contributed Daniel happy quarter, deals customers them these with I as on-premises sales the this quarters. same which period new Daniel is also new to discussed off. and report demonstrating of our over our the

of a know the our slightly with last sales the supplies good of our global vertical good We we the of leading said, call. feeling microchip discussed sector. in Industrial in representation automotive to That cloud ahead and continue ongoing of mix Electronics of the the each we are Automotive effects charge markets proportion shortage in see a key

to manufacturers We quarter, as to Coming the recovery, mixed will last lockdown states the perspective, and unforeseen the we are the and year, at starting and quarters, for Canal In can EMEA tough little significant Given improvement of parts in countries entertainment world global often the numbers recent distribution. the inside Asia-Pacific, microchip a a period in unexpected improve in guidance those regions another is forward chain we stages XX-year activity momentum compared vaccine manufacturing of interest profit still PMI believe our underline across with picture few of demand and global although decisions Europe supply off that more visibility DynaSys networks. high, and and the of time. Australia, need and supply and saw the ability demand in reflecting travel outlook. various have set the solutions the their period. supplier resilience focus to to see the From about a continue America operating bookings had events ship our our of profitability, having pandemic and again, while supply the divisions, such All had of business. good an in America respond had going maintained China how three a Precision in that quarters, on Allocation, cloud recent add Latin But drive the Ever pandemic improvement into sales what lingering North Suez we management strong with majority the shortage, This and chains management the over strong to and solid and and another contributed sub-segments in are a geographic quiet to are last to positive for a year. a of to vast still intelligent With the to be make The grounding in of verticals entire helped globally same early the very and in ongoing some of market. across beat for events. be and expenses yet as look there

QX. amortizations to. purchases in going improved of did continue the referred with our the with the That stated consulting of over to some improvements last between and positive quarter acquisition projects, our saw and the the one-time with implementation line said, balanced cloud our model partners we Daniel in improvement margin expense of direct margins do addition margins software nicely now effect we year, forward, over and workforce, long same expect professional While to services a side year’s busy run of goals. good maintained remains business was our last The see

the announced Following discussed on of Zone, April to capabilities our in acquisition help which navigate reducing complexities call, networks. taxes, fees Foreign have Network supply Trade both further the customers chains we the of really events of of fragility of while managing bring, the costs. solutions dependency on from last manage portfolio the Allocation enhancing custom we highlighted they today’s the of supply the duties, and management networks on Recent supply and and and and associated intricacies world-class effectively acquisition the and

With business portfolio. additions and growth excited of Allocation we accelerate about recent to of part FTZ, our the prospects the Network in this are

interest in competitive manufacturing Our and momentum highlight I’d from of manufacturing the that the customers in supply management, couple to And chain the strengths and together also chain a operations serve markets cloud. management deals quarter attract planning to have global like supply growing to in the solutions. continued illustrate with QAD new to cloud

chain dental in services solution, of transportation is to execution that customer our global that have globally products will their of trade back remain while global our empower to supply that for support for solution with combination the of dentistry disparate professionals quality them situation life dental automotive warehouses a of business life sciences supply chain moving objective demand leader marketplace expectations. planning legacy and planning global platform chose meeting supply the planning a integrated unified critical as to away single carriers and primary network a give it patients, and to is process them they and the a and sector, the applications. competitive distribution from move So a ensure they the supplier global to global current In which the global first a to selected of

was global carry seen to North Our their GTT address transport solution needs EMEA, Asia-Pacific application as best all the their and vision management across America. and

un-weighted pipelines pipeline deals. continue time to Our pipeline to compared And sales first and as seeing for acquisition the to levels. that value up Pam Both into present some in XX% be weighted last generation will new at with XX%. means time our hand detail our new increased when quarter year, same continues the Allocation un-weighted by pipeline management develop now at I and demonstrated, strongly the record capabilities. weighted our while on results Network lead what we’re the it translates to supplier momentum over for business and

customers out our like announced execution supplier recently. required Great. that missing talk competitive analyzing, in Thanks, Anton. positioning. to Today, of supplier and in and It’s I the fill acquisitions would acquisitions a comparing also QAD about a QX. provides all offering wonderful strong supplier auctions, – very both chain front generating area, area recommending events, two to new RFQs, was philosophy, we requesting customers supplier to requirements strong quality with has and including acquisition see our awarding Consistent sourcing are offering end help including contracts, Network the this response facilitating onboarding. bids, Allocation supply and that sourcing. with

is and well supply these side, which delivery, base. end-to-end to German Network, as in company Since for and XXXX, of manufacturer as new acquiring and customer we Munich, based Network have AN of in and our supplier demand manage now auctions, a are all its cloud. complete the already invoicing. course, quality, sourcing, with the supplier supply sales, management, a supplier made collaboration a able single the December sales Allocation Germany strong place With chain, interaction, to Allocation is acquisition includes QAD providing

the implemented recent the Foreign and For trade zone software, over operations. and acquisition, projects, Alabama, is recognized Corp. primarily our leader in trade many can most accelerate and see installed expand Back to funnel realize precision and to expand We companies trade companies to acquire to in manner QAD have rapid Thanks. FTZ on Mobile, sole both a global FTZ to develop, strengthens execution in capabilities building headquartered solution customers’ precision X,XXX growth. efficient contract transportation Combining FTZ, globally. deliver enables their zones in Zone consulting the and been Trade it was taxes. free our portfolio United enable bases needed FTZ around manufacturing, FTZ fees to continue ability you, large offering division’s implementations in QAD provides Anton. and duties, savings has our custom our to and with focus cross-selling and the and a to that QAD States. significant smaller on synergies competitive FTZ With the world. companies and capabilities

Thanks you, Pam. for Thank that color.

Okay.

another quarter with looking them So we our remain solid future, our to step the have again goals taken first and about results. towards confident long-term

today’s and in aimed in challenges manufacturers portfolio entire operating growth customer by attractiveness pipeline networks. Our new solving global the the to our solution faced and world continue at companies supplier wins quarter cloud of complex demonstrate

the Tomorrow, supplier had on edition hosted a today’s our has virtual the Following last event of focused of week, complex record generated challenges significant networks. chain specifically the second September, in of supply event in supply QAD offerings. from success interest our last and attendance Event, globally Fort on managing already Stream chain and just The registration we

continues several world, global to activity we at drive growth our XX-year do level with COVID-XX uncertainty PMI around a high as manufacturing in reported While the countries in see earlier.

conversions remain we a close continue But existing and the the now in customers. buzzing eye with new business and as to right things However, sales, on renewals key our vigilant strong stand manufacturing trends published shape call, to and with economy increasingly year feel analysts. business cloud And our progress about positive we year another from drive questions pipeline, we reported goals. as take remain on are of the we Operator, ready ahead. in good our to last keep towards

Bhavan question with come Blair. go ahead. will from today first Our William Instructions] Please [Operator Suri

Anton, the I you events wins. of of that guess, kind sort some the for sort understand those talked you. than the about those or and you’ve Thank things just transparency, them Are Canal, just pipeline? just taking etcetera, because driving discussed for are still to to some my the customer see these or need shortages, of into a it kind sort thanks the we we congrats were early earlier deal? Suez like And of Great. the as these of seeing those the playing of shorten, of even there, start you to seeing some pipeline they that, through and I converting little effects, of worked cycles kind Pam. question, on out of new is sales etcetera closed

majority growth of by Bhavan, we’ve I catalysts the using that we adds funnel something weren’t do each seen bring serve it logistics sort I responses value the closed Yes. visibility them value – But fuel believe this think the so forward, and that planning, those to like underpin automated going and solutions supply did to visibility that as around in manage think to just recent in get would, events. for digital more those of opportunities that those caused help technologies forecasting, that, they happens, and of said, of them sure. do a to too. I our chain That and solutions, time did terms fire the

close customer it. the un-weighted is of really but feel Got like understand rate. now number guidance, if for at at pipeline improving, sales It several And the you look take a pretty wins, And The out you’re you at look right? you it. growth conservative. year-over-year fall cycles improving, which maybe Got seems of pipeline, accounting and quarters massive a demand of new if stuff for doesn’t spectacular, environment the look will had second, you number. I that you is the

are XX% obviously you I’d vis-à-vis dollar how some reconcile I help the are guide understand which basis, thinking a Just the XX%, but conservative of on that basis. amount. un-weighted to those about you growing are guidance, because me bigger Line weighted think on love the a XX% being wins, an conversions, things, with of sort

that might all maybe together in a put for here. Daniel me chime clear Just to little and want

Sure.

the we ago. year a recall a more little you over issued month guidance our as for So Bhavan,

with QX, we think will along, I that if good the confidence those year so to adjust give regards whether need And as the quarter to Obviously, needed. evaluate results that we us numbers. after maybe first progresses

coming of time. Now COVID, cycles are it off is elongated number we a of – during that sales which

set to the sure are to all to want – we convert to normal, and now number to So fact to world into out we’re of meet the again, start seeing account. it’s expectations shorten a take we and starting of that there. the cognizant still we being we isn’t that that make can back but And of yet we those need that

much squeeze were partners. year, move jumping this margins And last months strong, over it. keep obviously, versus how of how services Got really you and to Got might going you of XX think much going it. the through come plays of to Help out. training, bring not out etcetera? so partners, in it terms queue. and the seen Again, envision sort what but next I over over try one implementation, are for the and terms professional playing on education, you have in one back before XX yourselves next the months me you adding us are in in or say in partners how even do back. they of to I that allocate like might how

Bhavan. Sure, Yes.

ability differentiator when competition us. is long-term to get professional remains really quickly services for and implementations for critical yes, to strategy compared So our a the that the done larger that medium to

to want make well. So that to partners to enough in sure influence partnership properly we as work able be manage that capacity with directly our we’ve to always and got that

So there balance. be will that

at a that competitive is seeing to be lower the edge. we just of the critical that’s are really good than but rest grow the And of consulting mass think over we We do that much growing. expect company expansion partners of so to the world. capabilities direct the to of able our rate And time, hence, maintain do around sort we’ve to hit sort and why point

lion’s of should our modest workforce that partners direct partners demand a the you of what take as as growth the short, in services around grows, for to more our QAD of on the for that professional So see more use but expansion work. share expect of is overall continued

taking enough. Fair enough. the my the Thanks candor. for Fair questions. for Thanks Appreciate it.

Bhavan. thanks, Well, Great.

from [Operator with Kevin Instructions] K. ahead. Liu question go come next Company. & Liu will Please Our

good and start fiscal nice here. afternoon year Hi, the to

just you talk in bit little more Are just question looks customers like? that is or as a interested focus you about opportunities seeing deals more First is can a the lot driving for new the of what organizations me as on pipeline more really of many possible? conversion

over I still no, term, a lot of see longer space. we in on-premises So interest think the conversions and the from

to roughly quarter calling, the been favor, just we business to This in last we customers that into years be still happened expect but be new think cloud. that a I customers consistently the converting new to now we’re couple the have the mix XX-XX as skew of over of

at base tail eroded more, point but that course, will some continue. that we’ve we’re expecting Maintenance off to for as Of now, that into see

well. Of course, to has new as for business hold, grow that ratio to

see conversions and to more But customers And coming the to the so same the we on board. will expect at more future. foreseeable for see continue new time, do we too grow

talking sort folks? to there where – that’s Are nature more seeing obviously, into more And Understood. the the pressure as the push their any SAP how lot you sales that into environment customer that base bigger cycles? And pushing Wondering has a you’re pricing is as about of impact to or to you’re anything coming a kind it cloud. – funnel? your making of just get out of talked seeing competitive there relates opportunities

Yes.

with obviously sense capabilities chain those supply solutions interest, that’s our system. that core think integrated as the attracting are good stand-alone our be can and as well I in ERP

that of So cycles some allows ERP. to those compared to an us shorten sales up

the in, that we in SAP, that in that. or are on of once same manufacturers past, seeing and agile global and growing or the we’re of for so have large reimplementation that the competitive are have represent faster been question seeing good. another using in using though, S/XHANA the over nimble landscape, And At we sector, time, that’s it’s seek a still demand that’s – an alternative rollout and for face more perhaps example, and challenge SAP or

the portion cloud, our to And side is business, continue having opportunity, well add is the of months having or your I hey, sort what’s of then bet so your so represented think do chain happened good fuel And than much that last to underlying supply in of will on-premises. too. of cloud both by the the to type the XX safer over that, a that applications run a the that running solutions as as them pandemic in in funnel

the And to continues that so well. as the underscore sort value of of cloud

Great. one any out you anticipate can that acquisition for on if regarding quarterly FTZ, of the wondering And of last a just us you one me, would with help revenue sort incremental or expenses basis?

Kevin. Yes,

that rest start we the to become as offering, also, QAD more we of puts AN have overall And much we as obviously, take As now And into material the that the did see integral to the certainly impact or term, I installed said, really of company. And solutions either growth part with any fabric expect of significant longer base. our competitive. acquisition the expect to those offering FTZ. we more the are incorporating the they into those overall

where So to is of that’s going felt. be the most really impact

Thanks. Thanks for taking the questions.

Sure.

you. Of course. Thank

Matthew come And from Please question ahead. Galinko our next with will Sidoti. go

unusual for my kind Hey, other chip good challenges? affected Can on afternoon. Thanks the taking and of how sectors in touch of shortages questions. is pipeline you by much

as the Texas kind for in one of supply the and they Given, difficult wrestle the have. impact conversations grounding an a also freeze networks, opportunity sector, conversely, like sales related with in event that stuff to of to all is that that automotive another it’s like it directly answer. Ever But issues of say it’s I’d that. those demonstrates the affected chain Yes, supply making certainly the that. say global I’d they short-term small fraction fragility big of

of And in very together gauge. those of solutions. interested by so them, to us difficult of are things them drive for much How all to mount kind more be to sort of one impacted of it’s just these customers directly any

I or Or they pipeline? of do guess, driving to targeting any And Alright. customer that Got acquisitions, do through smaller of there think sort these the then not in it. deals? you is way? bias respect of primarily a you – are a conversions it towards with have Or

opportunity a couple the of is think I So in spots.

an the So cloud. is certainly area so catalyst And it’s then an we and for existing and it’s the first customers, customer, those we it a rest of might all, continue another – QAD to if to customers applications, go push cloud to offering on QAD probably first us be the of for that existing that and as be And opportunity them cloud both QAD opportunity can that we the there. into have, portfolio. one – all, the three, might on-premises it’s get third customers, go expansion that’s to does gets that land then of and of new expand for best-of-breed us on-premises

So we look at us three opportunity good those real areas of for going sort as forward. of all

me takes your and it. portfolio take Got how a to and of it couple bring don’t existing opportunity if operationalized mind do in it you Maybe get to customers? but long to of and you FTZ cross-sell running more, up the acquisition, terms that to expect

Sure.

something of already not We’ve integrate. complex quick. taking past, very, their with to them I It’s that’s think advantage technically in it’s the worked very capabilities.

and expecting to pretty in need not so so of much, little ground work to time. are they do, today. but much capabilities running hit bit And we’re real our the pretty to much A where be

does question this and discussed, partners there it I you announced the quarter. me last impact? think them up is quickly for an new take to get it. And terms and in you were running XX that then Got of having How

Yes.

professional into excuse speed me, of So a if of up get terms versus those – them services, sort of the to services and ones, we selling bit the out little application. professional on in focused longer distribution them the split configuration to

they partners to be can So like, requirements, the supported around of in partner. to time. selling they typically space, that’s the then configure our know X sooner agent months know the And the takes just depending they the on the X is the model by than size sales if of but side then and business them. learning side, the it, requirements And those of that and of start distributors you what much sort on ecosystem can QAD

more in are they to months So really X sort going. the X momentum to of get

you. Thank Great.

welcome. are You

to And any remarks. this back conference Anton over for I’d question-and-answer turn the conclude the like closing will Chilton session. to

concludes joining look thanks, And Well, fiscal forward That we our August today. the for to Okay. of you the updating with us in call. second quarter. everyone, ‘XX results

conference has presentation. today’s attending Thank concluded. for you The now

now disconnect time. may You at lines your this