California-based manufacturing ERP vendor QAD has detailed a solid set of 2019 Q1 results, citing winning several large customer orders as a major highlight of the quarter.
Total revenue for the fiscal 2019 Q1 were $86.2m, which represents a 21% rise over the same period last year. The company says that a 40% rise in subscription revenue year-over-year now has it accounting for 25% of the Q1 figures.
QAD says that some 22 customer orders, with each representing more than $500k each in combined license, subscription, maintenance and professional services revenue, aided the quarter. The company said that out of these orders 8 of them were valued at more than $1m each.
The company says that it received license or cloud orders from customers across its six vertical markets, including: Accelerate Diagnostics Inc., Formfactor, Inc., Freedom Foods, Furukawa Electric Co. Ltd., Johnson Controls, Lemo SA, MiMedx Group Inc., Minth Group Limited, Oerlemans Foods, Panasonic Corporation, Samvardhana Motherson, SEMILAB Zrt., Sonoco Products Company, and Steel Partners Holdings L.P.
“As we continue to add new cloud customers and expand within our existing base, our subscription revenue grew 40 percent and now accounts for one-quarter of total revenue,” said Karl Lopker, Chief Executive Officer of QAD.
“Our outlook for the remainder of the year remains positive as we drive innovation through our offerings, and our customers continue to benefit from a positive manufacturing economy.”
QAD fundamentals are good
If you look further in to the Q1 financials the following stands out:
- Subscription revenue of $21.5 million, compared with $15.3 million.
- Subscription gross margin of 62 percent, a 12-percentage point increase from 50 percent.
- License revenue of $6.3 million, compared with $5.3 million.
- Professional services revenue of $26.9 million, compared with $18.9 million. $1.8 million in the fiscal 2019 first quarter related to additional revenue recognized in compliance with ASC Topic 606 versus the previous standard.
- Maintenance and other revenue of $31.5 million, compared with $31.9 million.
- GAAP pre-tax income of $2.6 million, versus a GAAP pre-tax loss of $2.0 million.
- Non-GAAP pre-tax income of $4.6 million, versus $146,000.
Looking to Q2 2019 the company is expecting a total revenue of $82 to $83m of which it expects $21.8 to $22.3m to come from subscription revenue. If the company then looks to the full 2019 fiscal year QAD expects a revenue of $328 to $332m, with subscription revenue expected to account for $90 to £92m of this. Its GAAP pre-tax income of breakeven to $3m is expected for fiscal 2019.
What does this mean
The Q1 results are not earth shattering, but at a time when ERP vendors are all eager to demonstrate their success in moving on-site customers to a cloud-based model the results are good. QAD is therefore expecting to hold its own in a crowded and competitive marketplace.