QAD, a cloud software company for the manufacturing industry, saw accelerated growth from its subscription services in the final quarter of the fiscal year, providing a bit of a bounce back for the Santa Barbara company.
QAD generated revenue worth $83 million in the final quarter of the fiscal year, which ended Jan. 31. That was 5.5% more than the same quarter a year earlier, according to earnings QAD released March 24.
The growth in revenue was driven by fourth quarter subscription revenue growing 24% year-over-year, from $28.6 million in fiscal year 2019-20 to $35.5 million in the most recent quarter.
“With cloud margins improved yet again reaching 70%, up 3% over the same quarter last year, we’ve hit our stated target and done so ahead of plan,” CEO Anton Chilton said during the company’s earnings call.
Net income rose to $8.2 million in the fourth quarter, up from just $400,000 in the same period a year earlier.
Earnings per share in the fourth quarter were at 39 cents, beating Zacks’ Consensus Estimate’s expectations of 21 cents.
QAD’s stock price closed at $59.61 on March 24, before the earnings release, and rose 7.3% the next day to close at $64.36.
During the fourth quarter, the company said it received orders from 53 customers representing more than $500,000 each in combined subscription, license, maintenance and professional services billings, including 18 orders exceeding $1 million.
For the full year, revenue for QAD was down slightly, from $310.8 million in 2019-20 to $307.9 million in 2020-21.
Revenue in maintenance, license and professional services were all down slightly for the year, but subscription revenue grew 22% to $131.1 million.
That, combined with a concerted effort by QAD to implement a number of cost-saving initiatives, helped the company produce solid financial results, said CFO Daniel Lender.
“We and our customers have adapted quite effectively to engaging remotely during sales cycles and implementations of our solutions,” Lender said during the earnings call.
QAD saw net income of $11 million in 2020-21, compared to a loss of $15 million in the previous fiscal year. Earnings per share were at 53 cents compared to a loss of 49 cents per share last year.
“Given the context at the macro level, we feel our sales performance for the year was strong and we posted our second highest cloud sales result on record,” Chilton said.
Sales for the company’s services are also starting to return back to pre-pandemic figures, according to Chilton.
“It’s been the strongest and so the effect is diminishing more quickly in North America, followed by Europe and then Asia-Pacific and Latin America, which seems to be going at a slightly slower pace,” Chilton said. “But we have seen increased levels of activity in the Asia Pacific region over the last couple of months and so we take that as a positive sign that it is starting to catch up now too.”
Lender also addressed QAD’s recent acquisition of Allocation Network, a provider of supply management solutions based out of Munich, Germany.
“This best-of-breed provider of supplier management solutions really rounds out our capabilities in this area, and it’s hugely complementary to our existing solutions portfolio,” Lender said. “The pandemic and its effect on supply networks has put in sharp relief the need for manufacturers to have robust integrated supplier management capabilities.”
QAD ended the fiscal year with cash and cash equivalents of $142.5 million.