QAD Inc (QADA) has reported a 40.72 percent plunge in profit for the quarter ended Oct. 31, 2016. The company has earned $1.53 million in the quarter, compared with $2.59 million for the same period last year. On an adjusted basis, net profit for the quarter was $2.98 million, when compared with $4.40 million in the last year period.
Revenue during the quarter went up marginally by 2.20 percent to $69.53 million from $68.04 million in the previous year period. Gross margin for the quarter contracted 197 basis points over the previous year period to 52.46 percent. Total expenses were 96.75 percent of quarterly revenues, up from 94.90 percent for the same period last year. That has resulted in a contraction of 185 basis points in operating margin to 3.25 percent.
Operating income for the quarter was $2.26 million, compared with $3.47 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $5.77 million compared with $6.91 million in the prior year period. At the same time, adjusted EBITDA margin contracted 185 basis points in the quarter to 8.30 percent from 10.15 percent in the last year period.
“QAD’s cloud revenue grew substantially again this quarter, as we benefited from the addition of new cloud customers and growth in our existing customer base, as well as engagements that began earlier in the year,” said Karl Lopker, chief executive officer. “As we anticipated, the increase in cloud activity has driven higher demand for professional services, further enhancing margins and improving financial performance.”
QAD Inc forecasts revenue to be in the range of $277 million to $279 million for fiscal year 2017.
Operating cash flow drops significantly
QAD Inc has generated cash of $5.47 million from operating activities during the nine month period, down 46.18 percent or $4.69 million, when compared with the last year period.
The company has spent $2.28 million cash to meet investing activities during the nine month period as against cash outgo of $2.71 million in the last year period.
The company has spent $6.02 million cash to carry out financing activities during the nine month period as against cash inflow of $0.97 million in the last year period.
Cash and cash equivalents stood at $135.69 million as on Oct. 31, 2016, up 7.16 percent or $9.07 million from $126.62 million on Oct. 31, 2015.
Working capital increases
QAD Inc has recorded an increase in the working capital over the last year. It stood at $88.93 million as at Oct. 31, 2016, up 5.77 percent or $4.85 million from $84.08 million on Oct. 31, 2015. Current ratio was at 1.80 as on Oct. 31, 2016, down from 1.80 on Oct. 31, 2015.
Days sales outstanding went down to 56 days for the quarter compared with 59 days for the same period last year.
Debt comes down marginally
QAD Inc has recorded a decline in total debt over the last one year. It stood at $14.32 million as on Oct. 31, 2016, down 3.13 percent or $0.46 million from $14.78 million on Oct. 31, 2015. Total debt was 5.55 percent of total assets as on Oct. 31, 2016, compared with 5.96 percent on Oct. 31, 2015. Debt to equity ratio was almost stable at 0.11 as on Oct. 31, 2016, when compared with the last year. Interest coverage ratio deteriorated to 13.45 for the quarter from 20.27 for the same period last year.
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