QAD Inc. EBITDA dropped on 71.3% and EBITDA Margin decreased on 2.5 pp from 3.4% to 0.88%
03/21/2018 • About QAD Inc. (
$QADB) • By InTwits
QAD Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 0.9% in FY2018 vs. 3.4% in FY2017 vs. 5.8% in FY2014
- EBITDA Margin is quite volatile: 0.9% in FY2018, 3.4% in FY2017, 5.7% in FY2016, 7.4% in FY2015, 5.8% in FY2014
- QAD Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $736m in 2018, $360m in 2017, $388m in 2016, $88m in 2015, $294m in 2014
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 9.7%. Revenue growth showed acceleration in FY18Q4 - it increased 10.2% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.63 pp from 3.1% to 3.7% in 2018. During the last 5 years EBITDA Margin topped in FY2015 at 7.4% and was declining since that time.
Gross Margin decreased slightly on 1.9 pp from 52.9% to 51.0% in FY2018. Gross Margin followed a declining trend at -1.3 pp per annum in FY2014-FY2018. SG&A as a % of Revenue showed almost no change in FY2018. During the last 5 years SG&A as a % of Revenue bottomed in FY2015 at 35.4% and was growing since that time.
Net Income margin increased on 2.6 pp from -5.6% to -3.0% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.2% in FY2018. CAPEX/Revenue showed almost no change from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 1.2%. The company maintained rich investment policy and has spent a lot to CAPEX (138% of EBITDA). During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2016 at 1.2% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -49.4x and Debt / EBITDA is 5.1x. Debt decreased on 3.1% while cash increased slightly on 1.3%.
QAD Inc. has no short term refinancing risk: cash is higher than short term debt (31,550.0%).
Management team
Daniel Lender is a QAD Inc.'s CFO. Daniel Lender has spent 10 years at the company.
Financial and operational results
FY ended 01/31/2018
QAD Inc. ($QADB) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 266.3 | 295.1 | 277.9 | 278.0 | 305.0 | 9.7% |
| Gross Profit | 149.3 | 163.5 | 151.3 | 147.1 | 155.6 | 5.8% |
| SG&A | 98.0 | 104.5 | 99.2 | 99.5 | 110.6 | 11.1% |
| EBITDA | 15.5 | 21.7 | 16.0 | 9.4 | 2.7 | -71.3% |
| Net Income | 6.4 | 12.9 | 8.9 | -15.5 | -9.1 | |
Balance Sheet
|
|---|
| Cash | 76.0 | 120.5 | 137.7 | 145.1 | 147.0 | 1.3% |
| Short Term Debt | 0.4 | 0.4 | 0.4 | 0.4 | 0.5 | 4.5% |
| Long Term Debt | 15.1 | 14.7 | 14.2 | 13.8 | 13.3 | -3.3% |
Cash flow
|
|---|
| Capex | 4.8 | 4.6 | 3.2 | 3.3 | 3.7 | 13.9% |
Ratios
|
|---|
| Revenue growth | 5.6% | 10.8% | -5.8% | 0.0% | 9.7% | |
| EBITDA growth | -7.9% | 40.5% | -26.6% | -41.0% | -71.3% | |
|
|---|
| Gross Margin | 56.1% | 55.4% | 54.4% | 52.9% | 51.0% | -1.9% |
| EBITDA Margin | 5.8% | 7.4% | 5.7% | 3.4% | 0.9% | -2.5% |
| SG&A, % of revenue | 36.8% | 35.4% | 35.7% | 35.8% | 36.3% | 0.5% |
| Net Income Margin | 2.4% | 4.4% | 3.2% | -5.6% | -3.0% | 2.6% |
| CAPEX, % of revenue | 1.8% | 1.6% | 1.2% | 1.2% | 1.2% | 0.0% |
|
|---|
| ROE | 10.4% | 14.8% | 7.5% | -12.8% | -8.3% | 4.5% |
| Net Debt/EBITDA | -3.9x | -4.8x | -7.7x | -13.9x | -49.4x | -35.5x |
QAD Inc. ($QADB) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 71 | 76 | 77 | 81 | | 9.2% | 8.9% | 10.6% | 10.2% |
| EBITDA | 0 | 2 | 2 | -1 | | | 33.8% | -50.9% | -123.3% |
| Net Income | -3 | -1 | -0 | -5 | | | -219.9% | -110.5% | |
Balance Sheet
|
|---|
| Cash | 153 | 149 | 140 | 147 | | 9.6% | 10.8% | 3.2% | 1.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | 5.1% | 5.3% | 4.5% | 4.5% |
| Long Term Debt | 14 | 14 | 13 | 13 | | -3.0% | -3.1% | -3.2% | -3.3% |
Ratios
|
|---|
| Gross Margin | 51.2% | 51.7% | 50.5% | 50.7% | | 0.3% | -1.3% | -1.9% | -4.5% |
| EBITDA Margin | 0.2% | 2.6% | 2.4% | -1.6% | | 2.5% | 0.5% | -3.0% | -9.3% |
| Net Income Margin | -3.6% | -1.5% | -0.2% | -6.4% | | 0.7% | -2.9% | -2.4% | 14.3% |
Peers in Application Software
Below you can find QAD Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| QAD Inc. ($QADB) | | 10.8% | -5.8% | 0.0% | 9.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.0% |
|---|
| QAD Inc. ($QADB) | 56.1% | 55.4% | 54.4% | 52.9% | 51.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| QAD Inc. ($QADB) | 5.8% | 7.4% | 5.7% | 3.4% | 0.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| QAD Inc. ($QADB) | 1.8% | 1.6% | 1.2% | 1.2% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.3% | -12.2% | -9.5% | -11.0% | -9.3% |
|---|
| QAD Inc. ($QADB) | | | | | |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.2x | -0.9x | -0.9x | -0.8x | -0.6x |
|---|
| QAD Inc. ($QADB) | -3.9x | -4.8x | -7.7x | -13.9x | -49.4x |
