QAD Corporate Overview. August 2018

Transcription

1 QAD Corporate Overview August 2018

2 2 Disclaimer Safe Harbor This presentation includes forward-looking statements about QAD and its business. These statements are subject to risks and uncertainties that may cause actual results and events to differ materially. These risks and uncertainties are detailed in QAD s SEC filings, including the company's latest Annual Report on Form 10-K dated April 13, 2018 and in particular the section titled Risk Factors therein and other periodic reports the company files with the Securities and Exchange Commission thereafter. This presentation contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ( GAAP ) in that they exclude unusual or non-recurring charges, losses, credits or gains. This presentation identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-gaap financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company s business results by investors. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-gaap financial measures presented by other companies. The following is intended to outline QAD s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD s products remains at the sole discretion of QAD. QAD undertakes no obligation to update forward-looking statements.

3 3 About QAD Established 1979 Revenue $305M FY18 Global Presence Offices in 18 Countries Employees 1,850 + Sites Users 4, ,000 + Stock NASDAQ IPO 1997 QADA, QADB QAD provides vertically-focused, missioncritical ERP software for global manufacturing companies AP 15% AP 29% Customers EMEA 29% LA 10% Employees LA 5% EMEA 32% NA 46% NA 34% Automotive Life Sciences High Tech Industrial Consumer Products Food and Beverage

4 4 QAD s Approach to ERP The Effective Enterprise Automotive Life Sciences High Technology Customer Service Supplier Performance Manufacturing Efficiency Manufacturing Schedule Supply Chain Effectiveness Industrial Products Food & Beverage Inventory Effectiveness Asset Utilization Financial Compliance Industry Compliance IT Effectiveness Consumer Products Metrics Best Practices Solutions We strive to help all of our customers to become an Effective Enterprise with every business process working at peak efficiency and perfectly aligned to their strategic goals.

5 5 Global Customer Base Customer Ownership Profile Automotive Consumer Products Food & Beverage High Technology Industrial Products Life Sciences Private Private Equity Public Customers by Vertical Automotive 43% High Tech & Industrial 29% Consumer, Food & Bev. 16% Life Sciences 12% Note: Data as of 4/30/2018

6 QAD Enterprise Cloud 6 About QAD Cloud Global 41 Countries Users 33,000+ Support 24 x 7 & Monitoring Secure SSAE18 (ISO27001) Available > 99.5% Blended On Premise & Cloud QAD Cloud Services 21.6 QAD Cloud Application QAD Cloud Portal TTM Subscription Revenue ($M) We are leaders in the Cloud delivering full-strength Cloud ERP available from anywhere in the world Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Q1 FY19 Global Secure Blended Scalable Proven Available

7 7 QAD Key Differentiators FIT Today & Tomorrow SPEED to Benefit LOWER COST Ecosystem

8 8 QAD Overview Technology & Solutions

9 Technology & Solutions QAD Enterprise Solutions Cloud 33,000+ users On Premise 300,000+ users Blended Cloud & On Premise Enterprise Financials Standard Financials Customer Management Manufacturing Demand & Supply Chain Planning Financial Analysis Management Reporting Multi-GAAP Budgeting Governance, Risk & Compliance Consolidations Allocations Shared Services Credit Management Tax Management General Ledger Multi Currency Accounts Receivable Accounts Payable Banking & Cash Management Cost Management Fixed Assets Enhanced Controls Logistics Sales & Use Tax Connector General Ledger Multi Currency Accounts Receivable Accounts Payable Banking & Cash Management Cost Management Fixed Assets Enhanced Controls Logistics Sales & Use Tax Connector Customer Relationship Management Sales Quotations Sales Orders Sales Analysis Pricing Configurator Customer Self Service Trade Management Product Data Management Manufacturing Planning Manufacturing Execution Lean Advanced Planning & Scheduling Quality Management PRO / PLUS Automated Data Collection Compliance Product Lifecycle Management Production Planning Demand Planning Procurement Planning Distribution Planning Sales & Operations Planning Scalable 5 5,000+ users Global Full International Support Supply Chain Execution Purchasing Supplier Performance Product Line Planning Distribution Requirements Planning Enterprise Operations Planning Consignment Inventory Warehousing Release Management Transportation Management Supply Chain Portal Service & Support Management Service & Support Management Field Service Scheduler Mobile Field Service Enterprise Asset Management Project Accounting Plant & Equipment Maintenance MRO Management Analytics Operational Metrics Reporting Framework Workflow Alerts Business Intelligence Mobile Interoperability Q-Xtend Integrated Customization Toolkit EDI ecommerce Document Management Output Management Process & Performance Performance Monitoring Framework Business Process Management Internationalization Local Regulations Local Business Local Bank Drivers Multi-Currency Multi-Language Multi-Entity Multi-Site Rapid Deployment 9

10 10 Technology & Solutions Precision Software Transportation Management Software DynaSys Demand and Supply Chain Management Software CEBOS Quality Management Software Tracks Shipment Accepts Order Denied Party Check Creates Documents QAD TMS Rates Shipment Consolidates Shipments Selects Carrier Routes Shipment

11 11 Technology & Solutions What is Channel Islands? ARCHITECTURE QAD Enterprise Platform Agile / Rapid Response Technologies USER EXPERIENCE Channel Islands Experience Anywhere, Anytime, on any Device

12 12 Advanced Technologies PRODUCTIZE / INTEGRATE Microservices Browses Automation Visual Screen Extension Modularization Cybersecurity Cloud Low Code / No Code A P I Integration Report Creator Attachments Business Process Management Mobile Personalization Embedded Analytics INNOVATE EDUCATE / EVALUATE Data Lake Industrial IoT Blockchain Edge Computing Robots Digital Twin Machine Learning Additive Manufacturing Artificial Intelligence Robotic Process Automation (RPA) Augmented Reality

13 13 Enterprise Platform A P I Microservices

14 14 Advanced Technologies PRODUCTIZE / INTEGRATE Microservices Browses Automation Visual Screen Extension Modularization Cybersecurity Cloud Low Code / No Code A P I Integration Report Creator Attachments Business Process Management Mobile Personalization Embedded Analytics INNOVATE EDUCATE / EVALUATE Data Lake Industrial IoT Blockchain Edge Computing Robots Digital Twin Machine Learning Additive Manufacturing Artificial Intelligence Robotic Process Automation (RPA) Augmented Reality

15 15 PRODUCTIZE / INTEGRATE Browses Automation Visual Screen Extension Modularization Cybersecurity Cloud Low Code / No Code Integration Report Creator Attachments Business Process Management Mobile Personalization Embedded Analytics

16 16 Advanced Technologies PRODUCTIZE / INTEGRATE Microservices Browses Automation Visual Screen Extension Modularization Cybersecurity Cloud Low Code / No Code A P I Integration Report Creator Attachments Business Process Management Mobile Personalization Embedded Analytics INNOVATE EDUCATE / EVALUATE Data Lake Industrial IoT Blockchain Edge Computing Robots Digital Twin Machine Learning Additive Manufacturing Artificial Intelligence Robotic Process Automation (RPA) Augmented Reality

17 17 INNOVATE Data Lake Industrial IoT Digital Twin Machine Learning

18 18 Advanced Technologies PRODUCTIZE / INTEGRATE Microservices Browses Automation Visual Screen Extension Modularization Cybersecurity Cloud Low Code / No Code A P I Integration Report Creator Attachments Business Process Management Mobile Personalization Embedded Analytics INNOVATE EDUCATE / EVALUATE Data Lake Industrial IoT Blockchain Edge Computing Robots Digital Twin Machine Learning Additive Manufacturing Artificial Intelligence Robotic Process Automation (RPA) Augmented Reality

19 19 EDUCATE / EVALUATE Blockchain Edge Computing Robots Additive Manufacturing Artificial Intelligence Robotic Process Automation (RPA) Augmented Reality

20 20 QAD Overview Financial Summary

21 21 Financial Highlights - Sources of Revenue On Premise TTM Revenue at 4/30/2018 Cloud Licenses Source - New Divisions - New Modules - New Users - New Customers Maintenance - High Retention Subscription 24% License 8% Services 28% Maintenance 40% Services New Implementations Upgrades Subscription Source - Conversions - New Divisions - New Customers - New Users Very sticky

22 22 Scale, Growth and Visibility TTM Subscription Revenue ($M) Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Q1 FY19 TTM Revenue * Recurring 64% Non- Recurring 36% 70% 60% 50% 40% 30% 20% 10% 0% TTM Subscription Gross Margin Long Term Target, 60%+ 59% 47% 49% 41% 37% Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Q1 FY19 TTM Gross Margin * Non- Recurring 14% Recurring 86% * As of 4/30/2018. Recurring includes Subscription and Maintenance revenues. Non-Recurring includes License and Services revenues.

23 QAD s Cloud Opportunities Cloud Sites by Country CLOUD CONVERSIONS Expected ~3x uplift vs. annual maintenance revenue United States 46% Rest of World 33% United Kingdom 6% France 6% Australia 5% China 4% NEW DIVISIONS Planned Rollouts Mergers & Acquisitions New locations Cloud Sites by Vertical NEW CUSTOMERS Legacy ERP Divestitures Greenfield Automotive Parts 28% Consumer, Food & Bev 18% High Tech & Industrial 27% Life Sciences 27% 23

24 24 Significant Cloud Conversion Opportunity $446k Annual Maint $1,463k Annual Cloud Customer Case Study Life Sciences Vertical Customer Since Users 1,800 1,600 1,400 1,200 1, x Annual Uplift Lifetime XX Catalysts 1. Focus on core business and system use optimization, not IT and infrastructure 2. Global and Extended support 24x7x Technical skills gap

25 Cloud Customer Type: New vs Conversion Cloud Customer Deal Types TTM Cloud Revenue 100% 75% 50% 25% New 40% Conversion 60% 0% Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 New Conversion Half of our new quarterly deals are new and half are existing on-premise customers converting to the cloud Conversions result in more upfront revenue since these customers are already using QAD 25

26 Strong Balance Sheet Deferred Revenue ($m) Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Subscription License Service Maintenance Cash & Equivalents ($m) Solid Maintenance base Increasing Subscription Deferred Revenues Subscriptions Growth Billing Cycles - Quarterly v Annually Solid Cash Position 0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 26

27 27 Equity Structure Economic Ownership Voting Structure Share Classes Pam and Karl Lopker 42% Other Shareholders 58% Pam and Karl Lopker 68% Other Shareholders 32% QADB 3,232 (17%) QADA 16,076 (83%) QADB 1 Vote/Share 100% Dividends $0.06/share per quarter QADA 1/20 th Vote/Share 120% Dividends $0.072/share per quarter Basic Shares (K) * Economic and Voting Ownership as of 4/16/2018

28 28 Experienced Leadership Team PAM LOPKER President & Founder DANIEL LENDER CFO KARL LOPKER CEO ANTON CHILTON Global Sales & Services Average QAD Tenure: More than 18 years Prior Experience: CARTER LLOYDS Chief Marketing Officer ED BOCLAIR North America BILL KEESE Global R&D JEAN-CLAUDE WALRAVENS EMEA CHRIS HAGEMAN Global Support STEFAN DE HAAR APAC TONY WINTER Global Technology EUGENIO RIVEROLL Latin America

29 29 A Winning Strategy Focus on the Effective Enterprise Highly satisfied customer base evidenced by 90%+ retention rate Strong vertical focus Industry and regulation-specific functionality and knowledge Broad solution footprint Meeting global and local requirements Fast growing QAD Cloud ERP revenue Cloud, On-Premise, Blended Global Capabilities Focused on customer success: rapid time to deployment

30 30 QAD Inc