Reports Fiscal Q2 '22 Results

QAD (QADA) reported fiscal Q2 ’22 results above our estimates. Total revenue of $84.8 million (+14.5% Y/Y) was ahead of our $83.1 million projection as license, maintenance and professional services revenue all surpassed our forecasts. Subscription revenue of $38.4 million (+23.7% Y/Y) was approximately in line with management’s guidance and our estimate of $38.5 million. Reflecting both higher revenue and a favorable mix, gross margin was nearly 200 basis points above our assumption. Operating expenses ran higher than we modeled as spending on both sales and marketing and general and administrative expenses outpaced our expectations. Regardless, both adjusted EBITDA of $10.2 million (12.0% margin) and non-GAAP EPS of $0.38 beat our estimates of $8.0 million and $0.25, respectively.

Due to QAD’s pending acquisition by Thoma Bravo, no earnings call was held and the company’s prior guidance for FY ’22 was withdrawn. Although we have revised our model to incorporate QAD’s fiscal Q2 results, we have not revisited our prior assumptions. The slight changes to our estimates, which should no longer be relied upon, primarily reflect the higher run rate of recurring revenue exiting Q2. Our price target remains $87.50, matching the acquisition price.

Our report with model and disclosures is available here.