QAD Inc. (NASDAQ:QADB) Q2 2020 Earnings Conference Call - Final Transcript
Aug 21, 2019 • 05:00 pm ET
Ladies and gentlemen, thank you for standing by, and welcome to the QAD Fiscal 2020 Second Quarter Financial Results Conference Call.
I would now like to turn the conference over to our host, Ms. Kara Bellamy. Please go ahead, ma'am
Kara L. Bellamy
Hello, everyone, and welcome to today's call. Before we begin, I'd like to ensure that everybody understands that our discussion may contain forward-looking statements that are based on certain expectations and analyses. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. QAD undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this call. For a complete description of these risks and uncertainties, please refer to QAD's 10-K and 10-Q filings with the Securities and Exchange Commission. Please also note that during this call, we will be discussing non-GAAP pretax income, which is a non-GAAP financial measure as defined by SEC Regulation G. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is included in today's press release, which is posted on the Company's website.
Now I'll turn the call over to our CEO, Anton Chilton
Thank you, Kara. Good afternoon, and thank you for joining today's call to discuss QAD's fiscal '20 second quarter results. Joining me on the call are Pam Lopker, our President; and Daniel Lender, Chief Financial Officer. Our second quarter saw us hit guidance for subscription and overall revenues, but our results are down over the same period last year, largely due to lower services numbers. The quarter also delivered strong growth in cloud bookings and when combined with our Q1 achievement, beats our previous highest first half bookings results by over 50% in value. With some great competitive wins in the quarter, the record growth in bookings and our cloud sales funnel 37% ahead of the same period last year, we're seeing our sales and marketing investments starting to pay off.
I'll now turn it over to Daniel to discuss the financial results.
Well, thank you, Anton. Second quarter results were essentially in line with our guidance with lower-than-expected services revenue. Subscription revenue came in at the high end of range at nearly $26 million, a new cloud business closed in Q2 was on track with our targets but did not sufficiently exceed them to make up for the Q1 shortfall. For the second quarter, currency negatively impacted total revenue by $1.4 million compared with last year and by $400,000 for the fiscal '20 first quarter. Our bottom line was negatively impacted by $325,000 compared with the prior year and negligible compared with the first quarter.
My discussion today about growth rates are given on a constant currency basis, unless otherwise noted. Second quarter revenue totaled $76.4 million compared with $84.5 million last year, primarily resulting from declines in our professional services business and license sales. While we expected services revenue to decline, the decline was higher than