QAD Inc. (NASDAQ:QADB) Q3 2019 Earnings Conference Call - Final Transcript
Nov 26, 2019 • 05:00 pm ET
All right, thank you. (Operator Instructions) We have a question from Bhavan Suri from William Blair. Please go ahead.
I wanted to touch on the continued trends of cloud customers sort of on the existing base. There's a long runway there for conversions from existing base. You've sort of mentioned it bounces back and forth between new, but I guess the big question I have is, have you seen any change, have you seen an increase maybe in the interest around cloud adoption, the base is still pretty steady eddy? At some point, I think, obviously, we see that sort of inflection happening as people understand the value of the cloud. Just sort of what you're seeing from trends in terms of the conversations, the adoption, the acceptance, the interest, would love to get a little more color there.
Sure. Thanks, Bhavan. Absolutely. So as we said, we expect the deal mix to stay at that kind of 50:50 by value. That said, obviously, we continue to grow the business. And so I would say, as part of that, there is a growing groundswell, if you like, of momentum in the existing base on that shift towards cloud, and that helps us maintain that 50:50 kind of mix. So we're seeing both an increase in new business as well as an increase in interest from customers on the conversion side. And when you put those two things together, that's helping us grow our business overall.
Yes, yes, increase there in the pipeline and the billings number there. I guess you obviously mentioned China as an impact, but love to understand about the customer adoption funnel buildup with Alibaba. Is that too early yet? And if it is, when do you expect it to be sort of a meaningful contributor? Could this offset some of the tariff issues or those two things sort of tied together? Love to get some color on the relationship and how it's progressing and then obviously the offset to the tariffs issue.
Yes. Look, relationship, we're very, very happy with. We have our first customer live in the cloud there, and that's been very, very successful. We're right at the final stages with another existing customer that's looking to move six of their China sites under a large enterprise customer global, but they're looking to move their six Chinese manufacturing operations into the Alibaba Cloud in the near term.
I would say, just the general sentiment in China right now, and there has been an impact on the economy, so things are moving a little bit slower than we would have liked and anticipated originally. But we still are very confident that in the medium term this is a great relationship for us and it's going to drive increased cloud momentum in that China business, but a little bit slower than we had originally anticipated.
Pamela M. Lopker
So we do -- if I could add to that, we did have cloud partnerships in Asia Pacific, not in China. And