QAD Inc. (NASDAQ:QADB) Q3 2019 Earnings Conference Call - Final Transcript
Nov 26, 2019 • 05:00 pm ET
16% and accounted for 35% of our business for the fiscal 2020 third quarter. On a rolling 12-month basis, our subscription billings grew by 18% with a three-year CAGR of 28%. Subscription margins for the third quarter grew to 65% versus 64% a year ago. For the fourth quarter, we expect subscription margins to remain at similar levels.
Maintenance and other revenues totaled $29.7 million compared with $30.4 million last year. On a performance basis, maintenance and other revenue was down about $220,000 with a decline relating mainly to cloud conversions. Conversions are expected to continue impacting our maintenance revenue line, but as a reminder, the conversion opportunity is generally three times maintenance, which gives us additional growth potential in a higher dollar margin on an ongoing basis.
Professional services revenue was $17.5 million compared with $20.7 million for last year's third quarter. Last year's results included a multi-site global project for personnel augmentation services, which has since been completed. Services margins improved to 6%, up from 1% for last year's third quarter and negative 4% for the fiscal '20 second quarter as a result of ongoing cost saving initiatives. We continue to expect breakeven services margins for the full year. License revenue for the fiscal '20 third quarter was $3.3 million compared with $4.6 million last year. In fiscal '20 period, there were two license deals greater than $300,000, the same as in last year's third quarter.
Total revenue by vertical for the third quarter was automotive 36%, high-tech and industrial 34%, consumer products and food and beverage 15% and life sciences and other 15%. By geography, total revenue was North America 49%, EMEA 29%, Asia Pacific 15%, and Latin America 7%. Gross margin for the third quarter improved to 57% from 53% last year. Sales and marketing expense was $19.8 million or 25% of total revenue versus $18.4 million or 23% of total revenue for last year's third quarter. The increase related primarily to higher headcount.
R&D expense amounted to $13.6 million for fiscal '20 third quarter compared with $13.2 million a year ago. As a percentage of total revenue, R&D expense was 18% this year and 17% last year. General and administrative expense was $9.2 million or 12% of total revenue versus $8.1 million or 10% of total revenue last year. The increase mainly resulted from the movement of certain personnel into G&A from other areas.
Stock compensation expense totaled $2.9 million for the fiscal '20 third quarter and $2.1 million last year. This brings GAAP pre-tax income to $1.5 million compared with $3.6 million for last year's third quarter. Non-GAAP pre-tax income was $4.6 million versus $5.7 million last year. We finished the quarter with approximately $134 million in cash and equivalents compared with approximately $139 million at the end of fiscal '19. Cash flow from operations for the first nine months of fiscal -- of the year was $7.7 million compared with $15.1 million for the same period of last year. Accounts receivable was $39.7