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 QAD Reports Fiscal 2016 Fourth Quarter and Full Year Financial Results
   Thursday, March 10, 2016 4:05:02 PM ET

QAD Inc. (QADA ) (QADB ), a leading provider of enterprise business software and services for global manufacturing companies, today reported financial results for the fiscal 2016 fourth quarter and full year ended January 31, 2016.

Fiscal 2016 was marked by QAD’s continued transition from an on-premise software provider to a cloud-based software provider. On a constant currency basis, subscription revenue increased by 40 percent over the prior year, and for the first time exceeded license revenue. The company’s subscription margins continued to improve, up 8 percentage points from the prior year, while maintaining industry-leading service level agreements.

Fiscal 2016 total revenue was $277.9 million, compared with $295.1 million last year. Currency had a $19.9 million negative impact on fiscal 2016 revenue. On a constant currency basis, total revenue increased 1 percent over fiscal 2015, while the revenue mix shifted significantly from license to subscription revenue.

Additional fiscal 2016 full year financial results, compared with fiscal 2015 full year financial results, include:

-- Subscription revenue of $38.8 million, versus $28.2 million. Currency had an approximate $900,000 negative impact on subscription revenue.

-- License revenue of $29.9 million, compared with $40.9 million. Currency had an approximate $2.5 million negative impact on license revenue.

-- Professional services revenue of $76.2 million, versus $84.7 million. Currency had an approximate $6.7 million negative impact on professional services revenue.

-- Maintenance and other revenue of $133.0 million, compared with $141.3 million. Currency had an approximate $9.7 million negative impact on maintenance and other revenue.

-- Gross profit for fiscal 2016 was $151.3 million, or 54 percent of total revenue, compared with $163.5 million, or 55 percent of total revenue, last year. Subscription gross profit margin was 47 percent for fiscal 2016, versus 39 percent for fiscal 2015.

-- GAAP net income of $8.9 million, or $0.47 per diluted Class A share and $0.40 per diluted Class B share, compared with $12.9 million, or $0.79 per diluted Class A share and $0.68 per diluted Class B share, for fiscal 2015.

-- Non-GAAP net income (defined as GAAP net income before stock-based compensation expense, amortization of purchased intangible assets, the change in fair value of the interest rate swap and certain income tax adjustments) of $15.6 million, or $0.82 per diluted Class A share and $0.69 per diluted Class B share, compared with $18.5 million, or $1.13 per diluted Class A share and $0.96 per diluted Class B share, for fiscal 2015.

Fiscal 2016 Fourth Quarter Financial Results

For the fiscal 2016 fourth quarter, total revenue was $69.3 million, compared with $79.6 million for the fiscal 2015 fourth quarter. Currency had a $4.1 million negative impact on fiscal 2016 fourth quarter total revenue. On a constant currency basis, total revenue declined 8 percent compared with the prior-year period primarily due to lower license revenue as we transition customers to the cloud, with subscription revenue increasing by 37 percent on a constant currency basis.

Additional fiscal 2016 fourth quarter financial results, compared with fiscal 2015 fourth quarter financial results, include:

-- Subscription revenue of $10.6 million, up from $7.9 million. Currency had an approximate $200,000 negative impact on subscription revenue.

-- License revenue of $8.1 million, compared with $16.7 million. Currency had an approximate $600,000 negative impact on license revenue.

-- Maintenance and other revenue of $32.4 million, compared with $34.1 million. Currency had an approximate $1.8 million negative impact on maintenance and other revenue.

-- Professional services revenue of $18.2 million, versus $20.9 million. Currency had an approximate $1.4 million negative impact on professional services revenue.

-- GAAP net income of $4.1 million, or $0.22 per diluted Class A share and $0.18 per diluted Class B share, compared with $6.9 million, or $0.42 per diluted Class A share and $0.36 per diluted Class B share. Diluted weighted average Class A shares outstanding increased 18 percent year-over-year.

-- Non-GAAP net income of $5.9 million, or $0.31 per diluted Class A share and $0.26 per diluted Class B share, compared with $8.5 million, or $0.51 per diluted Class A share and $0.45 per diluted Class B share.

"We had significant success in our cloud business throughout the year, with a strong finish in the fourth quarter during which we attracted new cloud customers and improved our uptime to more than 99.9 percent," said Karl Lopker, Chief Executive Officer. "The company achieved its highest quarterly number of new cloud customers in its history, while improving subscription margins."

Gross profit for the fiscal 2016 fourth quarter totaled $38.4 million, or 55 percent of total revenue, versus $45.7 million, or 57 percent of total revenue, for the fiscal 2015 fourth quarter.

Total operating expenses amounted to $34.8 million, or 50 percent of total revenue, for the fourth quarter of fiscal 2016, compared with $37.9 million, or 47 percent of total revenue, for the same period last year.

Operating income for the fourth quarter of fiscal 2016 was $3.6 million, which included $1.8 million in stock compensation expense. Operating income for the fourth quarter of fiscal 2015 was $7.7 million, which included $1.2 million in stock compensation expense. The increase in stock compensation expense related primarily to a rise in stock price over time.

QAD’s cash and equivalents balance increased to $137.7 million at January 31, 2016, up from $120.5 million at January 31, 2015. Cash provided by operations was $23.7 million for both fiscal 2016 and fiscal 2015.

Fiscal 2016 Fourth Quarter Operational Highlights:

-- Received orders from 49 customers representing more than $500,000 each in combined license, maintenance, subscription and professional services billings, including 13 orders in excess of $1.0 million;

-- Received license or cloud orders from companies across QAD’s six vertical markets, including: Alcoa, Inc., Arthrex Inc., CoorsTek, Inc., Invacare Corporation, Johnson Controls, Inc., KYB Corporation, Lear Corporation, Li & Fung Group, Moog Inc., Nexteer Automotive, Saint-Gobain SA, Scosche Industries Inc., and Sugar Foods Corporation;

-- Received Frost & Sullivan’s 2015 Global Cloud ERP Automotive Product Leadership Award for the QAD Cloud ERP Automotive Edition;

-- Subsequent to the fourth quarter, Tony Winter, QAD’s Chief Technology Officer, was named CTO of the Year by the 2016 Global Excellence Awards; and

-- Opened registration for 2016 Explore user conference, and announced futurist Jim Carroll, lean manufacturing expert Dr. James Womack and cybersecurity authority Dr. Doug White as headline speakers.

Business Outlook

For the fiscal 2017 year, QAD expects:

-- Total revenue of $279 to $285 million, including $48 to $52 million of subscription revenue.

-- GAAP earnings per share of approximately $0.30 to $0.38 per diluted Class A share and $0.24 to $0.32 per diluted Class B share.

-- Non-GAAP earnings per share of approximately $0.65 to $0.73 per diluted Class A share and $0.53 to $0.61 per diluted Class B share.

For the first quarter of fiscal 2017, QAD expects:

-- Total revenue of $64 to $66 million, including approximately $11 million of subscription revenue.

-- GAAP loss per share of $0.08 to $0.06 per diluted Class A share and $0.07 to $0.05 per diluted Class B share.

-- Non-GAAP earnings per share of $0.00 to $0.02 per diluted Class A and B shares.

Calculation of Earnings Per Share

EPS is reported based on the company’s dual-class share structure, and includes a calculation for both Class A and Class B shares. Since Class A shares have rights to 120% of dividends paid on Class B shares, net income is apportioned so that earnings per share attributable to a Class A share are 120% of earnings per share attributable to a Class B share.

Fiscal 2016 Fourth Quarter Conference Call

When:      Thursday, March 10, 2016
Time:                         2:00 p.m. PT (5:00 p.m. ET)
Phone:                        800-230-1092 (domestic); 612-234-9960 (international)
Replay:                       Accessible through midnight March 17, 2016
                              800-475-6701 (domestic); 320-365-3844 (international); passcode
                              383789
Webcast:                      Accessible at www.qad.com;
                              archive available for approximately one year
                               

Note about Non-GAAP Financial Measures

QAD has disclosed non-GAAP adjusted EBITDA, non-GAAP adjusted EBITDA margins, non-GAAP net income and non-GAAP earnings per diluted share in this press release for the fourth quarter and full fiscal 2016 and 2015 years. These are non-GAAP financial measures as defined by SEC Regulation G. QAD defines the non-GAAP measures as follows:

-- Non-GAAP adjusted EBITDA - EBITDA is GAAP net income before net interest expense, income tax expense, depreciation and amortization. Non-GAAP adjusted EBITDA is EBITDA less stock-based compensation expense and the change in the fair value of the interest rate swap.

-- Non-GAAP adjusted EBITDA margins - Calculated by dividing non-GAAP adjusted EBITDA by total revenue.

-- Non-GAAP net income - GAAP net income before stock-based compensation expense, amortization of purchased intangible assets, the change in fair value of the interest rate swap and certain income tax adjustments.

-- Non-GAAP earnings per diluted share - Non-GAAP net income allocated to Class A and Class B shares divided by the weighted average diluted shares outstanding of each class.

QAD’s management uses non-GAAP measures internally to evaluate the business and believes that presenting non-GAAP measures provides useful information to investors regarding the company’s underlying business trends and performance of the company’s ongoing operations as well as useful metrics for monitoring the company’s performance and evaluating it against industry peers. The non-GAAP financial measures presented should be used in addition to, and in conjunction with, results presented in accordance with GAAP, and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the company’s consolidated financial statements in their entirety and to not rely on any single financial measure in evaluating the company. A table providing a reconciliation of the non-GAAP measures to their most comparable GAAP measures is included at the end of this press release.

QAD non-GAAP measures reflect adjustments based on the following items:

EBITDA: The company reports EBITDA as a non-GAAP metric by excluding the effect of net interest expense, income tax expense, depreciation and amortization from net income because doing so makes internal comparisons to the company’s historical operating results more consistent. In addition, the company believes providing an EBITDA calculation is a more useful comparison of its operating results to the operating results of its peers.

Stock-based compensation expense: The company has excluded the effect of stock-based compensation expense from its non-GAAP adjusted EBITDA, non-GAAP net income and non-GAAP earnings per diluted share calculations. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense which generally requires cash settlement by QAD, and therefore is not used by the company to assess the profitability of its operations. The company also believes the exclusion of stock-based compensation expense provides a more useful comparison of its operating results to the operating results of its peers.

Amortization of purchased intangible assets: The company amortizes purchased intangible assets in connection with its acquisitions. QAD has excluded the effect of amortization of purchased intangible assets, which include purchased technology, customer relationships, trade names and other intangible assets, from its non-GAAP net income and non-GAAP earnings per diluted share calculations, because doing so makes internal comparisons to the company’s historical operating results more consistent. In addition, the company believes excluding amortization of purchased intangible assets provides a more useful comparison of its operating results to the operating results of its peers.

Change in fair value of the interest rate swap: The company entered into an interest rate swap to mitigate its exposure to the variability of one-month LIBOR for its floating rate debt related to the mortgage of its headquarters. QAD has excluded the gain/loss adjustments to record the interest rate swap at fair value from its non-GAAP adjusted EBITDA, non-GAAP net income and non-GAAP earnings per diluted share calculations. The company believes that these fluctuations are not indicative of its operational costs or meaningful in evaluating comparative period results because the company currently has no intention of exiting the debt agreement early; and therefore over the life of the debt the sum of the fair value adjustments will be $0.

Income tax adjustments: Beginning in fiscal 2016, the company began to compute and utilize a fixed long-term projected non-GAAP tax rate in order to provide better consistency across the interim reporting periods by eliminating the effects of non-recurring and period-specific items such as changes in the tax valuation allowance and tax effects of acquisition-related costs, since each of these can vary in size and frequency. When projecting the long-term rate the company evaluated four years of historical and expected results excluding the impact of the following non-cash items: stock-based compensation expense, amortization of purchased intangibles and the change in fair value of the interest rate swap. The projected rate assumes no new acquisitions and takes into account other factors including the current tax structure, existing tax positions in various jurisdictions and key legislation in major jurisdictions where the company operates. The long-term non-GAAP tax rate is 25%. The company intends to re-evaluate this long-term rate on an annual basis or if any significant events that may materially affect this long-term rate occur. This long-term rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix, acquisition activity or fundamental tax law changes in major jurisdictions where the company operates.

About QAD - The Effective Enterprise

QAD Inc. (QADA ) (QADB ) is a leading provider of enterprise software and services designed for global manufacturing companies. For more than 35 years, QAD has provided global manufacturing companies with QAD Enterprise Applications, an enterprise resource planning (ERP) system that supports operational requirements, including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD Enterprise Applications is offered in flexible deployment models in the cloud, on-premise, or in a blended environment. With QAD, customers and partners in the automotive, consumer products, food and beverage, high technology, industrial products and life sciences industries can better align daily operations with their strategic goals to meet their vision of becoming more Effective Enterprises.

For more information about QAD, call +1 805-566-6000, visit www.qad.com.

"QAD" is a registered trademark of QAD Inc. All other products or company names herein may be trademarks of their respective owners.

Note to Investors: This press release contains certain forward-looking statements made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding projections of revenue, income and loss, capital expenditures, plans and objectives of management regarding the Company’s business, future economic performance or any of the assumptions underlying or relating to any of the foregoing. Forward-looking statements are based on the company’s current expectations. Words such as "expects," "believes," "anticipates," "could," "will likely result," "estimates," "intends," "may," "projects," "should," "would," "might," "plan" and variations of these words and similar expressions are intended to identify these forward-looking statements. A number of risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. These risks include, but are not limited to: risks associated with our cloud service offerings, such as defects and disruptions in our services, our ability to properly manage our cloud service offerings, our reliance on third-party hosting and other service providers, and our exposure to liability and loss from security breaches; demand for the company’s products, including cloud service, licenses, services and maintenance; pressure to make concessions on our pricing and changes in our pricing models; protection of our intellectual property; dependence on third-party suppliers and other third-party relationships, such as sales, services and marketing channels; changes in our revenue, earnings, operating expenses and margins; the reliability of our financial forecasts and estimates of the costs and benefits of transactions; the ability to leverage changes in technology; defects in our software products and services; third party opinions about the company; competition in our industry; the ability to recruit and retain key personnel; delays in sales; timely and effective integration of newly acquired businesses; economic conditions in our vertical markets and worldwide; exchange rate fluctuations; and the global political environment. For a more detailed description of the risk factors associated with the company and factors that may affect our forward-looking statements, please refer to the company’s latest Annual Report on Form 10-K and, in particular, the section entitled "Risk Factors" therein, and in other periodic reports the company files with the Securities and Exchange Commission thereafter. Management does not undertake to update these forward-looking statements except as required by law.

 
                                                                                                                                                                                QAD Inc.
                                                                                                                                                               Condensed Consolidated Statements of Income
                                                                                                                                                                  (In thousands, except per share data)
                                                                                                                                                                               (unaudited)
                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                          
                                                                                                                                                   Three Months Ended                                                                                                                             Twelve Months Ended
                                                                                                                                                       January 31,                                                                                                                                    January 31,
                                                                                                 ----------------------------------------------------------------------------------------------------------------                            ---------------------------------------------------------------------------------------------------------------------
                                                                                                                       2016                                                                  2015                                                                   2016                                                                    2015
                                                                                                 -------------------------------------------------                     -------------------------------------------------                     --------------------------------------------------                     -----------------------------------------------------
Revenue:
                     License fees                                                                                   $  8,130                                                              $ 16,686                                                              $  29,891                                                              $     40,917
                     Subscription fees                                                                                10,583                                                                 7,873                                                                 38,806                                                                    28,217
                     Maintenance and other                                                                            32,351                                                                34,070                                                                132,962                                                                   141,295
                     Professional services                                                         18,195                          20,933                           76,193                              84,672  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                          Total revenue                                                               69,259                                                                79,562                                                                277,852                                                                   295,101
Cost of revenue:
                     License                                                                                             896                                                                 1,746                                                                  3,624                                                                     5,016
                     Subscription                                                                                      5,275                                                                 5,017                                                                 20,635                                                                    17,149
                     Maintenance and other                                                                             7,365                                                                 8,167                                                                 30,973                                                                    32,511
                     Professional services                                                         17,295                          18,979                           71,330                              76,954  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                          Total cost of revenue                                    30,831                          33,909                          126,562                             131,630  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Gross profit                                                                                       38,428                          45,653                          151,290                             163,471  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Operating expenses:
                     Sales and marketing                                                                              16,877                                                                19,466                                                                 66,535                                                                    69,785
                     Research and development                                                                          9,797                                                                10,066                                                                 41,237                                                                    42,315
                     General and administrative                                                                        7,970                                                                 8,216                                                                 32,689                                                                    34,680
                     Amortization of intangibles from acquisitions                                    163                             171                              658                                 706  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                          Total operating expenses                                 34,807                          37,919                          141,119                             147,486  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Operating income                                                                                    3,621                           7,734                           10,171                              15,985  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Other (income) expense:
                     Interest income                                                                                     (96 )                                                                 (73 )                                                                 (320 )                                                                    (242 )
                     Interest expense                                                                                    168                                                                   213                                                                    712                                                                       811
                     Other (income) expense, net                                                     (286 )                                             (113 )                                              (757 )                                                 (169 )
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                          Total other (income) expense, net                          (214 )                                               27                             (365 )                                                  400  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Income before income taxes                                                                                             3,835                                                                 7,707                                                                 10,536                                                                    15,585
                     Income tax (benefit) expense                                                    (311 )                                              760                            1,624                               2,639  
                                                                                                 -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Net income                                                                                                          $  4,146                                           $  6,947                                           $   8,912                                           $     12,946  
                                                                                                 ==================== ====== ====================                      ==================== ====== ====================                      ==================== ======= ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                          
Diluted net income per share
                     Class A                                                                                        $   0.22                                                              $   0.42                                                              $    0.47                                                              $       0.79
                     Class B                                                                                        $   0.18                                                              $   0.36                                                              $    0.40                                                              $       0.68
                                                                                                                                                                                                                                                                                                                                          
Diluted Weighted Shares
                     Class A                                                                                          16,272                                                                13,790                                                                 16,224                                                                    13,553
                     Class B                                                                                           3,282                                                                 3,271                                                                  3,283                                                                     3,271
 
                                                                                                      QAD Inc.
                                                                                        Condensed Consolidated Balance Sheets
                                                                                                   (In thousands)
                                                                                                     (unaudited)
                                                                                                      
                                                                                                                                                                                      
                                                                                                             January 31,                                                             January 31,
                                                                                                                2016                                                                    2015
                                                                                         --------------------------------------------------                     -----------------------------------------------------
Assets
  Current assets:
                     Cash and equivalents                                                                   $ 137,731                                                              $    120,526
                     Accounts receivable, net                                                                  65,512                                                                    78,887
                     Deferred tax assets, net                                                                   8,203                                                                     9,313
                     Other current assets                                                   16,024                              14,799  
                                                                                         -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                     Total current assets                                                     227,470                                                                   223,525
                                                                                                                                                                                      
  Property and equipment, net                                                                                  32,080                                                                    33,154
  Capitalized software costs, net                                                                               1,553                                                                     2,485
  Goodwill                                                                                                     10,645                                                                    10,911
  Long-term deferred tax assets, net                                                                           11,085                                                                     7,676
  Other assets, net                                                                          2,746                               3,614  
                                                                                         -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                      
                     Total assets                                                                           $ 285,579                                           $    281,365  
                                                                                         ==================== ======= ====================                      ==================== ========== ====================
                                                                                                                                                                                      
                                                                                                                                                                                      
Liabilities and stockholders’ equity
  Current liabilities:
                     Current portion of long-term debt                                                      $     422                                                              $        406
                     Accounts payable and other current liabilities                                            42,346                                                                    48,637
                     Deferred revenue                                                       97,911                             102,721  
                                                                                         -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                     Total current liabilities                                                140,679                                                                   151,764
                                                                                                                                                                                      
  Long-term debt                                                                                               14,258                                                                    14,680
  Other liabilities                                                                                             4,465                                                                     5,219
                                                                                                                                                                                      
  Stockholders’ equity:
                     Common stock                                                                                  21                                                                        20
                     Additional paid-in capital                                                               195,419                                                                   185,546
                     Treasury stock                                                                           (18,717 )                                                                 (22,977 )
                     Accumulated deficit                                                                      (41,846 )                                                                 (45,469 )
                     Accumulated other comprehensive loss                                   (8,700 )                                               (7,418 )
                                                                                         -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                     Total stockholders’ equity                            126,177                             109,702  
                                                                                         -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                      
                     Total liabilities and stockholders’ equity                                             $ 285,579                                           $    281,365  
                                                                                         ==================== ======= ====================                      ==================== ========== ====================
 
                                                                                                                QAD Inc.
                                                                                             Condensed Consolidated Statements of Cash Flows
                                                                                                             (In thousands)
                                                                                                               (unaudited)
                                                                                                                         
                                                                                                                                                                                                         
                                                                                                                                                                 Twelve Months Ended
                                                                                                                                                                     January 31,
                                                                                                            ----------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   2016                                                                    2015
                                                                                                            --------------------------------------------------                     -----------------------------------------------------
                                                                                                                                                                                                         
Net cash provided by operating activities                                                                                      $  23,652                                           $     23,697  
                                                                                                            -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                         
Cash flows from investing activities:
                         Purchase of property and equipment                                                                       (3,195 )                                                                  (4,568 )
                         Capitalized software costs                                                              (153 )                                                 (311 )
                                                                                                            -------------------- ------- --------------------                      -------------------- ---------- --------------------
Net cash used in investing activities                                                                          (3,348 )                                               (4,879 )
                                                                                                            -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                         
Cash flows from financing activities:
                         Repayments of debt                                                                                         (406 )                                                                    (388 )
                         Tax payments, net of proceeds, related to stock awards                                                   (2,461 )                                                                  (2,557 )
                         Excess tax benefits from share-based payment arrangements                                                   663                                                                       266
                         Payment of contingent liability associated with acquisitions                                               (750 )                                                                    (471 )
                         Cash dividends paid                                                                                      (5,235 )                                                                  (4,452 )
                         Proceeds from issuance of common stock, net of issuance costs                          8,365                              37,046  
                                                                                                            -------------------- ------- --------------------                      -------------------- ---------- --------------------
Net cash provided by financing activities                                                                         176                              29,444  
                                                                                                            -------------------- ------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                         
Effect of exchange rates on cash and equivalents                                                               (3,275 )                                               (3,720 )
                                                                                                            -------------------- ------- --------------------                      -------------------- ---------- --------------------
                         Net increase in cash and equivalents                                                                     17,205                                                                    44,542
                         Cash and equivalents at beginning of period                                          120,526                              75,984  
                                                                                                            -------------------- ------- --------------------                      -------------------- ---------- --------------------
                         Cash and equivalents at end of period                                                                 $ 137,731                                           $    120,526  
                                                                                                            ==================== ======= ====================                      ==================== ========== ====================
 
                                                                                                                                                                          QAD Inc.
                                                                                                                                                    Reconciliation of GAAP to Non-GAAP Financial Measures
                                                                                                                                                            (In thousands, except per share data)
                                                                                                                                                                         (unaudited)
                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                              
                                                                                                                                       Three Months Ended                                                                                                                             Twelve Months Ended
                                                                                                                                           January 31,                                                                                                                                    January 31,
                                                                                     ----------------------------------------------------------------------------------------------------------------                            ---------------------------------------------------------------------------------------------------------------------
                                                                                                           2016                                                                  2015                                                                   2016                                                                    2015
                                                                                     -------------------------------------------------                     -------------------------------------------------                     --------------------------------------------------                     -----------------------------------------------------
                                                                                                                                                                                                                                                                                                                              
Total revenue                                                                                           $ 69,259                                                              $ 79,562                                                              $ 277,852                                                              $    295,101
                                                                                                                                                                                                                                                                                                                              
Net income                                                                                                 4,146                                                                 6,947                                                                  8,912                                                                    12,946
Add back:
                     Net interest expense                                                                     72                                                                   140                                                                    392                                                                       569
                     Depreciation                                                                          1,015                                                                 1,007                                                                  3,968                                                                     3,816
                     Amortization                                                                            444                                                                   468                                                                  1,807                                                                     1,935
                     Income taxes                                                        (311 )                                              760                            1,624                               2,639  
                                                                                     -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
EBITDA                                                                                                  $  5,366                                           $  9,322                                           $  16,703                                           $     21,905  
                                                                                     -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Add back:
                     Non-cash stock-based compensation                                                     1,822                                                                 1,199                                                                  7,440                                                                     4,993
                     Change in fair value of interest rate swap                           212                             556                               48                                 877  
                                                                                     -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Adjusted EBITDA                                                                                         $  7,400                                           $ 11,077                                           $  24,191                                           $     27,775  
                                                                                     -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Adjusted EBITDA margin                                                                                        11 %                                                                  14 %                                                                    9 %                                                                       9 %
                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                              
Non-GAAP net income reconciliation
                                                                                                                                                                                                                                                                                                                              
Net income                                                                                              $  4,146                                                              $  6,947                                                              $   8,912                                                              $     12,946
Add back:
                     Non-cash stock-based compensation                                                     1,822                                                                 1,199                                                                  7,440                                                                     4,993
                     Amortization of purchased intangible assets                                             343                                                                   363                                                                  1,377                                                                     1,493
                     Change in fair value of interest rate swap                                              212                                                                   556                                                                     48                                                                       877
                     Income tax adjustments                                              (594 )                                             (530 )                                            (2,216 )                                               (1,841 )
                                                                                     -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Non-GAAP net income                                                                                     $  5,929                                           $  8,535                                           $  15,561                                           $     18,468  
                                                                                     ==================== ====== ====================                      ==================== ====== ====================                      ==================== ======= ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                              
Non-GAAP earnings per diluted Class A share reconciliation
                                                                                                                                                                                                                                                                                                                              
Earnings per diluted Class A share                                                                      $   0.22                                                              $   0.42                                                              $    0.47                                                              $       0.79
Add back:
                     Non-cash stock-based compensation                                                      0.09                                                                  0.07                                                                   0.39                                                                      0.31
                     Amortization of purchased intangible assets                                            0.02                                                                  0.02                                                                   0.07                                                                      0.09
                     Change in fair value of interest rate swap                                             0.01                                                                  0.03                                                                   0.00                                                                      0.05
                     Income tax adjustments                                             (0.03 )                                            (0.03 )                                             (0.11 )                                                (0.11 )
                                                                                     -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Non-GAAP earnings per diluted Class A share                                                             $   0.31                                           $   0.51                                           $    0.82                                           $       1.13  
                                                                                     ==================== ====== ====================                      ==================== ====== ====================                      ==================== ======= ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                              
Shares used in computing earnings per diluted Class A share                                               16,272                                                                13,790                                                                 16,224                                                                    13,553
                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                              
Non-GAAP earnings per diluted Class B share reconciliation
                                                                                                                                                                                                                                                                                                                              
Earnings per diluted Class B share                                                                      $   0.18                                                              $   0.36                                                              $    0.40                                                              $       0.68
Add back:
                     Non-cash stock-based compensation                                                      0.08                                                                  0.07                                                                   0.33                                                                      0.26
                     Amortization of purchased intangible assets                                            0.02                                                                  0.02                                                                   0.06                                                                      0.08
                     Change in fair value of interest rate swap                                             0.01                                                                  0.03                                                                   0.00                                                                      0.04
                     Income tax adjustments                                             (0.03 )                                            (0.03 )                                             (0.10 )                                                (0.10 )
                                                                                     -------------------- ------ --------------------                      -------------------- ------ --------------------                      -------------------- ------- --------------------                      -------------------- ---------- --------------------
Non-GAAP earnings per diluted Class B share                                                             $   0.26                                           $   0.45                                           $    0.69                                           $       0.96  
                                                                                     ==================== ====== ====================                      ==================== ====== ====================                      ==================== ======= ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                              
Shares used in computing earnings per diluted Class B share                                                3,282                                                                 3,271                                                                  3,283                                                                     3,271

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160310006421r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20160310006421/en/

SOURCE: QAD Inc.

QAD Inc. 
Kara Bellamy 
Chief Accounting Officer 
805-566-6100 
investor@qad.com 
or 
PondelWilkinson Inc. 
Laurie Berman | Matt Sheldon 
310-279-5980 
pwinvestor@pondel.com


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