Q3 2021 QAD Inc Earnings Call
Good day and welcome to the Q <unk> financial results for third quarter fiscal year 2021, all participants will be on the listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After todays presentation, there will be an opportunity to ask questions. Please note that this event is being recorded I went on.
I'd like to turn the conference over to Kara Bellamy. Please go ahead ma'am.
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 on analyses.
Such forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated cash.
<unk> undertakes no obligation to revise or update these forward looking statements to reflect events or circumstances. After the date of this call for <unk>.
Complete description of these risks and uncertainties. Please refer to <unk> 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 pre tax income, which is a non-GAAP financial measure as defined by a SIFI regulation G.
A reconciliation of this non-GAAP financial measure for 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 children, Inc.
Your Kara and good afternoon, everyone and thank you for joining todays call to discuss kuwaitis fiscal 21 third quarter results.
Joining me on the call on Pam Lopker Al President and Daniel lender Chief Financial Officer.
As we continue to March on on cloud transformation journey I'm delighted to report a third quarter with good results across all of our strategic focus areas.
This is especially pleasing in the context of the current business climate and the ongoing uncertainty related to the pandemic.
Beating guidance for cross all recurring revenue lines with 24% growth in subscription over the same quarter last year, what particular highlights and when combined with a marked improvement in other things underpinned a solid performance across the board.
Our strong competitive position held for sale sales team delivered another good bookings result, with sales up over 50% by deal value when compared to the prior year quarter.
The investments made in sales and marketing continue to bear fruit as does the focus on improving margins in both the professional services and cloud businesses.
These initiatives together with prudent expense management policies and this continued climate of uncertainty helped build on the solid bottom line performance, we've seen so far through this year.
While the effects of the COVID-19 pandemic carry on driving uncertainty over the short to medium term future strategies just kept the business in good shape and we continue to make good progress towards our long term strategic goals.
I'll now turn it over to Daniel to discuss the details on the financial results well think you're up on.
We're very pleased with our strong third quarter results, especially in light of other pandemic.
Description and maintenance revenue came in ahead of our expectations even.
Even without the currency Tailwinds, we experienced with.
With the outperformance driven mainly by bookings early in the quarter.
Pre tax profit ability improved significantly from both the prior year and prior sequential quarter and subscription revenue grew and we remain focused on continued cost control.
Subscription margins improved three percentage points from last year to 68% for professional services margin remained positive at 7%.
Driven mostly by our strategy on building and utilizing our partner network.
Currency had an approximate 700000 positive effect on total revenue compared with last years third quarter, and a 1.4 million positive impact compared with the second quarter.
The impact on profitability was negligible compared with the prior year, there were 300000 favorable compared with the prior sequential quarter.
We have seen significant fluctuation in currency so far this year on.
Well there was a positive impact this quarter the year to date period reflects a currency headwind with a negative 2.7 may have on impact on total revenue, including 700000 negative impact on subscription revenue.
The volume for revenue growth continued to accelerate this quarter and the anticipated total revenue was down as we continue to make or model transition.
Total revenue for the fiscal 21 third quarter was 76.7 million compared with 77.8 million last year.
Primarily as a result of lower professional services maintenance and license revenue.
Partially offset by improvements in subscription revenue.
It's good for revenue grew 24% to 33.8 million and accounted for 44% for total business for the fiscal <unk> third quarter up nine percentage points for last years third quarter.
Currency movements positively impacted subscription revenue by about 200000 compared to prior year.
On a rolling 12 month basis subscription billings grew by 22% with a three year CAGR of 23%.
During the quarter, we signed 22 cloud deals comprising 13 conversions and nine new customers versus last year's third quarter do you ever for which we signed 25 cloudy else 11 of which were conversions on 14 new.
Subscription bookings for the quarter were 50% higher in value than in the third quarter last year.
Bringing our year to date performance ahead of the prior year.
Compared to prior year quarter, our subscription bookings were significantly weighted towards the early part of the quarter, leading to a higher than expected revenue inside of Q3.
Compared to last year, the timing of our strong bookings performance would result in a comparable quarter over quarter revenue growth in subscription from Q3 two for a.
Some of that growth is already accounted for inside of Q3.
Maintenance revenue was 27 million for the fiscal 21 third quarter.
The 3 million decline from last year related primarily to cancellations and Clive conversions.
Our retention rate for maintenance.
It's still in excess of 90%, although some of our customers have been impacted by the pandemic and therefore, we've seen some increase in maintenance cancellations or maintenance revenue reductions compared to the prior year.
Professional services revenue totaled 14.2 million compared with 17, and a half million for last year's third quarter on a slightly on a sequential basis.
The lower revenue performance was expected and we continue to focus on building our partner network.
We are pleased with the stability of our services margins, which have ranged between 3% on 7% each quarter on fiscal Twentytwenty one.
License revenue for the fiscal 21 third quarter total 1.7 million versus 3.3 million in last year's third quarter life.
License revenue continues to be from existing customers purchasing new users or modules and the current year is impacted by the coordinating pandemic.
As we continue to focus our sales efforts on the cloud we expect license sales to remain low for the foreseeable future.
Total revenue by vertical for the fiscal 21 third quarter, what hi Tech on industrial 35%.
Automotive 33%.
Tumor products and food and beverage, 16% on life Sciences, another 16%.
By geography total revenue was North America, 51%, EMEA, 30% Asia Pacific, 13% on Latin America, 6%.
Gross margin for the third quarter fiscal 21, it improved to 60% up from 57% last year, mainly driven by improved subscription margins and the change in revenue mix.
Sales and marketing expenses was 17.4 million or 23% of total revenue versus 19.8 million or 25% of total revenue for last years third quarter. The majority of the decline was due to reduced travel and severance expense.
R&D expense equaled $14.2 million compared with 13.6 million for last years third quarter.
As a percentage of total revenue R&D was 19% compared with 18% for last years third quarter. The increase in R&D expenses, mostly related to higher personnel expenses due to higher headcount.
DNA expenses amounted to 10.3 million or 13% of total revenue for the third quarter of fiscal putting one compared with 9.2 or 12% of total revenue for last years third quarter. The increase in DNA expense, primarily was due to higher stock compensation and professional fees.
Stock compensation expense total 3.8 million for the fiscal 21 third quarter and 2.9 million last year.
This brings income from operations to $4.1 million compared with $1.4 million last year GAAP.
Non-GAAP pre tax income grew to 3.8 million versus what on a half million a year ago and non-GAAP pretax income was 7.6 million compared with 4.6 million last year.
We ended the third quarter with approximately 143 million in cash and equivalents compared with 137 million at the end of fiscal 20 cash flow from operations for the first nine months of the fiscal 21 totaled 19.2 million compared with $7.9 million for the similar period last year the increase in cash flow from operations.
It's directly related to our improved profitability.
Well some of the cost measures we put in place were precipitated by COVID-19, our focus on cost containment and improve profitability will continue as we transition path dependent Mick.
Accounts receivable was $39.2 million at October 31, 2020 versus 39.7 million at the same time last year.
And day sales outstanding using the Countback method was 44 days for the fiscal 21 October quarter versus 45 days for the pre or for the prior year quarter.
Our short term deferred revenue balance October 31 was 85.8 million versus 81.9 million a year ago debt.
For the revenue balances by category include 41.1 million of deferred subscription versus.
Versus $32.8 million, an improvement of 25% for.
42.3 million of deferred maintenance versus 47.1 million 2.4 million of deferred professional services versus 1.7 million on a 100000 of the for licenses and other versus 200000 on.
Maintenance contracts are billed annually, while subscription contracts can be both either annually on a quarterly.
And consistent with the guidance provided for the fiscal putting on third quarter acuities, providing guidance for subscription and maintenance revenue for the fourth quarter as follows subscription revenue of 35 million and maintenance revenue of 26 million now I'll turn the call back to you on tall. Thank you Daniel.
So with the ongoing challenges presented in the macro environment a high degree of uncertainty on some of our sales cycle remains normal.
Nonetheless, we had a good sales quarter in terms of cloud bookings.
You might remember on last call I said, we were set up for a strong finish for the year and would focus on bringing forward deals into our third quarter and we certainly had some success in doing that indeed, those efforts helped us achieve that 50% increase for our fiscal 23rd quarter I mentioned in the opening remarks.
We saw a good representation of most of our key vertical markets in the cloud sales mix and Pam will be providing some more color on that shortly.
At the headline level, our competitive strengths do continue to attract new customers for the Kuwaiti cloud and that supported the broadly 50, 50 mix of new customers to conditions by deal count for the quarter, which remains consistent with what we've seen historically.
And that we expect to carry on into the foreseeable future.
It was also very pleasing to see our cloud margins improve again in line with our plans for that margin up to 68% for closing in on our stated margin goal of 70%.
Looking at the quarter geographically North America can get again came in with a really strong performance and its cloud business and we also saw good results from our EMEA region, which was especially pleasing in the context of the Lockdowns that were implemented across many of the countries that in the last month for the quarter.
Hey, John Pacific on Latin America had quieter quarters, and we continue to observe a slow pace of business activity in China. It remains unclear. Whether this is a result of COVID-19, all trade relations between the U.S. on China or some combination of the two.
In the professional services side of the business I'll focus on moving more work to upon a community and improving our bottom line have combined to help sustain the positive margin gains we've seen over the past few quarters.
As discussed in prior calls given the uncertain economic outlook, we've kept up a focus on management control of general expenses across the entire business throughout the period of the pandemic.
In doing so we've not only been able to protect many of the investments we've made in our global work force and help improve on profitability for the but Weve also uncovered opportunities to extend deficiencies in our business post the pandemic.
With the success of our remote working practices. For example, we do not anticipate a return to price spend levels and travel.
Were also on the process of a comprehensive review of facilities and office capacity and for see opportunities to reduce expenses in those areas in the future too.
With multiple vaccines now on the horizon, we are increasingly optimistic about the medium to long term prospects for the business. So thats tempered in the short term by the increase in new cases in the U.S. in Europe on a move back to strict to walk downs in many places.
From a vertical market perspective, we continue to observe a mixed picture in almost all segments with some companies faring well on demonstrating a high degree of resilience and others more heavily impacted.
Those customers experience I'm on negative impact have increased pressure on maintenance renewals through the last quarter on our retention rates are still above 90%, we keeping a close eye on developments in our renewal efforts.
Our sales pipeline, though does continue to develop strongly.
Our weighted pipeline at the midpoint in November was up 26% when compared to the same period last year, while I on weighted pipeline volume almost doubled increasing a very healthy 96%.
Both weighted in on why the pipelines are at new record levels with the heavy growth an unweighted, suggesting a good number of early stage deals, indicating a healthy medium to long term sales outlook as a result.
The numbers also provide demonstration that the investments we made in lead generation continue to pay dividends.
Given all of that we remain cautiously optimistic about finished the year strongly on a becoming increasingly optimistic as we look beyond the middle of next year on.
I'll now hand over to Pam for a bit more detail on color on on cloud bookings. Thanks, and on time Q3, as you heard button on the excellent growth quarter for QHC cloud with 22, new cloud bookings 13 from conversions and nine net new customer well.
While this quarter was more heavily weighted towards conversion. We believe we will continue to hold on 50 cents day.
Between conversions and net net bookings that we have seen historically.
From a client activity price after all regions contributed to this quarter's bookings, but North America, and Europe performing exceptionally well.
Industrial and consumer products food and beverage part of call Latam bookings with auto and life science not far behind so really showing strong sales at all of our manufacturing sector.
An area that we like to large since accounts and bookings and new modules and new user. These two areas provide a great metric for this.
Sales of our customer how other fairing with our cloud offering this quarter, we continued to see strengthen demand for additional modules on user representing approximately one third of our activity.
Looking at the modules that were sold this quarter to existing customer you on math, our enterprise quality management system and processes on our trade management offering did particularly well.
Jimmy on call.
Color on a couple of those deals.
We on this quarter for you on mass quality management module, Wasnt global specialty chemical provider to transportation industrial and consumer markets.
Net sales spike to turn on wholesale price.
The company realized they needed to fully.
Fully integrated quality management Solutia on.
There are multiple divisions and geographies, including document management supplier management and corrective action management.
There are two main objectives for two decrease for cost of parts holiday and to improve the supply chain velocity.
For the deal we ended up replacing a small competitor. The main reason the company chose Q 80, less because of the enterprise.
For the Q 80, ERP as well as our cloud web based capability for easy access from anywhere that was for really the two deciding factor, but also integration between inventory and corrective action was particularly appreciated by the customer.
This quarter also included the sale of our trade management system to a large global organization working across many boundaries to leveraging the aveda.
Hi technologies and pharmaceutical services for several well known brands.
Well the onset of Brexit and other recent geopolitical trade issues, they recognize the impact of increasing complexity and therefore, the cost for their operations and lastly, automated they're important process.
Thank you I'd precision important solution management average changing trade regulations on duty rates adapting daily to geopolitical changes, including embargo on Terra floors, new trade agreements on other changes in this dynamic trading environment, which has been.
Very very extreme as we all know in Alaska, and the last year, but barely debt for Q I'd, helping our customers doing that and really making world sales for access accessible with automation. The company would have to without makes on the company would have 10 dry dramatically close.
On increased head count on their global trade team and facing significant increase on broker fees and a half and credit risk to their import operation.
And this situation. We competed against our income Thomas routers, which was formerly known as integration.
It was initially favor however, she lady precision was selected based on our track record on successful deployments of global trade on transportation on execution solutions and multiple other divisions on the company we've.
We believe much of our success on the cloud on how to deal with our enterprise platform customers are interested in cloud if they want to do away with the costs and uncertainty of how sitting there on ERP software, but at the same time, they need to be able to extend ERP income needs our individual competitive advantage day.
I need to do it in a way that allows them to take advantage of regular updates.
That's it for me back to you anti all right. Thank you Pam.
Okay. So looking for the future we remain confident about our long term goals and indeed, we feel we took another good step towards them.
With our results strong sales performance the improvements in the bottom line driven by our strategic focus on cloud margins professional service margins and the ongoing prudent management of operational expenses.
From a product on the services perspective, we remain committed to delivering cloud solutions to global manufacturers to support their needs to deal with change uncertainty and disruption on a continuous basis.
And to that point on September 22nd we held our virtual for extreme event called Q 80 Tomorrow in recognition of the challenges global manufacturers face and being prepared for and ready to deal with whatever it is tomorrow throws at them.
We're excited to have well over 2000 registrations from customers and prospective customers alike and during the event, we launched our diagnostic tool that helps manufacturing enterprises assess where they are on a maturity scale of readiness for adapting to change and on innovating for continued future success.
We've seen a significant number of attendees apply this on line diagnostics for their own situations and this is leading to a growing number of conversations about how Q I'd add on solutions can help them on the journey to being what we call on adaptive manufacturing enterprise.
[noise] with recent cobot, 19 cases, increasing and consequent lockdowns driving more short term uncertainty for many of our customers. It remains difficult for us to predict the exact effect on our sales on professional services projects for the remainder of this year.
However, as things stand right now with a strong pipeline on with global manufacturing PMI climbing to 53 since our last call. We do feel we remain in good shape for driving a solid finish to the year.
In summary, we continue to monitor the key business trends and new business sales cloud conversions on maintenance renewals with existing customers.
With some encouraging news around vaccine availability brightening the outlook for the medium term the continuing rising koby cases in many parts of the world sees our short term priorities remain consistent but.
For health and well being of all supporting our customers and driving sales activity remain our top priorities.
This prudent approach to managing the business has proven to be effective throughout this year and will remain in place to see us through our fourth quarter and at least the early part of next year.
We're encouraged by this quarter's results on the progress we've made towards our long term goals.
Operator, we are ready to take questions from analysts please.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we'll pause momentarily to assemble our roster.
And our first question will come come from both on Suri with William Blair. Please go ahead.
Hey, everybody. Congrats can you hear me okay.
Yes, yes, great.
Great Great yes.
Yeah, we really really nice job.
Both on the quarter.
And then on on obviously the pipeline I guess I wanted to start off on the pipeline and I'll leave this a little open ended on John maybe for you.
And for Pam sort of taking whatever direction you want.
But the weighted pipeline growth as you know whatever 20 plus percent is great.
The doubling of the overall pipeline is awesome I guess, what's driving that on more than doubling obviously, you've added sales resources, but a left on standard for things like cats for Honda end of life like what are you seeing that's driving that the funnel growing so much.
And then I'd love to on sound like are you comfortable with conversion rate do.
Do you think you should think about expanding or extending sort of conversion cycles for you.
Using a shrinkage of that potentially given as people are now saying, okay. We've got slightly on the tunnel. So a couple of questions and I would just love to adjusted how what's driving the pipeline and sort of how you think about the pipeline converting.
Yeah, absolutely thanks for your comments for them.
Yeah. So I'd say, it's a combination of things that are driving the increase in the funnel.
Yes, as we called out over the last 18 months or so you know we made some pretty significant investments in our marketing organization on on a lead generation engine and of course, the majority of that messaging is built around net.
Next generation next generation ERP.
Need the manufacturers have to be able to respond quickly deploy quickly and then a.
Managed the system in a dynamic environment and be able to change in a day that an update business models as evidenced changes throughout the lifecycle of the ERP and I think more and more people are hearing that message.
I think that message is helped by the Sep situation we've discussed before.
The still the intent of end of life on SCC six there's no migration path to EPS for Hannah.
On to our knowledge this still on though to large global manufacturing cash.
Company running on EPS will hand or across the board.
So I think thats, giving them strong headwinds and then of course there was the most recent announcements around some of the the challenges they've gotten the headwinds they face in terms of technology platforms, and all the technology and and getting those converted so I think thats added a bit more fuel to the fire.
Coming back to you know.
It's around conversions on sales cycles on lengthening or shortening.
We were all fairly optimistic optimistic given the other momentum we saw in Q3 and pulling some of those deals earlier that that could continue.
And I think that the fundamentals with that to support that except that you know these latest cases spiking in Europe and in the U.S.
You have the potential I think to to dampen some of that enthusiasm with some of our customers on and lead them to maybe delay so.
Fabio for us to predict when the world is going to get back to normal, but we see that situation of uncertainty continuing at least till this broad availability of the vaccine, which is probably sometime middle of next year towards the end of next year.
So but in the meantime, we'll keep trying to push that we'll keep trying to push the message.
What we do see is more and more customers.
Not waiting for covert to end, but saying Hey, we just got to work with this on around this right now on so that's helping us on sales cycles too, but for other is that still showing some signs of caution.
I think our plan.
Really debt play.
Claims well the ability to have a full ERP system for manufacturers that Dan, but the ability to extend an extended in a way that and does that allows you to sell up receive updates and you're on your extensions go with that so extensions for our son's customization.
For us as it relates to.
You have to adopt our standard processes on there can be no changes to that.
I think I like our message on I think it plays well.
Yes, no no. That's that's really helpful on and I think obviously, a spike on the logic for what people might delay makes sense I guess, the flip side a little bit it is given the global presence on the on the manufacturing base.
As you think about the U.S., China related tensions it's really early but obviously, we've now got potential transition happening the election on potentially a lighter stance on imported goods.
Do you feel.
Hey are you seeing any impacts on the I. I don't know if you are other but love to hear that but do you feel Inc.
Could have a change for manufacturers on how they view their growth trajectory is especially in Asia changing.
And how that might sort of potentially impact timeline and reacceleration of subscription growth.
Okay are you seeing and then I guess even.
Even if you're not do you think that could act like a tailwind.
Late 2021 into 2022.
Right.
Thanks for that and it's a real difficult ones to call I'd say, just our observation of them.
What is that.
We're not seeing behaviors change significantly, but we are hearing more questions about.
US companies in China are on the future of U.S., China relation.
We hope that the outlook is bright in the somewhat but.
We observed that the Chinese government when the first in line to get Biden, the caller I'd say congratulations so.
Hopefully it looks more optimistic I'd say, what drives even more optimism that for the medium term.
Total about what that is and the minute is I think it's in both countries interest.
Relations on solid there's a lot of us interest in China, we know that to our customer base and of course is a lot of interest from them from an economic perspective over here. So I think it's on Everybodys interest to work that out and make the best of it.
So hopefully more optimistic than we were.
You know timing on say medium term debt.
Yes, I think it's going to take time to work through and we don't know what level of priority prioritization. The next administration is going to give to that versus other things. So we'll see how that goes.
Yes, it's a tough question one quick.
One quick follow up here just about the partner efforts you know on.
Added to the new executives on the channel on how building that would love to get a sense of his first 90 days you touched on a little bit, but I love to see you've seen these channel start to drive any deal activity. Obviously on these cases you bring on deals you provide sort of the professional services.
Accessibility in deals to them, but have you seen any of the debt the firms.
Hi firms John.
Got to drive the initial deal software is that still on the comp. Thank you.
Thanks provider, yes, I'd say on.
On his first 90 days.
So obviously had some involvement on a GAAP.
Systems integration partner network.
Although weve had been primarily focus on.
The plans for a sales agent on distribution channels around.
Around that.
Comes often times with services capability.
So we would cover both for those.
So right now what we've got is his his initial plans that are laid out in terms of growth. He has been working with each of our regional heads.
To get that plant for a level of granularity through next year and we are in that cycle right now of reviewing and evaluating each of those plans, but our.
Our intention is of course to drive a material improvement in.
Sales for turn from the channel.
Back to your question on the systems integrators.
Yes, we have had some spots of where they have you know introduces two deals and so on.
But that is by far not the norm at this point. It's on so that is an area that we will continue to focus on especially with some of the larger ones on and we're in conversations with.
Some potential partners right, now, where I think that that could be more.
For the case that their.
Their model is leading us to business rather than with.
Offloading business to them, but thats something that were working towards in the future.
Got it Super helpful. Thanks, guys and congratulations as a really solid quarter.
Great. Thanks.
Our next question will come from Steven Chang with Stifel. Please go ahead.
Hi, Thanks for taking my question and congrats again on a great quarter.
I was just wondering like what degree will you see maybe of reinvestment of recent opex savings, especially for stemming from the current macro backdrop I know you touched a bit on you said potential for each ops you need that makes debt extend efficiencies, but maybe perhaps you could expand on that and then also in that vein should we expect any of that.
Hi, just ship spend shift to kind of remain for the longer term or take on more permanent change, especially if you said before the TLD levels will be lowered in the future. Thank you.
Yes sure no for I'll start and then I'll ask Daniel to flesh that out a bit more but yes.
Yes, certainly I think we've learned a lot through the pandemic about how we can operate the business more efficiently than we did in the past from in relation to things like travel expenditure our use of virtual compressing both externally and internally has of course like everyone else ramped up and.
And then we're also looking at use of offices and so on so Daniel you on a provided yes, I think that you know the.
In the short term I think we will see as business.
And general activities go back to you know, what we used to call normal.
I think what's going to happen is we will see some some level of increase with regards to the travel but travel is not going to return to the levels, where we where things were before I think.
We as a company and our customers as well have we've all learned how to be much more effective.
Using a lot of the remote tools. So we've been able to drive sales cycle, we have been able to drive.
On a number of.
Services projects and so forth without Pam.
The need to do all that travel.
With regards to the facility. That's another area that we think that over the long run we will experience. Some some savings is while.
Those cannot be implemented on won't take effect right away because you know you need for those need to be timed with when leases.
Come for exploration or on the ability to reduce some space. We don't believe we're going to be in a situation where everybody operates remotely as you may have seen some companies talk about that I think it's likely going to be a mix, where there will be some use of office space, but not to the degree that is being used today. So I.
There's a number there is also in terms of how do we reach customers.
How much how much of that activity is happening we are using a web tools I until for versus on actual events.
One thing that I would add that is not directly related to expenses that on the services side that we've always been known to be able to deliver our solutions.
At a much faster than the competition and get our customers to get value.
Significantly faster.
And with that for some of the remote.
[music].
Deployment that actually increases the speed of deployment of the application because now you are not wasting time with having consultants travel during the week, but you can actually have people being you know we've been productive working on the engagement or no.
For five days a week basis, so that will also help.
Our overall ability to drive.
No more cloud deployments in the past for fashion.
Okay, Great. That's very helpful. Thanks again.
Sure.
And our and our last question will come from Kevin Liu with Cailloux and company. Please go ahead.
Hi, good afternoon.
First question here just in terms of the 50% growth on the deal that you sold this quarter I was wondering if you could talk a little bit more about just how much of that might have been pent up demand from earlier in the pandemic is folks pause.
For the you guys mentioned not being able to pull in more of the deals this quarter and to that latter point and just are there any specific levers that you guys are able to to pull to drive those deals across the finish line or is it more so just kind of your customers moving along there on timelines.
Right. Thanks, Kevin Yes.
I'd say, it's a mixed picture.
If you think about we've talked that our Q2 bookings were at similar levels to last year's Q2.
Which was a good a good year I'll go quarter I should say.
We focused on pulling deals out of Q for into Q3 to help this year and we were successful in some regard with that.
Yes that was about.
Really switching that messaging from while we're waiting for the pandemic to end two well you could be waiting for a long time to let's go on drive some value now on and some customers responded to that on.
On the other side balancing that we did see some customers that actually as lockdowns initiated in Europe, and so on delayed some of those decisions and we'd hope to be able to pull them back into queue for all early in Q1 next year, but it.
It really is that mix picture, so I'd say it really depends on the companys specific circumstances, what they're making who they're selling it to other supply chain looks like Mr. Whether they're willing to go faster or they want to go a little bit slow up but that seems to have even itself out at least during our third quarter.
Understood and certainly you guys talked a little bit about some of the extensions within your installed base doing pretty well this quarter are there any specific kind of modules.
Your customer set is gravitating towards us in response to what's going on on the bottom macro or is it kind of across the board there.
No. We are seeing a few spots. So Pam mentioned in his commentary a quality management system and we are seeing.
An increasing level of interest in that.
And you know that's that's an area that yes.
We feel pretty optimistic about for the future in terms on good good headroom for growth there.
And then the other side of that is we with all the activity we see in supply chains.
And that's both with individual suppliers and disruptive, but also disruption in supply chains.
Some of that was caused by co bid.
That was built on the back of some of the disruptions we saw around trade on tariffs on us on and so.
People are acutely aware now the need to be able to proactively manage that and deal with all of that on deal with.
Well much real time changes when it comes to terrorists and customers and so on and so that's driving that increased level of interest we see in our global trade and transportation execution module as well as our demand on supply chain planning module. So I'd say those are probably the three highlights of course, we continue to push on so.
While the others, but those are three the contemporary times, a putting in shop early for customers and prospects.
Great and just a follow up on some of the other questions on the operating expenses earlier.
Some of the areas, where you've identified savings that could perhaps be more permanent post because of it.
Total like that's going to enable you to either reach for long term target target model goals and on faster time frame or perhaps gets on margin levels over and above what you guys put out earlier this year.
Yes, I mean, I think I think if anything it's we've we've accelerated a bit this year in terms of where we're where we are in terms of our long term goals. So.
The baseline that we have this year is.
It's higher than what we had originally planned.
Well at this point in time, we haven't gotten to the degree of.
Reevaluating the debt low to remodel that we published.
So those those targets remain remain in place obviously as as you know the situation develops.
Develops if if we do see some.
Additional.
Operating efficiencies that we can implement.
We will for sure.
Be updating that model.
Got it well congrats for me as well and good luck as well is that your fiscal year.
Great. Thanks, guys.
Thanks.
This concludes our question and answer session I would like to turn the conference back over to Anton Chilton for any closing remarks. Please go ahead Sir.
Thank you very much and thank you to everybody for joining US today, we look forward to seeing you in the new year and hopefully, it's a better year for many perspectives.
And we announced our fourth quarter and full year results them. Thank you very much sales.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
Moving.