Q3 2021 QAD Inc Earnings Call
Good day and welcome to the Q way de <unk> financial results for third quarter fiscal year 2021, all participants will be in a 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 would now 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.
Such forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated.
<unk> undertakes no obligation to revise or update these forward looking statements to reflect events or circumstances. After the date of this call.
On a 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.
A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is included in today's press release, which is posted on the company's website now I'll turn the call over to our CEO and on shelf. Thanks.
Thank you Karen 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 Pampacancha Al President and Daniel lender Chief Financial Officer.
As we continue to March on on cloud transformation journey I'm delighted to report 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 across 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 earnings underpinned a solid performance across the board.
Our strong competitive position helped call 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 on certainty over the short to medium term future strategies of cash in 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 of the financial results well. Thank you all flow.
We were very pleased with our strong third quarter results, especially in light on that pandemic subscription and maintenance revenue came in ahead of our expectation either.
Even without the currency Tailwinds, we experienced with.
With the outperformance driven mainly by bookings early in the quarter.
Pre tax profit ability improve 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%, while professional services margin to remain positive at 7% driven.
Driven mostly by our strategy of 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 that was 300000 favorable compared with the prior sequential quarter.
We have seen significant fluctuation in currency. So far this year on while 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.
Subscription revenue growth continued to accelerate this quarter and the anticipated total revenue was down as we continue to <unk> our 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.
Actually offset by improvements in subscription revenue.
Subscription revenue grew 24% to 33.8 million and accounted for 44% of our total business for the fiscal <unk> third quarter up nine percentage points from last year's third quarter growth.
I see 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 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 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 to Q4 I.
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 cloud conversions.
Our retention rate from 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 our focus on building our partner network.
We're pleased with the stability of our services margins, which have range between 3% on 7% each quarter of 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 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 improved to 60% approached 57% last year, mainly driven by improved subscription margins and the change in revenue mix.
Sales and marketing expense was 17.4 million or 23% of total revenue versus 19.8 million or 25% of total revenue for last year's third quarter 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% from last years third quarter. The increase in R&D expense, mostly related to higher personnel expense due to higher headcount.
DNA expense amounted to $10.3 million or 13% of total revenue for the third quarter 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.
GAAP pretax income grew to 3.8 million versus one and a half million a year ago and non-GAAP pre tax income was 7.6 million compared with 4.6 million last year.
We ended the third quarter with approximately a 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 increasing 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 items over 31 2020 versus $39.7 million at the same time last year.
And days 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.
From a revenue balances by category include 41.1 million of deferred subscription versus.
Versus $32.8 million, an improvement of 25% force.
The 2.3 million of deferred maintenance versus 47.1 million 2.4 million of deferred professional services versus 1.7 million on a 100000 of defer licenses and other versus 200000.
Our 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 securities 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 will turn the call back to you on the call. 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 nonetheless.
Nonetheless, we had a good sales quarter in terms of cloud bookings.
You might remember on our last call I said, we were set up for a strong finish to the year and would focus on bringing forward deals into our third quarter and we certainly had some success in doing that indeed, those assets helped us achieve that 50% increase over 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 strength to continue to attract new customers to 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.
We're also very pleasing to see our cloud margins improve again in line with our plans and with that margin up to 68% were closing in on our stated margin goal of 70%.
Looking at the quarter geographically North America can again came in with a really strong performance in 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 of the quarter.
Hey Pacific on Latin America had quiets at 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 will 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 further but we've also on covered opportunities will 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.
We're also on the process of a comprehensive review of facilities and office capacity and foresee 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, but thats tempered in the short term by the increasing new cases in the us and Europe on a move back to strict on Lockdowns 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 im on negative impact have increased pressure on maintenance renewals through the last quarter from our retention rates are still above 90%, we keeping a close eye on developments in all renewable assets.
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 unweighted pipeline value almost doubled increasing a very healthy 96%.
Both weighted and non white pipelines are at new record levels with the heavy growth in on weighted 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 and 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 our cloud bookings. Thanks, and time Q3 as you heard from an excellent growth quarter for QHC cloud with 22, new cloud bookings 13 from conversions and nine net new customers while.
While this quarter was more heavily weighted towards conversion. We believe we will continue to hold on a 50 50.
Got between conversions and net new bookings that we have seen historically.
From a client activity price factor all regions contributed to this quarter's bookings from North America, and euro performing exceptionally well.
Industrial and consumer products, President average barnicle, letting bucking auto and life science not far behind so really showing strong sales and 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 from buying a great metric.
South of our customer and how they're faring with our cloud offering this quarter, we continued to see strength and demand for additional modules on users representing approximately one third of our activity.
Looking at the modules that were sold this quarter to existing customers.
Q on math, our enterprise quality management system and principally on.
Trade management, offering did particularly well I.
Give me on telecom color on a couple of those deals.
We on this quarter are you on mass quality management module Wasnt global specialty chemical provider to transportation industrial and consumer markets.
Net sales spikes in turn wholesale price the company realized they needed to implement fully.
Fully integrated polity management solution.
There are multiple divisions and geographies, including document management supplier management and corrective action management.
There are two main objectives were to decrease our cost of parts holiday and to improve the supply chain velocity.
Further deal we ended up replacing a small competitor. The main reason the company chose Q 80, plus because of the energy price to the Q 80, ERP as well as our cloud web based capability for easy access from anywhere from really the true.
Deciding factor, but also integration between inventory and corrective action west, 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 delivering innovative.
Technologies and pharmaceutical services through several well known brands.
Well the onset of Brexit and other recent geopolitical trade issues, they recognize the impact of increasing complexity and therefore on the cost to their operations and lastly, automated they're important process.
Thank you I'd precision important solution management ever changing trade regulations on duty rates adapting daily to geopolitical changes, including embargo on Terra floors, new trade agreements and other changes in this dynamic trading environment, which has been.
Very very extreme as we all know in Alaska, and the last year, but rarely debt for Q Lady helping our customers doing that and really making world sales more access accessible with automation. The company would have to without automation on the company would have 10 dry dramatically close.
Yes.
Increased head count on their global trade team and facing significant increase on broker fees and a half and credit risk to their import operations.
On a situation. We competed against our income that Tom is routers, which was formerly known as integration.
Which was initially favor. However, you I'd precision was selected based on our track record on successful deployments of global trade and transportation on execution solutions and multiple other divisions on the company.
We believe much of our success on the cloud has to do with our enterprise platform.
Customers are interested in cloud if they want to do away with the costs and uncertainty on how seeing there on ERP software, but at the same time, they need to be able to extend ERP income needs our individual competitive advantage.
We need to do it in a way that allows them to take advantage of regular updates.
That's it from me back to you anti thank you Pam.
Okay. So looking to the future we remain confident about our long term goals and indeed, we feel we took another good step towards them.
With all 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 and services perspective, we remain committed to delivering cloud solutions to global manufacturers the support that needs to deal with change uncertainty and disruption on a continuous basis.
On to that point on September 22nd we held our virtual fought stream 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 on their own situations and this is leading to a growing number of conversations about how Q 80, and our 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 lumped balance driving more short term uncertainty from many of our customers. It remains difficult for us to predict the exact effect on our sales and professional services projects for the remainder of this year.
However, as things stand right now with our strong pipeline and 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.
The 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 from 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 of on surgery with William Blair. Please go ahead.
Hey, everybody. Congrats can you hear me okay.
Yes, yes, great.
Great great.
Yeah, we really really nice job.
Both on the quarter.
And then on the on obviously the pipeline.
Just wanted to start off on the pipeline and I'll leave us a little open ended ends on may be for you.
And for Pampa 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. It is awesome I guess, what's driving that on more than doubling on.
Youve added sales resources, but I'd love to understand with things like EPS 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.
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. On average is left just answered how what's driving the pipeline and from 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.
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 all lead generation engine and of course, the majority of that messaging is built around net.
Next generation next generation ERP.
The need to manufacturers have to be able to respond quickly deploy quickly and then.
Manage this system in a dynamic environment and be able to change an updated on update business models as evidenced changes throughout the lifecycle of the ERP and I think more and more people are hearing that message I.
I think that message is helped by.
Yes, IP situation, we've discussed before.
The still the intent of end of life on FCC six there's no migration path to EPS for Hana too.
Two on knowledge, there's still no large global manufacturing.
Company running on EPS will Hana across the board and.
And 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 you know technology platforms on 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 and sales cycles on lengthening or shortening.
We were all fairly optimistic optimistic given the momentum we saw in Q3 and pulling some of those deals earlier that that could continue.
And I think the fundamentals are there to support that except that you know these latest cases spiking in Europe and in the us.
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 from us to predict on the world's 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 and around this right now and so that's helping us on sales cycles too, but for others that still showing some signs of caution.
I think our.
Really debt plays.
Hi, as well the ability to have a full ERP system from manufacturers that Dan, but the ability to extend an extended in a way that allows you to sell up receive updates and your and your extensions go with that total extensions versus customization on.
Versus CP released.
You have to adopt our standard processes on there can be no changes.
No 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 of what people might delay makes sense I guess, the flip side a little bit assets 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 impact it's on the I. I don't know if you are a bit but love to hear that but do you feel.
Could have a change with manufacturers on how they view their growth trajectory is especially in Asia are changing.
And how that might sort of potentially impact timeline and re acceleration of subscription growth.
I guess are you seeing it 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 one to call I'd say just our observation on.
On the market is that.
We're not seeing behavior has changed significantly, but we are hearing more questions about.
US companies in China are on the future of U.S., China relation.
We'd hope that the outlook as Brian on the somewhat but you know.
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.
And talk about what that is in the minute is.
I think it's in both countries interest.
Relations are solid there's a lot of us interest in China, we know that to our customer base and of course as a lot of interest from them from an economic perspective over here. So I think its on everybodys interest to work that out and make the best of it so.
So.
Hopefully more optimistic than we were.
You know timing I'd say medium term.
Yes, I think it's going to take time to work through when 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 assets you know.
As you added to the new executives on the channel on how building that would love to get a sense of his first 90 day, you touched on a little bit, but I love to see you've seen these channel start to drive any deal activity. So obviously on these cases and bring them into deals you provide sort of the professional services.
Accessibility in deals to them, but have you seen any of the the from the peak.
Psi firms.
On to drive the initial deal software is that still on the comp. Thank you.
Thanks, Brian Yes, I'd say on his first 90 days.
Obviously had some involvement on.
Systems integration part and that work.
Although we have had in primarily focus on.
The plans for a sales agent on distribution channels.
We're on that.
That comes often times with services capability.
So we would cover both of 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 is 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 return from the channel.
Back to your question on the systems integrators.
We've had some spots of weather if 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.
More the case that their.
Our 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.
Right. Thanks.
Our next question will come from Steven Chang with Stifel. Please go ahead.
Hi, Thanks for taking my question and congrats again on the great quarter.
I was just wondering like what degree will you see maybe of reinvestment of recent opex savings, especially stemming from the current macro backdrop I know you touched a bit on you said potential future opportunities 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 a more from the change, especially if you said before the TLD levels will be lowered in the future. Thank you.
Yes, sure enough 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 then we're also looking at use of offices and so on so Daniel do on a provided yes I think that.
On the into 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 cycles, we have been able to drive.
On a number of.
Services projects and so forth without.
The need to do all that travel.
With regards to the facility Thats another area that we think that over the long run we will experience. Some some savings is while.
Those cannot be implemented on one take effect right away because you know you need with those need to be timed with when leases.
Come for exploration or 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 is 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 and so forth versus on actual event.
One thing that I would add that is not directly related to expenses is that on the services side.
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 signal.
Significantly faster.
And with that some of the remote.
Deployment that actually increases the speed of deployment on 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 on on that.
On five days a week basis.
So that will also help you know on.
Our overall ability to drive.
No more cloud deployments in a in a faster fashion.
Okay, Great Thats 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.
As 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 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 Q4 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 too well.
You could be waiting for a long time to let's go on driving value now on and some customers responded to that on.
On the other side balancing that we did see some customers that actually has locked down was initiated in Europe and so on delayed some of those decisions and we'd hope to be able to pull them back into Q4 or 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 will that supply chain looks like Mr. Whether they're willing to go faster or they want to go a little bit slower, but it seems to have even this self out at least during our third quarter.
Understood and certainly you guys talk a little bit about some of the extensions within your installed base doing pretty well this quarter are there any specific kind of modules.
Customer set is gravitating towards us in response to what's going on in the broader macro or is it kind of across the board there.
No. We are seeing a few spots so Pat mentioned in his commentary on quality management system and we are seeing any.
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 as we do with all the activity, we see and 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 so on and so.
People are acutely aware now the need to be able to proactively manage that and deal with all of that and deal with.
Almost 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 on 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 expense side earlier.
Some of the areas, where you've identified savings that could perhaps be more permanent post code. It do.
Do you feel like that's going to enable you to either reach your long term target target model goals in a faster timeframe or perhaps get some 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 accelerated a bit this year in terms of where we are where we are in terms of our long term goals. So.
The baseline that we have this year is on.
It's higher than what we had originally planned.
Well at this point in time, we haven't gone to the degree of.
Reevaluating the debt on long term model that we publish.
So those those targets remain remained in place obviously as as you know the situation that 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 from me as well and good luck as you close out your fiscal year.
Great. Thanks, guys.
This concludes our question and answer session I would like to turn the conference back over to assets on 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 from many perspectives.
And we amounts on fourth quarter and full year results them. Thank you very much day safe.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
Thanks.