QAD March 2017 Launch/ MWUG Meeting
QAD Revenue Recognition Solution
Patrick Grace, QAD Solutions Consultant
March 20th 2017
QAD Revenue Recognition Solution
Safe Harbor Statement
This presentation includes forward-looking statements about QAD and its business. These statements
are subject to risks and uncertainties that may cause actual results and events to differ
materially. These risks and uncertainties are detailed in QAD’s SEC filings, including the company's
latest Annual Report on Form 10-K dated April 15, 2016 and in particular the section titled “Risk
Factors” therein and other periodic reports the company files with the Securities and Exchange
Commission thereafter.
This presentation contains certain references to financial measures that have been adjusted to
exclude certain expenses and other specified items. These financial measures differ from
comparable measures calculated and presented in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) in that they exclude unusual or nonrecurring charges, losses, credits or gains. This presentation identifies the specific items excluded
from the comparable GAAP financial measure in the calculation of each non-GAAP financial
measure. Management believes that financial presentations excluding the impact of these items
provide useful supplemental information that is important to a proper understanding of the
Company’s business results by investors. These presentations should not be viewed as a substitute
for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP
financial measures presented by other companies.
The following is intended to outline QAD’s general product direction. It is intended for information
purposes only, and may not be incorporated into any contract. It is not a commitment to deliver
any material, code, functional capabilities, and should not be relied upon in making purchasing
decisions. The development, release, and timing of any features or functional capabilities described
for QAD’s products remains at the sole discretion of QAD.
QAD undertakes no obligation to update forward-looking statements.
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QAD Revenue Recognition Solution
Topics
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QAD Revenue Solution Background
Examples of Impacted Areas
Revenue Module Functionality
Revenue Recognition Challenges Solved
Who Can Benefit and Value
QAD Revenue Recognition Solution
What’s Unique
Release Status
Market Research Update
Potential Future Scenarios
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QAD Revenue Recognition Module
QAD Revenue Module Background
• Existing revenue recognition requirements within
customer base
• Effective date for public entities with annual reporting
periods beginning after December 15, 2017
• ASC 606 / IFRS 15 – Revenue from contracts with
customers
• Revenue recognition can become more
complicated for manufacturing companies
Identify contract
with customer
Identify performance
obligations in
contract
Determine
transaction price
Allocate transaction
price to
performance
obligations
Recognize revenue
when (or as) entity
satisfies performance
obligation
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QAD Revenue Recognition Module
Examples of Impacted Areas
• Interrelated goods & services on same sales
order
- Tooling & Engineering
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Interdependent items on the same sales order
Changing prices during life of an order
Provision of warranty with goods
Sale of goods with:
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L
volume discounts
rebates
financing arrangements
discounted settlement terms
sale or return basis
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QAD Revenue Recognition Solution
Revenue Module Functionality
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Revenue contract creation
Identify and create performance obligations
Pre-defined revenue recognition rules
Support for allocated transaction price
Revenue recognition engine
Detailed sub ledger transactions
Audit trail on contract changes
Management and statutory reporting
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QAD Revenue Recognition Module Introduction
Revenue Recognition Module
• Enterprise Edition only solution
R
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QAD Revenue Recognition Solution
Revenue Recognition Challenges Solved
Business Driver
Customer Pain
Industries
High level overview of most
common business drivers.
What pain does this
cause the customer?
Which industries
does this affect?
Interrelated goods and
services on same contract
Revenue may need to
be recognised only
when all items are
delivered
Auto, LS, CP/ F&B
Sales of goods with discounts Amount & timing of
/ rebates
revenue recognition
may change
Auto, LS, CP/
F&B
Medical bill and hold
practices
Revenue can be
recognised before
delivery to customer
LS
Automotive Tooling and
Engineering charges
Charging customer for Auto
contractually agreed
T&E services
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QAD Revenue Recognition Solution
Who Can Benefit and Value
Who Can Benefit
Value
CEO, CFO
Revenue standard compliance
allows approval of financial
statements by auditors
Revenue Accountant/ Manager
Efficient processing of customer
revenue in accounting system to
agree with new revenue rules
Revenue Official / Administrator
Streamlined processing of revenue
transactions in accounting system
with minimal manual effort
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QAD Revenue Recognition Solution
QAD Revenue Module Benefits
• Risk reduction
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Replace manual processes
Audit trail
Improved visibility
Single vendor
Integrated system
• Reduce cost
- Less expensive than manual processes and 3rd
party solutions
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QAD Revenue Recognition Solution
QAD Revenue Recognition Solution
• Revenue Recognition Assessment
- Services Q-Scan
• Revenue Recognition Module
- Enterprise Edition only
- Embedded in QAD Financials 2017
- Module separately charged
• Revenue Recognition Hub
- Under investigation
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QAD Revenue Recognition Module
Revenue Recognition Hub
• Optional solution for pre-EE customers to use
the Revenue Recognition module
• Ability to integrate to all versions of QAD
and other ERPs
Rev Rec
Hub
Other
ERP
SE
SE
eB2
9.0
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QAD Revenue Recognition Solution
What’s Unique About the Solution?
• Some 3rd party packages have well defined
revenue recognition functionality targeted
at the software industry
• QAD Revenue Recognition solution targeted
at manufacturing sector
• Functionality integrated with core processes
• Revenue sub ledger embedded in QAD
Financials
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QAD Revenue Recognition Solution
Release Status
• Customer interpretation of new revenue
rules ongoing
• Unique event in accounting world due to
conceptual standard rather than rule based
• Limited release QAD Financials 2017.1 for
revenue recognition customers only
• Contact your Account Executive if you want
to discuss in more detail
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QAD Revenue Recognition Solution
Market Research Update
• Customer validation meetings
• CAG meetings and survey
• Focus Group
• SyncDev Wave
• Many customers have not completed
analysis
• Majority of customers ascertain being
unaffected
• Might affect only specific cases
- Automotive (Tooling & Engineering)
- Medical (Bill and Hold)
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QAD Revenue Recognition Solution
Possible Future Scenarios
• Immediate applicability for selected group
of customers
• Other customers not affected or
compliance not possible
• Next year wake up call as effective date
looms
• Auditors may not agree with limited
interpretations and demand compliance
• May cause scramble for solutions
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QAD Revenue Recognition Solution
Future Developments
• Services/project part of manufacturing
companies keeps developing
• Move to subscription based revenue models
• Demand for revenue recognition solution
keeps growing
• Many companies have customizations in the
area of revenue recognition
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QAD Revenue Recognition Solution
Summary
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QAD revenue solution
Revenue module functionality
Business drivers and target personas
Release status
Market research update
Future scenarios
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QAD Revenue Recognition Solution
For More Information
• Contact your QAD Account Executive
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QAD Revenue Recognition Solution
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