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American Software Reports First Quarter of Fiscal Year 2024 Results

Subscription Fee Growth of 14% and Adjusted EBITDA Margin of 13% in Q1

American Software, Inc. (NASDAQ: AMSWA) today reported preliminary financial results for the first quarter of fiscal year 2024.

Key first Quarter Financial Highlights:

  • Subscription fees were $13.8 million for the quarter ended July 31, 2023, a 14% increase compared to $12.1 million for the same period last year.
  • Total revenues for the quarter ended July 31, 2023 decreased 7% to $29.2 million, compared to $31.3 million for the same period of the prior year, principally due to a decline in services and maintenance fee revenue.
  • Recurring revenue streams for Maintenance and Cloud Subscriptions were $21.9 million or 75% of total revenues in the quarter ended July 31, 2023 compared to $21.0 million or 67% of total revenues in the same period of the prior year.
  • Maintenance revenues for the quarter ended July 31, 2023 decreased 8% to $8.2 million compared to $8.9 million for the same period last year.
  • Professional services and other revenues for the quarter ended July 31, 2023 decreased 31% to $7.0 million for the quarter ended July 31, 2023 compared to $10.0 million for the same period last year. The decline was primarily driven by a 28% decrease in non-core project revenue in our IT Consulting business unit and a 33% decrease to $3.5 million in professional services revenues, when compared to $5.2 million in the same period last year in our Supply Chain business due to lower project work and outsourcing of some services to partners.
  • Software license revenues were $0.3 million for the quarter ended July 31, 2023 compared to $0.3 million in the same period last year.
  • Operating earnings for the quarter ended July 31, 2023 were $1.6 million compared to $2.6 million for the same period last year.
  • GAAP net earnings for the quarter ended July 31, 2023 were $2.8 million or $0.08 per fully diluted share compared to $2.1 million or $0.06 per fully diluted share for the same period last year.
  • Adjusted net earnings for the quarter ended July 31, 2023, which excludes non-cash stock-based compensation expense and amortization of acquisition-related intangibles, were $4.2 million or $0.12 per fully diluted share compared to $3.3 million or $0.10 per fully diluted share for the same period last year.
  • EBITDA was $2.3 million for the quarter ended July 31, 2023 compared to $3.3 million for the same period last year.
  • Adjusted EBITDA was $3.9 million for the quarter ended July 31, 2023 compared to $4.6 million for the same period last year. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, income tax expense and non-cash stock-based compensation expense.

Key First Quarter of Fiscal Year 2024 highlights:

Clients & Channels

  • Notable new and existing customers placing orders with the Company in the first quarter include: Canada Goose, Inc., Hasbro, Inc. Mitsubishi Electric Trane HVAC US, Inc., Niagara Bottling, Inc., Pharmacare, Inc., Terex, Inc. and Under Armor, Inc.
  • During the quarter, SaaS subscription and software license agreements were signed with customers located in the following six countries: Australia, Brazil, France, the Netherlands, the United Kingdom and the United States.

Company & Technology

  • In May, Logility introduced new functionality to advance our SaaS Capabilities with Enhancements to Supply Chain ESG Management. With the growth of Environmental, Social, and Governance (ESG) initiatives each year, more companies are beginning to track the impact of their supply chain ecosystem. Ensuring vendors and suppliers also make a responsible impact is vital to corporate success. This release introduces the ability to optimize network design for Scope 3 emissions, new supplier scorecards, and product traceability and compliance features, as well as offer better risk avoidance and management, which allows clients to balance sustainability with profitability.
  • In July, Logility announced that it has successfully completed its fifth annual System and Organization Controls (SOC) 2 Type II audit for the period from March 2022 to February 2023. The audit report validates that Logility’s cloud-based solution meets Logility’s standards for security and reliability and is one part of our larger program to ensure and enhance our security posture continually.

The overall financial condition of the Company remains strong, with cash and investments of approximately $115.3 million. During the first quarter of fiscal year 2024, the Company paid shareholder dividends of approximately $3.7 million.

“Amid ongoing economic uncertainty, we delivered results consistent with our expectations and remain on track to achieve our initial outlook for FY ‘24,” said Allan Dow, CEO and President of American Software. “As we believe our stock is significantly undervalued, we plan to opportunistically repurchase shares against our existing buyback authorization. We are also undertaking several strategic actions that we believe will create significant value for our shareholders.”

Fiscal Year 2024 Financial Outlook

  • Total revenues of $120.0 million to $126.0 million, including total recurring revenues of $88.0 million to $92.0 million.
  • Adjusted EBITDA of $19.0 million to $21.0 million.

About American Software, Inc.

Atlanta-based American Software, Inc. (NASDAQ: AMSWA), through its operating entity Logility delivers an innovative AI-powered platform that enables enterprises to accelerate their digital supply chain transformation from product concept to client availability via the Logility® Digital Supply Chain Platform, a single platform spanning Product, Demand, Inventory, Supply, Sourcing, Deploy, Corporate Responsibility Environment, Social and Governance (ESG) and Network Optimization aligned with Integrated Business Planning.

Serving clients such as Big Lots, Bunzl Australasia, Carter’s, Destination XL, Glen Raven, Hostess, Husqvarna Group, Jockey International, Johnson Controls, Parker Hannifin, Red Wing Shoe Company, Spanx and Taylor Farms; our solutions are marketed and sold through a direct sales team as well as an indirect global value-added reseller (“VAR”) distribution network.

Fueled by supply chain master data, allowing for the automation of critical business processes through the application of artificial intelligence and machine learning algorithms to a variety of internal and external data streams, the comprehensive Logility portfolio delivered in the cloud includes advanced analytics , supply chain visibility, demand, inventory and replenishment planning, Sales and Operations Planning (S&OP), Integrated Business Planning (IBP), supply and inventory optimization, manufacturing planning and scheduling, network design and optimization (NDO), retail merchandise and assortment planning and allocation, product lifecycle management (PLM), sourcing management, vendor quality and compliance, and product traceability. For more information about Logility, please visit www.logility.com. Logility is a wholly-owned subsidiary and operating entity for American Software, Inc.. You can learn more about American Software at www.amsoftware.com, or by calling (404) 364-7615 or emailing kliu@amsoftware.com.

Operating and Non-GAAP Financial Measures

American Software, Inc. (“the Company”) includes non-GAAP financial measures (EBITDA, adjusted EBITDA, adjusted net earnings and adjusted net earnings per share) in the summary financial information provided with this press release as supplemental information relating to its operating results. This financial information is not in accordance with, or an alternative for, GAAP-compliant financial information and may be different from the operating or non-GAAP financial information used by other companies. The Company believes that this presentation of EBITDA, adjusted EBITDA, adjusted net earnings and adjusted net earnings per share provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, and income tax expense. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, income tax expense and non-cash stock-based compensation expense.

Forward Looking Statements

This press release contains forward-looking statements that are subject to substantial risks and uncertainties. There are a number of factors that could cause actual results or performance to differ materially from what is anticipated by statements made herein. These factors include, but are not limited to, continuing U.S. and global economic uncertainty and the timing and degree of business recovery; the irregular pattern of the Company’s revenues; dependence on particular market segments or customers; competitive pressures; market acceptance of the Company’s products and services; technological complexity; undetected software errors; potential product liability or warranty claims; risks associated with new product development; the challenges and risks associated with integration of acquired product lines, companies and services; uncertainty about the viability and effectiveness of strategic alliances; the Company’s ability to satisfy in a timely manner all Securities and Exchange Commission (SEC) required filings and the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted under that Section; as well as a number of other risk factors that could affect the Company’s future performance. For further information about risks the Company could experience as well as other information, please refer to the Company’s current Form 10-K and other reports and documents subsequently filed with the SEC. For more information, contact: Kevin Liu, American Software, Inc., (626) 657-0013 or email kliu@amsoftware.com.

Logility® is a registered trademark of Logility, Inc. Other products mentioned in this document are registered, trademarked or service marked by their respective owners.

AMERICAN SOFTWARE, INC.
Consolidated Statements of Operations Information
(In thousands, except per share data, unaudited)
 

First Quarter Ended

July 31,

 

2023

 

 

2022

 

Pct Chg.

Revenues:
Subscription fees

$

13,764

$

12,062

14

%

License fees

 

289

 

320

(10

%)

Professional services & other

 

6,952

 

10,009

(31

%)

Maintenance

 

8,163

 

8,905

(8

%)

Total Revenues

 

29,168

 

31,296

(7

%)

 
Cost of Revenues:
Subscription services

 

4,217

 

3,618

17

%

License fees

 

72

 

89

(19

%)

Professional services & other

 

5,608

 

7,304

(23

%)

Maintenance

 

1,695

 

1,573

8

%

Total Cost of Revenues

 

11,592

 

12,584

(8

%)

 
Gross Margin

 

17,576

 

18,712

(6

%)

 
Operating expenses:
Research and development

 

4,249

 

4,454

(5

%)

Sales and marketing

 

6,148

 

5,912

4

%

General and administrative

 

5,587

 

5,765

(3

%)

Amortization of acquisition-related intangibles

 

25

 

24

4

%

 
Total Operating Expenses

 

16,009

 

16,155

(1

%)

 
Operating Earnings

 

1,567

 

2,557

(39

%)

 
Interest Income & Other, Net

 

1,887

 

119

1486

%

Earnings Before Income Taxes

 

3,454

 

2,676

29

%

Income Tax Expense

 

706

 

543

30

%

Net Earnings

$

2,748

$

2,133

29

%

Earnings per common share: (1)
Basic

$

0.08

$

0.06

33

%

Diluted

$

0.08

$

0.06

33

%

 
Weighted average number of common shares outstanding:
Basic

 

34,155

 

33,656

Diluted

 

34,160

 

34,007

 
nm- not meaningful
AMERICAN SOFTWARE, INC.
NON-GAAP MEASURES OF PERFORMANCE
(In thousands, except per share data, unaudited)
 

First Quarter Ended

July 31,

 

2023

 

 

 

2022

 

 

Pct Chg.

NON-GAAP Operating Earnings:
Operating Earnings (GAAP Basis)

$

1,567

 

$

2,557

 

(39

%)

Amortization of acquisition-related intangibles

 

233

 

 

99

 

135

%

Stock-based compensation

 

1,553

 

 

1,306

 

19

%

NON-GAAP Operating Earnings:

 

3,353

 

 

3,962

 

(15

%)

 
Non-GAAP Operating Earnings, as a % of revenue

 

11

%

 

13

%

 

First Quarter Ended

July 31,

 

2023

 

 

 

2022

 

 

Pct Chg.

NON-GAAP EBITDA:
Net Earnings (GAAP Basis)

$

2,748

 

$

2,133

 

29

%

Income Tax Expense

 

706

 

 

543

 

30

%

Interest Income & Other, Net

 

(1,887

)

 

(119

)

1486

%

Amortization of intangibles

 

371

 

 

556

 

(33

%)

Depreciation

 

360

 

 

212

 

70

%

EBITDA (earnings before interest, taxes, depreciation and amortization)

 

2,298

 

 

3,325

 

(31

%)

 
Stock-based compensation

 

1,553

 

 

1,306

 

19

%

Adjusted EBITDA

$

3,851

 

$

4,631

 

(17

%)

 
EBITDA, as a percentage of revenues

 

8

%

 

11

%

 
Adjusted EBITDA, as a percentage of revenues

 

13

%

 

15

%

 
 

First Quarter Ended

July 31,

 

2023

 

 

 

2022

 

 

Pct Chg.

NON-GAAP EARNINGS PER SHARE:
Net Earnings (GAAP Basis)

$

2,748

 

$

2,133

 

29

%

Amortization of acquisition-related intangibles (2)

 

185

 

 

79

 

134

%

Stock-based compensation (2)

 

1,236

 

 

1,041

 

19

%

Adjusted Net Earnings

$

4,169

 

$

3,253

 

28

%

 
Adjusted non-GAAP diluted earnings per share

$

0.12

 

$

0.10

 

20

%

 

First Quarter Ended

July 31,

 

2023

 

 

 

2022

 

 

Pct Chg.

NON-GAAP Earnings Per Share
Net Earnings (GAAP Basis)

$

0.08

 

$

0.06

 

33

%

Amortization of acquisition-related intangibles (2)

 

-

 

 

-

 

-

 

Stock-based compensation (2)

$

0.04

 

 

0.04

 

0

%

Adjusted Net Earnings

$

0.12

 

$

0.10

 

20

%

 
 

First Quarter Ended

July 31,

 

2023

 

 

 

2022

 

 

Pct Chg.

Amortization of acquisition-related intangibles
Cost of Subscription Services

$

208

 

$

75

 

-

 

Operating expenses

 

25

 

 

24

 

4

%

Total amortization of acquisition-related intangibles

$

233

 

$

99

 

135

%

 
Stock-based compensation
Cost of revenues

$

78

 

$

41

 

90

%

Research and development

 

173

 

 

149

 

16

%

Sales and marketing

 

347

 

 

218

 

59

%

General and administrative

 

955

 

 

898

 

6

%

Total stock-based compensation

$

1,553

 

$

1,306

 

19

%

 
 
(1) - Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A and Class B shares under the two-class method are $0.08 and $0.06 for the three months ended July 31, 2023 and 2022, respectively.
 
(2) - Tax affected using the effective tax rate excluding a discrete item related to excess tax benefit for stock options for the three month period ended July 31, 2023 of 20.4%. Tax affected using the effective tax rate excluding a discrete item related to excess tax benefit for stock options for the three month period ended July 31, 2022 of 20.3%.
nm- not meaningful
AMERICAN SOFTWARE, INC.
Consolidated Balance Sheet Information
(In thousands)
(Unaudited)

July 31,

 

April 30,

2023

 

2023

 
Cash and Cash Equivalents

$

93,887

$

90,696

Short-term Investments

 

20,957

 

23,451

Accounts Receivable:
Billed

 

21,220

 

25,405

Unbilled

 

2,817

 

2,604

Total Accounts Receivable, net

 

24,037

 

28,009

Prepaids & Other

 

5,825

 

7,833

Current Assets

 

144,706

 

149,989

 
Investments - Non-current

 

485

 

486

 
PP&E, net

 

6,551

 

6,444

Capitalized Software, net

 

253

 

391

Goodwill

 

29,558

 

29,558

Other Intangibles, net

 

1,910

 

2,143

Other Non-current Assets

 

7,120

 

6,609

Total Assets

$

190,583

$

195,620

 
Accounts Payable

$

1,532

$

2,142

Accrued Compensation and Related costs

 

2,461

 

4,268

Dividend Payable

 

3,758

 

3,756

Other Current Liabilities

 

2,639

 

2,708

Deferred Revenues - Current

 

39,797

 

43,124

Current Liabilities

 

50,187

 

55,998

 
Other Long-term Liabilities

 

271

 

288

 
Total Liabilities

 

50,458

 

56,286

 
Shareholders' Equity

 

140,125

 

139,334

 
Total Liabilities & Shareholders' Equity

$

190,583

$

195,620

 

AMERICAN SOFTWARE, INC.

Condensed Consolidated Cashflow Information
(In thousands)
(Unaudited)
 

Three Months Ended

July 31,

 

2023

 

 

 

2022

 

 
Net cash provided by operating activities

$

7,168

 

$

(1,518

)

 
Purchases of property and equipment, net of disposals

 

(467

)

 

(1,572

)

Purchase of business, net of cash acquired

 

-

 

 

(6,500

)

 
Net cash used in investing activities

 

(467

)

 

(8,072

)

 
Dividends paid

 

(3,756

)

 

(3,693

)

Proceeds from exercise of stock options

 

246

 

 

471

 

 
Net cash used in financing activities

 

(3,510

)

 

(3,222

)

 
Net change in cash and cash equivalents

 

3,191

 

 

(12,812

)

Cash and cash equivalents at beginning of period

 

90,696

 

 

110,690

 

 
Cash and cash equivalents at end of period

$

93,887

 

$

97,878

 

 
 

 

Contacts

Financial Information Press Contact:

Vincent C. Klinges

Chief Financial Officer

American Software, Inc.

(404) 264-5477

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