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American Software Reports First Quarter of Fiscal Year 2023 Results

Solid Start to Fiscal 2023 Highlighted by Continued Strong Growth in Subscription Fees of 23% and Adjusted EBITDA Margin of 15%

American Software, Inc. (NASDAQ: AMSWA) today reported preliminary financial results for the first quarter of fiscal year 2023.

Key First Quarter Financial Highlights:

  • Subscription fees were $12.1 million for the quarter ended July 31, 2022, a 23% increase compared to $9.8 million for the same period last year, and software license revenues were $0.3 million compared to $0.5 million for the same period last year.
  • Total revenues for the quarter ended July 31, 2022 increased 7% to $31.3 million, compared to $29.3 million for the same period of the prior year.
  • Recurring revenue streams for Maintenance and Cloud Subscriptions were $21.0 million or 67% of total revenues in the quarter ended July 31, 2022 compared to $19.3 million or 66% in the same period of the prior year.
  • Maintenance revenues for the quarter ended July 31, 2022 decreased 6% to $8.9 million compared to $9.5 million for the same period last year reflecting the shift to cloud revenue as a client preference.
  • Professional services and other revenues for the quarter ended July 31, 2022 increased 5% to $10.0 million compared to $9.5 million for the same period last year. For the Supply Chain business, professional services revenues for the quarter ended July 31, 2022 increased by 8% to $5.2 million when compared to $4.8 million in the same period prior year.
  • Operating earnings for the quarter ended July 31, 2022 increased 44% to $2.6 million compared to $1.8 million for the same period last year.
  • GAAP net earnings for the quarter ended July 31, 2022 decreased 28% to $2.1 million or $0.06 per fully diluted share compared to $2.9 million or $0.09 per fully diluted share for the same period last year.
  • Adjusted net earnings for the quarter ended July 31, 2022, which excludes non-cash stock-based compensation expense and amortization of acquisition-related intangibles, decreased 12% to $3.2 million or $0.09 per fully diluted share compared to $3.6 million or $0.11 per fully diluted share for the same period last year.
  • EBITDA increased by 15% to $3.3 million for the quarter ended July 31, 2022 compared to $2.9 million for the same period last year.
  • Adjusted EBITDA increased by 26% to $4.6 million for the quarter ended July 31, 2022 compared to $3.7 million for the same period last year. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest (loss)/income & other, net, income tax expense and non-cash stock-based compensation expense.

Key First Quarter of Fiscal Year 2023 highlights:

Customers & Channels

  • Notable new and existing customers placing orders with the Company in the first quarter include: Acushnet Company, Color Image Apparel, Inc., Pharmacare Laboratories Pty Ltd, Polyair Pty Ltd, Radial Inc., Sears Manufacturing Co., and U.S. Autoforce, Inc.
  • During the quarter, SaaS subscription and/or software license agreements were signed with customers located in the following eight countries: Australia, Belgium, Brazil, Canada, Denmark, France, the United Kingdom, and the United States.

Company & Technology

  • Logility announced it has signed a definitive agreement to acquire Starboard Solutions Corp., a Traverse City, Michigan based innovator of supply chain network design software. The integration of Starboard’s capabilities to create an interactive supply chain digital twin of the physical supply chain network into the Logility Digital Supply Chain Platform will offer supply chain leaders enhanced integrated business planning outcomes.
  • Logility, Inc. and Demand Management, Inc., wholly owned subsidiaries of the Company, were recognized by Supply & Demand Chain Executive as recipients of the Top Supply Chain Projects Award 2022. This marks Logility’s nineteenth year and Demand Management’s tenth year of recognition. This annual award, formerly known as SDCE 100 Award, spotlights successful and innovative transformation projects that deliver bottom-line value to enterprises across a range of supply chain functions.
  • Logility, Inc. and Demand Management, Inc., wholly owned subsidiaries of the Company, were also recognized as Top 100 Logistics IT Providers by Inbound Logistics. This is the 25th consecutive year Logility has been recognized, and the eleventh year of recognition for Demand Management. This annual award honors IT companies that support and enable logistics excellence.

The overall financial condition of the Company remains strong, with cash and investments of approximately $114.8 million. During the first quarter of fiscal year 2023, the Company paid shareholder dividends of approximately $3.7 million and purchased Starboard Solutions Corp., a supply chain network optimization solution for approximately $6.5 million.

Our fiscal year 2023 is off to a solid start, and we remain on track to deliver against our initial guidance for the year. Despite talk of recession and business uncertainty, our pipeline continues to increase, driven by the need for clients to holistically manage their supply chains in a sustainable and economically resilient way,” said Allan Dow, CEO and President of American Software. “In Q1, we also announced the acquisition of Starboard Solutions, expanding the scope of the Logility Digital Supply Chain Platform to include Network Design Optimization.”

“The integration of Starboard is ahead of plan, and we have already closed a couple of Network Design Optimization opportunities.” continued Dow.

Fiscal Year 2023 Financial Outlook

  • Total revenues of $132.5 million to $135.0 million, including total recurring revenues of $86.5 million to $89.0 million.
  • Adjusted EBITDA of $16.0 million to $18.0 million based on investments for growth and employee retention.

About American Software, Inc.

Atlanta-based American Software, Inc. (NASDAQ: AMSWA), through its operating entity Logility delivers an innovative technical 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 (ESG) and Network Optimization aligned with Integrated Business Planning.

Serving clients such as Big Lots, Carter’s, Destination XL, Hostess, Husqvarna Group, Jockey International, Johnson Controls, Parker Hannifin, Red Wing Shoe Company, Spanx, Trident Seafoods Corporation, and WEG; 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. (NASDAQ: AMSWA). 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

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/(benefit) 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,

2022

 

2021

 

Pct Chg.

Revenues:
Subscription fees

$

12,062

$

9,788

 

23

%

License fees

 

320

 

492

 

(35

%)

Professional services & other

 

10,009

 

9,529

 

5

%

Maintenance

 

8,905

 

9,462

 

(6

%)

Total Revenues

 

31,296

 

29,271

 

7

%

 
Cost of Revenues:
Subscription services

 

3,618

 

3,224

 

12

%

License fees

 

89

 

159

 

(44

%)

Professional services & other

 

7,304

 

7,010

 

4

%

Maintenance

 

1,573

 

1,974

 

(20

%)

Total Cost of Revenues

 

12,584

 

12,367

 

2

%

Gross Margin

 

18,712

 

16,904

 

11

%

 
Operating Expenses:
Research and development

 

4,454

 

4,424

 

1

%

Sales and marketing

 

5,912

 

6,120

 

(3

%)

General and administrative

 

5,765

 

4,534

 

27

%

Amortization of acquisition-related intangibles

 

24

 

53

 

(55

%)

 
Total Operating Expenses

 

16,155

 

15,131

 

7

%

Operating Earnings

 

2,557

 

1,773

 

44

%

Interest Income & Other, Net

 

119

 

437

 

(73

%)

Earnings Before Income Taxes

 

2,676

 

2,210

 

21

%

Income Tax Expense/(Benefit)

 

543

 

(737

)

nm
Net Earnings

$

2,133

$

2,947

 

(28

%)

Earnings Per Common Share: (1)
Basic

$

0.06

$

0.09

 

(33

%)

Diluted

$

0.06

$

0.09

 

(33

%)

 
Weighted average number of common shares outstanding:
Basic

 

33,656

 

33,053

 

Diluted

 

34,007

 

33,946

 

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

First Quarter Ended

July 31,

2022

 

2021

 

Pct Chg.

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

$

2,557

 

$

1,773

 

44

%

Amortization of acquisition-related intangibles

 

24

 

 

53

 

(55

%)

Stock-based compensation

 

1,306

 

 

775

 

69

%

Non-GAAP Operating Earnings:

 

3,887

 

 

2,601

 

49

%

 
Non-GAAP Operating Earnings, as a % of revenue

 

12

%

 

9

%

 

First Quarter Ended

July 31,

2022

 

2021

 

Pct Chg.

Non-GAAP EBITDA:
Net Earnings (GAAP Basis)

$

2,133

 

$

2,947

 

(28

%)

Income Tax Expense/(Benefit)

 

543

 

 

(737

)

(174

%)

Interest Income & Other, Net

 

(119

)

 

(437

)

(73

%)

Amortization of intangibles

 

556

 

 

956

 

(42

%)

Depreciation

 

212

 

 

174

 

22

%

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

 

3,325

 

 

2,903

 

15

%

 
Stock-based compensation

 

1,306

 

 

775

 

69

%

Adjusted EBITDA

$

4,631

 

$

3,678

 

26

%

 
EBITDA, as a percentage of revenues

 

11

%

 

10

%

 
Adjusted EBITDA, as a percentage of revenues

 

15

%

 

13

%

 

First Quarter Ended

July 31,

2022

 

2021

 

Pct Chg.

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

$

2,133

 

$

2,947

 

(28

%)

Amortization of acquisition-related intangibles (2)

 

19

 

 

42

 

(55

%)

Stock-based compensation (2)

 

1,041

 

 

621

 

68

%

Adjusted Net Earnings

$

3,193

 

$

3,610

 

(12

%)

 
Adjusted non-GAAP diluted earnings per share

$

0.09

 

$

0.11

 

(18

%)

 
 

First Quarter Ended

July 31,

2022

 

2021

 

Pct Chg.

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

$

0.06

 

$

0.09

 

(33

%)

Amortization of acquisition-related intangibles (2)

 

-

 

 

-

 

-

 

Stock-based compensation (2)

 

0.04

 

 

0.02

 

100

%

Adjusted Net Earnings

 

0.10

 

$

0.11

 

(9

%)

 
 

First Quarter Ended

July 31,

2022

 

2021

 

Pct Chg.

Amortization of acquisition-related intangibles
Cost of license

$

-

 

$

-

 

-

 

Operating expenses

 

24

 

 

53

 

(55

%)

Total amortization of acquisition-related intangibles

$

24

 

$

53

 

(55

%)

 
Stock-based compensation
Cost of revenues

$

41

 

$

61

 

(33

%)

Research and development

 

149

 

 

68

 

119

%

Sales and marketing

 

218

 

 

143

 

52

%

General and administrative

 

898

 

 

503

 

79

%

Total stock-based compensation

$

1,306

 

$

775

 

69

%

(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 $0.06 and $0.09 for the three months ended July 31, 2022 and 2021, 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, 2022 of 20.3%. 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, 2021 of 19.9%.

 

nm- not meaningful
AMERICAN SOFTWARE, INC.
Consolidated Balance Sheet Information
(In thousands)
(Unaudited)

July 31,

 

April 30,

2022

 

2022

 
Cash and Cash Equivalents

$

97,878

$

110,690

Short-term Investments

 

16,954

 

16,826

Accounts Receivable:
Billed

 

20,556

 

20,619

Unbilled

 

2,901

 

2,989

Total Accounts Receivable, net

 

23,457

 

23,608

Prepaids & Other

 

5,566

 

5,067

Current Assets

 

143,855

 

156,191

 
PP&E, net

 

5,000

 

3,654

Capitalized Software, net

 

1,129

 

1,586

Goodwill

 

32,518

 

25,888

Other Intangibles, net

 

2,918

 

147

Deferred Sales Commissions - Non-current

 

1,871

 

2,050

Lease Right of Use Assets

 

782

 

935

Other Non-current Assets

 

2,185

 

2,384

Total Assets

$

190,258

$

192,835

 
Accounts Payable

$

3,305

$

2,506

Accrued Compensation and Related costs

 

2,804

 

6,918

Dividend Payable

 

3,706

 

3,700

Operating Lease Obligation - Current

 

481

 

541

Other Current Liabilities

 

4,142

 

1,871

Deferred Revenues - Current

 

38,298

 

41,953

Current Liabilities

 

52,736

 

57,489

 
Operating Lease Obligation - Non-current

 

356

 

461

Deferred Tax Liability - Non-current

 

846

 

1,772

Other Long-term Liabilities

 

3,139

 

137

Long-term Liabilities

 

4,341

 

2,370

 
Total Liabilities

 

57,077

 

59,859

 
Shareholders' Equity

 

133,181

 

132,976

 
Total Liabilities & Shareholders' Equity

$

190,258

$

192,835

AMERICAN SOFTWARE, INC.
Condensed Consolidated Cashflow Information
(In thousands)
(Unaudited)
 

Three Months Ended

July 31,

2022

 

2021

 
Net cash (used in)/ provided by operating activities

$

(1,515

)

$

3,034

 

 
Purchases of property and equipment, net of disposals

 

(1,572

)

 

(302

)

Purchase of business, net of cash acquired

 

(6,503

)

 

-

 

 
Net cash used in investing activities

 

(8,075

)

 

(302

)

 
Dividends paid

 

(3,693

)

 

(3,608

)

Proceeds from exercise of stock options

 

471

 

 

4,072

 

 
Net cash (used in)/provided by financing activities

 

(3,222

)

 

464

 

 
Net change in cash and cash equivalents

 

(12,812

)

 

3,196

 

Cash and cash equivalents at beginning of period

 

110,690

 

 

88,658

 

 
Cash and cash equivalents at end of period

$

97,878

 

$

91,854

 

 

Contacts

Vincent C. Klinges

Chief Financial Officer

American Software, Inc.

(404) 264-5477

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