Subscription Fees Increase 64% for the Quarter and Cloud Services Annual Contract Value Increases 55%
ATLANTA--(BUSINESS WIRE)-- American Software, Inc. (NASDAQ: AMSWA) today reported preliminary financial results for the second quarter for fiscal year 2020.
Key Second quarter financial highlights:
Key fiscal 2020 year to date financial highlights:
The overall financial condition of the Company remains strong, with cash and investments of approximately $94.7 million and no debt as of October 31, 2019, an increase of over $12 million when compared to October 31, 2018. During the second quarter of fiscal 2020, the Company paid shareholder dividends of approximately $3.5 million.
“We are pleased with our 64% growth in Subscription Fees and 55% increase in Cloud Services ACV as these key performance indicators continue to underscore our successful transition to a cloud-first company,” said Allan Dow, president of American Software. “Our cloud-based solutions enable customers to gain additional value as they leverage our expertise in managing the solution platform and staying current with the latest innovative planning capabilities available. Additionally, our recurring revenue streams of Maintenance and Subscription Cloud Services represented 58% of second quarter total revenues, giving our business and shareholders increased visibility with respect to future revenue performance.”
“Our cloud-based solutions provide customers with the increased visibility and accuracy necessary to become a connected enterprise, automate critical planning functions and make better decisions across operational, tactical and strategic horizons, all on a single platform,” continued Dow. “We believe customers that take advantage of our advancements in artificial intelligence (AI), machine learning (ML) and advanced supply chain analytics to improve their operating performance from product concept to customer availability, will be better positioned to overcome the growing supply chain talent shortage that may hamper their profitable growth and ability to respond to rapidly changing market conditions.”
Additional highlights for the second quarter of fiscal 2020 include:
Customers & Channels
Company and Technology
About American Software, Inc.
Atlanta-based American Software, Inc.(NASDAQ: AMSWA), delivers innovative demand-driven supply chain management and advanced retail planning platforms backed by more than 45 years of industry expertise. Logility, Inc., a wholly-owned subsidiary of American Software, is a leading provider of collaborative supply chain optimization and advanced retail planning solutions that help medium, large and Fortune 500 companies transform their supply chain operations to gain a competitive advantage. Recognized for its high-touch approach to customer service, rapid implementations and industry-leading return on investment (ROI), Logility customers include Big Lots, Husqvarna Group, Parker Hannifin, Sonoco Products, Red Wing Shoe Company, Verizon Wireless and VF Corporation. Demand Management, Inc., a wholly-owned subsidiary of Logility, delivers affordable, easy-to-use Software-as-a-Service (SaaS) supply chain planning solutions designed to increase forecast accuracy, improve customer service and reduce inventory to maximize profits and lower costs. DMI serves customers such as Siemens Healthcare, AutomationDirect.com and Newfoundland Labrador Liquor Corporation. Halo, a division of Logility, is an advanced analytics software provider leveraging an innovative blend of artificial intelligence and machine learning technology to drive greater supply chain performance. Halo customers include Aaron’s and Leatherman Tool Group. New Generation Computing, Inc., a wholly-owned subsidiary of American Software, powers the digital supply chain with the Andromeda Cloud Platform®, enabling brand owners and retailers to maximize revenue and profit by accelerating lead times, streamlining product development and supply chain management, and optimizing distribution. NGC customers include Brooks Brothers, Carter’s, Destination XL, Fanatics, Foot Locker, Jockey International, Lacoste and Spanx. The comprehensive American Software supply chain and retail planning portfolio 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, retail merchandise and assortment planning and allocation, product lifecycle management (PLM), sourcing management ,and vendor quality and compliance. For more information about American Software, please visit www.amsoftware.com, call (800) 726-2946 or email: ask@amsoftware.com.
Operating and Non-GAAP Financial Measures
The Company includes operating measures (ACV) and other 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 ACV, 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. ACV is a forward-looking operating measure used by management to better understand cloud services (SaaS and other related cloud services) revenue trends within the Company’s business, as it reflects the Company’s current estimate of revenue to be generated under the existing client contracts in the forward 12-month period. EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest (expense)/income & other, net, and income tax (benefit)/expense. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest (expense)/income & other, net, income tax (benefit)/expense and non-cash stock-based compensation expense. A reconciliation of these non-GAAP financial measures to their nearest U.S. GAAP measures appears in the accompanying financial tables.
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 to differ materially from those anticipated by statements made herein. These factors include, but are not limited to, changes in general economic conditions, technology and the market for the Company's products and services, including economic conditions within the e-commerce markets; the timely availability and market acceptance of these products and services; the Company’s ability to satisfy in a timely manner all 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; the challenges and risks associated with integration of acquired product lines and companies; the effect of competitive products and pricing; the uncertainty of the viability and effectiveness of strategic alliances; and the irregular pattern of the Company's revenues. 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 Securities and Exchange Commission. For more information, contact: Vincent C. Klinges, Chief Financial Officer, American Software, Inc., (404) 264-5477 or fax: (404) 264-5298.
American Software® is a registered trademark of American Software, Inc.; Logility® is a registered trademark of Logility, Inc.; Demand Solutions® is a registered trademark of Demand Management, Inc.; and New Generation Computing®, Andromeda Cloud Platform®, Andromeda PLM® and Andromeda SCM® are registered trademarks of New Generation Computing, Inc. Other products mentioned in this document are registered marks, trademarks or service marks of their respective owners.
AMERICAN SOFTWARE, INC. | ||||||||||||||||||||||
Consolidated Statements of Operations Information | ||||||||||||||||||||||
(In thousands, except per share data, unaudited) | ||||||||||||||||||||||
Second Quarter Ended |
| Six Months Ended | ||||||||||||||||||||
October 31, |
| October 31, | ||||||||||||||||||||
2019 |
| 2018 |
| Pct Chg. |
| 2019 |
| 2018 |
| Pct Chg. | ||||||||||||
Revenues: | ||||||||||||||||||||||
License fees | $ | 1,046 |
| $ | 2,012 |
| (48 | %) | $ | 2,824 |
| $ | 3,714 |
| (24 | %) | ||||||
Subscription fees |
| 5,492 |
|
| 3,341 |
| 64 | % |
| 9,950 |
|
| 6,509 |
| 53 | % | ||||||
Professional services & other |
| 10,826 |
|
| 11,056 |
| (2 | %) |
| 20,963 |
|
| 22,064 |
| (5 | %) | ||||||
Maintenance |
| 10,846 |
|
| 11,624 |
| (7 | %) |
| 21,856 |
|
| 23,145 |
| (6 | %) | ||||||
Total Revenues |
| 28,210 |
|
| 28,033 |
| 1 | % |
| 55,593 |
|
| 55,432 |
| 0 | % | ||||||
Cost of Revenues: | ||||||||||||||||||||||
License fees |
| 1,007 |
|
| 1,760 |
| (43 | %) |
| 2,387 |
|
| 3,474 |
| (31 | %) | ||||||
Subscription services |
| 2,610 |
|
| 1,289 |
| 102 | % |
| 4,735 |
|
| 2,356 |
| 101 | % | ||||||
Professional services & other |
| 7,543 |
|
| 8,103 |
| (7 | %) |
| 14,948 |
|
| 16,771 |
| (11 | %) | ||||||
Maintenance |
| 1,864 |
|
| 2,214 |
| (16 | %) |
| 3,715 |
|
| 4,412 |
| (16 | %) | ||||||
Total Cost of Revenues |
| 13,024 |
|
| 13,366 |
| (3 | %) |
| 25,785 |
|
| 27,013 |
| (5 | %) | ||||||
Gross Margin |
| 15,186 |
|
| 14,667 |
| 4 | % |
| 29,808 |
|
| 28,419 |
| 5 | % | ||||||
Operating expenses: | ||||||||||||||||||||||
Research and development |
| 4,814 |
|
| 4,536 |
| 6 | % |
| 9,427 |
|
| 9,095 |
| 4 | % | ||||||
Less: capitalized development |
| (605 | ) |
| (1,204 | ) | (50 | %) |
| (1,890 | ) |
| (2,088 | ) | (9 | %) | ||||||
Sales and marketing |
| 5,148 |
|
| 5,304 |
| (3 | %) |
| 10,727 |
|
| 10,484 |
| 2 | % | ||||||
General and administrative |
| 4,908 |
|
| 4,408 |
| 11 | % |
| 9,696 |
|
| 8,601 |
| 13 | % | ||||||
Provision for doubtful accounts |
| - |
|
| - |
| - |
|
| 33 |
|
| - |
| nm | |||||||
Amortization of acquisition-related intangibles |
| 78 |
|
| 97 |
| (20 | %) |
| 175 |
|
| 194 |
| (10 | %) | ||||||
Total Operating Expenses |
| 14,343 |
|
| 13,141 |
| 9 | % |
| 28,168 |
|
| 26,286 |
| 7 | % | ||||||
Operating Earnings |
| 843 |
|
| 1,526 |
| (45 | %) |
| 1,640 |
|
| 2,133 |
| (23 | %) | ||||||
Interest Income /(Expense) & Other, Net |
| 712 |
|
| (190 | ) | nm |
| 1,237 |
|
| 563 |
| 120 | % | |||||||
Earnings Before Income Taxes |
| 1,555 |
|
| 1,336 |
| 16 | % |
| 2,877 |
|
| 2,696 |
| 7 | % | ||||||
Income Tax (Benefit)/Expense |
| (204 | ) |
| 93 |
| nm |
| (34 | ) |
| 68 |
| nm | ||||||||
Net Earnings | $ | 1,759 |
| $ | 1,243 |
| 42 | % | $ | 2,911 |
| $ | 2,628 |
| 11 | % | ||||||
Earnings per common share: (1) | ||||||||||||||||||||||
Basic | $ | 0.06 |
| $ | 0.04 |
| 50 | % | $ | 0.09 |
| $ | 0.09 |
| 0 | % | ||||||
Diluted | $ | 0.05 |
| $ | 0.04 |
| 25 | % | $ | 0.09 |
| $ | 0.08 |
| 13 | % | ||||||
Weighted average number of common shares outstanding: | ||||||||||||||||||||||
Basic |
| 31,609 |
|
| 30,926 |
|
| 31,440 |
|
| 30,825 |
| ||||||||||
Diluted |
| 32,310 |
|
| 31,477 |
|
| 32,065 |
|
| 31,412 |
| ||||||||||
nm- not meaningful |
| |||||||||||||||||||||
AMERICAN SOFTWARE, INC. | ||||||||||||||||
NON-GAAP MEASURES OF PERFORMANCE | ||||||||||||||||
(In thousands, except per share data, unaudited) | ||||||||||||||||
Second Quarter Ended | Six Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2019 | 2018 | Pct Chg. | 2019 | 2018 | Pct Chg. | |||||||||||
NON-GAAP Operating Earnings: | ||||||||||||||||
Operating Income (GAAP Basis) | $ | 843 |
| $ | 1,526 |
| (45 | %) | $ | 1,640 |
| $ | 2,133 |
| (23 | %) |
Amortization of acquisition-related intangibles |
| 377 |
|
| 597 |
| (37 | %) |
| 974 |
|
| 1,194 |
| (18 | %) |
Stock-based compensation |
| 503 |
|
| 443 |
| 14 | % |
| 946 |
|
| 841 |
| 12 | % |
NON-GAAP Operating Earnings: |
| 1,723 |
|
| 2,566 |
| (33 | %) |
| 3,560 |
|
| 4,168 |
| (15 | %) |
Non-GAAP Operating Earnings, as a % of revenue |
| 6 | % |
| 9 | % |
| 6 | % |
| 8 | % | ||||
Second Quarter Ended | Six Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2019 | 2018 | Pct Chg. | 2019 | 2018 | Pct Chg. | |||||||||||
NON-GAAP EBITDA: | ||||||||||||||||
Net Earnings (GAAP Basis) | $ | 1,759 |
| $ | 1,243 |
| 42 | % | $ | 2,911 |
| $ | 2,628 |
| 11 | % |
Income Tax (Benefit)/Expense |
| (204 | ) |
| 93 |
| nm |
|
| (34 | ) |
| 68 |
| nm |
|
Interest Income /(Expense) & Other, Net |
| (712 | ) |
| 190 |
| nm |
|
| (1,237 | ) |
| (563 | ) | 120 | % |
Amortization of intangibles |
| 2,026 |
|
| 1,742 |
| 16 | % |
| 4,111 |
|
| 3,392 |
| 21 | % |
Depreciation |
| 157 |
|
| 171 |
| (8 | %) |
| 318 |
|
| 319 |
| 0 | % |
EBITDA (earnings before interest, taxes, depreciation and amortization) |
| 3,026 |
|
| 3,439 |
| (12 | %) |
| 6,069 |
|
| 5,844 |
| 4 | % |
Stock-based compensation |
| 503 |
|
| 443 |
| 14 | % |
| 946 |
|
| 841 |
| 12 | % |
Adjusted EBITDA | $ | 3,529 |
| $ | 3,882 |
| (9 | %) | $ | 7,015 |
| $ | 6,685 |
| 5 | % |
EBITDA, as a percentage of revenues |
| 11 | % |
| 12 | % |
| 11 | % |
| 11 | % | ||||
Adjusted EBITDA, as a percentage of revenues |
| 13 | % |
| 14 | % |
| 13 | % |
| 12 | % | ||||
Second Quarter Ended | Six Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2019 | 2018 | Pct Chg. | 2019 | 2018 | Pct Chg. | |||||||||||
NON-GAAP EARNINGS PER SHARE: | ||||||||||||||||
Net Earnings (GAAP Basis) | $ | 1,759 |
| $ | 1,243 |
| 42 | % | $ | 2,911 |
| $ | 2,628 |
| 11 | % |
Amortization of acquisition-related intangibles (2) |
| 326 |
|
| 555 |
| (41 | %) |
| 825 |
|
| 1,164 |
| (29 | %) |
Stock-based compensation (2) |
| 436 |
|
| 411 |
| 6 | % |
| 802 |
|
| 819 |
| (2 | %) |
Adjusted Net Earnings | $ | 2,521 |
| $ | 2,209 |
| 14 | % | $ | 4,538 |
| $ | 4,611 |
| (2 | %) |
Adjusted non-GAAP diluted earnings per share | $ | 0.08 |
| $ | 0.07 |
| 14 | % | $ | 0.14 |
| $ | 0.15 |
| (7 | %) |
Second Quarter Ended | Six Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2019 | 2018 | Pct Chg. | 2019 | 2018 | Pct Chg. | |||||||||||
NON-GAAP Earnings Per Share | ||||||||||||||||
Net Earnings (GAAP Basis) | $ | 0.05 |
| $ | 0.04 |
| 25 | % | $ | 0.09 |
| $ | 0.08 |
| 13 | % |
Amortization of acquisition-related intangibles (2) |
| 0.02 |
|
| 0.02 |
| 0 | % |
| 0.03 |
|
| 0.05 |
| (40 | %) |
Stock-based compensation (2) |
| 0.01 |
|
| 0.01 |
| 0 | % |
| 0.02 |
|
| 0.02 |
| 0 | % |
Adjusted Net Earnings | $ | 0.08 |
| $ | 0.07 |
| 14 | % | $ | 0.14 |
| $ | 0.15 |
| (7 | %) |
Second Quarter Ended | Six Months Ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2019 | 2018 | Pct Chg. | 2019 | 2018 | Pct Chg. | |||||||||||
Amortization of acquisition-related intangibles | ||||||||||||||||
Cost of license | $ | 299 |
| $ | 500 |
| (40 | %) | $ | 799 |
| $ | 1,000 |
| (20 | %) |
Operating expenses |
| 78 |
|
| 97 |
| (20 | %) |
| 175 |
|
| 194 |
| (10 | %) |
Total amortization of acquisition-related intangibles | $ | 377 |
| $ | 597 |
| (37 | %) | $ | 974 |
| $ | 1,194 |
| (18 | %) |
Stock-based compensation | ||||||||||||||||
Cost of revenues | $ | 21 |
| $ | 33 |
| (36 | %) | $ | 51 |
| $ | 61 |
| (16 | %) |
Research and development |
| 40 |
|
| 33 |
| 21 | % |
| 73 |
|
| 63 |
| 16 | % |
Sales and marketing |
| 82 |
|
| 66 |
| 24 | % |
| 158 |
|
| 118 |
| 34 | % |
General and administrative |
| 360 |
|
| 311 |
| 16 | % |
| 664 |
|
| 599 |
| 11 | % |
Total stock-based compensation | $ | 503 |
| $ | 443 |
| 14 | % | $ | 946 |
| $ | 841 |
| 12 | % |
(1) - Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted per share for Class B shares under the two-class method are $0.06 and $0.09 for the three and six months ended October 31, 2019, respectively. Diluted per share for Class B shares under the two-class method are $0.04 and $0.09 for the three and six months ended October 31, 2018, respectively. | ||||||||||||||||
(2) - Tax affected using the effective tax rate excluding a discrete item related to excess tax benefit for stock options for the three and six month periods ended October 31, 2019 and 2018. | ||||||||||||||||
nm- not meaningful | ||||||||||||||||
|
|
|
| |||||||||||||
AMERICAN SOFTWARE, INC. | ||||||
Consolidated Balance Sheet Information | ||||||
(In thousands) | ||||||
(Unaudited) | ||||||
|
|
|
|
| ||
|
| October 31, |
| April 30, | ||
|
| 2019 |
| 2019 | ||
| ||||||
Cash and Cash Equivalents | $ | 62,684 | $ | 61,288 | ||
Short-term Investments |
| 31,493 |
| 24,710 | ||
Accounts Receivable: | ||||||
Billed |
| 15,432 |
| 18,819 | ||
Unbilled |
| 2,682 |
| 1,475 | ||
Total Accounts Receivable, net |
| 18,114 |
| 20,294 | ||
Prepaids & Other |
| 6,812 |
| 6,210 | ||
Current Assets |
| 119,103 |
| 112,502 | ||
Investments - Non-current |
| 494 |
| 2,484 | ||
PP&E, net |
| 3,505 |
| 3,585 | ||
Capitalized Software, net |
| 9,816 |
| 11,063 | ||
Goodwill |
| 25,888 |
| 25,888 | ||
Other Intangibles, net |
| 1,759 |
| 2,732 | ||
Deferred Sales Commissions - Non-current |
| 1,881 |
| 1,546 | ||
Lease Right of Use Assets |
| 2,401 |
| - | ||
Other Non-current Assets |
| 1,731 |
| 1,510 | ||
Total Assets | $ | 166,578 | $ | 161,310 | ||
Accounts Payable | $ | 1,846 | $ | 2,448 | ||
Accrued Compensation and Related costs |
| 4,097 |
| 2,561 | ||
Dividend Payable |
| 3,505 |
| 3,434 | ||
Operating Lease Obligation - Current |
| 775 |
| - | ||
Other Current Liabilities |
| 688 |
| 1,375 | ||
Deferred Revenues - Current |
| 32,563 |
| 33,283 | ||
Current Liabilities |
| 43,474 |
| 43,101 | ||
Operating Lease Obligation - Non-current |
| 1,769 |
| - | ||
Deferred Tax Liability - Non-current |
| 3,382 |
| 3,514 | ||
Other Long-term Liabilities |
| 87 |
| 88 | ||
Long-term Liabilities |
| 5,238 |
| 3,602 | ||
Total Liabilities |
| 48,712 |
| 46,703 | ||
Shareholders' Equity |
| 117,866 |
| 114,607 | ||
|
| |||||
Total Liabilities & Shareholders' Equity | $ | 166,578 | $ | 161,310 | ||
AMERICAN SOFTWARE, INC. | ||||||||
Condensed Consolidated Cashflow Information | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
|
|
|
|
| ||||
|
| Six Months Ended | ||||||
|
| October 31, | ||||||
|
| 2019 |
| 2018 | ||||
Net cash provided by operating activities | $ | 4,050 |
| $ | 4,802 |
| ||
Capitalized computer software development costs |
| (1,890 | ) |
| (2,088 | ) | ||
Purchases of property and equipment, net of disposals |
| (238 | ) |
| (894 | ) | ||
Net cash used in investing activities |
| (2,128 | ) |
| (2,982 | ) | ||
Dividends paid |
| (6,884 | ) |
| (6,767 | ) | ||
Proceeds from exercise of stock options |
| 6,358 |
|
| 3,086 |
| ||
Net cash used in financing activities |
| (526 | ) |
| (3,681 | ) | ||
Net change in cash and cash equivalents |
| 1,396 |
|
| (1,861 | ) | ||
Cash and cash equivalents at beginning of period |
| 61,288 |
|
| 52,794 |
| ||
Cash and cash equivalents at end of period | $ | 62,684 |
| $ | 50,933 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20191121005854/en/
Vincent C. Klinges Chief Financial Officer American Software, Inc. (404) 264-5477
Source: American Software, Inc.