American Software, Inc. reported preliminary financial results for the second quarter of fiscal year 2024. During the quarter we divested our information technology consulting firm, The Proven Method and its results are included in discontinuing operations.
Key Second Quarter Financial Highlights from Continuing Operations:
- Subscription fees were $13.4 million for the quarter ended October 31, 2023, an 8% increase compared to $12.3 million for the same period last year.
- Total revenues for the quarter ended October 31, 2023 decreased 6% to $25.7 million, compared to $27.3 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 $21.5 million or 84% of total revenues in the quarter ended October 31, 2023 compared to $21.2 million or 78% of total revenues in the same period of the prior year.
- Maintenance revenues for the quarter ended October 31, 2023 decreased 8% to $8.1 million compared to $8.8 million for the same period last year.
- Professional services and other revenues for the quarter ended October 31, 2023 decreased 26% to $4.0 million for the quarter ended October 31, 2023 compared to $5.4 million for the same period last year. The decline was primarily driven by lower project work and outsourcing of some services to partners.
- Software license revenues were $0.2 million for the quarter ended October 31, 2023 compared to $0.7 million in the same period last year.
- Operating earnings for the quarter ended October 31, 2023 were $1.2 million compared to $2.6 million for the same period last year.
- GAAP net earnings from continuing operations for the quarter ended October 31, 2023 were $0.6 million or $0.02 per fully diluted share compared to $1.9 million or $0.06 per fully diluted share for the same period last year.
- Adjusted net earnings from continuing operations for the quarter ended October 31, 2023, which excludes non-cash stock-based compensation expense and amortization of acquisition-related intangibles, were $2.9 million or $0.08 per fully diluted share compared to $3.2 million or $0.09 per fully diluted share for the same period last year.
- EBITDA from continuing operations was $2.5 million for the quarter ended October 31, 2023 compared to $3.4 million for the same period last year.
- Adjusted EBITDA from continuing operations was $4.1 million for the quarter ended October 31, 2023 compared to $4.7 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 Fiscal 2024 Year to Date Financial Highlights from Continuing Operations:
- Subscription fees were $27.1 million for the six months ended October 31, 2023, a 11% increase compared to $24.4 million for the same period last year, while Software license revenues were $0.5 million compared to $1.0 million for the same period last year.
- Total revenues for the six months ended October 31, 2023 decreased 5% to $51.6 million compared to $54.1 million for the same period last year.
- Recurring revenue streams for Maintenance and Cloud Services were $43.4 million and $42.1 million or 84% and 78% of total revenues for the six-month periods ended October 31, 2023 and 2022, respectively.
- Maintenance revenues for the six months ended October 31, 2023 were $16.3 million, an 8% decrease compared to $17.7 million for the same period last year.
- Professional services and other revenues for the six months ended October 31, 2023 decreased 30% to $7.7 million compared to $10.9 million for the same period last year. The decline was primarily driven by lower project work and outsourcing of some services to partners.
- For the six months ended October 31, 2023, the Company reported continuing operating earnings of approximately $2.6 million compared to $4.9 million for the same period last year.
- GAAP net earnings from continuing operations were approximately $3.2 million or $0.09 per fully diluted share for the six months ended October 31, 2023, a 17% decrease compared to $3.9 million or $0.11 per fully diluted share for the same period last year.
- Adjusted net earnings from continuing operations for the six months ended October 31, 2023, which exclude stock-based compensation expense and amortization of acquisition-related intangibles, increased 6% to $6.7 million or $0.19 per fully diluted share, compared to $6.3 million or $0.18 per fully diluted share for the same period last year.
- EBITDA from continuing operations decreased by 29% to $4.6 million for the six months ended October 31, 2023 compared to $6.5 million for the same period last year.
- Adjusted EBITDA from continuing operations decreased 15% to $7.8 million for the six months ended October 31, 2023 compared to $9.1 million for the six months ended October 31, 2022. 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.
Key Second Quarter of Fiscal Year 2024 highlights:
Clients & Channels
- Notable new and existing customers placing orders with the Company in the second quarter include: Black Rifle Coffee Company, Ferguson Enterprises, LLC, Hostess Brands, LLC., Johnson Brothers Liquor Company, Peet’s Coffee, Inc., Premier Farnell UK Limited, Reynolds Consumer Products LLC, Sandvick Mining and Construction Tools AB.
- During the quarter, SaaS subscription and software license agreements were signed with customers located in the following eight countries: Australia, Belgium, Brazil, France, Sweden, the Netherlands, the United Kingdom and the United States.
Company & Technology
- On September 5th, Logility closed the acquisition of Garvis B.V., a visionary SaaS startup that combines large language models (ChatGPT) with AI-native demand forecasting. DemandAI+ is the only offering available that combines advanced AI-driven demand planning, demand sensing, and causal forecasting with generative AI in a single solution elevating the planning capabilities across the supply chain. Analysts cite a 20 – 24% improvement in forecast accuracy for clients who adopt DemandAI+.
- In September, the Company announced the divestment of its information technology consulting firm, The Proven Method to Marathon TS, Inc., an IT professional services firm. The sale closed on September 18, 2023.
- During the quarter the Company implemented a stock buyback program and purchased 430,576 shares at an average price of $11.20 per share.
- InventoryAI+, a powerful new offering optimizing inventory with advanced AI and machine learning to enable clients to lower costs while improving service was released. Building on existing capabilities, Inventory AI+ empowers planners to resolve issues in real-time and achieve higher levels of supply chain performance.
- In September, two Logility clients, Rebecca Springett of Croda and Rita Fisher of Reynolds, were recognized as winners in Supply & Demand Chain Executive’s 2023 Women in Supply Chain. This award honors female supply chain leaders whose accomplishments, mentorship, and examples set a foundation for women in all levels of a company’s supply chain network.
- Logility’s planning solutions and clients were recognized in the following publications:
- Sourcing Innovation “Logility “Starboard”: The Real-Time What-If Supply Chain Network modeler that Every Sourcing Professional Should Have”
- Total Retail: “How Network Optimization Creates Dynamic CPG Supply Chains”
- SupplyChainBrain: “Applying AI to Supply Chain Network Design”
The overall financial condition of the Company remains strong, with cash and investments of approximately $83.9 million. During the second quarter of fiscal year 2024, the Company paid shareholder dividends of approximately $3.8 million.
“Our company transformation continued in the second quarter with several key events such as the acquisition of AI-native demand forecasting pioneer Garvis, the divestitures of two non-core businesses, information technology consulting firm, The Proven Method and Transportation Rating Solutions and implemented a stock buyback program,” said Allan Dow, CEO and President of American Software. “Supply chain planning is entering a significant transformation with advancements in technology, generational shifts of the workforce, and the significant speed of market charges and disruptions. We have positioned the company to concentrate on delivering modern, breakthrough technology to the supply chain industry. Our guidance for fiscal 2024 has been updated to reflect these transactions.”
Fiscal Year 2024 Financial Outlook from Continuing Operations:
- Total revenues of $100.0 million to $104.0 million, including total recurring revenues of $85.0 million to $88.0 million.
- Adjusted EBITDA of $14.5 million to $16.0 million.
