Subscription Fees Increase 43% for the
Quarter and Cloud Services Annual Contract Value Increases
48%
American Software, Inc. (NASDAQ: AMSWA) today reported
preliminary financial results for the third quarter for fiscal year
2019.
Key Third quarter financial highlights:
- Subscription fees were $3.7 million for
the quarter ended January 31, 2019, a 43% increase compared to $2.6
million for the same period last year, while software license
revenues were $1.7 million, a 71% decrease compared to $6.0 million
for the same period last year, reflecting our continued transition
to the SaaS engagement model.
- Cloud Services Annual Contract Value
(ACV) increased approximately 48% to $16.1 million as of the
quarter ended January 31, 2019 compared to $10.9 million as of the
same period of the prior year.
- Total revenues for the quarter ended
January 31, 2019 were $27.0 million, a decrease of 10% over the
comparable period last year.
- Recurring revenue streams for
Maintenance and Cloud Services were 56% of total revenues in the
quarter ended January 31, 2019 compared to 46% in the same period
of the prior year.
- Maintenance revenues for the quarter
ended January 31, 2019 increased 2% to $11.4 million compared to
$11.2 million for the same period last year.
- Professional services and other
revenues for the quarter ended January 31, 2019 were $10.2 million
compared to $10.3 million for the same period last year.
- Operating earnings for the quarter
ended January 31, 2019 decreased 49% to $2.1 million compared to
$4.2 million for the same period last year.
- GAAP net earnings for the quarter ended
January 31, 2019 decreased 58% to $2.3 million or $0.07 per fully
diluted share compared to $5.6 million or $0.18 per fully diluted
share for the same period last year.
- Adjusted net earnings for the quarter
ended January 31, 2019, which excludes non-cash stock-based
compensation expense, amortization of acquisition-related
intangibles and a discrete tax benefit adjustment related to the
Tax Cuts and Jobs Act of 2017 were $3.2 million or $0.10 per fully
diluted share compared to $5.1 million or $0.16 per fully diluted
share for the same period last year.
- EBITDA decreased by 30% to $4.1 million
for the quarter ended January 31, 2019 compared to $5.8 million for
the same period last year.
- Adjusted EBITDA decreased by 26% to
$4.6 million for the quarter ended January 31, 2019 compared to
$6.1 million for the quarter ended January 31, 2018. Adjusted
EBITDA represents GAAP net earnings adjusted for amortization of
intangibles, depreciation, interest (expense)/income & other,
net, income tax expense and non-cash stock-based compensation
expense.
Key fiscal 2019 year to date financial highlights:
- Subscription fees were $10.2 million
for the nine months ended January 31, 2019, a 63% increase compared
to $6.2 million for the same period last year, while software
license revenues were $5.4 million, a 56% decrease compared to
$12.4 million for the same period last year, reflecting our
continued transition to the SaaS engagement model.
- Total revenues for the nine months
ended January 31, 2019 decreased by 1% to $82.4 million compared to
$83.3 million for the same period last year.
- Recurring revenue streams of
Maintenance and Cloud Services were 54% of total revenues for the
nine month period ended January 31, 2019 compared to 47% in the
same period of the prior year.
- Maintenance revenues for the nine
months ended January 31, 2019 were $34.6 million, a 5% increase
compared to $32.9 million for the same period last year.
- Professional services and other
revenues for the nine months ended January 31, 2019 increased 1% to
$32.2 million compared to $31.8 million for the same period last
year.
- For the nine months ended January 31,
2019, the Company reported operating earnings of approximately $4.3
million compared to $11.1 million for the same period last year, a
61% decrease.
- GAAP net earnings were approximately
$4.9 million or $0.16 per fully diluted share for the nine months
ended January 31, 2019, a 54% decrease compared to $10.8 million or
$0.36 per fully diluted share for the same period last year.
- EBITDA decreased by 35% to $9.9 million
for the nine months ended January 31, 2019 compared to $15.4
million for the same period last year.
- Adjusted net earnings for the nine
months ended January 31, 2019, which excludes stock-based
compensation expense, amortization of acquisition-related
intangibles and a discrete tax benefit adjustment related to the
Tax Cuts and Jobs Act of 2017 decreased 31% to $7.8 million or
$0.25 per fully diluted share, compared to $11.3 million or $0.38
per fully diluted share for the same period last year.
- Adjusted EBITDA decreased 32% to $11.2
million for the nine months ended January 31, 2019 compared to
$16.5 million for the nine months ended January 31, 2018. 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.
The overall financial condition of the Company remains strong,
with cash and investments of approximately $84.2 million and no
debt as of January 31, 2019. During the third quarter of fiscal
2019, the Company paid shareholder dividends of approximately $3.4
million.
“We continued to execute on key strategic initiatives during the
third quarter of fiscal year 2019 in support of our continued
momentum towards Software-as-a-Service (SaaS) subscriptions as the
preferred customer engagement method,” said Allan Dow, president of
American Software. “This transition is highlighted by our 48%
increase in Cloud Services Annual Contract Value (ACV) and 43%
increase in Subscription Revenue, which has resulted in our
recurring revenue rising to 56% of our total revenue.”
“It’s an exciting time to be a leader in the supply chain
solutions marketplace. We can help our customers accelerate their
traditional planning cycles by as much as 50 percent while
increasing both the quality of data and the confidence in their
digital supply chain plans,” continued Dow. “We believe companies
that successfully transform to an autonomous digital supply chain
will gain a competitive advantage in their marketplaces. As a
market leader in transformative digital supply chain solutions, we
are proud to see our customers take leading positions in this
transition to gain new insights and make better decisions faster.
When our customers automate decision-making and breakdown the
barriers that prevent the flow of information, they can become more
collaborative, leverage our deep optimization and advance analytics
solutions, and improve visibility to deliver better customer
service, mitigate risk and harness new opportunities.”
Additional highlights for the third quarter of fiscal 2019
include:
Customers & Channels
- Notable new and existing customers
placing orders with the Company in the third quarter include:
Abbyson Living, California Manufacturing, Calox Panemena, CFS
Brands, iNova Pharmaceuticals, Italcar, Jantzen Brands, Lutron
Electronics, Madepa, Mediplast, Mother Parker’s Tea & Coffee,
Niagara Bottling, OneLegacy, Rip Curl, Tencate Geosynthetics, and
Winebow.
- During the quarter, SaaS subscription
and/or software license agreements were signed with customers
located in the following 11 countries: Australia, Belgium, Bolivia,
Canada, Mexico, Panama, Commonwealth of Puerto Rico, Sweden,
Tunisia, United Kingdom, and United States.
- Logility, Inc., a wholly owned
subsidiary of the Company, announced Rituals Cosmetics, a leading
European home and body cosmetics brand, selected Logility Voyager
Solutions™ to set the foundation for its sales and operations
planning (S&OP) process, improve service levels and enhance
visibility across its omni-channel operations.
- During the quarter, Logility announced
a live webcast featuring its customer CITIZEN WATCH AMERICA. The
event, broadcasted on January 30, 2019, highlighted how CITIZEN
WATCH AMERICA harnesses an S&OP process powered by Logility
Voyager Solutions to foster greater collaboration between
management, sales, product development, merchandising and planning
teams.
Company and Technology
- At NRF 2019: Retail’s Big Show,
Logility announced enhanced capabilities available within the
Logility Voyager Solutions Retail Optimization platform. These
innovations merge the art of merchandising with the science of
optimized planning to accelerate time to market and ensure the
right products and assortments are available at the right time
across multiple channels.
- Logility announced during the quarter
how its platform helps accelerate the digital supply chain from
product concept to customer delivery by breaking down business
silos and delivering greater visibility and collaboration across
multiple departments and global trading partners. By helping
companies expand visibility from concept to customer, Logility is
helping bring products to market by as much as 50 percent faster
than traditional business processes.
- Logility announced enhanced Demand
Sensing and advanced analytics capabilities for retailers at NRF
2019. Companies that take advantage of these capabilities are able
to sense and respond to changes in the market faster and with
greater precision, helping retailers stay ahead of consumer
behavior and preferences.
- Logility and New Generation Computing,
Inc. (NGC), a wholly-owned subsidiary of the Company, announced
each company was recognized as Leaders across multiple categories
of the 2019 RIS Software LeaderBoard. NGC was named a Leader in 19
categories and Logility was recognized in 13 categories. Both
Logility and NGC were recognized for outstanding customer
satisfaction, return on investment and business innovation.
- Logility announced its continued
support of The Empty Stocking Fund. Through Logility’s annual
sponsor-a-child tradition, and employee and company contributions,
Logility was able to fill the stockings of 1,350 children this
holiday season. Employees also volunteered at Santa’s Village to
personally help select the perfect gifts for children living in
poverty.
- Logility and COU Consulting, a global
management and information technology consulting firm, have teamed
up to help drive supply chain transformation excellence. With COU
Consulting, Logility expands its business alliances and global
reach to support customer transformation strategies.
About American Software, Inc.
Atlanta-based American Software, Inc. (NASDAQ: AMSWA),
named one of the 100 Most Trustworthy Companies in America by
Forbes Magazine, 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. Demand Management serves customers such as Siemens
Healthcare, AutomationDirect.com and Newfoundland Labrador Liquor
Corporation. Halo Business Intelligence, 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, Leatherman Tool Group and SweetWater
Brewing. New Generation Computing, Inc., a wholly-owned
subsidiary of American Software, is a leading provider of
cloud-based supply chain and product lifecycle management solutions
for brands, retailers and consumer products companies. NGC
customers include A|X Armani Exchange, Billabong, Carter’s,
Destination XL, Hugo Boss, Jos. A. Bank, Marchon Eyewear, Spanx,
and Swatfame. 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), 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, invest@amsoftware.com or Kevin Liu, Investor
Relations, (626) 657-0013.
American Software® is a registered trademark of American
Software, Inc. Logility® is a registered trademark and Logility
Voyager Solutions™ is a trademark of Logility, 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)
Third Quarter Ended Nine Months Ended
January 31, January 31, 2019 2018
Pct Chg. 2019 2018 Pct Chg. Revenues:
License fees $ 1,718 $ 5,955 (71 %) $ 5,432 $ 12,420 (56 %)
Subscription fees 3,687 2,584 43 % 10,196 6,244 63 % Professional
services & other 10,176 10,342 (2 %) 32,240 31,773 1 %
Maintenance 11,422 11,236 2 %
34,567 32,903 5 % Total Revenues 27,003
30,117 (10 %) 82,435
83,340 (1 %) Cost of Revenues: License fees 1,831
1,727 6 % 5,305 4,692 13 % Subscription services 1,389 1,028 35 %
3,746 2,779 35 % Professional services & other 7,714 7,912 (3
%) 24,484 22,673 8 % Maintenance 2,030 2,404
(16 %) 6,442 6,919 (7 %) Total
Cost of Revenues 12,964 13,071 (1 %)
39,977 37,063 8 % Gross Margin
14,039 17,046 (18 %) 42,458
46,277 (8 %) Operating expenses: Research and
development 4,884 4,134 18 % 13,980 11,902 17 % Less: capitalized
development (2,073 ) (1,035 ) 100 % (4,162 ) (3,652 ) 14 % Sales
and marketing 4,699 5,385 (13 %) 15,183 15,055 1 % General and
administrative 4,302 4,263 1 % 12,903 11,394 13 % Provision for
doubtful accounts - - - - 24 nm Amortization of acquisition-related
intangibles 97 95 2 % 291 486 (40 %)
Total Operating Expenses 11,909
12,842 (7 %) 38,195 35,209
8 % Operating Earnings 2,130 4,204
(49 %) 4,263 11,068 (61 %)
Interest Income & Other, Net 527 1,574
(67 %) 1,090 2,849 (62 %)
Earnings Before Income Taxes 2,657 5,778 (54 %) 5,353 13,917 (62 %)
Income Tax Expense 356 198 80 %
424 3,132 (86 %) Net Earnings $ 2,301 $
5,580 (59 %) $ 4,929 $ 10,785 (54 %)
Earnings per common share: (1) Basic $ 0.07 $ 0.18
(61 %) $ 0.16 $ 0.36 (56 %) Diluted $ 0.07
$ 0.18 (61 %) $ 0.16 $ 0.36 (56 %)
Weighted average number of common shares outstanding:
Basic 31,009 30,244 30,887 29,940 Diluted 31,170 30,701 31,361
30,299 nm- not meaningful
AMERICAN
SOFTWARE, INC. NON-GAAP MEASURES OF PERFORMANCE (In
thousands, except per share data, unaudited)
Third Quarter
Ended Nine Months Ended January 31, January
31, 2019 2018 Pct Chg. 2019
2018 Pct Chg. NON-GAAP Operating Income:
Operating Income (GAAP Basis) $ 2,130 $ 4,204 (49 %) $ 4,263
$ 11,068 (61 %) Amortization of acquisition-related intangibles 597
514 16 % 1,791 1,218 47 % Stock-based compensation 466
314 48 % 1,308 1,107
18 %
Non-GAAP Operating income 3,193
5,032 (37 %) 7,362 13,393
(45 %)
Non-GAAP Operating income, as
a % of revenue 12 % 17 % 9 % 16 %
Third Quarter Ended Nine Months Ended
January 31, January 31, 2019 2018
Pct Chg. 2019 2018 Pct Chg. NON-GAAP
EBITDA: Net Earnings (GAAP Basis) $ 2,301 $ 5,580 (59 %)
$ 4,929 $ 10,785 (54 %) Income Tax Expense 356 198 80 % 424 3,132
(86 %) Interest Income & Other, Net (527 ) (1,574 ) (67 %)
(1,090 ) (2,849 ) (62 %) Amortization of intangibles 1,792 1,475 21
% 5,184 3,945 31 % Depreciation 168 124
35 % 487 359 36 %
EBITDA (earnings
before interest, taxes, depreciation and amortization)
4,090 5,803 (30 %) 9,934
15,372 (35 %) Stock-based compensation 466
314 48 % 1,308 1,107
18 %
Adjusted EBITDA $ 4,556 $ 6,117
(26 %) $ 11,242 $ 16,479 (32 %)
EBITDA, as a percentage of revenues 15 %
19 % 12 % 18 %
Adjusted EBITDA, as a percentage of revenues 17 %
20 % 14 % 20 %
Third Quarter
Ended Nine Months Ended January 31, January
31, 2019 2018 Pct Chg. 2019
2018 Pct Chg. NON-GAAP EARNINGS PER SHARE:
Net Earnings (GAAP Basis) $ 2,301 $ 5,580 (59 %) $ 4,929 $
10,785 (54 %) Tax Cuts and Jobs Act of 2017 Adjustment (3) - (1,112
) nm - (1,112 ) nm Amortization of acquisition-related intangibles
(2) 519 398 30 % 1,649 855 93 % Stock-based compensation (2)
405 243 67 % 1,204 777
55 %
Adjusted Net Earnings $ 3,225 $ 5,109
(37 %) $ 7,782 $ 11,305 (31 %) Adjusted
non-GAAP diluted earnings per share $ 0.10 $ 0.16 (38
%) $ 0.25 $ 0.38 (34 %)
Third
Quarter Ended Nine Months Ended January 31,
January 31, 2019 2018 Pct Chg.
2019 2018 Pct Chg. NON-GAAP Earnings Per
Share Net Earnings (GAAP Basis) $ 0.07 $ 0.18 (61 %) $
0.16 $ 0.36 (56 %) Tax Cuts and Jobs Act of 2017 Adjustment (3) -
(0.04 ) nm - (0.04 ) nm Amortization of acquisition-related
intangibles (2) 0.02 0.01 100 % 0.05 0.03 67 %
Stock-based compensation (2)
0.01 0.01 0 % 0.04
0.03 33 %
Adjusted Net Earnings $ 0.10 $ 0.16
(38 %) $ 0.25 $ 0.38 (34 %)
Third Quarter Ended Nine Months Ended January
31, January 31, 2019 2018 Pct Chg.
2019 2018 Pct Chg. Amortization of
acquisition-related intangibles Cost of license $ 500 $ 419 19
% $ 1,500 $ 732 105 % Operating expenses 97 95
2 % 291 486 (40 %)
Total
amortization of acquisition-related intangibles $ 597 $
514 16 % $ 1,791 $ 1,218 47 %
Stock-based compensation Cost of revenues $ 35 $ 38 (8 %) $
96 $ 121 (21 %) Research and development 35 16 119 % 98 74 32 %
Sales and marketing 71 50 42 % 189 160 18 % General and
administrative 325 210 55 % 925
752 23 %
Total stock-based compensation
$ 466 $ 314 48 % $ 1,308 $ 1,107 18 %
(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 $0.07 and $0.16 for the three and nine months
ended January 31, 2019, respectively. Diluted per share for Class B
shares under the two-class method are $0.18 and $0.36 for the three
and nine months ended January 31, 2018, respectively. (2) - Tax
affected using the effective tax rate for the three and nine month
periods ended January 31, 2019 and 2018. (3) - Adjustment primarily
due to the rate difference on our Deferred Tax Liabilities from the
Tax Cuts and Jobs Act of 2017. nm- not meaningful
AMERICAN SOFTWARE, INC. Consolidated
Balance Sheet Information (In thousands)
(Unaudited) January 31,
April 30, 2019 2018 Cash
and Cash Equivalents $ 55,058 $ 52,794 Short-term Investments
28,106 26,121 Accounts Receivable: Billed 20,298 18,643 Unbilled
2,992 3,375 Total Accounts Receivable, net 23,290
22,018 Prepaids & Other 6,184 6,592 Current
Assets 112,638 107,525 Investments - Non-current 998 8,893
PP&E, net 3,561 3,034 Capitalized Software, net 10,497
9,728 Goodwill 25,888 25,888 Other Intangibles, net 3,329 5,120
Other Non-current Assets 3,910 2,777 Total Assets $
160,821 $ 162,965 Accounts Payable $ 1,789 $ 1,974 Accrued
Compensation and Related costs 2,909 6,310 Dividend Payable 3,417
3,367 Other Current Liabilities 1,279 1,246 Deferred Revenues -
Current 32,947 33,226 Current Liabilities 42,341
46,123 Deferred Revenues - Non-current - 147 Deferred Tax
Liability - Non-current 3,027 2,615 Other Long-term Liabilities
1,097 1,496 Long-term Liabilities 4,124 4,258
Total Liabilities 46,465 50,381 Shareholders' Equity
114,356 112,584 Total Liabilities & Shareholders'
Equity $ 160,821 $ 162,965
AMERICAN
SOFTWARE, INC. Condensed Consolidated Cashflow
Information (In thousands) (Unaudited)
Nine Months Ended
January 31, 2019 2018 Net cash
provided by operating activities $ 13,608 $ 5,351
Capitalized computer software development costs (4,162 ) (3,652 )
Purchases of property and equipment, net of disposals (1,014 ) (413
) Purchase of business, net of cash acquired - (9,253 )
Net cash used in investing activities (5,176 )
(13,318 ) Dividends paid (10,172 ) (9,841 ) Proceeds from
exercise of stock options 4,004 6,719
Net cash
used in financing activities (6,168 ) (3,122 ) Net
change in cash and cash equivalents 2,264 (11,089 ) Cash and cash
equivalents at beginning of period 52,794 66,001
Cash and cash equivalents at end of period $ 55,058 $
54,912
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190220005830/en/
Vincent C. KlingesChief Financial OfficerAmerican Software,
Inc.(404) 264-5477
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