Item 2.
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Managements Discussion and Analysis of Financial Condition and Results of Operations
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FORWARD-LOOKING STATEMENTS
This report on Form
10-Q
contains forward-looking statements relating to our future financial
performance, business strategy, financing plans and other future events that involve uncertainties and risks. You can identify these statements by forward-looking words such as anticipate, intend, plan,
continue, could, grow, may, potential, predict, strive will, seek, estimate, believe, expect, and similar
expressions that convey uncertainty of future events or outcomes. Any forward-looking statements we make herein are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include
statements concerning future:
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liquidity, cash flow and capital expenditures;
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demand for and pricing of our products and services;
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annual contract value (ACV);
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viability and effectiveness of strategic alliances;
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industry conditions and market conditions;
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acquisition activities and the effect of completed acquisitions; and
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general economic conditions.
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Although we believe that the goals, plans, expectations, and prospects that our forward-looking statements reflect are reasonable in view of
the information currently available to us, those statements are not guarantees of performance. There are many factors that could cause our actual results to differ materially from those anticipated by forward-looking statements made herein. These
factors include, but are not limited to, continuing U.S. and global economic uncertainty, the timing and degree of business recovery, unpredictability and the irregular pattern of future revenues, dependence on particular market segments or
customers, competitive pressures, delays, product liability and warranty claims and other risks associated with new product development, undetected software errors, market acceptance of our products, technological complexity, the challenges and
risks associated with integration of acquired product lines, companies and services, as well as a number of other risk factors that could affect our future performance. All forward-looking statements included in this report on Form
10-Q
are based upon information available to us as of the filing date of this report on Form
10-Q.
We undertake no obligation to update any of these forward-looking statements
for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or
implied by these statements. We discuss certain factors in greater detail in Business Overview below. The term fiscal 2019 and fiscal 2018 refers to our fiscal years ending April 30, 2019 and 2018,
respectively.
ECONOMIC OVERVIEW
Corporate capital spending trends and commitments are the primary determinants of the size of the market for business software. Corporate
capital spending is, in turn, a function of general economic conditions in the U.S. and abroad and in particular may be affected by conditions in global credit markets.
In July 2018, the International Monetary Fund (IMF) provided an update to the World Economic Outlook (WEO) for the
2018 and 2019 world economic growth forecast. The update noted that,
Global growth is projected to reach 3.9
percent in 2018 and 2019, in line with the forecast of the April 2018 World Economic Outlook (WEO), but the
expansion is becoming less even, and risks to the outlook are mounting. The rate of expansion appears to have peaked in some major economies and growth has become less synchronized. In the United States, near-term momentum is strengthening in line
with the April WEO forecast, and the US dollar has appreciated by around 5
percent in recent weeks. Growth projections have been revised down for the euro area, Japan, and the United Kingdom, reflecting negative surprises to
activity in early 2018. Among emerging market and developing economies, growth prospects are also becoming more uneven, amid rising oil prices, higher yields in the United States, escalating trade tensions, and market pressures on the currencies of
some economies with weaker fundamentals. Growth projections have been revised down for Argentina, Brazil, and India, while the outlook for some oil exporters has strengthened.
For fiscal 2019, we expect the global economy to improve modestly when compared to the prior year. We believe information technology spending
will incrementally improve over the long term as increased global competition forces companies to improve productivity by upgrading their technology systems, which could result in an improved selling environment. Although this improvement could slow
or regress at any time, due in part to concerns in global capital markets and general economic conditions, we believe that our organizational and financial structure will enable us to take advantage of any sustained economic rebound. Customers
continue to take long periods to evaluate discretionary software purchases.
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