American Software Reports Second Quarter of Fiscal Year 2022 Results

Rhea-AI Summary

American Software, Inc. (AMSWA) reported strong preliminary financial results for Q2 FY2022, showcasing a 49% increase in subscription fees, reaching $10.4 million. Total revenues rose 12% to $31.2 million, with recurring revenue streams comprising 63% of total revenue. Operating earnings surged 326% to $2.7 million, with GAAP net earnings increasing 379% to $3.3 million, equating to $0.10 per share. The company maintains a robust cash position of $111.3 million and no debt, highlighting a record backlog of $123 million, indicating promising growth and demand in cloud services.

Positive

• Subscription fees increased by 49% to $10.4 million in Q2 FY2022.
• Total revenues grew 12% to $31.2 million year-over-year.
• Operating earnings surged 326% to $2.7 million.
• GAAP net earnings rose 379% to $3.3 million, $0.10 per share.
• Record backlog of $123 million, a 58% increase from last year.
• Strong cash position of $111.3 million with no debt.

Negative

• Maintenance revenues decreased by 9% to $9.3 million.

Return to Double-Digit Revenue Growth Driven by Continued Strong Growth in Subscription Fees

ATLANTA--(BUSINESS WIRE)-- American Software, Inc. (NASDAQ: AMSWA) today reported preliminary financial results for the second quarter of fiscal year 2022.

Key Second Quarter Financial Highlights:

• Subscription fees were $10.4 million for the quarter ended October 31, 2021, a 49% increase compared to $7.0 million for the same period last year and software license revenues were up slightly to $0.8 million compared to $0.5 million for the same period last year.
• Cloud Services Annual Contract Value (ACV) increased approximately 44% to $42.5 million for the quarter ended October 31, 2021 compared to $29.6 million during the same period of the prior year.
• Total revenues for the quarter ended October 31, 2021 increased 12% to $31.2 million, compared to $27.9 million for the same period of the prior year.
• Recurring revenue streams for Maintenance and Cloud Subscriptions were 63% of total revenues in the quarter ended October 31, 2021 compared to 62% in the same period of the prior year.
• Maintenance revenues for the quarter ended October 31, 2021 decreased 9% to $9.3 million compared to $10.2 million for the same period last year.
• Professional services and other revenues for the quarter ended October 31, 2021 increased 5% to $10.8 million compared to $10.2 million for the same period last year. For the Supply Chain business, professional services revenues for the quarter ended October 31, 2021 increased by 6% to $5.3 million when compared to $5.0 million in the same period prior year.
• Operating earnings for the quarter ended October 31, 2021 increased 326% to $2.7 million compared to $0.6 million for the same period last year.
• GAAP net earnings for the quarter ended October 31, 2021 increased 379% to $3.3 million or $0.10 per fully diluted share compared to $0.7 million or $0.02 per fully diluted share for the same period last year.
• Adjusted net earnings for the quarter ended October 31, 2021, which excludes non-cash stock-based compensation expense and amortization of acquisition-related intangibles, increased 173% to $4.2 million or $0.12 per fully diluted share compared to $1.5 million or $0.05 per fully diluted share for the same period last year.
• EBITDA increased by 74% to $3.7 million for the quarter ended October 31, 2021 compared to $2.1 million for the same period last year.
• Adjusted EBITDA increased by 70% to $4.8 million for the quarter ended October 31, 2021 compared to $2.8 million for the same period last year. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income/(expense) & other, net, income tax expense/ (benefit) and non-cash stock-based compensation expense.

Key Fiscal 2022 Year to Date Financial Highlights:

• Subscription fees were $20.1 million for the six months ended October 31, 2021, a 51% increase compared to $13.3 million for the same period last year, while Software license revenues were $1.3 million compared to $1.2 million for the same period last year, reflecting our conversion to the SaaS engagement model.
• Total revenues for the six months ended October 31, 2021 increased 10% to $60.5 million compared to $55.2 million for the same period last year.
• Recurring revenue streams for Maintenance and Cloud Services were 64% of total revenues for the six-month period ended October 31, 2021 compared to 61% in the same period of the prior year.
• Maintenance revenues for the six months ended October 31, 2021 were $18.7 million, a 9% decrease compared to $20.5 million for the same period last year.
• Professional services and other revenues for the six months ended October 31, 2021 increased 1% to $20.3 million compared to $20.1 million for the same period last year.
• For the six months ended October 31, 2021, the Company reported operating earnings of approximately $4.5 million compared to $1.5 million for the same period last year, a 194% increase.
• GAAP net earnings were approximately $6.3 million or $0.18 per fully diluted share for the six months ended October 31, 2021, a 130% increase compared to $2.7 million or $0.08 per fully diluted share for the same period last year.
• Adjusted net earnings for the six months ended October 31, 2021, which exclude stock-based compensation expense and amortization of acquisition-related intangibles, increased 81% to $7.8 million or $0.23 per fully diluted share, compared to $4.3 million or $0.13 per fully diluted share for the same period last year.
• EBITDA increased by 41% to $6.6 million for the six months ended October 31, 2021 compared to $4.7 million for the same period last year.
• Adjusted EBITDA increased 43% to $8.4 million for the six months ended October 31, 2021 compared to $5.9 million for the six months ended October 31, 2020. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, income tax (benefit)/expense and non-cash stock-based compensation.

The overall financial condition of the Company remains strong, with cash and investments of approximately $111.3 million, an increase of approximately $16.7 million when compared to October 31, 2020, and no debt as of October 31, 2021. During the second quarter of fiscal year 2022, the Company paid shareholder dividends of approximately $3.7 million.

“Our second quarter of fiscal year 2022 is off to a solid start with two consecutive quarters of double-digit growth in our Supply Chain Management segment and a 44% increase in Cloud Services ACV when compared to the same period last year,” said Allan Dow, CEO and president of American Software. “Our backlog as measured by our Remaining Performance Obligations (RPO) increased 58% to $123 million in the second quarter when compared to last year, reflecting a new record for the company. As we head into our seasonally stronger second half, we expect to build upon our momentum as we execute against our growing pipeline and as enterprises increasingly adopt cloud-based supply chain transformation solutions.”

“This past quarter also emphasized that sustainability initiatives are becoming increasingly influential to consumers and, consequently, businesses. Many companies are evaluating their social and environmental initiatives and are finding that a majority of their impact can be traced back to their supply chain practices,” continued Dow. “This is driving companies of all sizes to lean on technology to measure their emissions and identify opportunities for improvement. We believe the future of supply chain sustainability is rooted in transparency, traceability and automation.”

Key Second quarter of fiscal year 2022 highlights:

Customers & Channels

• Notable new and existing customers placing orders with the Company in the second quarter include: Diversey, Inc., Gerdau Ameristeel US, Inc., Griffith Foods Worldwide, Inc., Lacoste Operations, Lindsay Corporation, Sauer Brands, Inc, Stichd B.V., Whitebridge Pet Brands, LLC.
• During the quarter, SaaS subscription and/or software license agreements were signed with customers located in the following 6 countries: Belgium, Canada, France, Mexico, New Zealand, and United States.
• Logility, Inc. and Demand Management, Inc., wholly owned subsidiaries of the Company, were recognized as SupplyChainBrain’s 2021 100 Great Supply Chain Partners. The recognized companies are a select group of companies whose customers recognize them for providing outstanding solutions and services.
• During the quarter, Logility announced its ranking as the highest in the Digital Planning Use Case in the 2021 Gartner “Critical Capabilities for Supply Chain Planning Solutions” report. Logility’s Digital Supply Chain Platform offers support for a broad range of supply chain planning requirements, from sales and operations planning (S&OP) through manufacturing.
• Also during the quarter, Logility and Demand Management congratulated their customers who were recognized as Supply & Demand Chain Executive’s 2021 Women in Supply Chain. Customers recognized were Mandy McCain of Berry Global, Katherine Storer of Berlin Packaging, Stephanie Francis of ChemPoint, Michelle Wielemaker of Capral Australia and Mariam Belghith of Laboratories Philadelphia in Sfax, Tunisia (laboratories SIMED).

Company and Technology

• During the quarter, Logility announced its partnership with PricewaterhouseCoopers (PwC) to bring the latest innovation in supply chain technology and services to strengthen its local Brazilian market presence and enable digital transformation.
• Logility announced the partnership with Visus LLC to support analytics customers and their digital transformation journeys. The partnership leverages digital solutions using web and mobile technology to help drive value.
• Logility also announced its latest software release which supports corporate social responsibility and supply chain traceability goals. Logility 21.02 powers technology to ensure sustainable, ethical practices that support brand integrity and corporate responsibility.
• Also during the quarter, Logility announced the partnership with ArcherGrey to strengthen consulting and technology solutions for its customers. The partnership will support the evolving needs of customers in a rapidly changing supply chain environment.

About American Software, Inc.

Atlanta-based American Software, Inc. (NASDAQ: AMSWA), through its operating entities, delivers an innovative technical platform with AI-powered capabilities for supply chain management and advanced retail planning that is accelerating digital supply chain optimization from product concept to customer availability. Logility, Inc. is helping large enterprise 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 and Red Wing Shoe Company. Demand Management, Inc. delivers affordable, easy-to-use 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. Customers of New Generation Computing, Inc. which are now serviced by Logility and Demand Management, include Brooks Brothers, Carter’s, Destination XL, Foot Locker, Jockey International, Lacoste and Spanx. The comprehensive American Software supply chain and retail planning 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, retail merchandise and assortment planning and allocation, product lifecycle management (PLM), sourcing management, vendor quality and compliance, and product traceability. For more information about American Software, please visit www.amsoftware.com, call (626) 657-0013 or email kliu@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 existing customer contracts in the forward 12-month period. EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income/(expense) & other, net, and income tax (benefit)/expense. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, income tax (benefit)/expense 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)
			Second Quarter Ended										Six Months Ended
			October 31,										October 31,
			2021			2020				Pct Chg.			2021				2020				Pct Chg.
Revenues:
	Subscription fees		$	10,361		$	6,966			49	%		$	20,149			$	13,329			51	%
	License fees			805			450			79	%			1,297				1,237			5	%
	Professional services & other			10,779			10,242			5	%			20,308				20,056			1	%
	Maintenance			9,266			10,223			(9	%)			18,728				20,537			(9	%)
		Total Revenues		31,211			27,881			12	%			60,482				55,159			10	%
Cost of Revenues:
	Subscription services			3,404			2,946			16	%			6,628				5,705			16	%
	License fees			198			553			(64	%)			357				1,228			(71	%)
	Professional services & other			7,477			7,624			(2	%)			14,487				15,454			(6	%)
	Maintenance			1,746			1,941			(10	%)			3,720				3,714			0	%
		Total Cost of Revenues		12,825			13,064			(2	%)			25,192				26,101			(3	%)
Gross Margin				18,386			14,817			24	%			35,290				29,058			21	%
Operating expenses:
	Research and development			4,278			4,463			(4	%)			8,702				8,803			(1	%)
	Less: capitalized development			-			(126	)		(100	%)			-				(371	)		(100	%)
	Sales and marketing			5,892			5,429			9	%			12,012				10,173			18	%
	General and administrative			5,476			4,367			25	%			10,010				8,831			13	%
	Amortization of acquisition-related intangibles			53			53			0	%			106				106			0	%
		Total Operating Expenses		15,699			14,186			11	%			30,830				27,542			12	%
Operating Earnings				2,687			631			326	%			4,460				1,516			194	%
Interest Income/(Expense) & Other, Net				930			(42	)		nm				1,367				1,290			6	%
Earnings Before Income Taxes				3,617			589			514	%			5,827				2,806			108	%
Income Tax Expense/(Benefit)				303			(103	)		nm				(434	)			80			nm
Net Earnings			$	3,314		$	692			379	%		$	6,261			$	2,726			130	%
Earnings per common share: (1)
	Basic		$	0.10		$	0.02			400	%		$	0.19			$	0.08			138	%
	Diluted		$	0.10		$	0.02			400	%		$	0.18			$	0.08			125	%
Weighted average number of common shares outstanding:
		Basic		33,336			32,489							33,195				32,414
		Diluted		34,684			32,896							34,448				32,919
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,
			2021				2020				Pct Chg.			2021				2020				Pct Chg.
NON-GAAP Operating Earnings:
Operating Earnings (GAAP Basis)			$	2,687			$	631			326	%		$	4,460			$	1,516			194	%
	Amortization of acquisition-related intangibles			53				311			(83	%)			106				622			(83	%)
	Stock-based compensation			1,042				652			60	%			1,817				1,198			52	%
NON-GAAP Operating Earnings:				3,782				1,594			137	%			6,383				3,336			91	%
Non-GAAP Operating Earnings, as a % of revenue				12	%			6	%						11	%			6	%
			Second Quarter Ended											Six Months Ended
			October 31,											October 31,
			2021				2020				Pct Chg.			2021				2020				Pct Chg.
NON-GAAP EBITDA:
Net Earnings (GAAP Basis)			$	3,314			$	692			379	%		$	6,261			$	2,726			130	%
	Income Tax Expense/(Benefit)			303				(103	)		nm				(434	)			80			nm
	Interest Income/(Expense) & Other, Net			(930	)			42			nm				(1,367	)			(1,290	)		6	%
	Amortization of intangibles			860				1,353			(36	%)			1,816				2,883			(37	%)
	Depreciation			179				161			11	%			353				311			14	%
EBITDA (earnings before interest, taxes, depreciation and amortization)				3,726				2,145			74	%			6,629				4,710			41	%
	Stock-based compensation			1,042				652			60	%			1,817				1,198			52	%
Adjusted EBITDA			$	4,768			$	2,797			70	%		$	8,446			$	5,908			43	%
EBITDA, as a percentage of revenues				12	%			8	%						11	%			9	%
Adjusted EBITDA, as a percentage of revenues				15	%			10	%						14	%			11	%
			Second Quarter Ended											Six Months Ended
			October 31,											October 31,
			2021				2020				Pct Chg.			2021				2020				Pct Chg.
NON-GAAP EARNINGS PER SHARE:
Net Earnings (GAAP Basis)			$	3,314			$	692			379	%		$	6,261			$	2,726			130	%
	Amortization of acquisition-related intangibles (2)			43				272			(84	%)			85				545			(84	%)
	Stock-based compensation (2)			836				570			47	%			1,456				1,048			39	%
Adjusted Net Earnings			$	4,193			$	1,534			173	%		$	7,802			$	4,319			81	%
Adjusted non-GAAP diluted earnings per share			$	0.12			$	0.05			140	%		$	0.23			$	0.13			77	%
			Second Quarter Ended											Six Months Ended
			October 31,											October 31,
			2021				2020				Pct Chg.			2021				2020				Pct Chg.
NON-GAAP Earnings Per Share
Net Earnings (GAAP Basis)			$	0.10			$	0.02			400	%		$	0.18			$	0.08			125	%
	Amortization of acquisition-related intangibles (2)			-				0.01			(100	%)			-				0.02			(100	%)
	Stock-based compensation (2)			0.02				0.02			0	%			0.05				0.03			67	%
Adjusted Net Earnings				0.12			$	0.05			140	%			0.23			$	0.13			77	%
			Second Quarter Ended											Six Months Ended
			October 31,											October 31,
			2021				2020				Pct Chg.			2021				2020				Pct Chg.
Amortization of acquisition-related intangibles
	Cost of license		$	-			$	258			(100	%)		$	-			$	516			(100	%)
	Operating expenses			53				53			0	%			106				106			0	%
Total amortization of acquisition-related intangibles			$	53			$	311			(83	%)		$	106			$	622			(83	%)
Stock-based compensation
	Cost of revenues		$	68			$	23			196	%		$	129			$	66			95	%
	Research and development			99				49			102	%			167				74			126	%
	Sales and marketing			174				87			100	%			317				153			107	%
	General and administrative			701				493			42	%			1,204				905			33	%
Total stock-based compensation			$	1,042			$	652			60	%		$	1,817			$	1,198			52	%
(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 $0.10 and $0.19 for the three and six months ended October 31, 2021, respectively. Diluted per share for Class B shares under the two-class method are $0.02 and $0.09 for the three and six months ended October 31, 2020, 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, 2021 of 19.8% and 12.5% for the three and six month periods ended October 31, 2020, respectively.
nm- not meaningful

AMERICAN SOFTWARE, INC.
Consolidated Balance Sheet Information
(In thousands)
(Unaudited)
			October 31,			April 30,
			2021			2021
Cash and Cash Equivalents			$	94,201		$	88,658
Short-term Investments				17,163			16,006
Accounts Receivable:
	Billed			19,662			24,438
	Unbilled			2,475			2,201
Total Accounts Receivable, net				22,137			26,639
Prepaids & Other				7,375			5,320
Current Assets				140,876			136,623
PP&E, net				3,689			3,428
Capitalized Software, net				3,057			4,767
Goodwill				25,888			25,888
Other Intangibles, net				254			360
Deferred Sales Commissions - Non-current				2,256			2,474
Lease Right of Use Assets				1,249			1,454
Other Non-current Assets				2,339			2,163
Total Assets			$	179,608		$	177,157
Accounts Payable			$	1,994		$	1,732
Accrued Compensation and Related costs				4,281			6,129
Dividend Payable				3,676			3,615
Operating Lease Obligation - Current				665			739
Other Current Liabilities				611			1,307
Deferred Revenues - Current				35,968			37,142
Current Liabilities				47,195			50,664
Operating Lease Obligation - Non-current				669			821
Deferred Tax Liability - Non-current				2,527			2,627
Other Long-term Liabilities				370			654
Long-term Liabilities				3,566			4,102
		Total Liabilities		50,761			54,766
Shareholders' Equity				128,847			122,391
Total Liabilities & Shareholders' Equity			$	179,608		$	177,157

AMERICAN SOFTWARE, INC.
Condensed Consolidated Cashflow Information
(In thousands)
(Unaudited)
			Second Quarter Ended
			October 31,
			2021				2020
		Net cash provided by operating activities	$	7,712			$	6,771
		Capitalized computer software development costs		-				(371	)
		Purchases of property and equipment, net of disposals		(615	)			(163	)
		Net cash used in investing activities		(615	)			(534	)
		Dividends paid		(7,268	)			(7,118	)
		Proceeds from exercise of stock options		5,714				2,853
		Net cash used in financing activities		(1,554	)			(4,265	)
		Net change in cash and cash equivalents		5,543				1,972
		Cash and cash equivalents at beginning of period		88,658				79,814
		Cash and cash equivalents at end of period	$	94,201			$	81,786

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211118006228/en/

Vincent C. Klinges

Chief Financial Officer

American Software, Inc.

(404) 264-5477

Source: American Software, Inc.

FAQ

What were American Software's revenues for Q2 FY2022?

Total revenues for Q2 FY2022 were $31.2 million, a 12% increase compared to the same quarter last year.

How much did subscription fees grow in Q2 FY2022 for AMSWA?

Subscription fees grew by 49% to $10.4 million in Q2 FY2022.

What is the net earnings per share for AMSWA in Q2 FY2022?

GAAP net earnings for Q2 FY2022 were approximately $3.3 million, or $0.10 per fully diluted share.

How much did American Software report in cash and investments?

American Software reported approximately $111.3 million in cash and investments.

What was the backlog reported by AMSWA for Q2 FY2022?

The company reported a record backlog of $123 million, a 58% increase year-over-year.