News

American Software Reports Preliminary Fourth Quarter and Fiscal Year 2019 Results

Subscription Fees Increase 47% for the Quarter and Cloud Services
Annual Contract Value Increases 36%

ATLANTA–(BUSINESS WIRE)–American Software, Inc. (NASDAQ: AMSWA) today reported preliminary
financial results for the fourth quarter and for fiscal year 2019.

Key fourth quarter financial highlights:

  • Subscription fees were $3.8 million for the quarter ended April 30,
    2019, a 47% increase compared to $2.6 million for the same period last
    year, while software license revenues were $1.7 million, a 42%
    decrease compared to $2.9 million for the same period last year,
    reflecting our continued transition to the SaaS engagement model.
  • Cloud Services Annual Contract Value (ACV) increased approximately 36%
    to $17.3 million as of the quarter ended April 30, 2019 compared to
    $12.7 million as of the same period of the prior year.
  • Total revenues for the quarter ended April 30, 2019 were $26.3
    million, a decrease of 11% over the comparable period last year.
  • Recurring revenue streams for Maintenance and Subscription Cloud
    Services were 56% of total revenues in the quarter ended April 30,
    2019 compared to 46% in the same period of the prior year.
  • Maintenance revenues for the quarter ended April 30, 2019 decreased 1%
    to $10.8 million compared to $10.9 million for the same period last
    year.
  • Professional services and other revenues for the quarter ended April
    30, 2019 were $9.9 million compared to $12.9 million for the same
    period last year.
  • Operating earnings for the quarter ended April 30, 2019 decreased 59%
    to $1.0 million compared to $2.5 million for the same period last year.
  • GAAP net earnings for the quarter ended April 30, 2019 increased 48%
    to $1.9 million or $0.06 per fully diluted share compared to $1.3
    million or $0.04 per fully diluted share for the same period last year.
  • Adjusted net earnings for the quarter ended April 30, 2019, which
    exclude non-cash stock-based compensation expense and amortization of
    acquisition-related intangibles, were $2.7 million or $0.09 per fully
    diluted share compared to $2.0 million or $0.06 per fully diluted
    share for the same period last year.
  • EBITDA decreased by 27% to $3.1 million for the quarter ended April
    30, 2019 compared to $4.2 million for the same period last year.
  • Adjusted EBITDA decreased by 23% to $3.5 million for the quarter ended
    April 30, 2019 compared to $4.5 million for the quarter ended April
    30, 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 year 2019 financial highlights:

  • Subscription fees were $14.0 million for the twelve months ended April
    30, 2019, a 58% increase compared to $8.9 million for the same period
    last year, while software license revenues were $7.1 million, a 54%
    decrease compared to $15.3 million for the same period last year,
    reflecting our continued transition to the SaaS engagement model.
  • Total revenues for the twelve months ended April 30, 2019 decreased by
    4% to $108.7 million compared to $112.7 million for the same period
    last year.
  • Recurring revenue streams of Maintenance and Subscription Cloud
    Services were 55% of total revenues for the twelve month period ended
    April 30, 2019 compared to 47% in the same period of the prior year.
  • Maintenance revenues for the twelve months ended April 30, 2019 were
    $45.4 million, a 4% increase compared to $43.8 million for the same
    period last year.
  • Professional services and other revenues for the twelve months ended
    April 30, 2019 decreased 6% to $42.2 million compared to $44.7 million
    for the same period last year.
  • For the twelve months ended April 30, 2019, the Company reported
    operating earnings of approximately $5.3 million compared to $13.5
    million for the same period last year, a 61% decrease.
  • GAAP net earnings were approximately $6.8 million or $0.22 per fully
    diluted share for the twelve months ended April 30, 2019, a 44%
    decrease compared to $12.1 million or $0.40 per fully diluted share
    for the same period last year.
  • Adjusted net earnings for the twelve months ended April 30, 2019,
    which exclude 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 22% to $10.5
    million or $0.33 per fully diluted share, compared to $13.5 million or
    $0.44 per fully diluted share for the same period last year.
  • EBITDA decreased by 34% to $13.0 million for the twelve months ended
    April 30, 2019 compared to $19.6 million for the same period last year.
  • Adjusted EBITDA decreased 30% to $14.8 million for the twelve months
    ended April 30, 2019 compared to $21.0 million for the twelve months
    ended April 30, 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 $88.5 million and no debt as of April
30, 2019. During the fourth quarter of fiscal 2019, the Company paid
shareholder dividends of approximately $3.4 million.

“We are pleased with our 58% growth in Subscription Fees and 36%
increase in Cloud Services Annual Contract Value (ACV) as these key
performance indicators continue to underscore our measured transition to
a cloud-first business model for the 2019 fiscal year,” said Allan Dow,
president of American Software. “Additionally, our recurring revenue
streams of Maintenance and Subscription Cloud Services represented 56%
of fourth quarter Total Revenues, giving our business and shareholders
increased visibility and stability with respect to future revenue. While
we remain encouraged by our progress towards higher recurring revenues,
we experienced longer sales cycles throughout the year and especially in
the fourth quarter. As we look forward to fiscal year 2020, we believe
our investments in product innovations, go-to-market coverage, and
advanced analytics should enable us to build upon our performance in
fiscal year 2019.”

“We are driving differentiated innovation across our portfolio and
continue to be recognized as a leader in the supply chain solutions
marketplace. In fact, Gartner positioned two of our brands in the May
2019 Magic Quadrant for Sales and Operations Planning Systems of
Differentiation. Logility was recognized with the highest overall
position for Ability to Execute in the Leader quadrant and Demand
Management was prominently ranked in the Challenger quadrant,” stated
Dow. “Artificial Intelligence and machine learning are powering the
ability for our solutions to further automate, accelerate and streamline
supply chain planning. These innovations will help our customers better
address the increasingly competitive labor market with new automation
advantages, increased visibility, greater operational efficiency and
more confident decision-making. It is an exciting time to be in the
supply chain innovation business and we are optimistic about the
opportunities ahead.”

Additional highlights for the fourth quarter and fiscal 2019 include:

Customers and Channels

  • Notable new and existing customers placing orders with the Company in
    the fourth quarter include: Bericap, Cement Australia, Dismatec S.A.,
    Helzberg’s Diamond Shops, Lacoste, Living Proof, Marco Pharma
    International, Oatly, Quicksilver Scientific, Red Wing Shoe Company,
    Sandvik, Sleep Country, Tencate Geosynthetics, Tyler Union, and
    Violeta.
  • During the quarter, SaaS subscription and/or software license
    agreements were signed with customers located in the following 12
    countries: Australia, Belgium, Bolivia, Bosnia and Herzegovina,
    Canada, France, Germany, Mexico, New Zealand, Sweden, United States
    and Uruguay.
  • Logility, Inc., a wholly owned subsidiary of the Company, announced
    Tillamook County Creamery Association has received the prestigious
    2019 Velocity Award. Presented at the 2019 Velocity Conference, the
    award highlights a company that has demonstrated exceptional
    innovation in its effort to implement a digital supply chain
    initiative that significantly improves operations and creates a
    platform for growth.
  • Logility also recognized the recipients of the 2019 Accelerator Awards
    presented to Follett Corporation, Jockey International, Inc., Leupold
    & Stevens, Siemens Healthineers, and Smithfield Foods, Inc. for
    leading transformative digital supply chain initiatives that resulted
    in significant business impact through the innovative use of people,
    process, technology and data.
  • Logility congratulated Elaine Videau, Tillamook County Creamery
    Association, and Jay Schmidt, Leupold & Stevens, on their selection to
    the 2019 Supply & Demand Chain Executive Practitioner Pros to Know.
    Ms. Videau and Mr. Schmidt were two of 27 professionals honored this
    year for their commitment to transformative supply chain solutions and
    processes.
  • Demand Management, Inc., a wholly-owned subsidiary of Logility,
    announced that Kale Aero, a leading provider of structural components,
    assemblies, and kits to the aerospace industry, chose Demand Solutions®
    manufacturing as its new scheduling platform. Kale Aero’s Demand
    Solutions implementation will support the growing company’s operations
    in Istanbul, Turkey.
  • New Generation Computing, Inc. (NGC), a wholly-owned subsidiary of the
    Company, announced that Quality Worldwide, a full-service apparel
    design and manufacturing company, is implementing its Andromeda Cloud
    Platform®. Quality Worldwide selected the Andromeda Cloud
    Platform, including PLM, SCM and Quality Control, as well as NGC’s ERP
    solution, to deliver an even higher level of service and support for
    its customers, who include many of the retail and fashion industry’s
    best-known brands.
  • NGC announced that California Manufacturing Company selected the
    Andromeda Cloud Platform. California Manufacturing Company will
    implement the NGC Andromeda PLM® and Andromeda SCM®
    solutions for both the Canyon Guide Outfitters and Dakota Grizzly
    brands, providing the company with an integrated, seamless solution
    for all its lines of business.
  • NGC announced that Rip Curl, a Torquay, Australia based designer,
    manufacturer and retailer of high-tech surfing sportswear and a broad
    spectrum of accompanying products, will replace its legacy PLM system
    with Andromeda PLM. Following a comprehensive market evaluation, Rip
    Curl selected NGC’s cloud-based Andromeda PLM solution based on the
    platform’s robust planning functionality, strong vendor interaction
    capabilities, and efficient data management and entry.

Company and Technology

  • During the quarter, the Company hosted the 2019 Velocity Conference
    with keynote presenters including Amber Salley, research director,
    Gartner, and Sean Willems, Ph.D., Haslam Chair in Supply Chain
    Analytics, University of Tennessee. The global customer conference
    drew a record audience and featured 80 breakout and training sessions
    to help supply chain leaders leverage best practices and new
    technology innovations to drive greater speed, precision and value for
    their companies.
  • Logility announced Logility Voyager Pulse Wise™, an autonomous engine
    that continuously senses, analyzes and updates demand planning
    parameters in real-time to help ensure the supply chain operates at
    peak performance. Artificial intelligence analyzes future demand
    signals and actual performance to proactively react to changes that
    may impact forecast accuracy. This innovative approach to creating a
    more precise supply chain plan has been shown to increase forecast
    accuracy by 20 to 50 percent.
  • Logility highlighted several enhancements to the Logility Voyager
    Solutions™ platform that leverage valuable applications of artificial
    intelligence (AI) and machine learning to boost supply chain
    performance. A few of the AI and machine learning features announced
    include Voyager Pulse Wise, Voyager Order Promising, Optimization
    Orchestration, Advanced Demand Simulation, Inventory Optimization and
    Inspiration Board.
  • Logility launched the Logility Evergreen Upgrade Service to help
    customers overcome IT obstacles and take advantage of the latest
    innovations offered with the Logility Voyager Solutions platform.
    Through Logility’s new service, companies will gain a better grasp of
    the margin, revenue and cost improvements available to them as well as
    intangible benefits including improved employee satisfaction, enhanced
    brand equity and customer loyalty.
  • During the quarter, Logility announced Mac McGary joined the company
    as the executive vice president of Global Sales. McGary was most
    recently president of Sweetbridge Alliance and has held various sales
    and operational leadership positions in both young and mature
    enterprise software companies focused on the supply chain, including
    executive vice president of global sales at GT Nexus and vice
    president of Industrial and High Tech Markets at QAD.
  • Halo, a division of Logility, Inc., announced the release of Halo
    Demand Sensing, an innovative solution that leverages AI and multiple
    data streams to create an accurate sense-and-respond forecast to
    increase margins and optimize inventory deployment. Halo Demand
    Sensing builds on traditional approaches to accelerate decision-making
    for improved service levels, reduced inventory investment and
    increased profitability across retail, consumer goods, consumer
    electronics, and food and beverage industries.
  • Logility and Demand Management both announced during the quarter that
    industry publication Food Logistics named each company to its
    2018 FL100+ Top Software and Technology Provider list. This marks the
    15th consecutive year Logility has received this recognition and the
    tenth time Demand Management has received the award for helping many
    of the world’s leading food and beverage companies overcome their
    complex supply chain challenges.
  • Demand Management announced the general availability of its new
    SaaS-based Manufacturing Optimization solution designed to identify
    the most effective use of a company’s production resources given
    business objectives and network constraints. Bridging the gap between
    demand planning and production scheduling, Demand Solutions
    Manufacturing Optimization combines short-term detailed scheduling
    with longer range capacity planning and modeling to simultaneously
    solve multiple, complex constraints and model the real-world
    environment.
  • Demand Management announced that its president, Bill Harrison, was
    named a Provider Pro to Know by industry publication Supply &
    Demand Chain Executive
    for the eleventh consecutive year and NGC
    announced that three of its executives, Mark Burstein, president sales
    and development, Fred Isenberg, president consulting services, and
    Roger Mayerson, vice president business solutions, were recognized.
    The Pros to Know Award recognizes supply chain executives that are
    leading initiatives to help prepare their customers’ or their
    companies’ supply chains for the significant challenges of today’s
    business climate.
  • NGC announced it would showcase how its Andromeda Cloud Platform is
    driving digital transformation at the 2019 Velocity Conference. In
    addition, the company highlighted several sessions led by leading
    apparel manufacturers and retailers.

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, 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), 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™and Logility Voyager Pulse Wise™ are
trademarks 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)
                       
Fourth Quarter Ended Twelve Months Ended
April 30, April 30,
2019 2018 Pct Chg. 2019 2018 Pct Chg.
Revenues:
License fees $ 1,694 $ 2,925 (42%) $ 7,126 $ 15,344 (54%)
Subscription fees 3,830 2,611 47% 14,026 8,855 58%
Professional services & other 9,914 12,889 (23%) 42,154 44,663 (6%)
Maintenance   10,833   10,938 (1%)   45,400   43,841 4%
Total Revenues   26,271   29,363 (11%)   108,706   112,703 (4%)
 
Cost of Revenues:
License fees 1,125 1,569 (28%) 6,430 6,261 3%
Subscription services 2,013 1,038 94% 5,759 3,817 51%
Professional services & other 6,937 7,923 (12%) 31,421 30,596 3%
Maintenance   1,914   2,407 (20%)   8,356   9,326 (10%)
Total Cost of Revenues   11,989   12,937 (7%)   51,966   50,000 4%
Gross Margin   14,282   16,426 (13%)   56,740   62,703 (10%)
Operating expenses:
Research and development 5,060 4,779 6% 19,039 16,681 14%
Less: capitalized development (1,800) (1,152) 56% (5,961) (4,804) 24%
Sales and marketing 5,809 5,603 4% 20,992 20,658 2%
General and administrative 4,103 4,639 (12%) 17,006 16,033 6%
Provision for doubtful accounts 24 nm
Amortization of acquisition-related intangibles 97 94 3% 388 580 (33%)
           
Total Operating Expenses   13,269   13,963 (5%)   51,464   49,172 5%
Operating Earnings   1,013   2,463 (59%)   5,276   13,531 (61%)
Interest Income & Other, Net   1,275   (665) nm   2,365   2,184 8%
Earnings Before Income Taxes 2,288 1,798 27% 7,641 15,715 (51%)
Income Tax Expense   414   530 (22%)   838   3,662 (77%)
Net Earnings $ 1,874 $ 1,268 48% $ 6,803 $ 12,053 (44%)
Earnings per common share: (1)
Basic $ 0.06 $ 0.04 50% $ 0.22 $ 0.40 (45%)
Diluted $ 0.06 $ 0.04 50% $ 0.22 $ 0.40 (45%)
 
Weighted average number of common shares outstanding:
Basic 31,144 30,514 30,950 30,080
Diluted 31,452 30,989 31,378 30,472
 
nm- not meaningful
 

Contacts

Vincent C. Klinges
Chief Financial Officer
American Software,
Inc.
(404) 264-5477

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