Business Wire | Feb 24, 2021 04:05PM EST

American Software Reports Third Quarter of Fiscal Year 2021 Results

Feb. 24, 2021

ATLANTA--(BUSINESS WIRE)--Feb. 24, 2021--American Software, Inc. (NASDAQ: AMSWA) today reported preliminary financial results for the third quarter of fiscal year 2021.

Key Third Quarter Financial Highlights:

* Subscription fees were $7.5 million for the quarter ended January 31, 2021, a 29% increase compared to $5.8 million for the same period last year, while Software license revenues were $0.5 million, an 86% decrease compared to $3.7 million for the same period last year, reflecting our continued transition to the Software as a Service (SaaS) engagement model. * Cloud Services Annual Contract Value (ACV) increased approximately 24% to $31.6 million as of the quarter ended January 31, 2021 compared to $25.5 million as of the same period of the prior year. * Total revenues for the quarter ended January 31, 2021 decreased 10% to $27.7 million, compared to $30.6 million for the same period of the prior year. * Recurring revenue streams for Maintenance and Cloud Services were 64% of total revenues in the quarter ended January 31, 2021 compared to 54% in the same period of the prior year. * Maintenance revenues for the quarter ended January 31, 2021 decreased 6% to $10.2 million compared to $10.8 million for the same period last year. * Professional services and other revenues for the quarter ended January 31, 2021 decreased 8% to $9.5 million compared to $10.3 million for the same period last year. * Operating earnings for the quarter ended January 31, 2021 decreased 67% to $0.9 million compared to $2.8 million for the same period last year. * GAAP net earnings for the quarter ended January 31, 2021 decreased 30% to $2.3 million or $0.07 per fully diluted share compared to $3.3 million or $0.10 per fully diluted share for the same period last year. * Adjusted net earnings for the quarter ended January 31, 2021, which excludes non-cash stock-based compensation expense and amortization of acquisition-related intangibles, decreased 26% to $3.0 million or $0.09 per fully diluted share compared to $4.0 million or $0.12 per fully diluted share for the same period last year. * EBITDA decreased by 54% to $2.2 million for the quarter ended January 31, 2021 compared to $4.7 million for the same period last year. * Adjusted EBITDA decreased by 45% to $2.9 million for the quarter ended January 31, 2021 compared to $5.3 million for the same period last year. 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 2021 Year to Date Financial Highlights:

* Subscription fees were $20.8 million for the nine months ended January 31, 2021, a 32% increase compared to $15.8 million for the same period last year, while Software license revenues were $1.8 million, a 73% decrease compared to $6.5 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, 2021 decreased 4% to $82.8 million compared to $86.2 million for the same period last year. * Recurring revenue streams for Maintenance and Cloud Services were 62% of total revenues for the nine-month period ended January 31, 2021 compared to 56% in the same period of the prior year. * Maintenance revenues for the nine months ended January 31, 2021 were $30.7 million, a 6% decrease compared to $32.7 million for the same period last year. * Professional services and other revenues for the nine months ended January 31, 2021 decreased 6% to $29.6 million compared to $31.3 million for the same period last year. * For the nine months ended January 31, 2021, the Company reported operating earnings of approximately $2.5 million compared to $4.5 million for the same period last year, a 45% decrease. * GAAP net earnings were approximately $5.0 million or $0.15 per fully diluted share for the nine months ended January 31, 2021, a 19% decrease compared to $6.2 million or $0.19 per fully diluted share for the same period last year. * Adjusted net earnings for the nine months ended January 31, 2021, which excludes stock-based compensation expense and amortization of acquisition-related intangibles, decreased 16% to $7.3 million or $0.22 per fully diluted share, compared to $8.6 million or $0.27 per fully diluted share for the same period last year. * EBITDA decreased by 36% to $6.9 million for the nine months ended January 31, 2021 compared to $10.8 million for the same period last year. * Adjusted EBITDA decreased 28% to $8.8 million for the nine months ended January 31, 2021 compared to $12.3 million for the nine months ended January 31, 2020. 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 $100.8 million and no debt as of January 31, 2021. During the third quarter of fiscal year 2021, the Company paid shareholder dividends of approximately $3.6 million.

"Third quarter fiscal year 2021 saw continued adoption of our cloud services offerings with a 29% growth in Subscription Fees and a 24% increase in Annual Contract Value, reflecting the increasing momentum across the industry towards cloud-based supply chain transformation solutions," said Allan Dow, CEO and president of American Software. "The impact of unforeseen risks over the last 12 months such as COVID-19 has driven increased interest in supply chain transformation initiatives, helping develop a strong pipeline for our innovative digital supply chain platform for the fourth quarter 2021 and beyond."

"This past quarter also brought renewed attention to the responsibility of supply chains to help ensure the ethical treatment of workers around the world following actions taken by the United States Customs and Border Protection to seize imports suspected of containing materials produced with forced labor," continued Dow. "The release of our digital supply chain traceability solution highlights our commitment to help companies ensure transparency across their supply chains and exceed their corporate social responsibility goals."

Additional highlights for the third quarter of fiscal year 2021 include:

Customers & Channels

* Notable new and existing customers placing orders with the Company in the third quarter include: Ansell Limited, Bruni Glass S.p.A., C&A Mexico, Cariuma Central Pte. Ltd., Color Image Apparel, Inc., Diversey, Inc., Dixon Valve & Coupling Company, LLC, Dyehard Fan Supply, LLC, Husqvarna AB, John Paul Richard, Rhone Apparel, Spanx, Stony Apparel Corp, The Echo Design Group, Topson Downs of California, Inc., Huhtamaki, Inc., Savant Technologies LLC, Sopal SA, Kyjen Company LLC, McIlhenny Company, and Tencate Geosynthetics.

* During the quarter, SaaS subscription and/or software license agreements were signed with customers located in the following 11 countries: Australia, France, Ireland, Italy, Mexico, New Zealand, Singapore, Sweden, Tunisia, United Kingdom, and United States.

* Logility, Inc., a wholly owned subsidiary of the Company, invited attendees of the 2020 NextGen Supply Chain Conference to attend the session "Pushing the Efficient Inventory Frontier at The Kraft Heinz Company," led by David Villalpando, senior analyst, logistics analytics at The Kraft Heinz Company.

Company and Technology

* Logility and New Generation Computing, Inc. (NGC), a wholly owned subsidiary of the Company, announced the availability of a digital traceability solution which allows brand owners and retailers to document the chain of custody from component origin to importer of record. During the quarter, United States Customs and Border Protection announced a region-wide withhold release order on cotton products and tomato products produced in China's Xinjiang Uyghur Autonomous Region. This new solution ensures that companies can prove their imports are free from suspect materials. * Logility announced the company won IDC's SaaS CSAT Award for Supply Chain Management Customer Satisfaction. Logility scored significantly higher than its peers' average in areas such as low total cost of ownership (TCO), user experience, high availability, industry specialization, out-of-the-box availability, and availability of training. The announcement highlights relentless passion to deliver the highest level of customer service and to ensure its customers around the world can rely on the supply chain innovations the company brings to the market. * Logility invited attendees to the webcast, "Thriving Through a Period of Disruption." The discussion included industry experts David Maloney, editorial director, Supply Chain Quarterly, and Mac McGary, executive vice president, Logility. The live webcast explored how resilient planning helps protect organizations through disruptions and optimizes supply chains for a stronger outlook. * NGC president Mark Burstein was accepted as a member of the Forbes Technology Council, an invitation-only community of leading technology executives. As a member of the Forbes Technology Council, Burstein shares his expertise on the intersection of supply chain technology in regular contributions to Forbes. * NGC was named a leading retail software company in the RIS Software LeaderBoard for 2021. NGC was named among the top 20 vendors in 17 categories, including top three rankings in nine categories such as Overall Performance, Customer Satisfaction for Apparel Vendors, Return on Investment and Total Cost of Operation. * Demand Management, Inc., a wholly owned subsidiary of Logility, was named one of Food Logistics' FL100+ Top Software and Technology Providers for 2020. This marked the company's twelfth time receiving the award. * Logility announced and invited attendees to the webcast, "Roadmap to Overcoming Five Obstacles to Achieving Multi-Echelon Inventory Optimization." The discussion featured industry experts Martijn Lofvers, founder and chief trendwatcher, Supply Chain Media; Jonathan Jackman, vice president, EMEA, Logility; and Gokhan Usanmaz, product owner, innovation, Logility. This live event explored how Multi-Echelon Inventory Optimization (MEIO) can help improve customer service levels while removing excess and obsolete inventory.

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. New Generation Computing, Inc. powers the digital supply chain to enable apparel brand owners and retailers to maximize revenue and profit by accelerating lead times, streamlining product development, and optimizing sourcing and 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 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 (404) 364-7615 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 & other, net, and income tax expense. 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 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.

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,

2021 2020 Pct 2021 2020 Pct Chg. Chg.

Revenues:

Subscription fees $ 7,486 $ 5,802 29 % $ 20,815 $ 15,752 32 %

License fees 530 3,695 (86 %) 1,767 6,519 (73 %)

Professional 9,495 10,308 (8 %) 29,551 31,271 (6 %) services & other

Maintenance 10,172 10,795 (6 %) 30,709 32,651 (6 %)

Total Revenues 27,683 30,600 (10 %) 82,842 86,193 (4 %)

Cost of Revenues:

Subscription 3,062 1,976 55 % 8,767 6,711 31 % services

License fees 288 1,582 (82 %) 1,516 3,969 (62 %)

Professional 7,178 7,764 (8 %) 22,632 22,712 0 % services & other

Maintenance 1,894 1,836 3 % 5,608 5,551 1 %

Total Cost of 12,422 13,158 (6 %) 38,523 38,943 (1 %) Revenues

Gross Margin 15,261 17,442 (13 %) 44,319 47,250 (6 %)

Operating expenses:

Research and 4,475 4,659 (4 %) 13,278 14,087 (6 %) development

Less: capitalized (233 ) (806 ) (71 %) (604 ) (2,697 ) (78 %) development

Sales and marketing 5,029 5,519 (9 %) 15,202 16,246 (6 %)

General and 5,002 5,194 (4 %) 13,833 14,890 (7 %) administrative

Provision for - - - - 33 - doubtful accounts

Amortization of acquisition-related 53 57 (7 %) 159 232 (31 %) intangibles

Total Operating 14,326 14,623 (2 %) 41,868 42,791 (2 %) Expenses

Operating Earnings 935 2,819 (67 %) 2,451 4,459 (45 %)

Interest Income & 1,432 978 46 % 2,722 2,215 23 %Other, Net

Earnings Before 2,367 3,797 (38 %) 5,173 6,674 (22 %)Income Taxes

Income Tax Expense 56 511 (89 %) 136 477 (71 %)

Net Earnings $ 2,311 $ 3,286 (30 %) $ 5,037 $ 6,197 (19 %)

Earnings per commonshare: (1)

Basic $ 0.07 $ 0.10 (30 %) $ 0.16 $ 0.20 (20 %)

Diluted $ 0.07 $ 0.10 (30 %) $ 0.15 $ 0.19 (21 %)

Weighted averagenumber of commonshares outstanding:

Basic 32,628 31,955 32,485 31,611

Diluted 33,293 32,668 33,107 32,260

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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,

2021 2020 Pct 2021 2020 Pct Chg. Chg.

NON-GAAP OperatingEarnings:

Operating Income $ 935 $ 2,819 (67 %) $ 2,451 $ 4,459 (45 %)(GAAP Basis)

Amortization of acquisition-related 96 315 (70 %) 718 1,289 (44 %) intangibles

Stock-based 703 564 25 % 1,901 1,510 26 % compensation

NON-GAAP Operating 1,734 3,698 (53 %) 5,070 7,258 (30 %)Earnings:

Non-GAAP OperatingEarnings, as a % of 6 % 12 % 6 % 8 %revenue

Third Quarter Ended Nine Months Ended

January 31, January 31,

2021 2020 Pct 2021 2020 Pct Chg. Chg.

NON-GAAP EBITDA:

Net Earnings (GAAP $ 2,311 $ 3,286 (30 %) $ 5,037 $ 6,197 (19 %)Basis)

Income Tax Expense 56 511 (89 %) 136 477 (71 %)

Interest Income & (1,432 ) (978 ) 46 % (2,722 ) (2,215 ) 23 % Other, Net

Amortization of 1,093 1,723 (37 %) 3,976 5,834 (32 %) intangibles

Depreciation 154 159 (3 %) 465 476 (2 %)

EBITDA (earningsbefore interest, 2,182 4,701 (54 %) 6,892 10,769 (36 %)taxes, depreciationand amortization)

Stock-based 703 564 25 % 1,901 1,510 26 % compensation

Adjusted EBITDA $ 2,885 $ 5,265 (45 %) $ 8,793 $ 12,279 (28 %)

EBITDA, as apercentage of 8 % 15 % 8 % 12 %revenues

Adjusted EBITDA, asa percentage of 10 % 17 % 11 % 14 %revenues

Third Quarter Ended Nine Months Ended

January 31, January 31,

2021 2020 Pct 2021 2020 Pct Chg. Chg.

NON-GAAP EARNINGSPER SHARE:

Net Earnings (GAAP $ 2,311 $ 3,286 (30 %) $ 5,037 $ 6,197 (19 %)Basis)

Amortization of acquisition-related 80 273 (71 %) 617 1,119 (45 %) intangibles (2)

Stock-based 589 488 21 % 1,631 1,309 25 % compensation (2)

Adjusted Net $ 2,980 $ 4,047 (26 %) $ 7,285 $ 8,625 (16 %)Earnings

Adjusted non-GAAPdiluted earnings per $ 0.09 $ 0.12 (25 %) $ 0.22 $ 0.27 (19 %)share

Third Quarter Ended Nine Months Ended

January 31, January 31,

2021 2020 Pct 2021 2020 Pct Chg. Chg.

NON-GAAP EarningsPer Share

Net Earnings (GAAP $ 0.07 $ 0.10 (30 %) $ 0.15 $ 0.19 (21 %)Basis)

Amortization of acquisition-related - 0.01 nm 0.02 0.04 (50 %) intangibles (2)

Stock-based 0.02 0.01 100 % 0.05 0.04 25 % compensation (2)

Adjusted Net 0.09 $ 0.12 (25 %) 0.22 $ 0.27 (19 %)Earnings

Third Quarter Ended Nine Months Ended

January 31, January 31,

2021 2020 Pct 2021 2020 Pct Chg. Chg.

Amortization ofacquisition-relatedintangibles

Cost of license $ 43 $ 258 (83 %) $ 559 $ 1,057 (47 %)

Operating expenses 53 57 (7 %) 159 232 (31 %)

Total amortizationof $ 96 $ 315 (70 %) $ 718 $ 1,289 (44 %)acquisition-relatedintangibles

Stock-basedcompensation

Cost of revenues $ 37 $ 43 (14 %) $ 103 $ 94 10 %

Research and 56 44 27 % 130 117 11 % development

Sales and marketing 104 102 2 % 257 260 (1 %)

General and 506 375 35 % 1,411 1,039 36 % administrative

Total stock-based $ 703 $ 564 25 % $ 1,901 $ 1,510 26 %compensation

(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 sharefor Class B shares under the two-class method are $0.07 and $0.16 for the threeand nine months ended January 31, 2021, respectively. Diluted per share forClass B shares under the two-class method are $0.10 and $0.20 for the three andnine months ended January 31, 2020, respectively.

(2) - Tax affected using the effective tax rate excluding a discrete itemrelated to excess tax benefit for stock options for the three and nine monthperiods ended January 31, 2021 of 16.2% and 14.2% and 13.5% and 13.3% for thethree and nine month periods ended January 31, 2020, respectively.

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AMERICAN SOFTWARE, INC.

Consolidated Balance Sheet Information

(In thousands)

(Unaudited)

January 31, April 30,

2021 2020



Cash and Cash Equivalents $ 86,721 $ 79,814

Short-term Investments 14,052 14,161

Accounts Receivable:

Billed 17,804 22,582

Unbilled 1,954 2,425

Total Accounts Receivable, net 19,758 25,007

Prepaids & Other 6,161 6,684

Current Assets 126,692 125,666



Investments - Non-current - 701



PP&E, net 3,368 3,373

Capitalized Software, net 5,708 8,362

Goodwill 25,888 25,888

Other Intangibles, net 413 1,132

Deferred Sales Commissions - Non-current 1,842 2,177

Lease Right of Use Assets 1,635 2,053

Other Non-current Assets 1,878 1,941

Total Assets $ 167,424 $ 171,293



Accounts Payable $ 1,696 $ 1,643

Accrued Compensation and Related costs 4,337 6,635

Dividend Payable 3,597 3,547

Operating Lease Obligation - Current 774 763

Other Current Liabilities 987 643

Deferred Revenues - Current 32,023 34,227

Current Liabilities 43,414 47,458



Operating Lease Obligation - Non-current 975 1,424

Deferred Tax Liability - Non-current 2,572 2,897

Other Long-term Liabilities 113 92

Long-term Liabilities 3,660 4,413



Total Liabilities 47,074 51,871



Shareholders' Equity 120,350 119,422



Total Liabilities & Shareholders' Equity $ 167,424 $ 171,293





AMERICAN SOFTWARE, INC.

Condensed Consolidated Cashflow Information

(In thousands)

(Unaudited)

Nine Months Ended

January 31,

2021 2020

Net cash provided by operating activities $ 13,933 $ 13,112

Capitalized computer software development costs (604 ) (2,697 )

Purchases of property and equipment, net of disposals (461 ) (339 )

Net cash used in investing activities (1,065 ) (3,036 )

Dividends paid (10,696 ) (10,392 )

Proceeds from exercise of stock options 4,735 7,837

Net cash used in financing activities (5,961 ) (2,555 )

Net change in cash and cash equivalents 6,907 7,521

Cash and cash equivalents at beginning of period 79,814 61,288

Cash and cash equivalents at end of period $ 86,721 $ 68,809

View source version on businesswire.com: https://www.businesswire.com/news/home/20210224005924/en/

CONTACT: Financial Information Press Contact: Vincent C. Klinges Chief Financial Officer American Software, Inc. (404) 264-5477