- Total Revenue: $25.4 million, decreased 5% from $26.8 million in the same period last year.
- Subscription Fees: $14.1 million, increased 8% year-over-year from $13 million.
- Software License Revenues: $0.2 million, compared to $0.7 million last year.
- Professional Services and Other Revenues: $3.7 million, decreased 23% from $4.8 million.
- Maintenance Revenues: $7.4 million, declined 9% year-over-year.
- Total Recurring Revenues: 85% of total revenue, up from 79% last year.
- Gross Margin: 66%, up from 65% last year.
- Subscription Fee Margin: 68%, consistent with the prior year.
- License Fee Margin: 68%, down from 77% last year.
- Professional Services Margin: 26%, down from 30% last year.
- Maintenance Margin: 81%, up from 80% last year.
- Gross R&D Expenses: 18% of total revenues, up from 17% last year.
- Sales and Marketing Expenses: 21% of revenues, up from 18% last year.
- G&A Expenses: 23% of total revenues, up from 22% last year.
- Operating Income: $0.7 million, down from $2.2 million last year.
- Net Income: $2.2 million, or $0.07 per diluted share, down from $2.9 million or $0.09 per diluted share last year.
- Adjusted Operating Income: $2.7 million, down from $3.7 million last year.
- Adjusted EBITDA: $3.1 million, down from $4.3 million last year.
- Adjusted Net Income: $4 million, or $0.12 per diluted share, consistent with last year.
- International Revenues: 20% of total revenues, up from 19% last year.
- Remaining Performance Obligations (Backlog): $128 million, an 8% sequential increase and a 3% year-over-year increase.
- Cash and Investments: $83.8 million at the end of the quarter.
- Days Sales Outstanding (DSO): 101 days, up from 78 days last year.
- Fiscal 2025 Guidance: Total revenue of $104 million to $108 million, recurring revenue between $87 million and $89 million, and adjusted EBITDA of $15 million to $16.4 million.
Release Date: June 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- American Software Inc (AMSWA, Financial) successfully divested non-core assets, focusing on its core supply chain software business.
- The company plans to rebrand as Logility, aligning with its well-known brand in the supply chain planning solutions market.
- Recognition by Gartner as a leader in the Magic Quadrant for supply chain planning solutions.
- Accelerated AI roadmap with the acquisition of Garvis, rebranded as Demand AI-Plus, showing early positive indications.
- Continued return of capital to shareholders through quarterly dividends and stock repurchases.
Negative Points
- Total revenues for the fourth quarter decreased by 5% year-over-year, primarily due to lower revenues from license fees and professional services.
- Operating income decreased to $0.7 million from $2.2 million in the same period last year.
- Net income decreased to $2.2 million from $2.9 million year-over-year.
- Clients and prospects are delaying approvals or start dates for projects amid persistent macroeconomic headwinds.
- Pipeline conversion rates remain below historic norms, impacting revenue recognition.
Q & A Highlights
Highlights from American Software Inc (AMSWA) Q4 2024 Earnings Call
Q: How has the current economic environment affected customer buying behavior?
A: (H. Allan Dow, President, CEO, Director) The economic environment has led to a stall in project approvals and start dates. Customers are breaking up projects into smaller phases and delaying approvals due to economic uncertainties. The evaluation period remains consistent, but the approval cycle has lengthened significantly.
Q: What feedback have you received from customers regarding the shift from on-premise to cloud solutions?
A: (H. Allan Dow, President, CEO, Director) Feedback has been mixed. Some customers are pleased as it aligns with their security concerns and modernization efforts, while others are initially frustrated but understand the necessity. The shift is driven by the difficulty of delivering on-prem solutions and increased cyber risks.
Q: Can you provide insights into the baseline assumptions for your recurring revenue guidance for fiscal 2025?
A: (Vincent Klinges, CFO, Treasurer) The guidance is conservative due to the anticipated delay in deal closures. We expect bookings to be weighted towards the latter half of the year, impacting the timing of revenue recognition.
Q: What are the main factors prolonging the approval cycle for projects?
A: (H. Allan Dow, President, CEO, Director) The primary factors include economic uncertainties affecting consumer spending, bloated inventories, and staffing cuts. Clients are cautious about making investments amid these conditions, although they recognize the need for supply chain improvements.
Q: How does the pipeline conversion rate compare to historical levels, and what are your expectations?
A: (H. Allan Dow, President, CEO, Director) The pipeline conversion rate is below historical levels but improving. We are seeing double-digit growth in the overall pipeline, and if economic conditions improve, we expect a rapid acceleration in project conversions.
Q: What is driving the decision to rebrand the company to Logility?
A: (H. Allan Dow, President, CEO, Director) The rebranding aligns the company with its well-known Logility brand in the supply chain solutions market. This move simplifies the brand identity for both the investment and business communities.
Q: How do you anticipate the elimination of the dual-class stock structure will impact investor interest?
A: (H. Allan Dow, President, CEO, Director) Eliminating the dual-class structure is expected to attract a broader investment community, as some investors are restricted from investing in companies with such structures. This change should be positively received by current and potential investors.
Q: What are the expectations for fiscal 2026 given the back-end loaded bookings in fiscal 2025?
A: (H. Allan Dow, President, CEO, Director) The back-end loaded bookings in fiscal 2025 are expected to significantly impact fiscal 2026 revenue. We anticipate a stronger performance as these bookings convert to revenue.
Q: How are you addressing the challenges in the professional services and maintenance revenue segments?
A: (Vincent Klinges, CFO, Treasurer) Professional services revenue decreased due to lower bookings and efforts to direct more services to SI partners. Maintenance revenue declined due to the divestiture of the transportation group and a normal falloff rate.
Q: What are the key drivers behind the growth in your subscription fee revenue?
A: (Vincent Klinges, CFO, Treasurer) Subscription fee revenue increased due to new client additions, existing client upgrades to cloud solutions, and the introduction of new AI capabilities. The shift from on-premise to cloud solutions is also a significant contributor.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
