UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM10-Q

_________________

(Mark One)

☒
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~January~~October 31, ~~2018~~

2020

☐
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to

_________

Commission File Number:0-12456

_________________

AMERICAN SOFTWARE, INC.

(Exact name of registrant as specified in its charter)

_________________

Georgia

58-1098795

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification Number)

470 East Paces Ferry Road, N.E.~~, Atlanta, Georgia~~

Atlanta

Georgia

30305

(Address of principal executive offices)

(Zip Code)

(404)261-4381

(Registrant’s telephone number, including area code)

~~None~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	AMSWA	NASDAQ Global Select Market

_________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, ~~smaller reporting~~an emerging growth company or ~~an emerging growth~~a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated ~~filer”,~~filer,” “emerging growth company” and “smaller reporting company” ~~and “emerging growth company”~~ inRule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated Filer

☒

~~Large accelerated~~Non-accelerated filer

☐

~~Accelerated filer~~Smaller reporting company

☒☐

~~Non-accelerated filer~~

~~☐ (Do not check if a smaller reporting company)~~

~~Smaller reporting company~~

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange act. ☐

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Classes						Outstanding at ~~February 28, 2018~~December 1, 2020
Class A Common Stock, $.10 par value						~~28,199,965~~30,764,645 Shares
Class B Common Stock, $.10 par value						~~2,206,588~~1,821,587 Shares

~~AMERICAN SOFTWARE, INC. AND SUBSIDIARIES~~

~~Form10-Q~~

~~Quarter ended January 31, 2018~~

~~Index~~

~~Page No.~~

Table of Contents

AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Form 10-Q

Quarter ended October 31, 2020

Index


~~Part I—Financial Information~~
Page No
Part I—Financial Information

Item 1.								Financial Statements ~~(unaudited)~~(Unaudited)


	Condensed Consolidated Balance Sheets as ~~of January~~o f October 31, ~~2018~~2020 and April 30, ~~2017~~2020					3

					Condensed Consolidated Statements of Operations for the ~~Three~~ T hree and ~~Nine~~Six Months ended ~~January~~ October31, ~~2018~~2020 and ~~2017~~2019	4

		Condensed Consolidated Statements of S hare holder s ' Equity for the Three and Six Months ende d October 31, 2020 and 2019			4			5

					Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months ended ~~January~~ October 31, ~~2018~~2020 and ~~2017~~2019					5	6

					Notes to Condensed Consolidated Financial Statements – ~~unaudited~~Unaudited					6	7

Item 2.					Management’s Discussion and Analysis of Financial Condition and Results of Operations					17	22

Item 3.					Quantitative and Qualitative Disclosures About Market Risk					31	37

Item 4.					Controls and Procedures					32	38

Part II—Other Information

~~Part II—~~ ~~Other Information~~Item 1.		Legal Proceedings			39

Item 1A.		Risk Factors			39

~~Item 1.~~			~~Legal Proceedings~~			32

~~Item 1A.~~	~~Risk Factors~~			33

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds					33	39

Item 3.					Defaults Upon Senior Securities					33	39

Item 4.					Mine Safety Disclosures					33	39

Item 5.		Other Information			39

Item 5. 6.		Exhibits			~~Other Information~~39					33

~~Item 6.~~						~~Exhibits~~			33

Signatures						34	40

Table of Contents

PART I—FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

Item 1. Financial Statements

American Software, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets ~~(unaudited)~~

(Unaudited)

(in thousands, except share data)

   January 31,
2018 April 30,
2017
ASSETS
Current assets:

Cash and cash equivalents
   $ 54,912 $ 66,001
Investments
   23,055 19,332
Trade accounts receivable, less allowance for doubtful accounts of $144 at January 31, 2018 and $172 at April 30, 2017:

Billed
   20,456 17,060
Unbilled
   2,714 2,811
Prepaid expenses and other current assets
   5,510 4,322


Total current assets
   106,647 109,526
Investments—noncurrent
   10,464 4,455
Property and equipment, net of accumulated depreciation of $28,513 at January 31, 2018 and $28,153 at April 30, 2017
   2,151 2,055
Capitalized software, net of accumulated amortization of $23,150 at January 31, 2018 and $20,423 at April 30, 2017
   9,539 8,614
Goodwill
   25,468 19,549
Other intangibles, net of accumulated amortization of $7,624 at January 31, 2018 and $6,406 at April 30, 2017
   6,171 3,399
Other assets
   3,483 1,176


Total assets
   $ 163,923 $ 148,774


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Accounts payable
   $ 1,841 $ 1,541
Accrued compensation and related costs
   5,624 3,329
Dividends payable
   3,344 3,259
Other current liabilities
   2,602 5,171
Deferred revenue
   33,564 29,437


Total current liabilities
   46,975 42,737
Deferred income taxes
   2,202 1,994
Long-term deferred revenue
   531 214
Other long-term liabilities
   1,779 79


Total liabilities
   51,487 45,024
Shareholders’ equity:

Common stock:

Class A, $.10 par value. Authorized 50,000,000 shares: Issued 32,786,381 shares at January 31, 2018 and 31,821,508 shares at April 30, 2017
   3,279 3,182
Class B, $.10 par value. Authorized 10,000,000 shares: Issued and outstanding 2,206,588 shares at January 31, 2018 and 2,393,336 shares at April 30, 2017; convertible into Class A shares on aone-for-one basis
   221 239
Additionalpaid-in capital
   129,028 121,280
Retained earnings
   5,467 4,608
Class A treasury stock, 4,588,632 shares at January 31, 2018 and April 30, 2017, at cost
   (25,559 ) (25,559 )


Total shareholders’ equity
   112,436 103,750


Commitments and contingencies

Total liabilities and shareholders’ equity
   $ 163,923 $ 148,774


	October 31, 2020		April 30, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	81,786	$	79,814
Investments	12,357		14,161
Trade accounts receivable, less allowance for doubtful accounts of $372 at October 31, 2020 and $264 at April 30, 2020:
Billed	18,499		22,582
Unbilled	2,499		2,425
Prepaid expenses and other current assets	6,673		6,684
Total current assets	121,814		125,666
Investments—noncurrent	472		701
Property and equipment, net of accumulated depreciation of $30,269 at October 31, 2020 and $29,959 at April 30, 2020	3,225		3,373
Capitalized software, net of accumulated amortization of $36,871 at October 31, 2020 and $34,611 at April 30, 2020	6,473		8,362
Goodwill	25,888		25,888
Other intangibles, net of accumulated amortization of $12,867 at October 31, 2020 and $12,243 at April 30, 2020	509		1,132
Lease right of use assets	1,813		2,053
Deferred sales commissions—noncurrent	1,909		2,177

Other assets	1,899		1,941
Total assets	$	164,002	$	171,293
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,640	$	1,643
Accrued compensation and related costs	3,139		6,635
Dividends payable	3,576		3,547
Operating lease obligations	797		763
Other current liabilities	790		643
Deferred revenue	31,206		34,227
Total current liabilities	41,148		47,458
Deferred income taxes	2,553		2,897
Long-term operating lease obligations	1,137		1,424

Other long-term liabilities	111		92
Total liabilities	44,949		51,871
Shareholders’ equity:
Common stock:
Class A, $.10 par value. Authorized 50,000,000 shares: 35,277,846 (30,689,214, net) shares issued and outstanding respectively at October 31, 2020 and 35,000,649 (30,412,017, net) shares issued and outstanding respectively at April 30, 2020	3,528		3,500
Class B, $.10 par value. Authorized 10,000,000 shares: 1,821,587 shares issued and outstanding at October 31, 2020 and April 30, 2020; convertible into Class A Common Shares on a one-for-one basis	182		182
Additional paid-in capital	154,335		150,312
Retained deficit	(13,433)		(9,013)
Class A treasury stock, 4,588,632 shares at October 31, 2020 and April 30, 2020, at cost	(25,559)		(25,559)
Total shareholders’ equity	119,053		119,422
Commitments and contingencies
Total liabilities and shareholders’ equity	$	164,002	$	171,293

See accompanying notes to condensed consolidated financial statements—unaudited.

Table of Contents

American Software, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations ~~(unaudited)~~

(Unaudited)

(in thousands, except per share data)


	Three Months Ended October 31,				Six Months Ended October 31,
	2020		2019		2020		2019
Revenues:
Subscription fees	$	6,966	$	5,492	$	13,329	$	9,950
License	450		1,046		1,237		2,824
Professional services and other	10,242		10,826		20,056		20,963
Maintenance	10,223		10,846		20,537		21,856
Total revenues	27,881		28,210		55,159		55,593
Cost of revenues:
Subscription fees	2,946		2,610		5,705		4,735
License	553		1,007		1,228		2,387
Professional services and other	7,624		7,543		15,454		14,948
Maintenance	1,941		1,864		3,714		3,715
Total cost of revenues	13,064		13,024		26,101		25,785
Gross margin	14,817		15,186		29,058		29,808
Research and development	4,337		4,209		8,432		7,537
Sales and marketing	5,429		5,148		10,173		10,727
General and administrative	4,367		4,908		8,831		9,729
Amortization of acquisition-related intangibles	53		78		106		175
Total operating expenses	14,186		14,343		27,542		28,168
Operating income	631		843		1,516		1,640
Other income:
Interest income	97		400		223		875
Other, net	(139)		312		1,067		362
Earnings before income taxes	589		1,555		2,806		2,877
Income tax (benefit)/expense	(103)		(204)		80		(34)
Net earnings	$	692	$	1,759	$	2,726	$	2,911
Earnings per common share (a):
Basic	$	0.02	$	0.06	$	0.08	$	0.09
Diluted	$	0.02	$	0.05	$	0.08	$	0.09
Cash dividends declared per common share	$	0.11	$	0.11	$	0.22	$	0.22
Shares used in the calculation of earnings per common share:
Basic	32,489		31,609		32,414		31,440
Diluted	32,896		32,310		32,919		32,066

______________

(a)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 earnings per share ~~data)~~

   Three Months Ended
January 31,    Nine Months Ended
January 31,
   2018    2017    2018    2017
Revenues:

License
   $ 5,955    $ 3,959    $ 12,420    $ 11,726
Services and other
   12,926    11,815    38,017    36,385
Maintenance
   11,236    10,667    32,903    31,909








Total revenues
   30,117    26,441    83,340    80,020








Cost of revenues:

License
   1,940    2,081    5,295    5,510
Services and other
   8,727    8,061    24,849    26,159
Maintenance
   2,404    2,250    6,919    7,489








Total cost of revenues
   13,071    12,392    37,063    39,158








Gross margin
   17,046    14,049    46,277    40,862








Research and development
   3,099    3,074    8,250    9,343
Sales and marketing
   5,385    4,635    15,055    15,307
General and administrative
   4,263    3,500    11,418    10,701
Amortization of acquisition-related intangibles
   95    385    486    702








Total operating expenses
   12,842    11,594    35,209    36,053








Operating income
   4,204    2,455    11,068    4,809
Other income:

Interest income
   403    287    1,120    882
Other, net
   1,171    738    1,729    637








Earnings before income taxes
   5,778    3,480    13,917    6,328
Income tax expense
   198    1,237    3,132    1,985








Net earnings
   $ 5,580    $ 2,243    $ 10,785    $ 4,343








Earnings per common share^(a):

Basic
   $ 0.18    $ 0.08    $ 0.36    $ 0.15








Diluted
   $ 0.18    $ 0.08    $ 0.36    $ 0.15








Cash dividends declared per common share
   $ 0.11    $ 0.11    $ 0.33    $ 0.32








Shares used in the calculation of earnings per common share:

Basic
   30,244    29,333    29,940    29,136








Diluted
   30,701    29,630    30,299    29,447

~~(a)~~

~~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 earnings per share for Class B shares under thetwo-class~~ method are $0.18 and $0.08 for the three months ended January 31, 2018 and 2017, and $0.35 and $0.15 for the nine months ended January 31, 2018 and 2017, respectively. See Note D to the Condensed Consolidated Financial Statements.

for Class B shares under the two-class method are $0.02 and $0.06 for the three months ended October 31, 2020 and 2019 and $0.09 and $0.10 for the six months ended October 31, 2020 and 2019. See Note E to the Condensed Consolidated Financial Statements.

See accompanying notes to condensed consolidated financial statements—unaudited.

Table of Contents

American Software, Inc. and Subsidiaries

Condensed Consolidated Statements of ~~Cash Flows (unaudited)~~

Shareholders’ Equity (Unaudited)

(in ~~thousands)~~

   Nine Months Ended
January 31,
   2018 2017
Cash flows from operating activities:

Net earnings
   $ 10,785 $ 4,343
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization
   4,305 5,045
Stock-based compensation expense
   1,108 1,111
Net gain on investments
   (1,378 ) (170 )
Deferred income taxes
   208 (281 )
Changes in operating assets and liabilities, net of effects of acquisition:

Purchases of trading securities
   (20,010 ) (7,150 )
Proceeds from maturities and sales of trading securities
   11,656 12,683
Accounts receivable, net
   (2,926 ) 3,661
Prepaid expenses and other assets
   (1,494 ) (5 )
Accounts payable and other liabilities
   (999 ) (53 )
Deferred revenue
   4,096 78


Net cash provided by operating activities
   5,351 19,262


Cash flows from investing activities:

Capitalized computer software development costs
   (3,652 ) (2,471 )
Purchases of property and equipment, net of disposals
   (413 ) (500 )
Purchase of business, net of cash acquired
   (9,253 ) (4,441 )


Net cash used in investing activities
   (13,318 ) (7,412 )


Cash flows from financing activities:

Proceeds from exercise of stock options
   6,719 4,397
Payment for accrued acquisition consideration
   —   (200 )
Dividends paid
   (9,841 ) (9,299 )


Net cash used in financing activities
   (3,122 ) (5,102 )


Net change in cash and cash equivalents
   (11,089 ) 6,748
Cash and cash equivalents at beginning of period
   66,001 49,004


Cash and cash equivalents at end of period
   $ 54,912 $ 55,752

thousands, except share data)


	Common stock				Additional paid-in capital	Retained deficit	Treasury stock	Total shareholders’ equity
	Class A		Class B
For the Three Months Ended October 31, 2019	Shares	Amount	Shares	Amount

Balance at July 31, 2019	34,131,239	3,413	1,821,587	182	140,195	(4,028)	(25,559)	114,203
Proceeds from stock options exercised	499,443	50	—	—	4,856	—	—	4,906
Stock-based compensation	—	—	—	—	503	—	—	503
Net earnings	—	—	—	—	—	1,759	—	1,759
Dividends declared*	—	—	—	—	—	(3,505)	—	(3,505)
Balance at October 31, 2019	34,630,682	3,463	1,821,587	182	145,554	(5,774)	(25,559)	117,866
For the Three Months Ended October 31, 2020
Balance at July 31, 2020	35,231,396	3,523	1,821,587	182	153,218	(10,550)	(25,559)	120,814
Proceeds from stock options exercised	46,450	5	—	—	466	—	—	471
Stock-based compensation	—	—	—	—	651	—	—	651
Net earnings	—	—	—	—	—	692	—	692
Dividends declared*	—	—	—	—	—	(3,575)	—	(3,575)
Balance at October 31, 2020	35,277,846	3,528	1,821,587	182	154,335	(13,433)	(25,559)	119,053

*Amounts adjusted for rounding


	Common stock				Additional paid-in capital	Retained deficit	Treasury stock	Total shareholders’ equity
	Class A		Class B
For the Six Months Ended October 31, 2019	Shares	Amount	Shares	Amount

Balance at April 30, 2019	33,979,739	3,398	1,821,587	182	138,315	(1,729)	(25,559)	114,607
Proceeds from stock options exercised	650,943	65	—	—	6,293	—	—	6,358
Stock-based compensation	—	—	—	—	946	—	—	946
Net earnings	—	—	—	—	—	2,911	—	2,911
Dividends declared*	—	—	—	—	—	(6,956)	—	(6,956)
Balance at October 31, 2019	34,630,682	3,463	1,821,587	182	145,554	(5,774)	(25,559)	117,866
For the Six Months Ended October 31, 2020
Balance at April 30, 2020	35,000,649	3,500	1,821,587	182	150,312	(9,013)	(25,559)	119,422
Proceeds from stock options exercised	277,197	28	—	—	2,825	—	—	2,853
Stock-based compensation	—	—	—	—	1,198	—	—	1,198
Net earnings	—	—	—	—	—	2,726	—	2,726
Dividends declared*	—	—	—	—	—	(7,146)	—	(7,146)
Balance at October 31, 2020	35,277,846	3,528	1,821,587	182	154,335	(13,433)	(25,559)	119,053

*Amounts adjusted for rounding

See accompanying notes to condensed consolidated financial statements—unaudited.

Table of Contents

American Software, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Six Months Ended October 31,
	2020		2019
Cash flows from operating activities:
Net earnings	$	2,726	$	2,911
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	3,194		4,428
Stock-based compensation expense	1,198		946
Net gain on investments	(803)		(356)
Deferred income taxes	(344)		(131)
Changes in operating assets and liabilities:
Purchases of trading securities	(285)		(21,412)
Proceeds from maturities and sales of trading securities	3,119		16,975
Accounts receivable, net	4,009		2,180

Prepaid expenses and other assets	322		(1,160)
Accounts payable and other liabilities	(3,344)		389
Deferred revenue	(3,021)		(720)
Net cash provided by operating activities	6,771		4,050
Cash flows from investing activities:
Capitalized computer software development costs	(371)		(1,890)
Purchases of property and equipment, net of disposals	(163)		(238)

Net cash used in investing activities	(534)		(2,128)
Cash flows from financing activities:
Proceeds from exercise of stock options	2,853		6,358
Dividends paid	(7,118)		(6,884)
Net cash used in financing activities	(4,265)		(526)
Net change in cash and cash equivalents	1,972		1,396
Cash and cash equivalents at beginning of period	79,814		61,288
Cash and cash equivalents at end of period	$	81,786	$	62,684

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes, net of refunds	$	205	$	260
Supplemental disclosures of noncash operating, investing and financing activities:
Accrual of dividends payable	$	3,576	$	3,505

See accompanying notes to condensed consolidated financial statements—unaudited.

Table of Contents

AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements—Unaudited

~~January~~

October 31, ~~2018~~

2020

A. Presentation and Summary of Significant Accounting Policies

Basis of Presentation ~~and Principles of Consolidation~~

~~Basis of Presentation~~

The accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and ~~with~~ the instructions to Form10-Q and Rule10-01 ofRegulation S-X. Accordingly, they do not include all of the information and footnotes required for complete consolidated financial statements. In the opinion of our management, these ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at ~~January~~October 31, ~~2018, the~~2020, results of operations for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017~~2019, consolidated statements of shareholders’ equity for the three and six months ended October 31, 2020 and 2019 and cash flows for the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017.~~2019. The Company’s results for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form10-K (the “Annual Report”) for the fiscal year ended April 30, ~~2017 (the “Annual Report”).~~

2020. The terms “fiscal 2021” and “fiscal 2020” refer to our fiscal years ending April 30, 2021 and 2020, respectively.

The preparation of these ~~financial statements~~Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the ~~financial statements~~Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for ~~the~~ fiscal ~~year ended April 30, 2017~~2020 contained in the Annual Report describes the significant accounting policies that we have used in preparing our consolidated financial statements. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to revenue/~~collectability, bad debts, capitalized software costs, goodwill, intangible assets, stock-based compensation, income taxes~~reserves and ~~business combination.~~allowances. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

Principles of Consolidation

The accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements include the accounts of American Software, Inc. (“American Software”) and its wholly-owned subsidiaries ~~(“American Software” or~~(collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

~~B. Revenue Recognition~~

~~We recognize revenue in accordance with the Software Revenue Recognition Topic of~~

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards ~~Board’s (“FASB”~~Board ("FASB") issued ASU 2017–04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill to eliminate Step 2 from the goodwill impairment test. In addition, it eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. ASU 2017–04 is effective for the Company’s fiscal year beginning May 1, 2020. The new guidance is required to be applied on a prospective basis. The adoption of ASU 2017–04 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (A Consensus of the FASB Emerging Issues Task Force). ASU 2018-15 provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract. The new guidance amends the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain implementation costs following the internal use software capitalization criteria within Accounting Standards Codification ~~(“ASC”~~("ASC") Subtopic 350-40.

We adopted ASU 2018-15 on May 1, 2020, applying the guidance prospectively, and the adoption of this standard did not have an impact on our consolidated financial statements. Historically we have not capitalized implementation costs associated with cloud computing arrangements that are service contracts following the guidance in Subtopic 350-40, but we will do so pursuant to the clarifications provided in the new guidance on a go forward basis.

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In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU No. 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. This guidance is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted.

On May 1, 2020, we adopted ASU 2016-13 using the modified retrospective method applied for all financial assets measured at amortized cost. In estimating the allowance for credit losses, we considered the age of the accounts receivable, our historical write-offs, and the historical creditworthiness of the customer, among other factors. Should any of these factors change, the estimates made by us will also change accordingly, which could affect the level of our future allowances. We also analyzed future expected credit losses given ever present changes to future risks in projected economic conditions and future risks of customer collection. The net impact of the adoption of ASU 2016-13 was immaterial on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.

~~License~~. The new guidance eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating taxes during the quarters and the recognition of deferred tax liabilities for outside basis differences. This guidance also simplifies aspects of the accounting for franchise taxes and changes in tax laws or rates, as well as clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 will be effective for the Company beginning May 1, 2021 and would require us to recognize a cumulative effect adjustment to the opening balance of reinvested earnings, if applicable. We do not expect our adoption of this guidance to have a material impact on our consolidated financial statements.

B. Revenue Recognition

We recognize ~~license~~ revenue when we transfer control of the promised goods or services to our customers, in ~~connection~~an amount that reflects the consideration we expect to receive in exchange for those goods or services. We derive our revenue from software licenses; maintenance services; consulting, implementation and training services; and Software-as-a-Service (“SaaS”), which includes a subscription to our software as well as maintenance, hosting and managed services.

The Company determines revenue recognition through the following steps:

Step 1 – Identification of the Contract with ~~license agreements~~the Customer

Step 2 – Identification of Promised Goods and Services and Evaluation of Whether the Promised Goods and Services are Distinct Performance Obligations

Step 3 – Determination of the Transaction Price

Step 4 – Allocation of the Transaction Price to Distinct Performance Obligations

Step 5 – Attribution of Revenue for ~~standard proprietary~~Each Distinct Performance Obligation

Nature of Products and Services

Subscription Fees. Subscription fees include SaaS revenues for the right to use the software ~~upon~~for a limited period of time in an environment hosted by the Company or by a third party. The customer accesses and uses the software on an as-needed basis over the Internet or via a dedicated line; however, the customer has no right to take delivery of the software ~~provided we consider collection~~without incurring a significant penalty. The underlying arrangements typically include a single fee for the service that is billed monthly, quarterly or annually. The Company’s SaaS solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to ~~be probable,~~ the ~~fee~~customer. Revenue from a SaaS solution is ~~fixed or determinable, there is evidence of an arrangement, and vendor specific objective evidence (“VSOE”) exists with respect to any undelivered elements~~generally recognized ratably over the term of the arrangement. ~~For multiple-element arrangements, we~~

Licenses. Our perpetual and term software licenses provide the customer with a right to use the software as it exists at the time of purchase. We recognize revenue ~~under~~for distinct software licenses once the ~~residual method, whereby (1)~~license period has begun and we have made the total fair value of the undelivered elements, as indicated by VSOE, is deferred and subsequently recognized and (2) the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as revenue relatedsoftware available to the ~~delivered elements. We record revenues from sales of third-party products in accordance~~customer.

Our software licenses are sold with ~~Principal Agent Considerations within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification. Furthermore,~~maintenance under which we ~~evaluate sales through our indirect channel on acase-by-case~~ basis to determine whether the transaction should be recorded gross or net, including but not limited to assessing whether or not we: (1) act as principal in the transaction, (2) take title to the products, (3) have risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) act as an agent or brokerprovide customers with ~~compensation on a commission or fee basis. Accordingly, in most cases we record our sales through the Demand Management, Inc. (“DMI”) channel on a gross basis.~~

~~Maintenance~~. ~~Revenue derived from maintenance contracts primarily includes~~ telephone consulting, product updates on a when and if available basis, and releases of new versions of products previously purchased by the customer, as well as error reporting and correction services.

Professional Services and Other. Our services revenue consists of fees generated from consulting, implementation and training services, including reimbursements of out-pocket expenses in connection with our services. Services are typically

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optional to our customers, and are distinct from our software. Fees for our services are separately priced and are generally billed on an hourly basis, and revenue is recognized over time as the services are performed. We believe the output method of hours worked provides the best depiction of the transfer of our services since the customer is receiving the benefit from our services as the work is performed. The total amount of expense reimbursement included in professional services and other revenue was approximately $12,000 and $16,000 for the three and six months ended October 31, 2020, respectively, and approximately $0.5 million and $0.9 million for the three and six months ended October 31, 2019, respectively.

Maintenance. Revenue is derived from maintenance under which we provide customers with telephone consulting, product updates on a when and if available basis, and releases of new versions of products previously purchased by the customer, as well as error reporting and correction services. Maintenance ~~contracts are~~for licenses is renewable, generally on an annual basis, at the option of the customer. Maintenance terms typically ~~sold for a separate fee with initial contractual periods ranging~~range from one to three ~~years with renewal for additional periods thereafter. Maintenance fees are~~years. Revenue related to maintenance is generally ~~billed annually~~paid in ~~advance. We recognize maintenance~~

~~revenue~~advance and recognized ratably over the term of the ~~maintenance agreement. In situations where we bundle all or a portion of the maintenance fee with the license fee, VSOE for maintenance is determined based on prices when sold separately.~~

~~Services~~. Revenue derived from services primarily includes consulting, implementation, and training. We primarily bill fees under time and materials arrangements and recognize them as we perform the services. In accordance with the other presentation matters within the Revenue Recognition Topic of the FASB’s Accounting Standards Codification, we recognize amounts received for reimbursement of travel and other~~out-of-pocket~~ expenses incurred as revenue in the condensed consolidated statements of operations under services and other. These amounts totaled approximately $419,000 and $1.4 million for the three and nine months ended January 31, 2018, respectively, and $414,000 and $1.6 million for the three and nine months ended January 31, 2017, respectively.

~~Software-as-a-Service~~ ~~(SaaS) revenues include fees for the right to use the software for a limited period of time in a hosted environment by~~agreement since the Company ~~or by~~is standing ready to provide a ~~third party and~~series of maintenance services that are substantially the ~~customer accesses and uses the software on anas-needed~~ ~~basis~~same each period over the ~~Internet or via a dedicated line; however,~~term; therefore, time is the ~~customer has no ability to take delivery~~best measure of the software. The underlying arrangements typically include a single fee for the service that is billed monthly, quarterly or annually. SaaS revenues (which rolls into services and other revenue) are recognized ratably over the subscription period once the services commence. Other cloud revenues consists of managed and hosting services.

progress.

Indirect Channel ~~Revenue~~.Revenue. We ~~recognize~~record revenues ~~for~~from sales made through the indirect sales channels ~~principally when~~on a gross basis, because we control the ~~distributor makes~~goods or services and act as the ~~sale~~principal in the transaction. In reaching this determination, we evaluated sales through our indirect channel on a case-by-case basis and considered a number of factors including indicators of control such as the party having the primary responsibility to an~~end-user,~~ ~~the license fee is fixed~~provide specified goods or ~~determinable, the license fee is nonrefundable,~~services and the ~~sale meets all other conditions for revenue recognition.~~

~~Deferred Revenue~~. ~~Deferred revenue represents advance payments or billings for software licenses, services, and maintenance billed~~party having discretion in ~~advance of the time revenue is recognized.~~

establishing prices.

Sales ~~Taxes~~.Taxes. We account for sales taxes collected from customers on a net basis.

~~Unbilled Accounts Receivable~~. ~~The unbilled receivable balance consists~~

Significant Judgments. Many of ~~amounts generated from license fee~~our contracts include multiple performance obligations. Our products and services generally do not require a significant amount of integration or interdependency; therefore, our products and services are generally not combined. We allocate the transaction price for each contract to each performance obligation based on the relative standalone selling price ("SSP") for each performance obligation within each contract.

We use judgment in determining the SSP for products and services. For substantially all performance obligations except on-premise licenses, we are able to establish SSP based on the observable prices of products or services sold separately to similar customers in comparable circumstances. We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change. Our on-premise licenses historically have not been sold on a standalone basis, as the vast majority of all customers elect to purchase on-premise license maintenance and support contracts at the time of an on-premise license purchase. We are unable to establish the SSP for our on-premise licenses based on observable prices, as the same products are sold for a broad range of prices (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence. As a result, the SSP for an on-premise license included in a contract with multiple performance obligations is determined by applying a residual approach, whereby all other performance obligations within a contract are first allocated a portion of the transaction price based upon their respective SSPs, with any residual amount of transaction price allocated to on-premise license revenues. ~~At January 31, 2018~~Maintenance and ~~April~~support contracts are generally priced as a percentage of the net fees paid by the customer to access the on-premise license.

Contract Balances. Timing of invoicing to customers may differ from timing of revenue recognition and these timing differences result in unbilled accounts receivables or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. Fees for our software licenses are generally due within 30 2017, unbilled license fees were approximately $384,000 and $1.0 million, respectively, and unbilled services revenues were approximately $2.3 million and $1.8 million, respectively. Unbilled license fee accounts receivable represents revenue that has been recognized, butdays of contract execution. We have an established history of collecting under the terms of ~~the~~our software license ~~agreement, which include specified payment terms that~~contracts without providing refunds or concessions to our customers. SaaS solutions and maintenance are ~~considered normal and customary, certain payments have not yet been invoiced to the customers. Unbilled services revenues primarily occur due to~~typically billed in advance on a monthly, quarterly, or annual basis. Services are typically billed as performed. In instances where the timing of revenue recognition differs from the ~~respective billings, which occur subsequent~~timing of invoicing, we have determined that our contracts generally do not include significant financing component. The primary purpose of our invoicing terms is to provide customers with predictable ways to purchase our software and services, not to provide or receive financing. Additionally, we are applying the practical expedient to exclude any financing component from consideration for any contracts with payment terms of one year or less since we rarely offer terms extending beyond one year. The consideration in our customer contracts is fixed.

We have an unconditional right to consideration for all goods and services transferred to our customers. That unconditional right to consideration is reflected in billed and unbilled accounts receivable in the accompanying consolidated balance sheets in accordance with ASC Topic 606.

Deferred revenue consists of amounts collected prior to having completed the performance of maintenance, SaaS, hosting, and managed services. We typically invoice customers for cloud subscription and support fees in advance on a monthly, quarterly or annual basis, with payment due at the start of the cloud subscription or support term. During the three months ended October 31, 2020, we recognized $14.6 million of revenue that was included in the deferred revenue balance as

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of July 31, 2020. During the six months ended October 31, 2020, we recognized $25 million of revenue that was included in the deferred revenue balance as of April 30, 2020.


	October 31, 2020		April 30, 2020
	(in thousands)





Deferred revenue, current	31,206		34,227
Deferred revenue, long-term	0		0
Total deferred revenue	$	31,206	$	34,227

Remaining Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the ~~end~~customer and is the unit of account under Topic 606. The transaction price is allocated to each ~~reporting~~distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies and tracks the performance obligations at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract. Remaining performance obligations represent the transaction price of orders for which products have not been delivered or services have not been performed. As of October 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $78.0 million. The Company expects to recognize revenue on approximately two-thirds of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter.

Disaggregated Revenue. The Company disaggregates revenue from contracts with customers by geography, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s revenue by geography is as follows:


	Three Months Ended October 31,				Six Months Ended October 31,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Revenues:
Domestic	$	23,659	$	22,763	$	46,799	$	44,174
International	4,222		5,447		8,360		11,419
	$	27,881	$	28,210	$	55,159	$	55,593

Contract Costs. The Company capitalizes the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission). The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all of the following criteria:

a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify.

b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.

c. The costs are expected to be recovered.

Certain sales commissions incurred by the Company were determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the economic benefit period.

These deferred commission costs are classified as current or non-current based on the timing of when the Company expects to recognize the expense. The current and non-current portions of deferred commissions are included in prepaid expenses and other current assets and deferred sales commissions—noncurrent, respectively, in the Company’s Condensed Consolidated Balance Sheets. Total deferred commissions at October 31, 2020 and April 30, 2020 were $3.1 million and $3.5 million, respectively. Amortization of sales

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commissions was $0.5 million and $0.9 million for the three and six months ended October 31, 2020, respectively, which is included in "Sales and marketing" expense in the accompanying Condensed Consolidated Statements of Operations. NaN impairment losses were recognized during the periods.

C. Leases

The Company’s operating leases are primarily related to facility leases for administration and sales. The operating leases have terms ranging from three to five years. While each of the leases includes renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities. The Company does not have any finance leases.

Balance sheet information related to operating leases is as follows (in thousands):


	October 31, 2020
Assets
Right of use assets	$	1,813

Liabilities
Current lease liabilities	797
Long-term lease liabilities	1,137
Total liabilities	$	1,934

Lease cost information related to operating leases is as follows (in thousands):


	Three Months Ended October 31, 2020		Six Months Ended October 31, 2020
Lease cost
Operating lease cost	$	197	$	391
Short-term lease cost	161		319
Variable lease cost	76		145

Total lease cost	$	434	$	855

Lease costs are primarily included in "Sales and marketing" and "General and administrative" expenses in the Company’s Condensed Consolidated Statements of Operations.

The impact of the Company's leases on Condensed Consolidated Statement of Cash Flows is presented in the operating activities section, which mainly consisted of cash paid for operating lease liabilities of approximately $0.9 million during the six months ended October 31, 2020. On October 6, 2020, the Company extended the lease between Haymac LLC, and Logility, Inc., for an additional three years for the office building located in Massachusetts now ending on December 31, 2023.

Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:


	October 31, 2020
Weighted average remaining lease term	2.8 years
Weighted average discount rate	3.3	%

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The following table summarizes the maturity of the Company’s operating lease liabilities as of October 31, 2020 (in thousands):


FY2021	$	407
FY2022	711
FY2023	486
FY2024	361
FY2025	20
Thereafter	0
Total operating lease payments	$	1,985
Less imputed interest	(51)
Total operating lease liabilities	$	1,934

The Company leases to other tenants a portion of its headquarters building that it owns in Atlanta, Georgia. The leases expire at various dates through October 2025. Lease income is included in "Other, net" in the Company’s Condensed Consolidated Statements of Operations and totaled approximately $79,000 and $150,000 for the three and six months ended October 31, 2020, respectively. Lease payments to be received as of October 31, 2020 are as follows (in thousands):


FY2021	$	93
FY2022	149
FY2023	96
FY2024	98
FY2025	100
Thereafter	50
Total	$	586

D. Declaration of Dividend Payable

On ~~November 15, 2017,~~August 19, 2020, our Board of Directors declared a quarterly cash dividend of $0.11 per share of our Class A and Class B ~~Common Stock.~~common stock. The cash dividend ~~was~~is payable on ~~February 23, 2018~~December 4, 2020 to Class A and Class B shareholders of record at the close of business on ~~February 9, 2018.~~

D.November 20, 2020.

E. Earnings ~~per~~Per Common Share

~~We have~~

The Company has two classes of common ~~stock, of which~~stock. Class B ~~Common Shares~~common shares are convertible into Class A ~~Common Shares~~common shares at any time, on a~~one-for-one~~ 1-for-one basis. Under ~~our~~the Company’s Articles of Incorporation, if ~~we declare~~ dividends are declared, holders of Class A ~~Common Shares~~common shares shall receive a $0.05 dividend per share prior to the Class B ~~Common Shares~~common shares receiving any dividend and holders of Class A ~~Common Shares~~common shares shall receive a dividend at least equal to Class B ~~Common Shares~~common shares dividends on a per share basis. As a result, ~~we have~~the Company has computed the earnings per share in ~~accordance~~compliance with the Earnings Per Share ~~within the Presentation~~ Topic of the ~~FASB’s Accounting Standards Codification,~~FASB ASC, which requires companies that have multiple classes of equity securities to use the~~“two-class”~~ “two-class” method in computing earnings per share.

For ~~our~~the Company’s basic earnings per share calculation, ~~we use~~ the~~“two-class”~~ Company uses the “two-class” method. Basic earnings per share are calculated by dividing net earnings attributable to each class of common stock by the weighted average number of shares outstanding. All undistributed earnings are allocated evenly between Class A and B ~~Common Shares~~common shares in the earnings per share calculation to the extent that earnings equal or exceed $0.05 per share. This allocation is based on management’s judgment after considering the dividend rights of the ~~two classes~~two-classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B ~~Common~~ shares to Class A ~~Common~~ shares.

~~The calculation of diluted~~ If Class B shares convert to Class A shares during the period, the distributed net earnings for Class B shares is calculated using the weighted average common shares outstanding during the period.

Diluted earnings per share is ~~similar~~calculated similarly to ~~the calculation of~~ basic earnings per share, except that the calculation includes the dilutive effect of the assumed exercise of options issuable under ~~our~~the Company’s stock incentive plans. For ~~our~~the Company’s diluted earnings per

share calculation for Class A ~~Common Shares, we use~~shares, the~~“if-converted”~~ Company uses the “if-converted” method. This calculation

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assumes that all Class B ~~Common Shares~~common shares are converted into Class A ~~Common Shares (if antidilutive)~~common shares and, as a result, assumes there are no holders of Class B ~~Common Shares~~common shares to participate in undistributed earnings.

For ~~our~~the Company’s diluted earnings per share calculation for Class B ~~Common Shares, we use~~shares, the~~“two-class”~~ Company uses the “two-class” method. This calculation does not assume that all Class B ~~Common Shares~~common shares are converted into Class A ~~Common Shares.~~common shares. In addition, this method assumes the dilutive effect ifof Class A stock options were converted to Class A ~~Common Shares~~shares and the undistributed earnings are allocated evenly to both Class A and B ~~Common Shares~~shares including Class A ~~Common Shares~~shares issued pursuant to those converted stock options. This allocation is based on management’s judgment after considering the dividend rights of the ~~two classes~~two-classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B ~~Common Shares~~shares into Class A ~~Common Shares.~~

shares.

The following tables set forth the computation of basic earnings per common share and diluted earnings per common share (in thousands except for per share amounts):

Basic earnings per common share:

   Three Months Ended
January 31, 2018    Nine Months Ended
January 31, 2018
   Class A    Class B    Class A    Class B
Distributed earnings
   $ 0.11    $ 0.11    $ 0.33    $ 0.33
Undistributed earnings
   0.07    0.07    0.03    0.02








Total
   $ 0.18    $ 0.18    $ 0.36    $ 0.35








Distributed earnings
   $ 3,102    $ 242    $ 9,180    $ 747
Undistributed earnings
   2,069    167    799    59








Total
   $ 5,171    $ 409    $ 9,979    $ 806








Basic weighted average common shares outstanding
   27,992    2,252    27,630    2,310
   Three Months Ended
January 31, 2017    Nine Months Ended
January 31, 2017
   Class A    Class B    Class A    Class B
Distributed earnings
   $ 0.11    $ 0.11    $ 0.32    $ 0.32
Undistributed earnings
   (0.03 )    (0.03 )    (0.17 )    (0.17 )








Total
   $ 0.08    $ 0.08    $ 0.15    $ 0.15








Distributed earnings
   $ 2,943    $ 267    $ 8,583    $ 778
Undistributed earnings
   (887 )    (80 )    (4,596 )    (422 )








Total
   $ 2,056    $ 187    $ 3,987    $ 356








Basic weighted average common shares outstanding
   26,901    2,432    26,687    2,449

Three Months Ended
October 31, 2020 Six Months Ended
October 31, 2020
Class A
Common
Shares Class B
Common
Shares Class A
Common
Shares Class B
Common
Shares
Distributed earnings $ 0.11 $ 0.11 $ 0.22 $ 0.22
Undistributed losses (0.09) (0.09) (0.14) (0.14)
Total $ 0.02 $ 0.02 $ 0.08 $ 0.08
Distributed earnings $ 3,375 $ 201 $ 6,745 $ 402
Undistributed losses (2,722) (162) (4,172) (249)
Total $ 653 $ 39 $ 2,573 $ 153
Basic weighted average common shares outstanding 30,667 1,822 30,592 1,822

Three Months Ended
October 31, 2019 Six Months Ended
October 31, 2019
Class A
Common
Shares Class B
Common
Shares Class A
Common
Shares Class B
Common
Shares
Distributed earnings $ 0.11 $ 0.11 $ 0.22 $ 0.22
Undistributed losses $ (0.05) $ (0.05) $ (0.13) $ (0.13)
Total $ 0.06 $ 0.06 $ 0.09 $ 0.09
Distributed earnings $ 3,303 $ 202 $ 6,552 $ 403
Undistributed losses $ (1,645) $ (101) $ (3,810) $ (234)
Total $ 1,658 $ 101 $ 2,742 $ 169
Basic weighted average common shares outstanding $ 29,787 $ 1,822 $ 29,618 $ 1,822

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Diluted EPS for Class A Common Shares Using theIf-Converted Method

Three Months Ended ~~January~~October 31, ~~2018~~

   Undistributed
& Distributed
Earnings to
Class A
Common    Class A
Common
Shares    EPS*
Per Basic
   $ 5,171    27,992    $ 0.18
Common Stock Equivalents
   —      457    —






   5,171    28,449    0.18
Class B Conversion
   409    2,252    —






Diluted EPS for Class A Common Shares
   $ 5,580    30,701    $ 0.18

~~Nine~~2020


	Undistributed & Distributed Earnings to Class A Common Shares		Class A Common Shares	EPS*
Per Basic	$	653	30,667	$	0.02
Common Stock Equivalents	—		407	—
	653		31,074	0.02
Class B Common Share Conversion	39		1,822	—
Diluted EPS for Class A Common Shares	$	692	32,896	$	0.02

Six Months Ended ~~January~~October 31, ~~2018~~

   Undistributed
& Distributed
Earnings to
Class A
Common    Class A
Common
Shares    EPS*
Per Basic
   $ 9,979    27,630    $ 0.36
Common Stock Equivalents
   —      359    —






   9,979    27,989    0.36
Class B Conversion
   806    2,310    —






Diluted EPS for Class A Common Shares
   $ 10,785    30,299    $ 0.36

2020


	Undistributed & Distributed Earnings to Class A Common Shares		Class A Common Shares	EPS*
Per Basic	$	2,573	30,592	$	0.08
Common Stock Equivalents	—		505	—
	2,573		31,097	0.08
Class B Common Share Conversion	153		1,822	—
Diluted EPS for Class A Common Shares	$	2,726	32,919	$	0.08

Three Months Ended ~~January~~October 31, ~~2017~~

   Undistributed
& Distributed
Earnings to
Class A
Common    Class A
Common
Shares    EPS*
Per Basic
   $ 2,056    26,901    $ 0.08
Common Stock Equivalents
   —      297    —






   2,056    27,198    0.08
Class B Conversion
   187    2,432    —






Diluted EPS for Class A Common Shares
   $ 2,243    29,630    $ 0.08

~~Nine~~2019


	Undistributed & Distributed Earnings to Class A Common Shares		Class A Common Shares	EPS*
Per Basic	$	1,658	29,787	$	0.06
Common Stock Equivalents	—		701	—
	1,658		30,488	0.05
Class B Common Share Conversion	101		1,822	—
Diluted EPS for Class A Common Shares	$	1,759	32,310	$	0.05

Six Months Ended ~~January~~October 31, ~~2017~~

   Undistributed
& Distributed
Earnings to
Class A
Common    Class A
Common
Shares    EPS*
Per Basic
   $ 3,987    26,687    $ 0.15
Common Stock Equivalents
   —      311    —






   3,987    26,998    0.15
Class B Conversion
   356    2,449    —






Diluted EPS for Class A Common Shares
   $ 4,343    29,447    $ 0.15

2019

Undistributed
& Distributed
Earnings
to Class A
Common
Shares Class A
Common
Shares EPS*
Per Basic $ 2,742 29,618 $ 0.09
Common Stock Equivalents — 626 —
2,742 30,244 0.09
Class B Common Share Conversion 169 1,822 —
Diluted EPS for Class A Common Shares $ 2,911 32,066 $ 0.09

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Diluted EPS for Class B Common Shares Using theTwo-Class Method

Three Months Ended ~~January~~October 31, ~~2018~~

   Undistributed &
Distributed
Earnings to Class B
Common    Class B
Common
Shares    EPS*
Per Basic
   $ 409    2,252    $ 0.18
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares
   (2 )    —      —






Diluted EPS for Class B Common Shares
   $ 407    2,252    $ 0.18

~~Nine~~2020


	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares	EPS*
Per Basic	$	39	1,822	$	0.02
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares	2		—	—
Diluted EPS for Class B Common Shares	$	41	1,822	$	0.02

Six Months Ended ~~January~~October 31, ~~2018~~

   Undistributed &
Distributed
Earnings to Class B
Common    Class B
Common
Shares    EPS*
Per Basic
   $ 806    2,310    $ 0.35
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares
   (1 )    —      —






Diluted EPS for Class B Common Shares
   $ 805    2,310    $ 0.35

2020


	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares		EPS*
Per Basic	$	153	$	1,822	$	0.08
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares	4		—		—
Diluted EPS for Class B Common Shares	$	157	$	1,822	$	0.09

Three Months Ended ~~January~~October 31, ~~2017~~

   Undistributed
& Distributed
Earnings to
Class B
Common    Class B
Common
Shares    EPS*
Per Basic
   $ 187    2,432    $ 0.08
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares
   2    —      —






Diluted EPS for Class B Common Shares
   $ 189    2,432    $ 0.08

~~Nine~~2019


	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares		EPS*
Per Basic	$	101	$	1,822	$	0.06
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares	3		—		—
Diluted EPS for Class B Common Shares	$	104	$	1,822	$	0.06

Six Months Ended ~~January~~October 31, ~~2017~~

   Undistributed
& Distributed
Earnings to
Class B
Common    Class B
Common
Shares    EPS*
Per Basic
   $ 356    2,449    $ 0.15
Reallocation of undistributed earnings from Class A shares to Class B shares
   6    —      —






Diluted EPS for Class B
   $ 362    2,449    $ 0.15

*	~~Amounts adjusted for rounding~~

2019


	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares		EPS*
Per Basic	$	169	$	1,822	$	0.09
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares	6		—		—
Diluted EPS for Class B Common Shares	$	175	$	1,822	$	0.10

_______________

*Amounts adjusted for rounding

For the three months and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, we excluded options to purchase ~~12,130~~1,842,587 and ~~57,598~~1,426,760 Class A Common Shares, respectively, and for the three months and ~~nine~~six months ended ~~January~~October 31, ~~2017,~~2019, we excluded options

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to purchase ~~374,439~~12,174 and ~~337,500~~330,620 Class A Common Shares, respectively, from the computation of diluted earnings per Class A Common Shares. We excluded these option share amounts because the exercise prices of those options were greater than the average market price of the Class A Common Shares during the applicable period. As of ~~January~~October 31, ~~2018,~~2020, we had a total of ~~3,470,017~~4,378,453 options outstanding and as of ~~January~~October 31, ~~2017,~~2019, we had a total of ~~3,230,575~~4,333,117 options outstanding.

~~E. Acquisitions~~

~~We account for business combinations using~~

F. Stock-Based Compensation

During the acquisition method of accounting and accordingly, the identifiable assets acquired and liabilities assumed are recorded based upon management’s estimates of current fair values as of the acquisition date. The estimation process includes analyses based on income and market approaches. Goodwill represents the excess purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The goodwill generated is due in part to the synergies that are not included in the fair value of identifiable intangible assets. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues. Identifiable intangible assets with finite lives are amortized over their useful lives. Amortization of current technology is recorded in cost of revenues-license and amortization of all other intangible assets is recorded in amortization of acquisition-related intangibles. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in general and administrative expenses in the periods in which such costs are incurred. The results of operations of acquired businesses are included in the condensed consolidated financial statements from the acquisition date.

Effective November 21, 2017, the Company acquired certain assets of privately held Innovare Holding Co., Incorporated, a Delaware corporation and its subsidiaries (collectively, “Halo”) and a supplier of advanced analytics and business intelligence solutions, for the supply chain market, pursuant to the terms of an asset purchase agreement, dated as of November 21, 2017 (the “Purchase Agreement”).

Halo’s advanced analytics will be embedded into the Logility Voyager Solutions advanced analytics platform. These enriched analytics will leverage interactive visualization, machine learning algorithms, and artificial intelligence (AI) to transform both structured and unstructured data to accelerate business planning performance and proactively identify new business opportunities or mitigate risks. Customers on the DMI and NGC platforms will be able to add~~pre-packaged~~ Halo advanced analytics capabilities to their subscriptions to drive quick insights and appropriate actions for their businesses. In addition, Logility will continue to offer Halo standalone to complement other enterprise systems.

Under the terms of the Purchase Agreement, the Company acquired the assets of Halo for cash consideration paid of approximately $9.25 million, which represents a purchase price of approximately $9.95 million net of a $700,000 negative working capital adjustment, subject to certain post-closing adjustments, which included an additional negative working capital adjustment of $113,000 (recorded as a receivable), thus resulting in an adjusted purchase price consideration of $9.14 million. The Company incurred acquisition costs of approximately $73,000 and $91,000 during the three and ninesix months ended ~~January~~October 31, ~~2018,~~2020 and 2019, we granted options for 1,120,000 and 1,063,000 shares of Class A common stock, respectively. The operating results of Halo are not material for pro forma disclosure. We preliminarily allocated $5,919,000 of the total purchase price to goodwill, which has been assigned to the Supply Chain Management segment and is deductible for income tax purposes.

~~The following preliminary allocation of the total purchase price reflects the fair value of the assets acquired and liabilities assumed as of November 21, 2017 (in thousands):~~

      Useful Life
Accounts receivable, net
   $ 373
Current assets
   188
Property and equipment, net
   43
Other assets
   1,700
Goodwill
   5,919
Non-compete
   30    2 years
Trade name
   160    2 years
Customer relationships
   600    8 years
Current technology
   3,200    3 years



Total assets acquired
   12,213
Current liabilities
   (1,370 )
Long-term liabilities
   (1,703 )



Total liabilities assumed
   (3,073 )



Net assets acquired
   $ 9,140

~~Non-compete~~ agreements, trade name, customer relationships and current technology are being amortized on a straight-line basis over the remaining estimated economic life of the assets, including the period being reported. The fair value of ~~deferred revenues in a business combination is considered to be an assumed liability (which must arise from a legal performance obligation) and, accordingly,~~each option award is estimated ~~based~~ on the ~~direct~~date of grant using the Black-Scholes option pricing model. The forfeiture rates are estimated using historical data. We recorded stock option compensation cost of ~~fulfilling~~approximately $0.7 million and $0.5 million and income tax benefits of approximately $38,000 and $412,000 from option exercises during the obligation plus a normal profit margin, which approximates fair value. Also, in practice, the normal profit margin is limited to the profit margin on the costs to provide the product or service (that is, the fulfillment effort).

~~F. Stock-Based Compensation~~

~~During the nine~~three months ended ~~January~~October 31, ~~2018~~2020 and ~~2017, we granted options for 1,196,000 and 342,000 shares of common stock,~~2019, respectively. We recorded stock option compensation cost of approximately ~~$314,000~~$1.2 million and ~~$333,000~~$0.9 million and ~~related~~ income tax benefits of approximately ~~$138,000~~$0.3 million and ~~$124,000~~$0.5 million from option exercises during the ~~three~~six months ended ~~January~~October 31, ~~2018~~2020 and 2017, respectively. We recorded stock option compensation cost of approximately $1.1 million and $1.1 million and related income tax benefits of approximately $413,000 and $409,000 during the nine months ended January 31, 2018 and 2017,2019, respectively. We record stock-based compensation expense on a straight-line basis over the vesting period directly to additional~~paid-in-capital.~~

paid-in capital.

During the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017,~~2019, we issued ~~778,129~~277,197 and ~~593,082~~650,943 shares of Class A common stock, respectively, resulting from the exercise of stock options. The total intrinsic value of options exercised during the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017~~2019 based on market value at the exercise dates was approximately ~~$2.2~~$1.6 million and ~~$1.9~~$3.2 million, respectively. As of ~~January~~October 31, ~~2018,~~2020, unrecognized compensation cost related to unvested stock option awards approximated ~~$3.6~~$7.7 million, which we expect to recognize over a weighted average period of ~~1.85~~1.99 years.

G. Fair Value of Financial Instruments

We measure our investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. A number of factors affect market price observability, including the type of asset or liability and its characteristics. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1—Quoted prices for identical instruments in active ~~markets for identical instruments.~~markets.

•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

•Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following is a general description of the valuation methodologies we use for financial assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash Equivalents—Cash equivalents include investments in government obligation based money-market funds, other money market instruments and interest-bearing deposits with initial terms of three months or less. The fair value of cash equivalents approximates its carrying value due to the short-term nature of these instruments.

Marketable Securities—Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. ~~Government~~government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include municipal bonds. We value these securities using market-corroborated pricing or other models that use observable inputs such as yield curves.

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The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of ~~January~~October 31, ~~2018~~2020 and April 30, ~~2017, respectively,~~2020, and ~~indicates~~indicate the fair value hierarchy of the valuation techniques we used to determine such fair value (in thousands):

   January 31, 2018
   Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Balance
Cash equivalents
   $ 50,541    $ —      $ —      $ 50,541
Marketable securities
   12,990    20,529    —      33,519








Total
   $ 63,531    $ 20,529    $ —      $ 84,060








   April 30, 2017
   Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Balance
Cash equivalents
   $ 62,647    $ —      $ —      $ 62,647
Marketable securities
   8,984    14,803    —      23,787








Total
   $ 71,631    $ 14,803    $ —      $ 86,434


	October 31, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	74,902	$	0	$	0	$	74,902
Marketable securities	11,725		1,104		0		12,829
Total	$	86,627	$	1,104	$	0	$	87,731


	April 30, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Balance
Cash equivalents	75,256	0	0	75,256
Marketable securities	11,758	3,104	0	14,862
Total	87,014	3,104	0	90,118

H. Stock Repurchases

On August 19, 2002, our Board of Directors ~~approved a resolution authorizing~~authorized the repurchase of up to an additional 2.0 million shares of our Class A common stock. We have made and will make these repurchases through open market purchases at prevailing market prices. The timing of any repurchase will depend upon market conditions, the market price of our Class A common stock and management’s assessment of our liquidity and cash flow needs. Under this repurchase plan, ~~through January 31, 2018,~~ we have repurchased 1,053,679 shares of Class A common stock at a cost of approximately $6.2 ~~million.~~million, which had no impact on fiscal 2021. As of ~~January~~October 31, ~~2018,~~2020, under all repurchase plans previously authorized, including this most recent plan, we have repurchased a total of 4,588,632 shares of common stock at a cost of approximately $25.6 million.

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I. Comprehensive Income

We have not included condensed consolidated statements of comprehensive income in the accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements since comprehensive income and net earnings presented in the accompanying ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations would be substantially the same.

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J. Industry Segments

FASB ASC 280,Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of a public entity about which separate financial information is available that is evaluated regularly by the chief operating decision makers (“CODMs”), or decision making group, in deciding how to allocate resources and in assessing performance. Our ~~chief operating decision makers (“CODMs”)~~CODMs are our ~~Principal~~Chief Executive Officer ~~(“PEO”)~~ and ~~President.~~President and our Chief Financial Officer. While our CODMs are apprised of a variety of financial metrics and information, we manage our business primarily on a segment basis, with the

CODMs evaluating performance based upon segment operating profit or loss, ~~that includes an allocation of~~with certain corporate and other common expenses ~~but excludes certain unallocated corporate expenses, which are~~ included in the Other segment. Our CODMs review the operating results of our three segments, assess performance and allocate resources in a manner that is consistent with the changing market dynamics that we have experienced. As a result, in the third quarter of fiscal 2018, we updated our operating segments to reflect the fact that we provide our software solutions through ~~three~~3 major operating segments, which are further broken down into a total of ~~six~~6 major product and service groups. The ~~three~~3 operating segments are (1) Supply Chain Management (“SCM”), (2) Information Technology (“IT”) Consulting and (3) Other.

~~The~~

Our primary operating units or brands under our SCM segment ~~consists of~~include Logility, which provides supply chain optimization and advance retail planning solutions, as an integrated suite of sales and operations planning, demand optimization, inventory optimization, manufacturing planning and scheduling, supply optimization, retail allocation and merchandise planning and transportation optimization, as well as (i) DMI, which provides collaborative supply chain solutions to streamline and optimize the forecasting, inventory, production, supply, allocation, distribution and management of products between trading partners, (ii)Inc., New Generation Computing, ~~(“NGC”~~Inc. ("NGC"), ~~which provides cloud solutions for supply chain management, product lifecycle management, quality control, vendor compliance~~ and enterprise resource planning for both retailers and manufacturers in the apparel, sewn products and furniture industries, and (iii) Halo, which provides advanced analytics and business intelligence solutions for the supply chain market. The IT Consulting segment consists of The Proven Method,Demand Management, Inc., an IT staffing and consulting services firm, which provides support for our software products, such as software enhancements, documentation, updates, customer education, consulting, systems integration services, maintenance and support services. The Other segment consists of (i) American Software ERP, which provides purchasing and materials management, customer order processing, financial,~~e-commerce~~ ~~and traditional manufacturing solutions, and (ii) unallocated corporate overhead expenses.~~

~~Previously, we maintained three operating segments: (1) SCM, (2) IT and (3) Enterprise Resource Planning (“ERP”~~ ("DMI"). AsLogility and NGC are each a ~~result~~wholly-owned subsidiary of the ~~organizational realignment during the third quarter fiscal 2018, NGC was repositioned out~~Company, and DMI is a wholly-owned subsidiary of Logility, Inc. Each operating unit focuses on a segment of the ERP segment and into the SCM segment. There were no changes to the IT segment. Certain prior year amounts have been recasted to conform to fiscal 2018 presentation. The change in reportable segments had no effect on our previously reported consolidated financial position or results of operations.

marketplace where their expertise lies.

All of our revenues are derived from external customers. We do not have any ~~inter-segment~~intersegment revenue. Our income taxes and dividends are paid at a consolidated level. Consequently, it is not practical to show these items by operating segment.

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In the following table, we have broken down the intersegment transactions applicable to the three ~~and nine~~ months ended ~~January~~October 31, ~~2018~~2020 and ~~2017:~~

   Three Months Ended
January 31,    Nine Months Ended
January 31,
   2018    2017    2018    2017
Revenues:

Supply Chain Management
   $ 24,902    $ 20,770    $ 67,965    $ 62,724
IT Consulting
   4,557    5,108    13,522    15,386
Other
   658    563    1,853    1,910








   $ 30,117    $ 26,441    $ 83,340    $ 80,020








Operating income (loss) before intersegment eliminations:

Supply Chain Management
   $ 5,969    $ 3,667    $ 15,551    $ 8,719
IT Consulting
   185    330    775    698
Other
   (1,950 )    (1,542 )    (5,258 )    (4,608 )








   $ 4,204    $ 2,455    $ 11,068    $ 4,809








Intersegment eliminations:

Supply Chain Management
   $ 922    $ 846    $ 2,763    $ 2,638
IT Consulting
   (20 )    —      (26 )    (33 )
Other
   (902 )    (846 )    (2,737 )    (2,605 )








   $ —      $ —      $ —      $ —








Operating income (loss) after intersegment eliminations:

Supply Chain Management
   $ 6,891    $ 4,513    $ 18,314    $ 11,357
IT Consulting
   165    330    749    665
Other
   (2,852 )    (2,388 )    (7,995 )    (7,213 )








   $ 4,204    $ 2,455    $ 11,068    $ 4,809








Capital expenditures:

Supply Chain Management
   $ 79    $ 65    $ 160    $ 257
IT Consulting
   2    —      8    2
Other
   120    107    245    241








   $ 201    $ 172    $ 413    $ 500








Capitalized software:

Supply Chain Management
   $ 1,035    $ 865    $ 3,652    $ 2,471
IT Consulting
   —      —      —      —
Other
   —      —      —      —








   $ 1,035    $ 865    $ 3,652    $ 2,471








Depreciation and amortization:

Supply Chain Management
   $ 1,551    $ 1,915    $ 4,157    $ 4,645
IT Consulting
   2    2    6    6
Other
   46    83    142    394








   $ 1,599    $ 2,000    $ 4,305    $ 5,045








Earnings (loss) before income taxes:

Supply Chain Management
   $ 6,099    $ 3,651    $ 15,892    $ 8,639
IT Consulting
   185    329    775    698
Other
   (506 )    (500 )    (2,750 )    (3,009 )








   $ 5,778    $ 3,480    $ 13,917    $ 6,328

2019 (in thousands):


	Three Months Ended October 31,				Six Months Ended October 31,
	2020		2019		2020		2019
Revenues:
Supply Chain Management	$	22,297	$	23,487	$	44,033	$	45,834
IT Consulting	5,033		4,158		10,059		8,536
Other	551		565		1,067		1,223
	$	27,881	$	28,210	$	55,159	$	55,593
Operating income (loss):
Supply Chain Management	$	3,983	$	4,360	$	8,087	$	8,211
IT Consulting	103		(12)		209		166
Other	(3,455)		(3,505)		(6,780)		(6,737)
	$	631	$	843	$	1,516	$	1,640










Capital expenditures:
Supply Chain Management	$	45	$	44	$	84	$	75
IT Consulting	0		0		0		0
Other	0		84		79		163
	$	45	$	128	$	163	$	238
Capitalized software:
Supply Chain Management	$	126	$	605	$	371	$	1,890
IT Consulting	0		0		0		0
Other	0		0		0		0
	$	126	$	605	$	371	$	1,890
Depreciation and amortization:
Supply Chain Management	$	1,415	$	2,089	$	3,001	$	4,241
IT Consulting	0		1		1		3
Other	99		93		192		184
	$	1,514	$	2,183	$	3,194	$	4,428
Earnings (loss) before income taxes:
Supply Chain Management	$	3,845	$	4,480	$	8,220	$	8,516
IT Consulting	103		(12)		207		166
Other	(3,359)		(2,913)		(5,621)		(5,805)
	$	589	$	1,555	$	2,806	$	2,877

K. Major ~~Customer~~

Customers

No ~~one~~single customer accounted for more than 10% of total revenues for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017.~~

K.2019.

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L. Contingencies

We ~~more often than not~~generally indemnify our customers against damages and costs resulting from third-party claims of patent, copyright or trademark infringement associated with use of our products. WeHistorically, we have ~~historically~~ not been required to make any payments under such indemnifications. However, we continue to monitor the conditions that are subject to ~~the indemnifications~~indemnification to identify whether it is probable that a loss has occurred, and would recognize any such losses ~~under the indemnifications~~ when those losses are estimable. In addition, we warrant to our customers that our software products operate substantially in accordance with ~~the software products’ specifications.~~their documentation. Historically, we have incurred no costs related to software product warranties and we do not expect to incur such costs in the future, and as such we have made no accruals for software product warranty costs. Additionally, we are involved in various claims arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our financial position or results of operations.

M. Subsequent Event

On ~~February 15, 2018,~~November 18, 2020, our Board of Directors declared a quarterly cash dividend of $0.11 per share of our Class A and Class B ~~Common Stock.~~common stock. The cash dividend is payable on ~~May 25, 2018~~February 19, 2021 to Class A and Class B shareholders of record at the close of business on ~~May 11, 2018.~~

February 5, 2021.

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~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report on Form10-Q (this “Quarterly Report”) 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:

•results of operations;

•liquidity, cash flow and capital expenditures;

•demand for and pricing of our products and services;

•cloud services annual contract value (“ACV”);

•viability and effectiveness of strategic alliances;

•industry conditions and market conditions;

•acquisition activities and the effect of completed acquisitions; and

•general economic conditions.

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 ~~Form10-Q~~Quarterly Report are based upon information available to us as of the filing date of this ~~Form10-Q.~~Quarterly Report. 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 terms “fiscal 2018”~~

ECONOMIC OVERVIEW

For the remainder of fiscal 2021, we expect the global economy to improve modestly when compared to recent periods. 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 related to the spread of the global virus and ~~“fiscal 2017” refer~~trade conflicts on 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. While we do not expect that the virus will cause any further material adverse changes on our business or financial results for the second half of this fiscal ~~years ending April 30, 2018~~year, we are unable to accurately predict the impact that the coronavirus will have due to various uncertainties, including the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and ~~2017, respectively.~~

~~ECONOMIC OVERVIEW~~

actions that may be taken by governmental authorities. Customers continue to take long periods to evaluate discretionary software purchases.

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 ~~January 2018,~~October 2020, the International Monetary Fund (“IMF”)provided an update to the World Economic Outlook ~~(“WEO”)~~for ~~the 2018 and 2019 world economic growth forecast.~~2020. The update noted that,“Global ~~economic activity continues to firm up. Global output~~growth is ~~estimated to have grown by 3.7~~projected at−4.4 percent in ~~2017, which is 0.1 percentage point faster~~2020, a less severe contraction than ~~projected~~forecast in the ~~fall and~~¹⁄₂ percentage point higher than in 2016. The pickup in growth has been broad based, with notable upside surprises in Europe and Asia. Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 ~~percentage point to 3.9~~ ~~percent.~~June 2020 World Economic Outlook (WEO) Update. The revision reflects ~~increased global growth momentum and the expected impact of the recently approved U.S. tax policy changes.”~~

~~For the remainder of fiscal 2018, we expect the global economy~~better-than anticipated second quarter GDP outturns, mostly in advanced economies, where activity began to improve ~~when compared~~sooner than expected after lockdowns were scaled back in May and June, as well as indicators of a stronger recovery in the third quarter. Global growth is projected at 5.2 percent in 2021, a

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little lower than in the June 2020 WEO Update, reflecting the more moderate downturn projected for 2020 and consistent with expectations of persistent social distancing. Following the contraction in 2020 and recovery in 2021, the level of global GDP in 2021 is expected to ~~the prior~~be a modest 0.6 percent above that of 2019. The growth projections imply wide negative output gaps and elevated unemployment rates this year ~~which could result~~and in ~~an improved selling environment. Overall information technology spending is improving as a result of the current global economic environment.~~ 2021 across both advanced and emerging market economies."

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. Although this improvement could slow or regress at any time, due in part to concerns in global capital markets and generalimproved 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.~~

~~We believe the improvement in economic conditions~~increasingly complex supply chain challenges may be driving some businesses to ~~invest in~~focus on achieving more process and efficiency enhancements in their operations and to invest in solutions that improve operating margins, rather than make large infrastructure-type technology purchases. If this trend continues, we believe it may tend to favor solutions such as our ~~Logility~~ supply chain solutions, which are designed to provide a more rapid return on investment and are targeted at some of the largest profit drivers in a customer’s business. While the recent low growth environment has had a particularly adverse impact on the weaker companies in our target markets, we believe a large percentage of our customers are seeking to make investments to strengthen their operations, and some are taking advantage of current economic conditions to gain market share.

BUSINESS OVERVIEW

American Software was incorporated as a Georgia corporation in 1970. We develop, market and support a portfolio of software and services that deliver enterprise management and collaborative supply chain solutions to the global marketplace. We have designed our software and services to bring business value to enterprises by supporting their operations over intranets, extranets, client/servers or the Internet. References to “the Company,” “our products,” “our software,” “our services” and similar references include the appropriate business ~~unit~~segment actually providing the product or service.

The Company enables enterprises to accelerate their operations from product concept to customer availability. Our three brands - Logility, Demand Solutions, and NGC Software - provide ~~our software solutions through three major business segments, which are further broken down into~~ a total of six major product and service groups. The three business segments are (1) Supply Chain Management (“SCM”), (2) Information Technology (“IT”) Consulting and (3) Other. The SCM segment, consists of Logility, which providessingle platform spanning eight supply chain ~~optimization and advance retail planning solutions, as an integrated suite of sales and operations planning,~~process areas, including demand optimization, inventory optimization, ~~manufacturing planning and scheduling,~~ supply optimization, retail ~~allocation~~optimization, quality and ~~merchandise planning~~compliance, product lifecycle management, sourcing management and ~~transportation optimization, as well as (i) DMI, which provides collaborative~~integrated business planning. Our platform includes advanced analytics and is fueled by supply chain ~~solutions~~master data, allowing for the automation of critical business processes through the application of artificial intelligence and machine learning algorithms to ~~streamline~~a variety of internal and ~~optimize the forecasting, inventory, production, supply, allocation, distribution and management of products between trading partners, (ii)~~external data streams.

Our primary operating units under our SCM segment include Logility, Inc., New Generation Computing, Inc. (“NGC”)~~, which provides cloud solutions for supply chain management, product lifecycle management, quality control, vendor compliance~~ and ~~enterprise resource planning for both retailers~~Demand Management, Inc. (“DMI”). Logility and ~~manufacturers in the apparel, sewn products~~NGC are wholly-owned subsidiaries of American Software; DMI is a wholly-owned subsidiary of Logility. In addition to our core SCM software business, we also offer technology staffing and ~~furniture industries, and, (iii) Halo, which provides advanced analytics and business intelligence solutions for the supply chain market. The IT Consulting segment consists of~~consulting services through our wholly-owned subsidiary, The Proven Method, Inc., anin the IT staffing and consulting services firm, which provides support for our software products, such as software enhancements, documentation, updates, customer education, consulting, systems integration services, maintenance and support services.Consulting segment. The Other segment consists of ~~(i) American Software ERP, which provides purchasing~~software and ~~materials management, customer order processing, financial,e-commerce~~ ~~and traditional manufacturing solutions, and (ii) unallocated~~services provided to our legacy enterprise resource planning (“ERP”) customers, as well as corporate overhead and other common expenses.

We derive revenues primarily from four sources: ~~subscriptions,~~ software licenses, subscriptions, professional services and other, and maintenance. We generally determine software license and ~~Software as a Service (SaaS)~~SaaS fees based on the depth of functionality, contractual term, number of production deployments, users and/or sites licensed and/or subscribed. ~~Services~~Professional services and other revenues consist primarily of fees from software implementation, training, ~~consulting services, SaaS, hosting,~~ and ~~managed~~consulting services. We bill ~~service fees~~ primarily under time and materials arrangements and recognize revenues as we perform services. ~~Subscription~~SaaS and maintenance agreements typically are for aone- to three-year term, commencing at the time of the initial contract. We generally bill these fees, monthly, quarterly and annually in advance under agreements with terms of one to three years, and then recognize the resulting revenues ratably over the term of the agreement. Deferred ~~revenues represent advance~~revenue represents payments or billings for subscriptions ~~software licenses,~~and services and maintenance ~~billed~~ in advance of the time we recognize the related revenues.

Our cost of revenue for licenses and subscriptions includes amortization of ~~technology intangibles and~~ capitalized computer software development costs, amortization of acquired developed technology, royalties paid to third-party software vendors, and agent commission expenses related to ~~license~~ revenues generated by the indirect channel, primarily from DMI. Costs for maintenance and services include the cost of personnel to conduct implementations and customer support, consulting, other personnel-related expenses, and agent commission expenses related to maintenance revenues generated by the indirect channel, primarily from DMI. We account for the development costs of software intended for sale in accordance with the ~~Intangibles—Goodwill and Other~~Software topic of the ~~Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification~~FASB ASC.We monitor the net realizable value of our capitalized software on a quarterly basis based on an estimate of future product revenues. We currently expect to fully recover the value of the capitalized software asset recorded on our ~~consolidated balance sheet;~~Condensed Consolidated Balance Sheets; however, if future product revenues are less than management’s current expectations, we may incur a write-down of capitalized software costs.

Our ~~selling~~sales and marketing expenses ~~generally~~mainly include the salary and commissions paid to our sales professionals, along with marketing, promotional, travel and associated costs. Our general and administrative expenses ~~generally~~mainly include the salary and benefits paid to executive, corporate and support personnel, as well as facilities-related costs, utilities, communications expenses, and various professional fees.

We currently view the following factors as the primary opportunities and risks associated with our business:

•

~~Dependence on Capital Spending Patterns.~~ There is a risk associated with our dependence on the capital spending patterns of U.S. and international businesses, which in turn are functions of economic trends and conditions over which we have no control.

•

~~Acquisition Opportunities.~~ There are opportunities for selective acquisitions or investments to provide opportunities to expand our sales distribution channels and/or broaden our product offering by providing additional solutions for our target markets.

•

~~Acquisition Risks.~~ There are risks associated with acquisitions of complementary companies, products and technologies, including the risks that we will not achieve the financial and strategic goals that we contemplate at the time of the transaction. More specifically, in any acquisition we will face risks and challenges associated with the uncertain value of the acquired business or assets, the difficulty of assimilating operations and personnel, integrating acquired technologies and products and maintaining the loyalty of the customers of the acquired business.

•

~~Competitive Technologies.~~ ~~There is a risk that our competitors may develop technologies that are substantially equivalent or superior to our technology.~~

•

~~Competition in General.~~ There are risks inherent in the market for business application software and related services, which has been and continues to be intensely competitive; for example, some of our competitors may become more aggressive with their prices and/or payment terms, which may adversely affect our profit margins.

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•Acquisition Opportunities. There are opportunities for selective acquisitions or investments to expand our sales distribution channels and/or broaden our product offering by providing additional solutions for our target markets.

•Dependence on Capital Spending Patterns. There is risk associated with our dependence on the capital spending patterns of U.S. and international businesses, which in turn are functions of economic trends and conditions over which we have no control.

•Acquisition Risks. There are risks associated with acquisitions of complementary companies, products and technologies, including the risks that we will not achieve the financial and strategic goals that we contemplate at the time of the transaction. More specifically, in any acquisition we will face risks and challenges associated with the uncertain value of the acquired business or assets, the difficulty of assimilating operations and personnel, integrating acquired technologies and products and maintaining the loyalty of the customers of the acquired business.

•Competitive Technologies. There is a risk that our competitors may develop technologies that are substantially equivalent or superior to our technology.

•Competition in General. There are risks inherent in the market for business application software and related services, which has been and continues to be intensely competitive; for example, some of our competitors may become more aggressive with their prices and/or payment terms, which may adversely affect our profit margins.

A discussion of a number of additional risk factors associated with our business is included in our Annual Report ~~on Form10-K~~for fiscal 2020. Additional information and other factors that could affect future financial results may be included, from time to time, in our filings with the ~~fiscal year ended April 30, 2017, which risk factors have been supplemented by the risk factors appearing in Item 1A of Part II of this report on Form10-Q.~~

Securities and Exchange Commission (“SEC”).

Recent Accounting Pronouncements

~~In August 2015, the FASB issued Accounting Standards Update (“ASU”)No. 2015-14,~~~~Revenue from Contracts~~

For information with ~~Customers – Deferral of Effective Date~~~~, which defers the implementation of ASU2014-09,~~~~Revenue from Contracts with Customers~~~~, for one year from the initial effective date. The initial effective date of ASUNo. 2014-09~~ ~~was for annual reporting periods beginning after December 15, 2016, and early adoption was not permitted. ASUNo. 2015-14~~ ~~extends the effective date~~respect to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of reporting periods beginning after December 16, 2016, including interim reporting periods within that reporting period. The Company has performed a review of the requirements of the new revenue standard and is monitoring the activity of the FASB as it relates to specific interpretive guidance. The Company plans to adopt ASU~~2014-09,~~ as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on May 1, 2018. The Company will apply the modified retrospective transition method, which would result in an adjustment to retained earnings for the cumulative effect,recent accounting pronouncements, if any, of applying the standard to contracts in process as of the adoption date. Under this method, the Company would not restate the prior financial statements presented. Therefore, the new standard would require additional disclosures of the amount by which each financial statement line item is affected in the fiscal year 2019 reporting period.

~~In assessing the new standard, the Company has completed its review of representative contracts~~ and identification of policy and differences resulting from the adoption of the new revenue standard. The Company has drafted policy memos for all streams of revenue and expects to finalize by end of fiscal 2018. The Company has also evaluated and is in the process of documenting internal controls over financial reporting surrounding the adoption of the standard and periodic reporting and disclosures. The Company is still assessing the materiality of the standard’s adoption, including its impact on disclosures.

~~In February 2016, the FASB issued ASUNo. 2016-02,~~~~Leases (Topic~~ ~~842)~~, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is evaluating the impact of ~~the adoption of this update~~these pronouncements on our consolidated financial statements, ~~and related disclosures.~~

if any, see Note A in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

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COMPARISON OF RESULTS OF OPERATIONS

Three-Month Comparisons.The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage changes in those items for the three months ended ~~January~~October 31, ~~2018~~2020 and ~~2017:~~

   Three Months Ended January 31,
   Percentage of Total
Revenues Pct. Change in
Dollars
   2018 2017 2018 vs. 2017
Revenues:

License
   20 % 15 % 50 %
Services and other
   43 45 9
Maintenance
   37 40 5


Total revenues
   100 100 14


Cost of revenues:

License
   6 8 (7 )
Services and other
   29 30 8
Maintenance
   8 9 7


Total cost of revenues
   43 47 5


Gross margin
   57 53 21


Research and development
   10 12 1
Sales and marketing
   18 18 16
General and administrative
   14 13 22
Amortization of acquisition-related intangibles
   1 1 (75 )


Total operating expenses
   43 44 11


Operating income
   14 9 71


Other income:

Interest income
   1 1 40
Other, net
   4 3 59


Earnings before income taxes
   19 13 66
Income tax expense
   —   5 (84 )


Net earnings
   19 % 8 % 149 %

~~Nine-Month~~2019:

Three Months Ended October 31,
Percentage of Total
Revenues Pct. Change in
Dollars
2020 2019 2020 vs. 2019
Revenues:
Subscription fees 25 % 19 % 27 %
License 2 % 4 % (57) %
Professional services and other 37 % 38 % (5) %
Maintenance 36 % 39 % (6) %
Total revenues 100 % 100 % (1) %
Cost of revenues:
Subscription fees 11 % 9 % 13 %
License 2 % 4 % (45) %
Professional services and other 27 % 26 % 1 %
Maintenance 7 % 7 % 4 %
Total cost of revenues 47 % 46 % — %
Gross margin 53 % 54 % (2) %
Research and development 16 % 15 % 3 %
Sales and marketing 19 % 18 % 5 %
General and administrative 16 % 17 % (11) %
Amortization of acquisition-related intangibles — % — % (32) %
Total operating expenses 51 % 50 % (1) %
Operating income 2 % 4 % (25) %
Other income:
Interest income — % 1 % (76) %
Other, net — % 1 % nm
Earnings before income taxes 2 % 6 % (62) %
Income tax expense — % (1) % (50) %
Net earnings 2 % 7 % (61) %

nm - not meaningful

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Six-Month Comparisons.The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage changes in those items for the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017:~~

   Nine Months Ended January 31,
   Percentage of Total
Revenues Pct. Change in
Dollars
   2018 2017 2018 vs. 2017
Revenues:

License
   15 % 15 % 6 %
Services and other
   46 45 4
Maintenance
   39 40 3


Total revenues
   100 100 4


Cost of revenues:

License
   6 7 (4 )
Services and other
   30 33 (5 )
Maintenance
   8 9 (8 )


Total cost of revenues
   44 49 (5 )


Gross margin
   56 51 13


Research and development
   10 12 (12 )
Sales and marketing
   18 19 (2 )
General and administrative
   14 13 7
Amortization of acquisition-related intangibles
   1 1 (31 )


Total operating expenses
   43 45 (2 )


Operating income
   13 6 130


Other income:

Interest income
   2 1 27
Other, net
   2 1 171


Earnings before income taxes
   17 8 120
Income tax expense
   4 3 58


Net earnings
   13 % 5 % 148 %

2019:


	Six Months Ended October 31,
	Percentage of Total Revenues				Pct. Change in Dollars
	2020		2019		2020 vs. 2019
Revenues:
Subscription fees	24	%	18	%	34	%
License	2	%	5	%	(56)	%
Professional services and other	36	%	38	%	(4)	%
Maintenance	38	%	39	%	(6)	%
Total revenues	100	%	100	%	(1)	%
Cost of revenues:
Subscription fees	10	%	9	%	20	%
License	2	%	4	%	(49)	%
Professional services and other	28	%	26	%	3	%
Maintenance	7	%	7	%	—	%
Total cost of revenues	47	%	46	%	1	%
Gross margin	53	%	54	%	(3)	%
Research and development	15	%	14	%	12	%
Sales and marketing	18	%	19	%	(5)	%
General and administrative	16	%	18	%	(9)	%
Amortization of acquisition-related intangibles	—	%	—	%	(39)	%
Total operating expenses	49	%	51	%	(2)	%
Operating income	4	%	3	%	(8)	%
Other income:
Interest income	—	%	1	%	(75)	%
Other, net	2	%	1	%	nm
Earnings before income taxes	6	%	5	%	(2)	%
Income tax expense	—	%	—	%	nm
Net earnings	6	%	5	%	(6)	%

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COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~JANUARY~~OCTOBER 31, ~~2018~~2020 AND ~~2017~~

2019

REVENUES

   Three Months Ended January 31,
      % of Total Revenue
   2018    2017    % Change 2018 2017
   (in thousands)
License
   $ 5,955    $ 3,959    50 % 20 % 15 %
Services and other
   12,926    11,815    9 43 % 45 %
Maintenance
   11,236    10,667    5 37 % 40 %






Total revenues
   $ 30,117    $ 26,441    14 % 100 % 100 %






   Nine Months Ended January 31,
      % of Total Revenue
   2018    2017    % Change 2018 2017
   (in thousands)
License
   $ 12,420    $ 11,726    6 % 15 % 15 %
Services and other
   38,017    36,385    4 46 % 45 %
Maintenance
   32,903    31,909    3 39 % 40 %






Total revenues
   $ 83,340    $ 80,020    4 % 100 % 100 %

~~The 14% increase in revenues over~~


	Three Months Ended October 31,
							% of Total Revenue
	2020		2019		% Change		2020		2019
	(in thousands)
Subscription fees	$	6,966	$	5,492	27	%	25	%	19	%
License	$	450	1,046		(57)	%	2	%	4	%
Professional services and other	10,242		10,826		(5)	%	37	%	38	%
Maintenance	10,223		10,846		(6)	%	36	%	39	%
Total revenues	$	27,881	$	28,210	(1)	%	100	%	100	%


	Six Months Ended October 31,
							% of Total Revenue
	2020		2019		% Change		2020		2019
	(in thousands)
Subscription fees	$	13,329	$	9,950	34	%	24	%	18	%
License	1,237		2,824		(56)	%	2	%	5	%
Professional services and other	20,056		20,963		(4)	%	36	%	38	%
Maintenance	20,537		21,856		(6)	%	38	%	39	%
Total revenues	$	55,159	$	55,593	(1)	%	100	%	100	%

For the three months ended ~~January~~October 31, ~~2018~~2020 compared to October 31, 2019 revenues stayed flat attributable primarily to a 27% increase in subscription fees, that was partially offset by a 57% decrease in license revenues, a 6% decrease in maintenance revenues and a 5% decrease in professional services and other revenues when compared to the same period last ~~year was~~year.

For the six months ended October 31, 2020 compared to October 31, 2019 revenues stayed flat attributable primarily to a ~~50%~~34% increase in subscription fees, that was partially offset by a 56% decrease in license ~~fee~~revenues, a 6% decrease in maintenance revenues and to a ~~lesser extent, a 9% increase~~4% decrease in professional services and other revenues ~~and a 5% increase in maintenance revenues. The increase in license fee revenues was attributable~~when compared to ~~entering into several license fee agreements during~~ the quarter in our SCM segment, due to an increase in general economic activity and higher overall business information technology spending from the US tax reform. The primary reason for the increase in services and other revenues in the three months ended January 31, 2018 was an increase in implementation and cloud services in our SCM segment partially offset by a decrease in our IT consulting services due to decreased demand for IT temporary staff.

same period last year.

Due to intense competition in our industry, we dosometimes discount ~~license~~ fees from our published list price. Numerous factors contribute to the amount of the ~~discounts~~discount provided, such as previous customer purchases, the number of customer sites utilizing the software, the number of modules purchased and the number of users, as well as the overall size of the contract. While all these factors may affect the discount amount of a particular contract, the overall percentage discount has not materially changed in the recent reported fiscal periods.

The change in our revenues from period to period is primarily due to the volume of products and related services sold in any period and the ~~amount~~number of products or modules purchased with each sale.

International revenues represented approximately ~~20% and 17%~~15% of total revenues for the three and six months ended October 31, 2020 compared to 19% and 21% for the same periods in the ~~three months ended January 31, 2018 and 2017, respectively.~~prior year. Our revenues, ~~in particular~~particularly our international revenues, may fluctuate substantially from period to period, primarily because we derive most of our license and subscription fee revenues from a relatively small number of customers in a given period.

~~License Revenues~~

   Three Months Ended January 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 5,875    $ 3,948    49%
Other
   80    11    627





Total license revenues
   $ 5,955    $ 3,959    50%





   Nine Months Ended January 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 12,316    $ 11,592    6%
Other
   104    134    (22 )





Total license revenues
   $ 12,420    $ 11,726    6%

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Subscription Fees


	Three Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	6,966	$	5,492	27	%
Total subscription fees revenues	$	6,966	$	5,492	27	%


	Six Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	13,329	$	9,950	34	%
Total subscription fees revenues	$	13,329	$	9,950	34	%

For the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, subscription fees revenues increased by 27% and 34%, respectively, when compared to the same periods in the prior year primarily due to a contracts with a 32% increase in ACV as of October 31, 2020 when compared to the same time last year. This is evidence of our successful transition to the cloud subscription model.

License Revenues


	Three Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	434	$	1,017	(57)	%
Other	16		29		(45)	%
Total license revenues	$	450	$	1,046	(57)	%


	Six Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	1,221	$	2,724	(55)	%
Other	$	16	$	100	(84)	%
Total license revenues	$	1,237	$	2,824	(56)	%

For the three and six months ended October 31, 2020, license fee revenues ~~increased 50%~~decreased 57% and 6%56%, respectively, when compared to the same periods in the prior year. InFor the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, license fee revenues from our SCM ~~business unit increased 49%~~segment decreased 57% and 6%55%, respectively, when compared to the corresponding periods in the prior year. ~~We believe that~~The majority of our current license fee revenue is generated from additional users and expanded scope from our existing customers. For the ~~increase was due to the economic improvement in the global economy~~three and ~~higher overall business information technology spending. Our~~six months ended October 31, 2020 and 2019, our SCM ~~business unit~~segment constituted approximately 96% and 97% and 99% and ~~100%~~96%, respectively, of total license fee revenues. Our Other segment license fee revenues decreased by 45% and 84%, respectively, for the three and six months ended ~~January~~October 31, 2018 and 2017, respectively. Our SCM business unit constituted 99% and 99% of total license fee revenues for the nine months ended January 31, 2018 and 2017, respectively. Our Other business unit license fee revenues increased by 627% for the three months ended January 31, 20182020 when compared to the same ~~period~~periods in the prior year ~~and decreased 22% in the nine months ended January 31, 2018 when compared to the same period in the prior year~~primarily due to timing of ~~closing~~sales to our existing ERP ~~deals.~~

customers for additional users.

The direct sales channel provided approximately ~~91%~~65% and ~~83%~~77% of license fee revenues for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, compared to approximately ~~81%~~92% and 94% in ~~each of~~ the comparable periods last ~~year. The increase in the proportion of sales by~~year due to larger customers obtained through our direct sales channel ~~was due~~moving to ~~a larger increase~~the Cloud platform faster than those in ~~license fee revenue from~~ the ~~SCM segment’s direct~~mid-sized market that are primarily served by our indirect sales channel. For the three and six months ended ~~January~~October 31, ~~2018 and 2017,~~2020, our margins after commissions on direct sales were approximately ~~88%~~83% and ~~87%~~84%, ~~respectively. For the nine months ended January 31, 2018~~compared to 86% and ~~2017, our margins after commissions on direct sales were approximately 87%. The margins increased slightly~~89% in the ~~current period~~comparable periods last year. The decrease in margins is due to the mix of sales commission rates based on each individual ~~salespersons’~~salesperson’s quotas and related achievement. For the three months ended ~~January~~October 31, ~~2018~~2020 and ~~2017,~~2019, our margins after commissions on indirect sales were approximately ~~32%~~57% and ~~41%~~54%, respectively. For the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017,~~2019, our margins after

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commissions on indirect sales were approximately ~~36%~~55% and ~~44%~~54%, respectively. The indirect channel margins for the

current quarter ~~and year to date decreased when~~increased compared to the same periods in the prior year due to the mix of value-added reseller (“VAR”) commission rates. These margin calculations include only commission expense for comparative purposes and do not include other costs of license fees such as amortization of capitalized software.

Professional Services and Other Revenues

   Three Months Ended January 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 8,151    $ 6,564    24 %
IT Consulting
   4,557    5,108    (11 )
Other
   218    143    52





Total services and other revenues
   $ 12,926    $ 11,815    9 %





   Nine Months Ended January 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 23,879    $ 20,431    17 %
IT Consulting
   13,522    15,386    (12 )
Other
   616    568    8





Total services and other revenues
   $ 38,017    $ 36,385    4 %


	Three Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	4,981	$	6,440	(23)	%
IT Consulting	5,033		4,158		21	%
Other	228		228		—	%
Total professional services and other revenues	$	10,242	$	10,826	(5)	%


	Six Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	9,556	$	11,932	(20)	%
IT Consulting	10,059		8,536		18	%
Other	441		495		(11)	%
Total professional services and other revenues	$	20,056	$	20,963	(4)	%

For the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, professional services ~~revenue increased~~and other revenues decreased by 9%5% and 4%, respectively, ~~primarily~~ due to ~~increased~~the decreased professional services and other revenues from our SCM ~~business unit~~and Other segments. This decrease was partially offset by ~~a decrease~~an increase in professional services and other revenues from our IT ~~consulting business unit.~~Consulting segment. For the three and ~~nine~~six months ended ~~January~~October 31, ~~2018, a 24%~~2020, our Other segment’s revenues remained flat and ~~17% increase,~~decreased by 11%, respectively, ~~at our SCM business unit was~~ due to ~~services revenue related to our Logility cloud services area and an increase~~a decrease in ~~utilization from project implementation services from higher~~ license ~~fees in prior periods. For the three and nine months ended January 31, 2018, our IT Consulting segment’s revenues decreased 11% and 12%, respectively,~~fee sales when compared to the same periods ~~in the prior year due lower project work.~~last year. For the three and ~~nine~~six months ended ~~January~~October 31, ~~2018, services~~2020, our SCM segment’s revenues decreased 23% and ~~other~~20%, respectively, primarily due to a slower ramp up of implementation project work due to lower subscription and license fee sales in recent periods. For the three and six months ended October 31, 2020, our IT Consulting segment’s revenues ~~from our Other segment~~ increased ~~by 52%~~21% and 8%18%, respectively, when compared to the same periods in the prior year due to ~~the timing of implementation work.~~an increase in project work from existing customers. We have observed that there is a tendency for services and other revenues, other than from IT Consulting, to lag changes in license and subscription revenues by one to three quarters, as new licenses and subscriptions in one quarter often involve implementation and consulting services in subsequent quarters, for which we recognize revenues only as we perform those services.

For the three months ended January 31, 2018, cloud services Annual Contract Value (“ACV”) increased approximately 125% to $10.9 million compared to $4.9 million in the same period of the prior year. ACV is comprised of~~software-as-a-service~~ (“SaaS”) ACV of $8.1 million compared to approximately $2.6 million during the same period last year and other cloud services ACV of $2.8 million compared to $2.3 million during the same period last year. ACV is a forward-looking operating measure used by management to better understand cloud services (SaaS and other related cloud services) revenue trends within our business, as it reflects our current estimate of revenue to be generated under existing client contracts in the forward~~12-month~~ ~~period.~~

Maintenance Revenues

   Three Months Ended January 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 10,876    $ 10,259    6 %
Other
   360    408    (12 )





Total maintenance revenues
   $ 11,236    $ 10,667    5 %

   Nine Months Ended January 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 31,769    $ 30,701    3 %
Other
   1,134    1,208    (6 )





Total maintenance revenues
   $ 32,903    $ 31,909    3 %


	Three Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	9,916	$	10,537	(6)	%
Other	307		309		(1)	%
Total maintenance revenues	$	10,223	$	10,846	(6)	%


	Six Months Ended October 31,
	2020		2019		% Change
	(in thousands)
Supply Chain Management	$	19,927	$	21,228	(6)	%
Other	610		628		(3)	%
Total maintenance revenues	$	20,537	$	21,856	(6)	%

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For both the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, maintenance revenues ~~increased 5% and 3%~~decreased 6%, ~~respectively,~~ when compared to the same periods in the prior year. Our SCM maintenance revenue decreased 6% for both the three and six months ended October 31, 2020, when compared to the same periods last year due ~~primarily~~ to ~~increased~~normal customer attrition and lower license ~~fees~~fee revenue in recent ~~periods. Our~~periods that would add additional maintenance revenue. The SCM ~~Segment~~segment accounted for 97% ~~and 96%~~ of total maintenance revenues for both the three and ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017, respectively.~~for the same periods in the prior year. Typically, our maintenance revenues have had a direct relationship to current and historic license fee revenues, since ~~new~~ licenses are the ~~potential~~ source of ~~new~~ maintenance customers.

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GROSS MARGIN

The following table provides both dollar amounts (in thousands) and percentage measures of gross margin:

   Three months ended January 31, Nine months ended January 31,
   2018    2017    2018    2017
Gross margin on license fees
   $ 4,015    67 % $ 1,878    47 % $ 7,125    57 % $ 6,216    53 %
Gross margin on services and other
   4,199    32 % 3,754    32 % 13,168    35 % 10,226    28 %
Gross margin on maintenance
   8,832    79 % 8,417    79 % 25,984    79 % 24,420    77 %









Total gross margin
   $ 17,046    57 % $ 14,049    53 % $ 46,277    56 % $ 40,862    51 %


	Three Months Ended October 31,								Six Months Ended October 31,
	2020		%		2019		%		2020		%		2019		%
Gross margin on subscription fees	$	4,020	58	%	$	2,882	53	%	$	7,624	57	%	$	5,215	52	%
Gross margin on license fees	(103)		(23)	%	39		4	%	9		1	%	437		16	%
Gross margin on professional services and other	2,618		26	%	3,283		30	%	4,602		23	%	6,015		29	%
Gross margin on maintenance	8,282		81	%	8,982		83	%	16,823		82	%	18,141		83	%
Total gross margin	$	14,817	53	%	$	15,186	54	%	$	29,058	53	%	$	29,808	54	%

For the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, our total gross margin ~~percentage increased~~percentages remained relatively flat when compared to the same periods in the prior year primarily due to aour higher margins on subscription fees revenue, partially offset by lower margins on maintenance revenue, license fee ~~margin from higher license fees~~revenue and ~~for the nine months ended January 31, 2018, to a lesser extent, due to an increase in gross margins in~~professional services and other ~~and maintenance revenues.~~

revenue.

Gross Margin on ~~License~~Subscription Fees

~~License fee~~

For the three and six months ended October 31, 2020, our gross margin percentage ~~for the three~~on subscription fees revenue increased from 53% to 58% and ~~nine months ended January 31, 2018 increased~~52% to 57%, respectively, when compared to the same periods in the prior year, primarily due to ~~higher~~the increase in portfolio shift from license ~~fees.~~fee to subscription revenue.

Gross Margin on License Fees

License fee gross margin percentage for the three and six months ended October 31, 2020 decreased when compared to the same period in the prior year. License fee gross margin percentage tends to be directly related to the level of license fee revenues due to the relatively fixed cost of computer software amortization expense, amortization of acquired software and the sales mix between our direct and indirect channels.

Gross Margin on Professional Services and Other

~~For the nine months ended January 31, 2018, the~~

Our gross margin percentage on professional services and other ~~revenue increased by seven percentage points when~~revenues decreased to 26% for the three months ended October 31, 2020 from 30% for the three months ended October 31, 2019 and decreased to 23% for the six months ended October 31, 2020 from 29% for the six months ended October 31, 2019 . This decrease was primarily due to lower gross margins in our SCM segment services of 35% and 37% for the three months ended October 31, 2020 and 2019, respectively, due to lower billing utilization, an increase in vacations and customers delaying project start dates compared to the same ~~periods~~period in the prior ~~year primarily~~year. Our Other segment professional services gross margin decreased to 39% from 46% for the three months ended October 31, 2020 and 2019, respectively, due to an increase in our Logility cloud services area which has higher margin services and related implementation services. Also, the margin increase was partially offset by a decrease in services revenue from our lower margin projects year to date. Our IT ~~business unit. Services~~Consulting segment professional services gross margin decreased to 16% from 19% for the three months ended October 31, 2020 and 2019, respectively, due to lower margin projects in the current quarter. Professional services and other gross margin is directly related to the level of services and other revenues. The primary component of cost of services and other revenues is services staffing, which is relatively inelastic in the short term.

~~Gross Margin on Maintenance~~

~~Maintenance~~

For the six months ended October 31, 2020 and 2019, SCM segment gross margins decreased to 29% from 34%, respectively, due to lower billing utilization, an increase in vacations and customers delaying project start dates compared to the same period in the prior year. Our Other segment professional services gross margin ~~percentage~~decreased to 41% from 51% for the ~~three~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017 remained flat at 79%. For~~2019, respectively, due to lower margin projects year to date. Our IT Consulting segment professional services gross margin decreased to 16% from 20% for the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017, the gross margin percentage had a slight uptick to 79% from 77%,~~2019, respectively, ~~primarily~~ due to ~~increased maintenance revenue~~lower margin projects in the current quarter. Professional services and ~~cost containment efforts. Maintenance~~other gross margin ~~normally~~ is directly related to the level of ~~maintenance~~services and other revenues.

Gross Margin on Maintenance

Maintenance gross margin percentage remained relatively flat for the three and six months ended October 31, 2020 and October 31, 2019. The primary ~~component of~~ cost ~~of maintenance revenue~~component is maintenance staffing, which is relatively inelastic in the short term.

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EXPENSES

   Three Months Ended January 31, Nine Months Ended January 31,
   2018    2017    % of Revenues 2018    2017    % of Revenues
         2018 2017       2018 2017
   (in thousands)    (in thousands)
Research and development
   $ 3,099    $ 3,074    10 % 12 % $ 8,250    $ 9,343    10 % 12 %
Sales and marketing
   $ 5,385    $ 4,635    18 % 18 % $ 15,055    $ 15,307    18 % 19 %
General and administrative
   $ 4,263    $ 3,500    14 % 13 % $ 11,418    $ 10,701    14 % 13 %
Amortization of acquisition-related intangible assets
   $ 95    $ 385    —   1 % $ 486    $ 702    1 % 1 %
Other income, net
   $ 1,574    $ 1,025    5 % 4 % $ 2,849    $ 1,519    4 % 2 %
Income tax expense
   $ 198    $ 1,237    —   % 5 % $ 3,132    $ 1,985    4 % 3 %

Three Months Ended October 31, Six Months Ended October 31,
2020 2019 % of Revenues 2020 2019 % of Revenues
2020 2019 2020 2019
(in thousands)
Research and development $ 4,337 $ 4,209 16 % 15 % $ 8,432 $ 7,537 15 % 14 %
Sales and marketing $ 5,429 $ 5,148 19 % 18 % $ 10,173 $ 10,727 18 % 19 %
General and administrative $ 4,367 $ 4,908 16 % 17 % $ 8,831 $ 9,729 16 % 18 %
Amortization of acquisition-related intangible assets $ 53 $ 78 — % — % $ 106 $ 175 — % — %
Other income, net $ (42) $ 712 — % nm $ 1,290 $ 1,237 2 % 2 %
Income tax expense/(benefit) $ (103) $ (204) — % nm $ 80 $ (34) — % nm

nm - not meaningful

Research and Development

Gross product research and development costs include allnon-capitalized and capitalized software development costs. A breakdown of the research and development costs is as follows:

   Three Months Ended
(in thousands)
   January 31,
2018 Percent
Change January 31,
2017
Total capitalized computer software development costs
   $ 1,035 20 % $ 865
Percentage of gross product research and development costs
   25 % 22 %
Total research and development expense
   3,099 1 % 3,074


Percentage of total revenues
   10 % 12 %
Total research and development expense and capitalized computer software development costs
   $ 4,134 5 % $ 3,939


Percentage of total revenues
   14 % 15 %
Total amortization of capitalized computer software development costs *
   $ 965 (26 )% $ 1,307

   Nine Months Ended
(in thousands)
   January 31,
2018 Percent
Change January 31,
2017
Total capitalized computer software development costs
   $ 3,652 48 % $ 2,471
Percentage of gross product research and development costs
   31 % 21 %
Total research and development expense
   8,250 (12 )% 9,343


Percentage of total revenues
   10 % 12 %
Total research and development expense and capitalized computer software development costs
   $ 11,902 1 % $ 11,814


Percentage of total revenues
   14 % 15 %
Total amortization of capitalized computer software development costs *
   $ 2,727 (17 )% $ 3,287

*	~~Included in cost of license fees~~


	Three Months Ended October 31,
	2020			2019			% Change
	(in thousands)
Total capitalized computer software development costs	$	126		$	605		(79)	%
Percentage of gross product research and development costs	3		%	13		%
Total research and development expense	$	4,337		$	4,209		3	%
Percentage of total revenues	16		%	15		%
Total gross product research and development expense and capitalized computer software development costs	$	4,463		$	4,814		(7)	%
Percentage of total revenues	16		%	17		%
Total amortization of capitalized computer software development costs *	$	1,042		$	1,650		(37)	%


	Six Months Ended October 31,
	2020			2019			% Change
	(in thousands)
Total capitalized computer software development costs	$	371		$	1,890		(80)	%
Percentage of gross product research and development costs	4		%	20		%
Total research and development expense	$	8,432		$	7,537		12	%
Percentage of total revenues	15		%	14		%
Total gross product research and development expense and capitalized computer software development costs	$	8,803		$	9,427		(7)	%
Percentage of total revenues	16		%	17		%
Total amortization of capitalized computer software development costs *	$	2,260		$	3,137		(28)	%

*Included in cost of license fees and subscription fees.

For both the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, gross product research and development costs ~~increased 5% and 1%, respectively~~decreased 7% when compared to the same periods in the previous year, due increased headcount and related expenses. Capitalized software development costs increased 20% and 48%, respectively, for the three and nine months ended January 31, 2018 when compared to the same period last yearprimarily due to ~~timing~~a decrease in the use of ~~capitalizable project work.~~third-party contractors

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and personnel costs. We expect capitalized product development costs to ~~remain consistent for the remainder of fiscal 2018 as compared~~decrease due to the ~~third quarter~~timing of ~~2018,~~projects and wean increase in agile software programming that accelerate the software releases to weeks from months. We expect capitalized software amortization expense to be relatively stable in the coming quarters. Costs included in gross product development are salaries of product development personnel, hardware lease expense, computer software expense, telephone expense and rent.

Sales and Marketing

~~Sales and marketing expenses for~~

For the three and six months ended ~~January~~October 31, ~~2018 and 2017 remained flat at 18% as a percentage of revenue. For the nine months ended January 31, 2018 and 2017, we had a slight reduction in~~2020, sales and marketing expenses ~~to 18% from 19% as a percentage of revenue, respectively. We generally include commissions on indirect sales in cost of sales.~~

~~General~~increased 5% and ~~Administrative~~

~~For the three and nine months ended January 31, 2018, general and administrative expenses increased~~decreased 5%, respectively, when compared to the same periods a year ago, primarily due to an increase in headcount and our use of third-party contractors and a decreases in trade shows, variable compensation and travel due to the ~~purchase of Halo~~COVID-19 pandemic, respectively.

General and Administrative

For the three and six months ended October 31, 2020, general and administrative expenses decreased 11% and 9%, respectively, when compared to the same periods a year ago, primarily due to a decrease in variable ~~compensation.~~

compensation, personnel costs and legal fees.

At ~~January~~October 31, ~~2018,~~2020, the total number of employees was ~~440~~442 compared to ~~386~~411 at ~~January~~October 31, ~~2017.~~

2019.

Operating Income/(Loss)

   Three Months Ended January 31, Nine Months Ended January 31,
   2018 2017 % Change 2018 2017 % Change
   (in thousands) (in thousands)
Supply Chain Management
   $ 5,969 $ 3,667 63 % $ 15,551 $ 8,719 78 %
IT Consulting
   185 330 (44 )% 775 698 11 %
Other*
   (1,950 ) (1,542 ) 26 % (5,258 ) (4,608 ) 14 %


Total Operating Income
   $ 4,204 $ 2,455 71 % $ 11,068 $ 4,809 130 %

*	~~includes certain unallocated corporate expenses.~~


	Three Months Ended October 31,						Six Months Ended October 31,
	2020		2019		% Change		2020		2019		% Change
	(in thousands)						(in thousands)
Supply Chain Management	$	3,983	$	4,360	(9)	%	$	8,087	$	8,211	(2)	%
IT Consulting	103		(12)		nm		209		166		26	%
Other*	(3,455)		(3,505)		(1)	%	(6,780)		(6,737)		1	%
Total Operating Income	$	631	$	843	(25)	%	$	1,516	$	1,640	(8)	%

nm - not meaningful

* Includes all corporate overhead and other common expenses.

Our SCM ~~segment’s~~segment operating income ~~increased~~decreased by ~~63%~~9% and ~~78%~~2%, respectively, for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018, respectively, compared to same period last year primarily due to higher overall revenues and higher margin cloud services.~~

Our IT Consulting segment operating income decreased 44% and increased 11% for the three and nine months ended January 31, 2018, respectively, when compared to the prior year due to lower revenues for the three month period and improved gross margins for the nine month period.

~~Our Other segment operating loss increased 26% and 14% in the three and nine months ended January 31, 2018,~~2020, respectively, compared to the same ~~period~~periods in the prior year primarily due to ~~higher corporate variable compensation~~lower gross margins.

Our IT Consulting segment operating income increased for the three and six months ended October 31, 2020, compared to same periods last year primarily due to increased revenues and lower ~~revenues.~~

personnel costs.

Our Other segment operating loss decreased by 1% and increased 1%, respectively, for the three and six months ended October 31, 2020, respectively, when compared to the same periods in the prior year due to a decreased followed by an increase in corporate expenses.

Other Income

Other income is comprised of net interest and dividend income, rental income, ~~net of related depreciation expenses,~~ exchange rate gains and losses, and realized and unrealized gains and losses from investments.

~~For the three months ended January 31, 2018, the increase in other~~ Other income was ~~due primarily to a 1) higher unrealized gains on investments, 2) higher interest income and 3) an exchange rate gain of~~ approximately ~~$75,000~~($42,000) for the three months ended ~~January~~October 31, ~~2018 when~~2020 compared to ~~a loss~~$712,000 for the same period last year. The decrease was primarily due to unrealized losses of $0.1 million in October 31, 2020 compared to unrealized gains of $0.4 million for the same period last year and lower interest income of $0.1 million in October 31, 2020 compared to $0.4 million in same period in the prior year.

Other income was approximately ~~$56,000~~$1.3 million for the six months ended October 31, 2020 compared to $1.2 million for the same period last year, mainly due to an increase in unrealized gains of $0.8 million compared to $0.7 million for the same period last year. This increase was partially offset by lower ~~rental~~interest income ~~when~~of approximately $0.2 million for the six months ended October 31, 2020 compared to $0.9 million for the same period last ~~year as a result~~year.

Table of ~~our real estate sale in the fourth quarter of fiscal 2017.~~

For the nine months ended January 31, 2018, the increase in other income was due primarily to a 1) higher unrealized gains on investments, 2) higher interest income of $1,120,000 for the nine months ended January 31, 2018 when compared to $882,000 in the same period in the prior year when compared to the same period last year and 3) higher exchange rate gains of approximately $75,000 for the nine months ended January 31, 2018 when compared to a loss of approximately $236,000 in the same period last year. This increase was partially offset by lower rental income of $263,000 when compared to $697,000 the same period last year as a result of our real estate sale in the fourth quarter of fiscal 2017.

We recorded gains of approximately $997,000 and $1.4 million for the three and nine months ended January 31, 2018, respectively, from our trading securities portfolio. We recorded gains of approximately $564,000 and $170,000 the three and nine months ended January 31, 2017, respectively, from our trading securities portfolio.

Contents

For the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, our investments generated an annualized yield of approximately ~~1.33%~~1.69% and ~~1.37%~~3.72%, respectively, compared to approximately ~~1.59%~~1.29% and ~~1.62%~~1.35% for the three and ~~nine~~six months ended ~~January~~October 31, ~~2017,~~

2019.

Income Taxes

We recognize deferred tax assets and liabilities based on the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. We measure deferred tax assets and liabilities using statutory tax rates in effect in the year in which we expect the differences to reverse. We establish a deferred tax asset for the expected future benefit of net operating loss and credit carry-forwards. Under the Income Tax Topic of the FASB ~~Accounting Standards Codification,~~ASC, we cannot recognize a deferred tax asset for the future benefit of our net operating losses, tax credits and temporary differences unless we can establish that it is “more likely than not” that the deferred tax asset would be realized.

~~On December 22, 2017,~~

During the ~~U.S. enacted the Tax Cuts~~three and ~~Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered our U.S. statutory federal~~six months ended October 31, 2020, we recorded an income tax ~~rate from 35% to 21% effective January 1, 2018. For fiscal year 2018, our blended U.S. federal statutory tax rate is 30.3%. This is the result~~benefit of ~~using the tax rate of 35% for the first eight months of fiscal year 2018~~$103,000 and the reduced tax rate of 21% for the final four months of fiscal year 2018. During the third quarter of 2018, we recorded a $1.1 million benefit from the impact of changes in the tax rate, primarily on deferred tax assets and liabilities, which was included inan income tax expense ~~on our condensed consolidated statements~~ of ~~operations~~$80,000, respectively, primarily due to discrete stock compensation benefits of $38,000 and ~~deferred~~$272,000 respectively, net of normal income taxes on our condensed consolidated balance sheets. We remeasured our deferred taxes to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. To calculate the remeasurement of deferred taxes, we estimated when the existing deferred taxes will be settled or realized.

tax expense from operations. During the three and six months ended ~~January~~October 31, ~~2018,~~2019, we recorded an income tax benefit of $204,000 and $34,000, respectively, primarily due to discrete stock compensation benefits of $412,000 and $472,000 respectively, net of normal income tax expense from operations. Before adjusting for these discrete tax benefits, our effective tax rate ~~was 3.4%~~would have been (11.2%) and 12.5%, respectively, in the three and six months ended October 31, 2020 compared to our tax effective rate of 13.4% and 15.3% in the three and six months ended October 31, 2019. In addition, research and development and foreign tax credits reduced our effective tax rate ~~of 35.5%~~by 10.8% and 1.3%, respectively, in the ~~three~~six months ended ~~January~~October 31, ~~2017. During~~2020, compared to reductions of 8.1% and 1.4%, respectively, in the ~~nine~~six months ended ~~January~~October 31, 2018, our effective rate was 22.5% compared to our effective rate of 31.4% in the nine months ended January 31, 2017. Our effective tax rates were lower in both the three and nine months ended January 31, 2018 than the same period last year because of the Act.

2019.

Operating Pattern

We experience an irregular pattern of quarterly operating results, caused primarily by fluctuations in both the number and size of software license and subscription contracts received and delivered from quarter to quarter and our ability to recognize revenues in that quarter in accordance with our revenue recognition policies. We expect this pattern to continue.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION

Sources and Uses of Cash

We have historically funded, and continue to fund, our operations and capital expenditures primarily with cash generated from operating activities. The changes in net cash that our operating activities provide generally reflect the changes in net earnings andnon-cash operating items plus the effect of changes in operating assets and liabilities, such as investment trading securities, trade accounts receivable, trade accounts payable, accrued expenses and deferred revenue. We have no debt obligations oroff-balance sheet financing arrangements, and therefore we used no cash for debt service purposes.

The following table shows information about our cash flows and liquidity positions during the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2020 and ~~2017.~~2019. You should read this table and the discussion that follows in conjunction with our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~cash flows~~Cash Flows contained in ~~“Item 1. Financial Statements”~~Item 1 in Part I of this ~~report~~Quarterly Report and in our Annual Report ~~on Form10-K~~for ~~the~~ fiscal ~~year ended April 30, 2017.~~

   Nine Months Ended
January 31,
(in thousands)
   2018    2017
Net cash provided by operating activities
   $ 5,351    $ 19,262
Net cash used in investing activities
   (13,318 )    (7,412 )
Net cash used in financing activities
   (3,122 )    (5,102 )




Net change in cash and cash equivalents
   $ (11,089 )    $ 6,748

2020.


	Six Months Ended October 31,
	2020		2019
Net cash provided by operating activities	$	6,771	$	4,050
Net cash used in investing activities	(534)		(2,128)
Net cash used in financing activities	(4,265)		(526)
Net change in cash and cash equivalents	$	1,972	$	1,396

For the ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, the net increase in cash provided by operating activities ~~decreased~~ when compared to the same period last year was due primarily to ~~1) an increase~~the following: (1) a decrease in purchases of trading securities, ~~2) an increase~~(2) a relative decrease in customer accounts receivables ~~compared to a decrease the same period last year~~ caused by the timing of closing customer sales and related collections, ~~3) an increase~~

~~in the comparative increase~~(3) a relative decrease in prepaid expenses when compared to an increase in the same period ~~in the prior~~last year due to the timing of purchases 4)and (4) an increase in ~~gain on investments compared to the same period last year, 5)~~stock-based compensation expense.

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This increase in cash provided by operating activities was partially offset by: (1) lower proceeds from the maturity and sales of trading securities, ~~6) an increase in the~~(2) a relative decrease in accounts payable and other accruals compared to a relative increase in the same period last year due to timing of payments, 7)(3) a relative decrease in deferred revenue due to timing of revenue recognition, (4) a decrease in depreciation and amortization, ~~and 8) a decrease in stock-based compensation expense. This decrease was partially offset by: 1) an increase in net earnings, 2) an increase~~(5) higher gains on investments than in the ~~comparative increase in deferred revenues due to timing of revenue recognition and 3)~~prior year, (6) an increase in deferred income tax ~~compared to~~and (7) a decrease ~~the same period last year.~~

in net earnings.

The ~~increase~~decrease in cash used in investing activities when compared to the same period in the prior year was mainly due ~~primarily~~ to ~~the acquisition of Halo~~a decrease in ~~the current quarter compared to the acquisition of AdapChain, Inc. in the prior year period and higher~~ capitalized computer software development costs ~~partially offset by~~and a decrease in purchases of property and equipment.

The ~~decrease~~increase in cash used in financing activities compared to the prior year was due primarily ~~due~~ to ~~an increase~~a decrease in proceeds from exercise of stock options ~~partially offset by~~and an increase in dividends paid.

The following table shows net changes in total cash, cash equivalents, and investments, which is one measure that management uses to ~~view~~understand net total cash generated by our activities:

   As of January 31,
(in thousands)
   2018    2017
Cash and cash equivalents
   $ 54,912    $ 55,752
Short and long-term investments
   33,519    23,519




Total cash and short and long-term investments
   $ 88,431    $ 79,271




Net (decrease) increase in total cash and investments (nine months ended January 31)
   $ (1,357 )    $ 1,386


	As of October 31, (in thousands)
	2020		2019
Cash and cash equivalents	$	81,786	$	62,684
Short and long-term investments	12,829		31,987
Total cash and short and long-term investments	94,615		94,671
Net (decrease)/increase in total cash and investments (six months ended October 31)	$	(61)	$	6,189

Our total activities used more cash and investments during the ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, when compared to the prior year period, ~~due primarily to~~in the ~~operating results and changes in operating assets and liabilities as noted above.~~

course of normal business operations.

Days Sales Outstanding in accounts receivable were 7069 days as of ~~January~~October 31, ~~2018,~~2020, compared to 6058 days as of ~~January~~October 31, ~~2017.~~2019. This increase is primarily due to ~~billing~~the timing of billings, cash ~~collections.~~collections and delays in customer payments due to the COVID-19 pandemic. Our current ratio on ~~January~~October 31, ~~2018~~2020 was ~~2.3~~3.0 to 1 and on ~~January~~October 31, ~~2017~~2019 was ~~2.4~~2.7 to 1.

Our business in recent periods has generated substantial positive cash flow from operations, excluding purchases and proceeds of sale of trading securities. For this reason, and because we had ~~$88.4~~$94.6 million in cash and investments with no debt as of ~~January~~October 31, ~~2018,~~2020, we believe that our sources of liquidity and capital resources will be sufficient to satisfy our presently anticipated requirements during at least the next twelve months for working capital, capital expenditures and other corporate needs. However, at some future date we may need to seek additional sources of capital to meet our requirements. If such need arises, we may be required to raise additional funds through equity or debt financing. We do not currently have a bank line of credit. We can provide no assurance that bank lines of credit or other financing will be available on terms acceptable to us. If available, such financing may result in dilution to our shareholders or higher interest expense.

On August 19, 2002, our Board of Directors approved a resolution authorizing the repurchase of up to an additional 2.0 million shares of our Class A common stock. We have made and will make these repurchases through open market purchases at prevailing market prices. The timing of any repurchase will depend upon market conditions, the market price of our common stock and management’s assessment of our liquidity and cash flow needs. Under this repurchase plan, through October 31, 2020, we have repurchased 1,053,679 shares of common stock at a cost of approximately $6.2 million. As of October 31, 2020, under all repurchase plans previously authorized, including this most recent plan, we have repurchased a total of 4,588,632 shares of common stock at a cost of approximately $25.6 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have based the ~~following~~foregoing discussion and analysis of financial condition and results of operations on our ~~financial statements,~~Condensed Consolidated Financial Statements, which we have prepared in accordance with U.S. generally accepted accounting ~~principles.~~principles ("GAAP"). The preparation of these ~~financial statements~~Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the ~~financial statements~~Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements in our Annual Report ~~on Form10-K~~for ~~the~~ fiscal ~~year ended April 30, 2017,~~2020, describes the significant accounting policies that we have used in preparing our ~~financial statements.~~Condensed Consolidated Financial Statements. On an ongoing basis, we evaluate our estimates ~~including, but not limited to those~~ related to revenue/~~collectability, bad debts, capitalized software costs, goodwill, intangible asset impairment, stock-based compensation, income taxes and business combination.~~collectability. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for

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making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

We believe the critical accounting policies listed below affect significant judgments and estimates used in the preparation of the ~~financial statements.~~

Condensed Consolidated Financial Statements.

Revenue Recognition. ~~We recognize~~The most critical judgment required in applying Topic 606 and our revenue ~~predominantly in accordance with~~recognition policy relates to the ~~Software Revenue Recognition Topic~~evaluation of the ~~Financial Accounting Standards Board’s (FASB) Accounting Standards Codification~~.standalone selling price ("SSP") for each performance obligation.

We recognize license revenues in connection with license agreements for standard proprietary software upon delivery of the software, provided we deem collection to be probable, the fee is fixed or determinable, there is persuasive evidence of an arrangement,use historical sales transaction data and VSOE exists with respect to any undelivered elements of the arrangement. We generally bill maintenance fees annually in advance and recognize the resulting revenues ratably over the term of the maintenance agreement. We derive revenues from services which primarily include consulting, implementation, training, SaaS, hosting and managed services. We bill for these services primarily under time and materials arrangements and recognize fees as we perform the services. Deferred revenues represent advance payments or billings for software licenses, services, and maintenance billed in advance of the time we recognize revenues. We record revenues from sales of third-party products in accordance with Principal Agent Considerations within the Revenue Recognition Topic of the FASB Accounting Standards Codification.~~Furthermore, we evaluate sales through our indirect channel on acase-by-case~~ basis to determine whether the transaction should be recorded gross or net, including but not limited to assessing whether or not we (1) act as principal in the transaction, (2) take title to the products, (3) have risks and rewards of ownership, such as the risk of loss for collection, delivery, or returns, and (4) act as an agent or broker with compensation on a commission or fee basis. Accordingly, our sales through the DMI channel are typically recorded on a gross basis.

Generally, our software products do not require significant modification or customization. Installation of the products is routine and is not essential to their functionality. Our sales frequently include maintenance contracts and professional services with the sale of our software licenses. We have established VSOE for our maintenance contracts and professional services. We determine fair value based upon the prices we charge to customers when we sell these elements separately. We defer maintenance revenues, including those sold with the initial license fee, based on VSOE, and recognize the revenue ratably over the maintenance contract period. We recognize consulting and training service revenues, including those sold with license fees, as we perform the services based on their established VSOE. We determine the amount of revenue we allocate to the licenses sold with services or maintenance using the “residual method” of accounting. Under the residual method, we allocate the total value of the arrangement first to the undelivered elements based on their VSOE and allocate the remainder to license fees. SaaS revenues are recognized ratably over the subscription term as the customer has no ability to take delivery of the software, and the underlying arrangements typically include a single fee for the service that is billed monthly, quarterly or annually.

~~Allowance for Doubtful Accounts~~. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. If the financial condition of these customers were to deteriorate, resulting in an impairment of their ability to make payments, we may require additional allowances or we may defer revenue until we determine that collectability is probable. We specifically analyze accounts receivable and historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when we evaluate the adequacy of the allowance for doubtful accounts.

~~Valuation of Long-Lived and Intangible Assets~~~~. In accordance with the Intangibles-Goodwill and Other Topic of the FASB’s Accounting Standards Codification, we do not amortize goodwill and~~judgments, among other intangible assets with indefinite lives. Our goodwill is subject to annual impairment tests, which require us to estimate the fair value of our business compared to the carrying value. The impairment reviews require an analysis of future projections and assumptions about our operating performance. Should such review indicate the assets are impaired, we would record an expense for the impaired assets.

In accordance with the Property, Plant, and Equipment Topic of the FASB’s Accounting Standards Codification, long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability would be measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, we recognize an impairment charge in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The determination of estimated future cash flows, however, requires management to make estimates. Future events and changes in circumstances may require us to record a significant impairment charge in the period in which such events or changes occur. Impairment testing requires considerable analysis and judgmentfactors, in determining ~~results. If other assumptions~~the SSP for products and ~~estimates were used in our evaluations,~~services. For substantially all performance obligations except on-premise licenses, we are able to establish the ~~results could differ significantly.~~

Annual tests or other future events could cause us to conclude that impairment indicators exist and that our goodwill is impaired. For example, if we had reason to believe that our recorded goodwill and intangible assets had become impaired due to decreases in the fair market value of the underlying business, we would have to take a charge to income for that portion of goodwill or intangible

assets that we believed was impaired. Any resulting impairment loss could have a material adverse impact on our financial position and results of operations. At January 31, 2018, our goodwill balance was $25.5 million and our intangible assets with definite lives balance was approximately $6.2 million, net of accumulated amortization.

~~Valuation of Capitalized Software Assets~~. We capitalize certain computer software development costs in accordance with the Intangibles-Goodwill and Other Topic of the FASB’s Accounting Standards Codification. Costs incurred internally to create a computer software product or to develop an enhancement to an existing product are charged to expense when incurred as research and development expense until technological feasibility for the respective product is established. Thereafter, we capitalize all software development costs and report those costs at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers. We make ongoing evaluations of the recoverability of our capitalized software projects by comparing the amount capitalized for each product to the estimated net realizable value of the product. If such evaluations indicate that the unamortized software development costs exceed the net realizable value, we write off the amount by which the unamortized software development costs exceed net realizable value. We amortize capitalized computer software development costs ratablySSP based on the ~~projected revenues associated with the related software~~observable prices of products or services sold separately to similar customers in comparable circumstances. We typically establish an SSP range for our products and services, which is reassessed on a ~~straight-line~~periodic basis or when facts and circumstances change. SSP for our products and services can evolve over ~~three years, whichever method results~~time due to changes in our pricing practices that are influenced by competition, changes in demand for our products and services, and economic factors, among others. Our on-premise licenses historically have not been sold on a standalone basis, as substantially all customers elect to purchase maintenance at the time of an on-premise license purchase. Maintenance fees are generally priced as a percentage of the net fees paid by the customer to access the on-premise license. We are unable to establish the SSP for our on-premise licenses based on observable prices, as the same products are sold for a broad range of prices (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence. As a result, the SSP for a on-premise license included in a ~~higher level~~contract with multiple performance obligations is determined by applying a residual approach, whereby all other performance obligations within a contract are first allocated a portion of ~~amortization. Amortization of capitalized computer software development costs is included in~~ the ~~cost of license revenues in the condensed consolidated statements of operations.~~

~~Stock-Based Compensation~~. We estimate the value of options granted on the date of grant using the Black-Scholes option pricing model. Management’s judgments and assumptions related to volatility, the expected term and the forfeiture rate are made in connectiontransaction price based upon their respective SSPs, with ~~the calculation of stock compensation expense. We periodically review all assumptions used in our stock option pricing model. Changes in these assumptions could have a significant impact on the~~any residual amount of ~~stock compensation expense.~~

~~Income Taxes~~~~. We provide for the effect~~transaction price allocated to on-premise license revenues.

Table of ~~income taxes on our financial position and results of operations in accordance with the Income Tax Topic of the FASB’s Accounting Standards Codification~~. Under this accounting guidance, income tax expense is recognized for the amount of income taxes payable or refundable for the current year and for the change in net deferred tax assets or liabilities resulting from events that are recorded for financial reporting purposes in a different reporting period than recorded in the tax return. Management must make significant assumptions, judgments and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against our net deferred tax asset. Our judgments, assumptions and estimates relative to the current provision for income tax take into account current tax laws, our interpretation of current tax laws, allowable deductions, and projected tax credits. Changes in tax law or our interpretation of tax laws could significantly impact the amounts provided for income taxes in our financial position and results of operations. Our assumptions, judgments and estimates relative to the value of our deferred tax assets take into account our expectations of the amount and category of future taxable income. Actual operating results and the underlying amount and category of income in future years, which could significantly increase tax expense, could render inaccurate our current assumptions, judgments and estimates of recoverable net deferred taxes.

~~Business Combinations and Intangible Assets Including Goodwill.~~ We account for business combinations using the acquisition method of accounting and accordingly, the identifiable assets acquired and liabilities assumed are recorded based upon management’s estimates of current fair values as of the acquisition date. The estimation process includes analyses based on income and market approaches. Goodwill represents the excess purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. The goodwill generated is due in part to the synergies that are not included in the fair value of identifiable intangible assets. Goodwill recorded in an acquisition is assigned to applicable reporting units based on expected revenues. Identifiable intangible assets with finite lives are amortized over there useful lives. Amortization of current technology is recorded in cost of revenues-license and amortization of all other intangible assets is recorded in amortization of acquisition-related intangibles. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs, are expensed in general and administrative expenses in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

Contents

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3 Quantitative and Qualitative Disclosures About Market Risk

Foreign ~~Currency~~Currency. In the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, we generated approximately ~~20% and 20%, respectively,~~15% of our revenues outside the United States. We typically make international sales through our VARs and employees located in foreign ~~branches or our Logility branch~~countries and denominate those sales ~~typically~~ in U.S., Australian and New Zealand dollars, British pounds sterling or euros. However, expenses incurred in connection with these sales are typically denominated in the local currencies. We recorded exchange rate ~~gains~~loss of approximately ~~$75,000~~$145,000 and $9,000 for ~~both~~ the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2020, respectively, compared to an exchange rate losses of approximately ~~$56,000~~$0.1 million and

~~$236,000~~ $0.2 million for the three and six months ~~and nine months ended January~~October 31, ~~2017, respectively.~~2019. We estimate that a 10% movement in foreign currency rates would have had the effect of creating up to a ~~$456,000 and $455,000~~$0.3 million exchange rate gain or loss for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018, respectively.~~2020. We have not engaged in any hedging activities.

Interest Rates and Other Market ~~Risks.~~Risks. We have no debt, and therefore limit our discussion of interest rate risk to risk associated with our investment profile. We manage our interest rate risk by maintaining an investment portfolio of trading investments with high credit quality and relatively short average maturities. These instruments include, but are not limited to, money-market instruments, bank time deposits, and taxable andtax-advantaged variable rate and fixed rate obligations of corporations, municipalities, and national, state, and local government ~~agencies, in accordance with an investment policy approved by our Board of Directors.~~agencies. These instruments are denominated in U.S. ~~Dollars.~~dollars. The fair market value of these instruments as of ~~January~~October 31, ~~2018~~2020 was approximately ~~$84.0~~$87.7 million compared to ~~$72.8~~$89.7 million as of ~~January~~October 31, ~~2017.~~

2019.

We also hold cash balances in accounts with commercial banks in the United States and foreign countries. These cash balances represent operating balances only and are invested in short-term time deposits of the local bank. Such operating cash balances held at banks outside the United States are denominated in the local currency and are minor.

Many of our investments carry a degree of interest rate risk. When interest rates fall, our income from investments in variable-rate securities declines. When interest rates rise, the fair market value of our investments in fixed-rate securities declines. In addition, our investments in equity securities are subject to stock market volatility. Due in part to these factors, our future investment income may fall short of expectations or we may suffer losses in principal if forced to sell securities, which have seen a decline in market value due to changes in interest rates. We attempt to mitigate risk by holding fixed-rate securities to maturity, but, if our liquidity needs force us to sell fixed-rate securities prior to maturity, we may experience a loss of principal.

Inflation.Although we cannot accurately determine the amounts attributable thereto, we have been affected by inflation through increased costs of employee compensation and other operational expenses. To the extent permitted by the marketplace for our products and services, we attempt to recover increases in costs by periodically increasing prices.

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~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Management’s Report on Internal Control Over Financial Reporting

Our disclosure controls and procedures (as ~~such term is~~ defined in Rule13a-15(e) ~~and15d-15(e)~~ ~~under~~ of the Securities Exchange Act of 1934 (“Exchange Act”)) are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods ~~specifies~~specified in the SEC rules and forms. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our ~~chief~~principal executive ~~office~~officer and ~~chief~~principal financial officer, to allow timely decisions regarding ~~required~~ disclosure.

Our principal executive officer and principal financial officer, with the assistance of our Disclosure Committee, have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our Annual Report on~~Form 10-K~~and Quarterly ~~Reports onForm 10-Q.~~Reports. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules~~13a-15(f)~~13a-15(f) and15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

We are not currently involved in legal proceedings requiring disclosure under this item.

~~Item 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

In addition to the other information set forth in this ~~report,~~Quarterly Report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,” of our Annual Report ~~on Form10-K~~for ~~the~~ fiscal ~~year ended April 30, 2017.~~2020. There have been no material changes to the risk factors as previously disclosed in such Annual ~~Report on Form10-K.~~

Report.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~None~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

~~Item 3.~~

~~Defaults Upon Senior Securities~~

Item 3. Defaults Upon Senior Securities

Not applicable.

~~Item 4.~~

~~Mine Safety Disclosures~~

Item 4. Mine Safety Disclosures

Not applicable.

~~Item 5.~~

~~Other Information~~

Item 5. Other Information

None.

Item 6. Exhibits

~~Item 6.~~

~~Exhibits~~


Exhibit 3.1			Amended and Restated Articles of Incorporation, and amendments thereto. (1) (P)

Exhibit 3.2			Amended and RestatedBy-Laws dated May 18, 2009. (2)

Exhibits 31.1-31.2.			Rule 13a-14(a)/15d-14(a) Certifications

~~Exhibits 31.1~~		~~Rule13a-14(a)/15d-14(a)~~ ~~Certifications~~

~~Exhibits 31.2.~~	~~Rule13a-14(a)/15d-14(a)~~ ~~Certifications~~

Exhibit 32.1.		Section 906 Certifications

Exhibit 101.INS			XBRL Instance Document.

~~Exhibit 101.INS~~		~~XBRL Instance Document.~~

Exhibit 101.SCH		XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 101.LAB			XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.

~~(1)~~

~~Incorporated by reference herein. Filed by the Company as an exhibit to its Quarterly Report filed on Form10-Q~~ ~~for the quarter ended October 31, 1990.~~

~~(2)~~

~~Incorporated by reference herein. Filed by the Company as an exhibit to its Quarterly Report filed on Form10-Q~~ ~~for the quarter ended January 31, 2010.~~

______________

(1)Incorporated by reference herein. Filed by the Company as an exhibit to its Quarterly Report filed on Form 10-Q for the quarter ended October 31, 1990. (P) Filed in paper format.

(2)Incorporated by reference herein. Filed by the Company as Exhibit 3.1 to its Quarterly Report filed on Form 10-Q for the quarter ended January 31, 2010.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERICAN SOFTWARE, INC.

Date: December 4, 2020

By:

/s/ H. Allan Dow

~~Date: March 9, 2018~~

~~By:~~

~~/s/ James C. Edenfield~~

~~James C. Edenfield~~

H. Allan Dow
Chief Executive ~~Chairman, Treasurer~~Officer and ~~Director~~

President
(Principal Executive Officer)

Date: ~~March 9, 2018~~December 4, 2020

By:

~~By:~~

/s/ Vincent C. Klinges

Vincent C. Klinges

Chief Financial Officer

(Principal Financial Officer)

Date: ~~March 9, 2018~~December 4, 2020

By:

~~By:~~

/s/ Bryan L. Sell

Bryan L. Sell

Controller and Principal Accounting Officer


	January 31, 2018			April 30, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	54,912		$	66,001
Investments		23,055			19,332
Trade accounts receivable, less allowance for doubtful accounts of $144 at January 31, 2018 and $172 at April 30, 2017:
Billed		20,456			17,060
Unbilled		2,714			2,811
Prepaid expenses and other current assets		5,510			4,322

Total current assets		106,647			109,526
Investments—noncurrent		10,464			4,455
Property and equipment, net of accumulated depreciation of $28,513 at January 31, 2018 and $28,153 at April 30, 2017		2,151			2,055
Capitalized software, net of accumulated amortization of $23,150 at January 31, 2018 and $20,423 at April 30, 2017		9,539			8,614
Goodwill		25,468			19,549
Other intangibles, net of accumulated amortization of $7,624 at January 31, 2018 and $6,406 at April 30, 2017		6,171			3,399
Other assets		3,483			1,176

Total assets	$	163,923		$	148,774

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,841		$	1,541
Accrued compensation and related costs		5,624			3,329
Dividends payable		3,344			3,259
Other current liabilities		2,602			5,171
Deferred revenue		33,564			29,437

Total current liabilities		46,975			42,737
Deferred income taxes		2,202			1,994
Long-term deferred revenue		531			214
Other long-term liabilities		1,779			79

Total liabilities		51,487			45,024
Shareholders’ equity:
Common stock:
Class A, $.10 par value. Authorized 50,000,000 shares: Issued 32,786,381 shares at January 31, 2018 and 31,821,508 shares at April 30, 2017		3,279			3,182
Class B, $.10 par value. Authorized 10,000,000 shares: Issued and outstanding 2,206,588 shares at January 31, 2018 and 2,393,336 shares at April 30, 2017; convertible into Class A shares on aone-for-one basis		221			239
Additionalpaid-in capital		129,028			121,280
Retained earnings		5,467			4,608
Class A treasury stock, 4,588,632 shares at January 31, 2018 and April 30, 2017, at cost		(25,559	)		(25,559	)

Total shareholders’ equity		112,436			103,750

Commitments and contingencies
Total liabilities and shareholders’ equity	$	163,923		$	148,774


	Three Months Ended January 31,				Nine Months Ended January 31,
	2018		2017		2018		2017
Revenues:
License	$	5,955	$	3,959	$	12,420	$	11,726
Services and other		12,926		11,815		38,017		36,385
Maintenance		11,236		10,667		32,903		31,909

Total revenues		30,117		26,441		83,340		80,020

Cost of revenues:
License		1,940		2,081		5,295		5,510
Services and other		8,727		8,061		24,849		26,159
Maintenance		2,404		2,250		6,919		7,489

Total cost of revenues		13,071		12,392		37,063		39,158

Gross margin		17,046		14,049		46,277		40,862

Research and development		3,099		3,074		8,250		9,343
Sales and marketing		5,385		4,635		15,055		15,307
General and administrative		4,263		3,500		11,418		10,701
Amortization of acquisition-related intangibles		95		385		486		702

Total operating expenses		12,842		11,594		35,209		36,053

Operating income		4,204		2,455		11,068		4,809
Other income:
Interest income		403		287		1,120		882
Other, net		1,171		738		1,729		637

Earnings before income taxes		5,778		3,480		13,917		6,328
Income tax expense		198		1,237		3,132		1,985

Net earnings	$	5,580	$	2,243	$	10,785	$	4,343

Earnings per common share^(a):
Basic	$	0.18	$	0.08	$	0.36	$	0.15

Diluted	$	0.18	$	0.08	$	0.36	$	0.15

Cash dividends declared per common share	$	0.11	$	0.11	$	0.33	$	0.32

Shares used in the calculation of earnings per common share:
Basic		30,244		29,333		29,940		29,136

Diluted		30,701		29,630		30,299		29,447


	Nine Months Ended January 31,
	2018			2017
Cash flows from operating activities:
Net earnings	$	10,785		$	4,343
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		4,305			5,045
Stock-based compensation expense		1,108			1,111
Net gain on investments		(1,378	)		(170	)
Deferred income taxes		208			(281	)
Changes in operating assets and liabilities, net of effects of acquisition:
Purchases of trading securities		(20,010	)		(7,150	)
Proceeds from maturities and sales of trading securities		11,656			12,683
Accounts receivable, net		(2,926	)		3,661
Prepaid expenses and other assets		(1,494	)		(5	)
Accounts payable and other liabilities		(999	)		(53	)
Deferred revenue		4,096			78

Net cash provided by operating activities		5,351			19,262

Cash flows from investing activities:
Capitalized computer software development costs		(3,652	)		(2,471	)
Purchases of property and equipment, net of disposals		(413	)		(500	)
Purchase of business, net of cash acquired		(9,253	)		(4,441	)

Net cash used in investing activities		(13,318	)		(7,412	)

Cash flows from financing activities:
Proceeds from exercise of stock options		6,719			4,397
Payment for accrued acquisition consideration		—			(200	)
Dividends paid		(9,841	)		(9,299	)

Net cash used in financing activities		(3,122	)		(5,102	)

Net change in cash and cash equivalents		(11,089	)		6,748
Cash and cash equivalents at beginning of period		66,001			49,004

Cash and cash equivalents at end of period	$	54,912		$	55,752


	Three Months Ended January 31, 2018						Nine Months Ended January 31, 2018
	Class A			Class B			Class A			Class B
Distributed earnings	$	0.11		$	0.11		$	0.33		$	0.33
Undistributed earnings		0.07			0.07			0.03			0.02

Total	$	0.18		$	0.18		$	0.36		$	0.35

Distributed earnings	$	3,102		$	242		$	9,180		$	747
Undistributed earnings		2,069			167			799			59

Total	$	5,171		$	409		$	9,979		$	806

Basic weighted average common shares outstanding		27,992			2,252			27,630			2,310

	Three Months Ended January 31, 2017						Nine Months Ended January 31, 2017
	Class A			Class B			Class A			Class B
Distributed earnings	$	0.11		$	0.11		$	0.32		$	0.32
Undistributed earnings		(0.03	)		(0.03	)		(0.17	)		(0.17	)

Total	$	0.08		$	0.08		$	0.15		$	0.15

Distributed earnings	$	2,943		$	267		$	8,583		$	778
Undistributed earnings		(887	)		(80	)		(4,596	)		(422	)

Total	$	2,056		$	187		$	3,987		$	356

Basic weighted average common shares outstanding		26,901			2,432			26,687			2,449


	Three Months Ended October 31, 2020				Six Months Ended October 31, 2020
	Class A Common Shares		Class B Common Shares		Class A Common Shares		Class B Common Shares
Distributed earnings	$	0.11	$	0.11	$	0.22	$	0.22
Undistributed losses	(0.09)		(0.09)		(0.14)		(0.14)
Total	$	0.02	$	0.02	$	0.08	$	0.08
Distributed earnings	$	3,375	$	201	$	6,745	$	402
Undistributed losses	(2,722)		(162)		(4,172)		(249)
Total	$	653	$	39	$	2,573	$	153
Basic weighted average common shares outstanding	30,667		1,822		30,592		1,822


	Three Months Ended October 31, 2019				Six Months Ended October 31, 2019
	Class A Common Shares		Class B Common Shares		Class A Common Shares		Class B Common Shares
Distributed earnings	$	0.11	$	0.11	$	0.22	$	0.22
Undistributed losses	$	(0.05)	$	(0.05)	$	(0.13)	$	(0.13)
Total	$	0.06	$	0.06	$	0.09	$	0.09
Distributed earnings	$	3,303	$	202	$	6,552	$	403
Undistributed losses	$	(1,645)	$	(101)	$	(3,810)	$	(234)
Total	$	1,658	$	101	$	2,742	$	169
Basic weighted average common shares outstanding	$	29,787	$	1,822	$	29,618	$	1,822


				Useful Life
Accounts receivable, net	$	373
Current assets		188
Property and equipment, net		43
Other assets		1,700
Goodwill		5,919
Non-compete		30			2 years
Trade name		160			2 years
Customer relationships		600			8 years
Current technology		3,200			3 years

Total assets acquired		12,213
Current liabilities		(1,370	)
Long-term liabilities		(1,703	)

Total liabilities assumed		(3,073	)

Net assets acquired	$	9,140


	January 31, 2018
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	50,541	$	—	$	—	$	50,541
Marketable securities		12,990		20,529		—		33,519

Total	$	63,531	$	20,529	$	—	$	84,060


	April 30, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	62,647	$	—	$	—	$	62,647
Marketable securities		8,984		14,803		—		23,787

Total	$	71,631	$	14,803	$	—	$	86,434


	Three Months Ended January 31,						Nine Months Ended January 31,
	2018			2017			2018			2017
Revenues:

Supply Chain Management	$	24,902		$	20,770		$	67,965		$	62,724
IT Consulting		4,557			5,108			13,522			15,386
Other		658			563			1,853			1,910

	$	30,117		$	26,441		$	83,340		$	80,020

Operating income (loss) before intersegment eliminations:

Supply Chain Management	$	5,969		$	3,667		$	15,551		$	8,719
IT Consulting		185			330			775			698
Other		(1,950	)		(1,542	)		(5,258	)		(4,608	)

	$	4,204		$	2,455		$	11,068		$	4,809

Intersegment eliminations:

Supply Chain Management	$	922		$	846		$	2,763		$	2,638
IT Consulting		(20	)		—			(26	)		(33	)
Other		(902	)		(846	)		(2,737	)		(2,605	)

	$	—		$	—		$	—		$	—

Operating income (loss) after intersegment eliminations:

Supply Chain Management	$	6,891		$	4,513		$	18,314		$	11,357
IT Consulting		165			330			749			665
Other		(2,852	)		(2,388	)		(7,995	)		(7,213	)

	$	4,204		$	2,455		$	11,068		$	4,809

Capital expenditures:

Supply Chain Management	$	79		$	65		$	160		$	257
IT Consulting		2			—			8			2
Other		120			107			245			241

	$	201		$	172		$	413		$	500

Capitalized software:

Supply Chain Management	$	1,035		$	865		$	3,652		$	2,471
IT Consulting		—			—			—			—
Other		—			—			—			—

	$	1,035		$	865		$	3,652		$	2,471

Depreciation and amortization:
Supply Chain Management	$	1,551		$	1,915		$	4,157		$	4,645
IT Consulting		2			2			6			6
Other		46			83			142			394

	$	1,599		$	2,000		$	4,305		$	5,045

Earnings (loss) before income taxes:
Supply Chain Management	$	6,099		$	3,651		$	15,892		$	8,639
IT Consulting		185			329			775			698
Other		(506	)		(500	)		(2,750	)		(3,009	)

	$	5,778		$	3,480		$	13,917		$	6,328


	Three Months Ended January 31,
	Percentage of Total Revenues						Pct. Change in Dollars
	2018			2017			2018 vs. 2017
Revenues:
License		20	%		15	%		50	%
Services and other		43			45			9
Maintenance		37			40			5

Total revenues		100			100			14

Cost of revenues:
License		6			8			(7	)
Services and other		29			30			8
Maintenance		8			9			7

Total cost of revenues		43			47			5

Gross margin		57			53			21

Research and development		10			12			1
Sales and marketing		18			18			16
General and administrative		14			13			22
Amortization of acquisition-related intangibles		1			1			(75	)

Total operating expenses		43			44			11

Operating income		14			9			71

Other income:
Interest income		1			1			40
Other, net		4			3			59

Earnings before income taxes		19			13			66
Income tax expense		—			5			(84	)

Net earnings		19	%		8	%		149	%


	Nine Months Ended January 31,
	Percentage of Total Revenues						Pct. Change in Dollars
	2018			2017			2018 vs. 2017
Revenues:
License		15	%		15	%		6	%
Services and other		46			45			4
Maintenance		39			40			3

Total revenues		100			100			4

Cost of revenues:
License		6			7			(4	)
Services and other		30			33			(5	)
Maintenance		8			9			(8	)

Total cost of revenues		44			49			(5	)

Gross margin		56			51			13

Research and development		10			12			(12	)
Sales and marketing		18			19			(2	)
General and administrative		14			13			7
Amortization of acquisition-related intangibles		1			1			(31	)

Total operating expenses		43			45			(2	)

Operating income		13			6			130

Other income:
Interest income		2			1			27
Other, net		2			1			171

Earnings before income taxes		17			8			120
Income tax expense		4			3			58

Net earnings		13	%		5	%		148	%


	Three Months Ended (in thousands)
	January 31, 2018			Percent Change			January 31, 2017
Total capitalized computer software development costs	$	1,035			20	%	$	865
Percentage of gross product research and development costs		25	%					22	%
Total research and development expense		3,099			1	%		3,074

Percentage of total revenues		10	%					12	%
Total research and development expense and capitalized computer software development costs	$	4,134			5	%	$	3,939

Percentage of total revenues		14	%					15	%
Total amortization of capitalized computer software development costs *	$	965			(26	)%	$	1,307


	As of January 31, (in thousands)
	2018			2017
Cash and cash equivalents	$	54,912		$	55,752
Short and long-term investments		33,519			23,519

Total cash and short and long-term investments	$	88,431		$	79,271

Net (decrease) increase in total cash and investments (nine months ended January 31)	$	(1,357	)	$	1,386