SECURITIES AND EXCHANGE COMMISSION
_________________
_________________
(Mark One)
☒ | | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
JanuaryOctober 31,
20182021
☐ | | | | | |
☐ | 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_________________
(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) |
(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 Regulation
S-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, a
non-accelerated filer,
smaller reportingan emerging growth company or
an emerging growtha smaller reporting company. See the definitions of “large accelerated filer,” “accelerated
filer”,filer,” “emerging growth company” and “smaller reporting company”
and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | | |
Large Accelerated Filer | | ☐ | | Accelerated Filer | | ☒ |
| | | | | | |
Large acceleratedNon-accelerated filer | | ☐ | | Accelerated filerSmaller 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 in
Rule 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, 2018December 1, 2021 |
Class A Common Stock, $.10 par value | | 28,199,965 31,676,176 Shares |
Class B Common Stock, $.10 par value | | 2,206,5881,821,587 Shares |
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Form10-Q
Quarter ended January 31, 2018
Index
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Form 10-Q
Quarter ended October 31, 2021
Index
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, 2021 | | April 30, 2021 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 94,201 | | | $ | 88,658 | |
Investments | 17,163 | | | 16,006 | |
Trade accounts receivable, less allowance for doubtful accounts of $441 at October 31, 2021 and $430 at April 30, 2021: | | | |
Billed | 19,662 | | | 24,438 | |
Unbilled | 2,475 | | | 2,201 | |
Prepaid expenses and other current assets | 7,375 | | | 5,320 | |
Total current assets | 140,876 | | | 136,623 | |
| | | |
Property and equipment, net of accumulated depreciation of $30,936 at October 31, 2021 and $30,581 at April 30, 2021 | 3,689 | | | 3,428 | |
Capitalized software, net of accumulated amortization of $40,536 at October 31, 2021 and $38,826 at April 30, 2021 | 3,057 | | | 4,767 | |
Goodwill | 25,888 | | | 25,888 | |
Other intangibles, net of accumulated amortization of $13,121 at October 31, 2021 and $13,015 at April 30, 2021 | 254 | | | 360 | |
Lease right of use assets | 1,249 | | | 1,454 | |
Deferred sales commissions—noncurrent | 2,256 | | | 2,474 | |
| | | |
Other assets | 2,339 | | | 2,163 | |
Total assets | $ | 179,608 | | | $ | 177,157 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Accounts payable | $ | 1,994 | | | $ | 1,732 | |
Accrued compensation and related costs | 4,281 | | | 6,129 | |
Dividends payable | 3,676 | | | 3,615 | |
Operating lease obligations | 665 | | | 739 | |
Other current liabilities | 611 | | | 1,307 | |
Deferred revenue | 35,968 | | | 37,142 | |
Total current liabilities | 47,195 | | | 50,664 | |
Deferred income taxes | 2,527 | | | 2,627 | |
Long-term operating lease obligations | 669 | | | 821 | |
| | | |
Other long-term liabilities | 370 | | | 654 | |
Total liabilities | 50,761 | | | 54,766 | |
Shareholders’ equity: | | | |
Common stock: | | | |
Class A, $.10 par value. Authorized 50,000,000 shares: 36,174,808 (31,586,176, net) shares issued and outstanding respectively at October 31, 2021 and 35,629,566 (31,040,934, net) shares issued and outstanding respectively at April 30, 2021 | 3,617 | | | 3,563 | |
Class B, $.10 par value. Authorized 10,000,000 shares: 1,821,587 shares issued and outstanding at October 31, 2021 and April 30, 2021; convertible into Class A Common Shares on a 1-for-one basis | 182 | | | 182 | |
Additional paid-in capital | 166,969 | | | 159,492 | |
Retained deficit | (16,362) | | | (15,287) | |
Class A treasury stock, 4,588,632 shares at October 31, 2021 and April 30, 2021, at cost | (25,559) | | | (25,559) | |
Total shareholders’ equity | 128,847 | | | 122,391 | |
Commitments and contingencies | 0 | | 0 |
Total liabilities and shareholders’ equity | $ | 179,608 | | | $ | 177,157 | |
See accompanying notes to condensed consolidated financial statements—unaudited.
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, | |
| 2021 | | 2020 | | 2021 | | 2020 | |
Revenue: | | | | | | | | |
Subscription fees | $ | 10,361 | | | $ | 6,966 | | | 20,149 | | | 13,329 | | |
License | 805 | | | 450 | | | $ | 1,297 | | | $ | 1,237 | | |
Professional services and other | 10,779 | | | 10,242 | | | 20,308 | | | 20,056 | | |
Maintenance | 9,266 | | | 10,223 | | | 18,728 | | | 20,537 | | |
Total revenue | 31,211 | | | 27,881 | | | 60,482 | | | 55,159 | | |
Cost of revenue: | | | | | | | | |
Subscription fees | 3,404 | | | 2,946 | | | 6,628 | | | 5,705 | | |
License | 198 | | | 553 | | | 357 | | | 1,228 | | |
Professional services and other | 7,477 | | | 7,624 | | | 14,487 | | | 15,454 | | |
Maintenance | 1,746 | | | 1,941 | | | 3,720 | | | 3,714 | | |
Total cost of revenue | 12,825 | | | 13,064 | | | 25,192 | | | 26,101 | | |
Gross margin | 18,386 | | | 14,817 | | | 35,290 | | | 29,058 | | |
Research and development | 4,278 | | | 4,337 | | | 8,702 | | | 8,432 | | |
Sales and marketing | 5,892 | | | 5,429 | | | 12,012 | | | 10,173 | | |
General and administrative | 5,476 | | | 4,367 | | | 10,010 | | | 8,831 | | |
Amortization of acquisition-related intangibles | 53 | | | 53 | | | 106 | | | 106 | | |
Total operating expenses | 15,699 | | | 14,186 | | | 30,830 | | | 27,542 | | |
Operating income | 2,687 | | | 631 | | | 4,460 | | | 1,516 | | |
Other income\(loss): | | | | | | | | |
Interest income | 97 | | | 97 | | | 190 | | | 223 | | |
Other, net | 833 | | | (139) | | | 1,177 | | | 1,067 | | |
Earnings before income taxes | 3,617 | | | 589 | | | 5,827 | | | 2,806 | | |
Income tax expense\(benefit) | 303 | | | (103) | | | (434) | | | 80 | | |
Net earnings | $ | 3,314 | | | $ | 692 | | | $ | 6,261 | | | $ | 2,726 | | |
Earnings per common share (a): | | | | | | | | |
Basic | $ | 0.10 | | | $ | 0.02 | | | $ | 0.19 | | | $ | 0.08 | | |
Diluted | $ | 0.10 | | | $ | 0.02 | | | $ | 0.18 | | | $ | 0.08 | | |
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 | 33,337 | | | 32,489 | | | 33,195 | | | 32,414 | | |
Diluted | 34,685 | | | 32,896 | | | 34,448 | | | 32,919 | | |
______________
(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 $0.10 and $0.02 for the three months ended October 31, 2021 and 2020 and $0.19 and $0.09 for the six months ended October 31, 2021 and 2020. See Note D to the Condensed Consolidated Financial Statements.
See accompanying notes to condensed consolidated financial statements—unaudited.
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, 2020 | Shares | | Amount | | Shares | | Amount | |
| | | | | | | | | | | | | | | |
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 |
For the Three Months Ended October 31, 2021 | | | | | | | | | | | | | | | |
Balance at July 31, 2021 | 36,028,566 | | | 3,603 | | | 1,821,587 | | | 182 | | | 164,299 | | (15,991) | | | (25,559) | | | 126,534 | |
Proceeds from stock options exercised* | 146,242 | | | 14 | | — | | | — | | | 1,628 | | — | | | — | | | 1,642 | |
Stock-based compensation | — | | | — | | | — | | | — | | | 1,042 | | — | | | — | | | 1,042 | |
Net earnings | — | | | — | | | — | | | — | | | — | | | 3,314 | | — | | | 3,314 | |
Dividends declared* | — | | | — | | | — | | | — | | | — | | | (3,685) | | | — | | | (3,685) | |
Balance at October 31, 2021 | 36,174,808 | | | 3,617 | | | 1,821,587 | | | 182 | | | 166,969 | | | (16,362) | | | (25,559) | | | 128,847 | |
*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, 2020 | Shares | | Amount | | Shares | | Amount | |
| | | | | | | | | | | | | | | |
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 |
For the Six Months Ended October 31, 2021 | | | | | | | | | | | | | | | |
Balance at April 30, 2021 | 35,629,566 | | | 3,563 | | | 1,821,587 | | | 182 | | | 159,492 | | (15,287) | | | (25,559) | | | 122,391 | |
Proceeds from stock options exercised* | 545,242 | | | 54 | | — | | | — | | | 5,660 | | — | | | — | | | 5,714 | |
Stock-based compensation | — | | | — | | | — | | | — | | | 1,817 | | — | | | — | | | 1,817 | |
Net earnings | — | | | — | | | — | | | — | | | — | | | 6,261 | | — | | | 6,261 | |
Dividends declared* | — | | | — | | | — | | | — | | | — | | | (7,336) | | | — | | | (7,336) | |
Balance at October 31, 2021 | 36,174,808 | | | 3,617 | | | 1,821,587 | | | 182 | | | 166,969 | | | (16,362) | | | (25,559) | | | 128,847 | |
*Amounts adjusted for rounding
See accompanying notes to condensed consolidated financial statements—unaudited.
American Software, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| | | | | | | | | | | |
| Six Months Ended October 31, |
| 2021 | | 2020 |
Cash flows from operating activities: | | | |
Net earnings | $ | 6,261 | | | $ | 2,726 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
Depreciation and amortization | 2,170 | | | 3,194 | |
Stock-based compensation expense | 1,817 | | | 1,198 | |
Net gain on investments | (1,193) | | | (803) | |
Deferred income taxes | (99) | | | (344) | |
Changes in operating assets and liabilities: | | | |
Purchases of trading securities | (174) | | | (285) | |
Proceeds from maturities and sales of trading securities | 210 | | | 3,119 | |
Accounts receivable, net | 4,502 | | | 4,009 | |
| | | |
Prepaid expenses and other assets | (2,013) | | | 322 | |
Accounts payable and other liabilities | (2,595) | | | (3,344) | |
Deferred revenue | (1,174) | | | (3,021) | |
Net cash provided by operating activities | 7,712 | | | 6,771 | |
Cash flows from investing activities: | | | |
Capitalized computer software development costs | — | | | (371) | |
Purchases of property and equipment, net of disposals | (615) | | | (163) | |
| | | |
Net cash used in investing activities | (615) | | | (534) | |
Cash flows from financing activities: | | | |
Proceeds from exercise of stock options | 5,714 | | | 2,853 | |
Dividends paid | (7,268) | | | (7,118) | |
Net cash used in financing activities | (1,554) | | | (4,265) | |
Net change in cash and cash equivalents | 5,543 | | | 1,972 | |
Cash and cash equivalents at beginning of period | 88,658 | | | 79,814 | |
Cash and cash equivalents at end of period | $ | 94,201 | | | $ | 81,786 | |
| | | |
Supplemental disclosure of cash flow information: | | | |
Cash paid during the period for: | | | |
Income taxes, net of refunds | $ | 176 | | | $ | 205 | |
Supplemental disclosures of noncash operating, investing and financing activities: | | | |
Accrual of dividends payable | $ | 3,676 | | | $ | 3,576 | |
See accompanying notes to condensed consolidated financial statements—unaudited.
AMERICAN SOFTWARE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements—Unaudited
January
A. Presentation and Summary of Significant Accounting Policies
Basis of Presentation
and Principles of ConsolidationBasis of Presentation
The accompanying unaudited
condensed consolidated financial statementsCondensed 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 Form
10-Q and Rule
10-01 of
Regulation 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 statementsCondensed Consolidated Financial Statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at
JanuaryOctober 31,
2018, the2021, results of operations for the three and
ninesix months ended
JanuaryOctober 31,
20182021 and
20172020, consolidated statements of shareholders’ equity for the three and six months ended October 31, 2021 and 2020 and cash flows for the
ninesix months ended
JanuaryOctober 31,
20182021 and
2017.2020. The Company’s results for the three
and nine months ended
JanuaryOctober 31,
20182021 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 Form
10-K (the “Annual Report”) for the fiscal year ended April 30,
2017 (the “Annual Report”).2021. The terms “fiscal 2022” and “fiscal 2021” refer to our fiscal years ending April 30, 2022 and 2021, respectively.
The preparation of these
financial statementsCondensed 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 statementsCondensed Consolidated Financial Statements and the reported amounts of
revenuesrevenue and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for
the fiscal
year ended April 30, 20172021 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 taxesreserves 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 statementsCondensed 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.
Recent Accounting Pronouncements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating taxes for each quarter 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 was 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. The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements.
We recognize revenue when we transfer control of the promised goods or services to our customers, in accordancean 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 the Software Revenue Recognition TopicCustomer
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 Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)Transaction Price
Step 4 – Allocation of the Transaction Price to Distinct Performance Obligations
Step 5 – Attribution of Revenue for Each Distinct Performance Obligation
Nature of Products and Services.
Subscription Fees.License. We recognize license Subscription fees include SaaS revenue for the right to use the software for a limited period of time in connection with license agreements for standard proprietaryan environment hosted by the Company or by a third party. The customer accesses and uses the software uponon 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 collectionwithout 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 feecustomer. 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 elementsgenerally recognized ratably over the term of the arrangement. For multiple-element arrangements, we
Licenses. Our software licenses provide the customer with a right to use the software as it exists at the time of purchase. We recognize revenue underfor 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 accordancecustomer.
Our perpetual 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 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 $40,000 for the three and six months ended October 31, 2021 and $12,000 and $16,000 for the three and six months ended October 31, 2020, 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 arefor perpetual 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 rangingrange from one to three years with renewal for additional periods thereafter. Maintenance fees areyears. Revenue related to maintenance is generally billed annuallypaid in advance. We recognize maintenancerevenueadvance and recognized ratably over the term of the agreement since the Company is standing ready to provide a series of maintenance agreement. In situations where we bundle all or a portionservices that are substantially the same each period over the term; therefore, time is the best measure of the maintenance fee with the license fee, VSOEprogress. Support services 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 otherout-of-pocket expenses incurred as revenuesubscriptions are included in the condensed consolidated statements of operations under servicessubscription fees 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 the Company or by a third party and the customer accesses and uses the software on anas-needed basis over the Internet or via a dedicated line; however, the customer has no ability to take delivery 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 consistsas a component of managed and hosting services.
such fees.
Indirect Channel Revenue.Revenue. We recognize revenues forrecord revenue from sales made through the indirect sales channels principally whenon a gross basis, because we control the distributor makesgoods or services and act as the saleprincipal 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 anend-user, the license fee is fixedprovide 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 billedparty 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 feeour contracts include multiple performance obligations. Our products and services revenues. At January 31, 2018generally do not require a significant amount of integration or interdependency; therefore, our products and Aprilservices 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 in comparable circumstances to similar customers. We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change. Historically our on-premise licenses 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 revenue. Maintenance and 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 condensed 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 theour software license agreement, which include specified payment terms thatcontracts 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 totypically 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 subsequenttiming 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 condensed 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, 2021, we recognized $17.1 million of revenue that was included in the deferred revenue balance as of July 31, 2021. During the six months ended October 31, 2021, we recognized $27.1 million of revenue that was included in the deferred revenue balance as of April 30, 2021.
| | | | | | | | | | | |
| October 31, 2021 | | April 30, 2021 |
(in thousands) |
| | | |
| | | |
| | | |
| | | |
| | | |
Deferred revenue, current | 35,968 | | | 37,142 | |
Deferred revenue, long-term* | 250 | | | 540 | |
Total deferred revenue | $ | 36,218 | | | $ | 37,682 | |
*included in other long-term liabilities on the accompanying condensed consolidated balance sheets.
Remaining Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the endcustomer and is the unit of account under Topic 606. The transaction price is allocated to each reportingdistinct 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, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $123.3 million. The Company expects to recognize revenue on approximately 47% 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, |
2021 | | 2020 | | 2021 | | 2020 |
(in thousands) | | (in thousands) |
Revenue: | | | | | | | |
Domestic | $ | 26,197 | | | $ | 23,659 | | | $ | 50,624 | | | $ | 46,799 | |
International | 5,014 | | | 4,222 | | | 9,858 | | | 8,360 | |
| $ | 31,211 | | | $ | 27,881 | | | $ | 60,482 | | | $ | 55,159 | |
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, 2021 and April 30, 2021 were $3.7 million and $3.9 million, respectively. Amortization of sales commissions was $0.5 million and $1.0 million for the three and six months ended October 31, 2021, respectively, and $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. No impairment losses were recognized during the periods.
C. Declaration of Dividend Payable
On
November 15, 2017,August 19, 2021, 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
wasis payable on
February 23, 2018December 3, 2021 to Class A and Class B shareholders of record at the close of business on
February 9, 2018.November 19, 2021.
D. Earnings
perPer Common Share
We have
The Company has two classes of common
stock, of whichstock. Class B
Common Sharescommon shares are convertible into Class A
Common Sharescommon shares at any time, on a
one-for-one 1-for-one basis. Under
ourthe Company’s Articles of Incorporation, if
we declare dividends
are declared, holders of Class A
Common Sharescommon shares shall receive a $0.05 dividend per share prior to the Class B
Common Sharescommon shares receiving any dividend and holders of Class A
Common Sharescommon shares shall receive a dividend at least equal to Class B
Common Sharescommon shares dividends on a per share basis. As a result,
we havethe Company has computed the earnings per share in
accordancecompliance 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
ourthe 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 Sharescommon 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 classestwo-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 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
similarcalculated 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
ourthe Company’s stock incentive plans. For
ourthe Company’s diluted earnings per
share calculation for Class A Common Shares, we useshares, the“if-converted” Company uses the “if-converted” method. This calculation assumes that all Class B Common Sharescommon 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 Sharescommon shares to participate in undistributed earnings.
For
ourthe Company’s diluted earnings per share calculation for Class B
Common Shares, we useshares, the
“two-class” Company uses the “two-class” method. This calculation does not assume that all Class B
Common Sharescommon 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 Sharesshares and the undistributed earnings are allocated evenly to both Class A and B
Common Sharesshares including Class A
Common Sharesshares issued pursuant to those converted stock options. This allocation is based on management’s judgment after considering the dividend rights of the
two classestwo-classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B
Common Sharesshares 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, 2021 | | Six Months Ended October 31, 2021 |
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 | (0.01) | | | (0.01) | | | (0.03) | | | (0.03) | |
Total | $ | 0.10 | | | $ | 0.10 | | | $ | 0.19 | | | $ | 0.19 | |
Distributed earnings | $ | 3,475 | | | $ | 201 | | | $ | 6,926 | | | $ | 401 | |
Undistributed losses | (342) | | | (20) | | | (1,007) | | | (59) | |
Total | $ | 3,133 | | | $ | 181 | | | $ | 5,919 | | | $ | 342 | |
Basic weighted average common shares outstanding | 31,515 | | | 1,822 | | | 31,373 | | | 1,822 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| 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 | |
Diluted EPS for Class A Common Shares Using the
If-Converted Method
Three Months Ended
JanuaryOctober 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 | |
| | | | | | | | | | | | |
Nine2021
| | | | | | | | | | | | | | | | | |
| Undistributed & Distributed Earnings to Class A Common Shares | | Class A Common Shares | | EPS* |
Per Basic | $ | 3,133 | | | 31,515 | | | $ | 0.10 | |
Common Stock Equivalents | — | | | 1,348 | | | — | |
| 3,133 | | | 32,863 | | | 0.10 | |
Class B Common Share Conversion | 181 | | | 1,822 | | | — | |
Diluted EPS for Class A Common Shares* | $ | 3,314 | | | 34,685 | | | $ | 0.10 | |
Six Months Ended
JanuaryOctober 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 | |
| | | | | | | | | | | | |
2021
| | | | | | | | | | | | | | | | | |
| Undistributed & Distributed Earnings to Class A Common Shares | | Class A Common Shares | | EPS* |
Per Basic | $ | 5,919 | | | 31,373 | | | $ | 0.19 | |
Common Stock Equivalents | — | | | 1,253 | | | — | |
| 5,919 | | | 32,626 | | | 0.18 | |
Class B Common Share Conversion | 342 | | | 1,822 | | | — | |
Diluted EPS for Class A Common Shares | $ | 6,261 | | | 34,448 | | | $ | 0.18 | |
Three Months Ended
JanuaryOctober 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 | |
| | | | | | | | | | | | |
Nine2020
| | | | | | | | | | | | | | | | | |
| 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
JanuaryOctober 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 | |
| | | | | | | | | | | | |
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 | |
Diluted EPS for Class B Common Shares Using the
Two-Class Method
Three Months Ended
JanuaryOctober 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 | |
| | | | | | | | | | | | |
Nine2021
| | | | | | | | | | | | | | | | | |
| Undistributed & Distributed Earnings to Class B Common Shares | | Class B Common Shares | | EPS* |
Per Basic | $ | 181 | | | 1,822 | | | $ | 0.10 | |
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares | 1 | | | — | | | — | |
Diluted EPS for Class B Common Shares | $ | 182 | | | 1,822 | | | $ | 0.10 | |
Six Months Ended
JanuaryOctober 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 | |
| | | | | | | | | | | | |
2021
| | | | | | | | | | | | | | | | | |
| Undistributed & Distributed Earnings to Class B Common Shares | | Class B Common Shares | | EPS* |
Per Basic | $ | 342 | | | $ | 1,822 | | | $ | 0.19 | |
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares | 2 | | | — | | | — | |
Diluted EPS for Class B Common Shares | $ | 344 | | | 1,822 | | | $ | 0.19 | |
| | | | | |
Three Months Ended
JanuaryOctober 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 | |
| | | | | | | | | | | | |
Nine2020
| | | | | | | | | | | | | | | | | |
| 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
JanuaryOctober 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 |
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 | |
_______________
*Amounts adjusted for rounding
For the three and ninesix months ended JanuaryOctober 31, 2018,2021, we excluded options to purchase 12,1301,098,815 and 57,598704,554, Class A Common Shares, respectively, and for the three and ninesix months ended JanuaryOctober 31, 2017,2020, we excluded options to purchase 374,4391,842,587 and 337,5001,426,760 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
JanuaryOctober 31,
2018,2021, we had a total of
3,470,0174,831,991 options outstanding and as of
JanuaryOctober 31,
2017,2020, we had a total of
3,230,5754,378,453 options outstanding.
E.
AcquisitionsWe account for business combinations usingStock-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 addpre-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 JanuaryOctober 31, 2018,2021 and 2020, we granted options for 1,308,500 and 1,120,000 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 directdate of grant using the Black-Scholes option pricing model. The forfeiture rates are estimated using historical data. We recorded stock option compensation cost of fulfillingapproximately $1.0 million and $0.7 million and income tax benefits of approximately $439,000 and $38,000 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 ninethree months ended JanuaryOctober 31, 20182021 and 2017, we granted options for 1,196,000 and 342,000 shares of common stock,2020, respectively. We recorded stock option compensation cost of approximately $314,000$1.8 million and $333,000$1.2 million and related income tax benefits of approximately $138,000$1.6 million and $124,000$0.3 million from option exercises during the threesix months ended JanuaryOctober 31, 20182021 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 2017,2020, respectively. We record stock-based compensation expense on a straight-line basis over the vesting period directly to additionalpaid-in-capital.
paid-in capital.
During the
ninesix months ended
JanuaryOctober 31,
20182021 and
2017,2020, we issued
778,129545,242 and
593,082277,197 shares of
Class A common stock, respectively, resulting from the exercise of stock options. The total intrinsic value of options exercised during the
ninesix months ended
JanuaryOctober 31,
20182021 and
20172020 based on market value at the exercise dates was approximately
$2.2$7.6 million and
$1.9$1.6 million, respectively. As of
JanuaryOctober 31,
2018,2021, unrecognized compensation cost related to unvested stock option awards approximated
$3.6$13.7 million, which we expect to recognize over a weighted average period of
1.852.07 years.
G.
F. 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. Governmentgovernment 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.
The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of
JanuaryOctober 31,
20182021 and April 30,
2017, respectively,2021, and
indicatesindicate 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 | |
| | | | | | | | | | | | | | | | |
H.
| | | | | | | | | | | | | | | | | | | | | | | |
| October 31, 2021 |
| Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Balance |
Cash equivalents | $ | 87,275 | | | $ | — | | | $ | — | | | $ | 87,275 | |
Marketable securities | 16,712 | | | 451 | | | — | | | 17,163 | |
Total | $ | 103,987 | | | $ | 451 | | | $ | — | | | $ | 104,438 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| April 30, 2021 |
| Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Balance |
Cash equivalents | 81,720 | | | — | | | — | | | 81,720 | |
Marketable securities | 15,332 | | | 674 | | | — | | | 16,006 | |
Total | 97,052 | | | 674 | | | — | | | 97,726 | |
On August 19, 2002, our Board of Directors
approved a resolution authorizingauthorized 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 2022. As of
JanuaryOctober 31,
2018,2021, 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.
I.
We have not included condensed consolidated statements of comprehensive income in the accompanying unaudited
condensed consolidated financial statementsCondensed Consolidated Financial Statements since comprehensive income and net earnings presented in the accompanying
condensed consolidated statementsCondensed Consolidated Statements of
operationsOperations would be substantially the same.
J.
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 PrincipalChief 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 theCODMs evaluating performance based upon segment operating profit or loss that includes an allocation of common expenses, but excludes certain unallocated corporate expenses, which are included in the Other segment. Our CODMs review the operating results of our three3 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 ourThe 3 operating segments to reflect the fact that we provide our software solutions through three major operating segments, which are further broken down into a total of six major product and service groups. The three operating segments areare: (1) Supply Chain Management (“SCM”), (2) Information Technology Consulting (“IT”IT Consulting”) Consulting and (3) Other.
The SCM segment consists of Logility
which providesand DMI. Both operating companies leverage a single platform spanning 8 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
allocationoptimization, quality and
merchandise planningcompliance, PLM, sourcing management 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) New Generation Computing (“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 andintegrated business
intelligence solutions for the supply chain market.planning. The IT Consulting segment consists of The Proven Method, 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”). As a result of the organizational realignment during the third quarter fiscal 2018, NGC was repositioned out 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.
All of our
revenues arerevenue is derived from external customers. We do not have any inter-segment revenue. Our income taxes and dividends are paid at a consolidated level. Consequently, it is not practical to show these items by operating segment.
In the following table, we have broken down the intersegment transactions applicable to the three and
ninesix months ended
JanuaryOctober 31,
20182021 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 | |
| | | | | | | | | | | | | | | | |
2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, | | Six Months Ended October 31, |
| 2021 | | 2020 | | 2021 | | 2020 |
Revenue: | | | | | | | |
Supply Chain Management | $ | 25,380 | | | $ | 22,297 | | | $ | 49,631 | | | $ | 44,033 | |
IT Consulting | 5,226 | | | 5,033 | | | 9,702 | | | 10,059 | |
Other | 605 | | | 551 | | | 1,149 | | | 1,067 | |
| $ | 31,211 | | | $ | 27,881 | | | $ | 60,482 | | | $ | 55,159 | |
Operating income\(loss): | | | | | | | |
Supply Chain Management | $ | 6,718 | | | $ | 3,983 | | | $ | 12,073 | | | $ | 8,087 | |
IT Consulting | 336 | | | 103 | | | 499 | | | 209 | |
Other | (4,367) | | | (3,455) | | | (8,112) | | | (6,780) | |
| $ | 2,687 | | | $ | 631 | | | $ | 4,460 | | | $ | 1,516 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Capital expenditures: | | | | | | | |
Supply Chain Management | $ | 313 | | | $ | 45 | | | $ | 615 | | | $ | 84 | |
IT Consulting | — | | | — | | | — | | | — | |
Other | — | | | — | | | — | | | 79 | |
| $ | 313 | | | $ | 45 | | | $ | 615 | | | $ | 163 | |
Capitalized software: | | | | | | | |
Supply Chain Management | $ | — | | | $ | 126 | | | $ | — | | | $ | 371 | |
IT Consulting | — | | | — | | | — | | | — | |
Other | — | | | — | | | — | | | — | |
| $ | — | | | $ | 126 | | | $ | — | | | $ | 371 | |
Depreciation and amortization: | | | | | | | |
Supply Chain Management | $ | 948 | | | $ | 1,415 | | | $ | 1,982 | | | $ | 3,001 | |
IT Consulting | — | | | — | | | — | | | 1 | |
Other | 91 | | | 99 | | | 188 | | | 192 | |
| $ | 1,039 | | | $ | 1,514 | | | $ | 2,170 | | | $ | 3,194 | |
Earnings\(loss) before income taxes: | | | | | | | |
Supply Chain Management | $ | 6,657 | | | $ | 3,845 | | | $ | 11,919 | | | $ | 8,220 | |
IT Consulting | 336 | | | 103 | | | 499 | | | 207 | |
Other | (3,376) | | | (3,359) | | | (6,591) | | | (5,621) | |
| $ | 3,617 | | | $ | 589 | | | $ | 5,827 | | | $ | 2,806 | |
J. Major
CustomerCustomers
No
onesingle customer accounted for more than 10% of total
revenuesrevenue for the three and
ninesix months ended
JanuaryOctober 31,
20182021 and
2017.2020.
We
more often than notgenerally 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 indemnificationsindemnification 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.
On
February 15, 2018,November 17, 2021, 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, 2018February 18, 2022 to Class A and Class B shareholders of record at the close of business on
May 11, 2018.February 4, 2022.
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 Form
10-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,revenue, 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-QQuarterly 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 fiscal 2022, we expect the global economy to improve modestly when compared to recent periods. We believe improved economic conditions and
“fiscal 2017” referincreasingly complex supply chain challenges may be driving some businesses to
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
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 we do not expect that the COVID-19 pandemic will cause any material adverse changes on our business or financial results for fiscal
years ending April 30, 20182022, 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.
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
U.S. and global credit markets.
In January 2018,recent years, the weakness in the overall global economy and the U.S. economy has resulted in reduced expenditures in the business software market.
In October 2021, the International Monetary Fund (“IMF”)provided an update to the World Economic Outlook (“WEO”)for the 2018 and 2019 world economic growth forecast.2021. The update noted that,“Global economic activity continuesThe global economy is projected to firm up. Global output is estimated to have grown by 3.7grow 5.9 percent in 2017, which is 0.12021 and 4.9 percent in 2022 (0.1 percentage point fasterlower for 2021 than projected in the fall and 1⁄2 percentage point higher than in 2016.July 2021 World Economic Outlook (WEO) Update). The pickup in growth has been broad based, with notable upside surprises in Europe and Asia. Global growth forecastsdownward revision for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9 percent. The revision2021 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 to improve when compared to the prior year, which could result in an improved selling environment. Overall information technology spending is improving as a result of the current global economic environment. 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 downgrade for advanced economies—in part due to concernssupply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics. This is partially offset by stronger near term prospects among some commodity-
exporting emerging market and developing economies.Employment is generally expected to continue lagging the recovery in
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. Customers continue to take long periods to evaluate discretionary software purchases. We believe the improvement in economic conditions may be driving some businesses to invest in 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.
output."
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
unitsegment actually providing the product or service.
We
The Company enables enterprises to accelerate their operations from product concept to customer availability. Our brands - Logility and Demand Solutions - 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 allocationoptimization, quality 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) New Generation Computing (“NGC”), which provides cloud solutions for supply chain management,compliance, product lifecycle management, quality control, vendor compliancesourcing management and enterprise resource planning for both retailers and manufacturers in the apparel, sewn products and furniture industries, and, (iii) Halo, which providesintegrated business planning. Our platform includes advanced analytics and business intelligence solutionsis fueled by supply chain master data, allowing for the supply chain market. The IT Consultingautomation of critical business processes through the application of artificial intelligence and machine learning algorithms to a variety of internal and external data streams.
Our primary operating units under our SCM segment
consistsinclude Logility, Inc. and Demand Management, Inc. (“DMI”). Logility is a wholly-owned subsidiary of
the Company, and DMI is a wholly-owned subsidiary of Logility. In addition to our core SCM software business, we also offer technology staffing and 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 purchasingsoftware and
materials management, customer order processing, financial,e-commerce and traditional manufacturing solutions, and (ii) unallocatedservices provided to our legacy enterprise resource planning (“ERP”) customers, as well as corporate overhead
and other common expenses.
We derive
revenuesrevenue 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.
ServicesProfessional services and other
revenuesrevenue consist primarily of fees from software implementation, training,
consulting services, SaaS, hosting, and
managedconsulting services. We bill
service fees primarily under time and materials arrangements and recognize
revenuesrevenue as we perform services.
SubscriptionSaaS and maintenance agreements typically are for a
one- 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
revenuesrevenue ratably over the term of the agreement. Deferred
revenues represent advancerevenue represents payments or billings for subscriptions
software licenses,and services and maintenance
billed in advance of the time we recognize the related
revenues.revenue.
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 revenuesrevenue 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 revenuesrevenue 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 OtherSoftware topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards CodificationFASB ASC.We monitor the net realizable value of our capitalized software on a quarterly basis based on an estimate of future product revenues.revenue. 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 revenuesrevenue are less than management’s current expectations, we may incur a write-down of capitalized software costs. Our
sellingsales and marketing expenses
generallymainly include the salary and commissions paid to our sales professionals, along with marketing, promotional, travel and associated costs. Our general and administrative expenses
generallymainly 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. |
•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-Kfor
fiscal 2021. 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 daterespect 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 ASU2014-09, 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 updatethese pronouncements on our condensed 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.
COMPARISON OF RESULTS OF OPERATIONS
Three-Month Comparisons.The following table sets forth certain revenue and expense items as a percentage of total revenuesrevenue and the percentage changes in those items for the three months ended JanuaryOctober 31, 20182021 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-Month2020:
| | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, |
| Percentage of Total Revenue | | Pct. Change in Dollars |
| 2021 | | 2020 | | 2021 vs. 2020 |
Revenue: | | | | | |
Subscription fees | 33 | % | | 25 | % | | 49 | % |
License | 2 | % | | 2 | % | | 79 | % |
Professional services and other | 35 | % | | 37 | % | | 5 | % |
Maintenance | 30 | % | | 36 | % | | (9) | % |
Total revenue | 100 | % | | 100 | % | | 12 | % |
Cost of revenue: | | | | | |
Subscription fees | 11 | % | | 11 | % | | 16 | % |
License | 1 | % | | 2 | % | | (64) | % |
Professional services and other | 24 | % | | 27 | % | | (2) | % |
Maintenance | 6 | % | | 7 | % | | (10) | % |
Total cost of revenue | 42 | % | | 47 | % | | (2) | % |
Gross margin | 58 | % | | 53 | % | | 24 | % |
Research and development | 14 | % | | 16 | % | | (1) | % |
Sales and marketing | 19 | % | | 19 | % | | 9 | % |
General and administrative | 18 | % | | 16 | % | | 25 | % |
| | | | | |
Total operating expenses | 51 | % | | 51 | % | | 11 | % |
Operating income | 7 | % | | 2 | % | | 326 | % |
Other income: | | | | | |
| | | | | |
Other, net | 3 | % | | — | % | | nm |
Earnings before income taxes | 10 | % | | 2 | % | | 514 | % |
Income tax expense\(benefit) | 1 | % | | — | % | | nm |
Net earnings | 9 | % | | 2 | % | | 379 | % |
nm - not meaningful
Six-Month Comparisons.The following table sets forth certain revenue and expense items as a percentage of total revenuesrevenue and the percentage changes in those items for the ninesix months ended JanuaryOctober 31, 20182021 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 | % |
| | | | | | | | | | | | |
2020:
| | | | | | | | | | | | | | | | | |
| Six Months Ended October 31, |
| Percentage of Total Revenue | | Pct. Change in Dollars |
| 2021 | | 2020 | | 2021 vs. 2020 |
Revenue: | | | | | |
Subscription fees | 33 | % | | 24 | % | | 51 | % |
License | 2 | % | | 2 | % | | 5 | % |
Professional services and other | 34 | % | | 36 | % | | 1 | % |
Maintenance | 31 | % | | 38 | % | | (9) | % |
Total revenue | 100 | % | | 100 | % | | 10 | % |
Cost of revenue: | | | | | |
Subscription fees | 11 | % | | 10 | % | | 16 | % |
License | 1 | % | | 2 | % | | (71) | % |
Professional services and other | 24 | % | | 28 | % | | (6) | % |
Maintenance | 6 | % | | 7 | % | | — | % |
Total cost of revenue | 42 | % | | 47 | % | | (3) | % |
Gross margin | 58 | % | | 53 | % | | 21 | % |
Research and development | 14 | % | | 15 | % | | 3 | % |
Sales and marketing | 20 | % | | 18 | % | | 18 | % |
General and administrative | 17 | % | | 16 | % | | 13 | % |
| | | | | |
Total operating expenses | 51 | % | | 49 | % | | 12 | % |
Operating income | 7 | % | | 4 | % | | 194 | % |
Other income: | | | | | |
| | | | | |
Other, net | 2 | % | | 2 | % | | 10 | % |
Earnings before income taxes | 9 | % | | 6 | % | | 108 | % |
Income tax expense\(benefit) | (1) | % | | — | % | | nm |
Net earnings | 10 | % | | 6 | % | | 130 | % |
nm - not meaningful
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND
NINESIX MONTHS ENDED
JANUARYOCTOBER 31,
20182021 AND
2017REVENUES
| | | | | | | | | | | | | | | | | | | | |
| | 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 over2020
REVENUE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, |
| | | | | | | % of Total Revenue |
| 2021 | | 2020 | | % Change | | 2021 | | 2020 |
| (in thousands) | | | | | | |
Subscription fees | $ | 10,361 | | | $ | 6,966 | | | 49 | % | | 33 | % | | 25 | % |
License | $ | 805 | | | 450 | | | 79 | % | | 2 | % | | 2 | % |
Professional services and other | 10,779 | | | 10,242 | | | 5 | % | | 35 | % | | 37 | % |
Maintenance | 9,266 | | | 10,223 | | | (9) | % | | 30 | % | | 36 | % |
Total revenue | $ | 31,211 | | | $ | 27,881 | | | 12 | % | | 100 | % | | 100 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended October 31, |
| | | | | | | % of Total Revenue |
| 2021 | | 2020 | | % Change | | 2021 | | 2020 |
| (in thousands) | | | | | | |
Subscription fees | $ | 20,149 | | | $ | 13,329 | | | 51 | % | | 33 | % | | 24 | % |
License | $ | 1,297 | | | 1,237 | | | 5 | % | | 2 | % | | 2 | % |
Professional services and other | 20,308 | | | 20,056 | | | 1 | % | | 34 | % | | 36 | % |
Maintenance | 18,728 | | | 20,537 | | | (9) | % | | 31 | % | | 38 | % |
Total revenue | $ | 60,482 | | | $ | 55,159 | | | 10 | % | | 100 | % | | 100 | % |
For the three months ended JanuaryOctober 31, 20182021 compared to October 31, 2020 revenue increased by 12% attributable primarily to a 79% increase in license revenue, a 49% increase in subscription fees and a 5% increase in professional services and other revenue, partially offset by a 9% decrease in maintenance revenue when compared to the same period last year wasyear.
For the six months ended October 31, 2021 compared to October 31, 2020 revenue increased by 10% attributable primarily to a
50%51% increase in
license fee revenues and, to a lesser extent, a 9% increase in services and other revenues andsubscription fees, a 5% increase in
maintenance revenues. Thelicense revenue and a 1% increase in
license fee revenues was attributable 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 inprofessional services and other
revenues in the three months ended January 31, 2018 was an increase in implementation and cloud services in our SCM segmentrevenue, partially offset by a
9% decrease in
our IT consulting services duemaintenance revenue when compared to
decreased demand for IT temporary staff.the 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
discountsdiscount 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
revenuesrevenue from period to period is primarily due to the volume of products and related services sold in any period and the
amountnumber of products or modules purchased with each sale.
International
revenuesrevenue represented approximately
20% and 17%16% of total
revenuesrevenue in the three
and six months ended
JanuaryOctober 31,
2018 and 2017, respectively.2021 compared to 15% for the same periods in the prior year. Our
revenues, in particularrevenue, particularly our international
revenues,revenue, may fluctuate substantially from period to period, primarily because we derive most of our license
and subscription fee
revenuesrevenue 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% | |
| | | | | | | | | | | | |
Subscription Fees
| | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 10,361 | | | $ | 6,966 | | | 49 | % |
Total subscription fees revenue | $ | 10,361 | | | $ | 6,966 | | | 49 | % |
| | | | | | | | | | | | | | | | | |
| Six Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 20,149 | | | $ | 13,329 | | | 51 | % |
Total subscription fees revenue | $ | 20,149 | | | $ | 13,329 | | | 51 | % |
For the three and ninesix months ended JanuaryOctober 31, 2018,2021, subscription fees revenue over the same periods last year increased 49% and 51%, respectively primarily due to an increase in the number of contracts, contracts with a higher cloud services ACV, as well as an increase in multi-year contracts. This is evidenced by our successful transition to the cloud subscription model.
License Revenue
| | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 800 | | | $ | 434 | | | 84 | % |
Other | 5 | | | 16 | | | (69) | % |
Total license revenue | $ | 805 | | | $ | 450 | | | 79 | % |
| | | | | | | | | | | | | | | | | |
| Six Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 1,276 | | | $ | 1,221 | | | 5 | % |
Other | 21 | | | 16 | | | 31 | % |
Total license revenue | $ | 1,297 | | | $ | 1,237 | | | 5 | % |
For the three and six months ended October 31, 2021, license fee
revenuesrevenue increased
50%79% and
6%5%, respectively when compared to the same periods in the prior year. In the three
and nine months ended
JanuaryOctober 31,
2018,2021, license fee
revenuesrevenue from our SCM
business unitsegment increased
49% and 6%84%,
respectively,partially offset by a decrease in our Other segment of 69% when compared to the corresponding
periodsperiod in the prior year.
We believe that the increase was due to the economic improvement in the global economy and higher overall business information technology spending. Our SCM business unit constituted 99% and 100%The majority of
totalour current license fee
revenues forrevenue is generated from additional users and expanded scope from our existing on-premise customers. For the three
and six months ended
JanuaryOctober 31,
20182021 and
2017, respectively. Our2020, our SCM
business unitsegment constituted
approximately 99%
, 96%, 98% and 99% of total license fee
revenues for the nine months ended January 31, 2018 and 2017,revenue, respectively. Our Other
business unitsegment license fee
revenuesrevenue increased by
627%31% for the
threesix months ended
JanuaryOctober 31,
20182021 when compared to the same period in the prior year
and decreased 22% in the nine months ended January 31, 2018 when compared to the same period in the prior yearprimarily due to timing of
closingsales to our existing ERP
deals.customers.
The direct sales channel provided approximately
91%98% and
83%96% of license fee revenues for the three and
ninesix months ended
JanuaryOctober 31,
2018,2021, compared to approximately
81%65% and 77% in
each of the comparable periods last
year. The increase in the proportion of sales byyear due to larger customers obtained through our direct sales channel
was duemoving to
a larger increasethe Cloud platform faster than those in
license fee revenue from the
SCM segment’s directmid-sized market that are primarily served by our indirect sales channel. For the three
and six months ended
JanuaryOctober 31,
2018 and 2017,2021, our margins after commissions on direct sales were approximately
88%90% and
87%89%,
respectively. For the nine months ended January 31, 2018compared to 83% and
2017, our margins after commissions on direct sales were approximately 87%. The margins increased slightly84% in the
current periodcomparable periods last year. The increase 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
JanuaryOctober 31,
20182021 and
2017,2020, our margins after commissions on indirect sales were approximately
32%67% and
41%57%, respectively. For the
ninesix months ended
JanuaryOctober 31,
20182021 and
2017,2020, our margins after commissions on indirect sales were approximately
36%65% and
44%55%, respectively. The indirect channel margins for the
current quarter and fiscal year to date decreased whenincreased 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 | % |
| | | | | | | | | | | | |
Revenue
| | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 5,263 | | | $ | 4,981 | | | 6 | % |
IT Consulting | 5,226 | | | 5,033 | | | 4 | % |
Other | 290 | | | 228 | | | 27 | % |
Total professional services and other revenue | $ | 10,779 | | | $ | 10,242 | | | 5 | % |
| | | | | | | | | | | | | | | | | |
| Six Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 10,099 | | | $ | 9,556 | | | 6 | % |
IT Consulting | 9,702 | | | 10,059 | | | (4) | % |
Other | 507 | | | 441 | | | 15 | % |
Total professional services and other revenue | $ | 20,308 | | | $ | 20,056 | | | 1 | % |
For the three and
ninesix months ended
JanuaryOctober 31,
2018,2021, professional services
and other revenue increased by
9%5% and
4%1%, respectively
primarily due to
the increased
professional services
revenuesand other revenue from our
Other and SCM
business unit partially offset by a decrease in our IT consulting business unit.segments. For the three and
ninesix months ended
JanuaryOctober 31,
2018, a 24% and 17% increase, respectively, at our SCM business unit was due to services revenue related to our Logility cloud services area and an increase in utilization from project implementation services from higher license fees in prior periods. For the three and nine months ended January 31, 2018,2021, our IT Consulting segment’s
revenuesrevenue increased 4% and decreased
11% and 12%4%, respectively when compared to the same
periods in the prior year due lower project work. For the three and nine months ended January 31, 2018, services and other revenues from our Other segment increased by 52% and 8%, respectively, when compared to the same periodsperiod in the prior year due to the
demand of project work from existing customers during the applicable period. This was partially offset by an increase in professional services and other revenue from our SCM and Other segments. For the three and six months ended October 31, 2021, our SCM segment’s revenue increased 6%, primarily due to a higher ramp up of implementation project work due to an increase in subscription fees revenue in recent periods. For the three and six months ended October 31, 2021, our Other segment’s revenue increased 27% and 15%, respectively due to the timing of
implementation work.project work with existing customers. We have observed that there is a tendency for services and other
revenues,revenue, other than from IT Consulting, to lag changes in license
revenuesand subscription revenue 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
revenuesrevenue 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 ofsoftware-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 forward12-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 | % |
| | | | | | | | | | | | |
Revenue
| | | | | | | | | | | | | | | | | |
| Three Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 8,956 | | | $ | 9,916 | | | (10) | % |
Other | 310 | | | 307 | | | 1 | % |
Total maintenance revenue | $ | 9,266 | | | $ | 10,223 | | | (9) | % |
| | | | | | | | | | | | | | | | | |
| Six Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | |
Supply Chain Management | $ | 18,107 | | | $ | 19,927 | | | (9) | % |
Other | 621 | | | 610 | | | 2 | % |
Total maintenance revenue | $ | 18,728 | | | $ | 20,537 | | | (9) | % |
For the three and
ninesix months ended
JanuaryOctober 31,
2018,2021, maintenance
revenues increased 5%revenue decreased 9% when compared to the same period in the prior year. Our SCM maintenance revenue decreased 10% and
3%,9% for the three and six months ended October 31, 2021, respectively when compared to the same
period last year due to a normal customer attrition rate. The SCM segment accounted for 97% of total maintenance revenue for the three and six months ended October 31, 2021 and for the same periods in the prior
year, due primarily to increased license fees in recent periods. Our SCM Segment accounted for 97% and 96% of total maintenance revenues for the three and nine months ended January 31, 2018 and 2017, respectively.year. Typically, our maintenance
revenuesrevenue have had a direct relationship to current and historic license fee
revenues,revenue, since
new licenses are the
potential source of
new maintenance customers.
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, |
| 2021 | | % | | 2020 | | % | | 2021 | | % | | 2020 | | % |
Gross margin on subscription fees | $ | 6,957 | | | 67 | % | | $ | 4,020 | | | 58 | % | | $ | 13,521 | | | 67 | % | | $ | 7,624 | | | 57 | % |
Gross margin on license fees | 607 | | | 75 | % | | (103) | | | (23) | % | | 940 | | | 72 | % | | 9 | | | 1 | % |
Gross margin on professional services and other | 3,302 | | | 31 | % | | 2,618 | | | 26 | % | | 5,821 | | | 29 | % | | 4,602 | | | 23 | % |
Gross margin on maintenance | 7,520 | | | 81 | % | | 8,282 | | | 81 | % | | 15,008 | | | 80 | % | | 16,823 | | | 82 | % |
Total gross margin | $ | 18,386 | | | 58 | % | | $ | 14,817 | | | 53 | % | | $ | 35,290 | | | 58 | % | | $ | 29,058 | | | 53 | % |
For the three and ninesix months ended JanuaryOctober 31, 2018,2021, our total gross margin percentage increased by 5% when compared to the same periods in the prior year primarily due to a higher margins on subscription fees revenue, license fee margin from higher license fees and for the nine months ended January 31, 2018, to a lesser extent, due to an increase in gross margins inprofessional services and other revenue, partially offset by a decrease in maintenance revenue.
Gross Margin on Subscription Fees
For the three months ended October 31, 2021, our gross margin percentage on subscription fees revenue increased from 58% to 67% when compared to the same period in the prior year, primarily due to the increased subscription revenue and
maintenance revenues.related cost efficiencies. For the six months ended October 31, 2021, our gross margin percentage on subscription fees revenue increased from 57% to 67% when compared to the same period in the prior year, primarily due to the portfolio shift from license fee to subscription revenue.
Gross Margin on License Fees
License fee gross margin percentage for the three and
ninesix months ended
JanuaryOctober 31,
20182021 increased
by 98% and 71%, respectively, when compared to the same
periodsperiod in the prior
year due to higher license fees.year. License fee gross margin percentage tends to be directly related to the level of license fee
revenuesrevenue 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 comparedfrom 26% to
31% for the
same periods in the prior yearthree months ended October 31, 2021 and October 31, 2020, primarily due to an increase in
revenues, improved utilization and better billing rates. Our gross margins percentage in our
Logility cloudSCM segment services
areaincreased to 40% from 35% for the three months ended October 31, 2021 and 2020, respectively. This is primarily the result of an increase in professional services and other revenue, which
hasis being driven by an increase in billing rates and utilization. Our Other segment professional services gross margin increased to 42% from 39% for the three months ended October 31, 2021 and 2020, respectively, due to higher margin
projects year to date. Our IT Consulting segment professional services
and related implementation services. Also,gross margin increased to 21% of revenue when compared to 16% the
same period last year due to higher margin
increase was partially offset by a decrease inproject work. Professional services
revenue from our lower margin IT business unit. Services and other gross margin is directly related to the level of services and other
revenues.revenue. The primary component of cost of services and other
revenuesrevenue is services staffing, which is relatively inelastic in the short term.
Gross Margin on Maintenance
Maintenance
For the six months ended October 31, 2021 and October 31, 2020, our 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 percentageincreased to 43% from 41% for the threesix months ended JanuaryOctober 31, 20182021 and 2017 remained flat at 79%. For2020, respectively, due to higher margin projects year to date. Our IT Consulting segment professional services gross margin increased to 21% from 16% for the ninesix months ended JanuaryOctober 31, 20182021 and 2017, the gross margin percentage had a slight uptick to 79% from 77%,2020, respectively, primarily due to increased maintenance revenuehigher margin projects in the current quarter. Professional services and cost containment efforts. Maintenanceother gross margin normally is directly related to the level of services and other revenues.
Gross Margin on Maintenance
Maintenance gross margin percentage remained flat at 81% for the three months ended October 31, 2021 and October 31, 2020, and decreased from 82% to 80% for the six months ended October 31, 2021 and October 31, 2020, respectively. The decrease is primarily due to lower maintenance
revenues.revenue and increase in personnel costs, compared to the same period in the prior year. The primary
component of cost
of maintenance revenuecomponent is maintenance staffing, which is relatively inelastic in the short term.
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, |
| 2021 | | 2020 | | % of Revenue | | 2021 | | 2020 | | % of Revenue |
| 2021 | | 2020 | | 2021 | | 2020 |
| (in thousands) | | | | | | (in thousands) | | | | |
Research and development | $ | 4,278 | | | $ | 4,337 | | | 14 | % | | 16 | % | | $ | 8,702 | | | $ | 8,432 | | | 14 | % | | 15 | % |
Sales and marketing | $ | 5,892 | | | $ | 5,429 | | | 19 | % | | 19 | % | | $ | 12,012 | | | $ | 10,173 | | | 20 | % | | 18 | % |
General and administrative | $ | 5,476 | | | $ | 4,367 | | | 18 | % | | 16 | % | | $ | 10,010 | | | $ | 8,831 | | | 17 | % | | 16 | % |
Amortization of acquisition-related intangible assets | $ | 53 | | | $ | 53 | | | — | % | | — | % | | $ | 106 | | | $ | 106 | | | — | % | | — | % |
Other income (expense), net | $ | 930 | | | $ | (42) | | | 3 | % | | — | % | | $ | 1,367 | | | $ | 1,290 | | | 2 | % | | 2 | % |
Income tax expense\(benefit) | $ | 303 | | | $ | (103) | | | 1 | % | | — | % | | $ | (434) | | | $ | 80 | | | (1) | % | | — | % |
Gross product research and development costs include all
non-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, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | | | |
Total capitalized computer software development costs | $ | — | | | $ | 126 | | | (100) | % |
Percentage of gross product research and development costs | — | % | | 3 | % | | |
Total research and development expense | $ | 4,278 | | | $ | 4,337 | | | (1) | % |
Percentage of total revenue | 14 | % | | 16 | % | | |
Total gross product research and development expense and capitalized computer software development costs | $ | 4,278 | | | $ | 4,463 | | | (4) | % |
Percentage of total revenue | 14 | % | | 16 | % | | |
Total amortization of capitalized computer software development costs * | $ | 807 | | | $ | 1,042 | | | (23) | % |
| | | | | | | | | | | | | | | | | |
| Six Months Ended October 31, |
| 2021 | | 2020 | | % Change |
| (in thousands) | | | | |
Total capitalized computer software development costs | $ | — | | | $ | 371 | | | (100) | % |
Percentage of gross product research and development costs | — | % | | 4 | % | | |
Total research and development expense | $ | 8,702 | | | $ | 8,432 | | | 3 | % |
Percentage of total revenue | 14 | % | | 15 | % | | |
Total gross product research and development expense and capitalized computer software development costs | $ | 8,702 | | | $ | 8,803 | | | (1) | % |
Percentage of total revenue | 14 | % | | 16 | % | | |
Total amortization of capitalized computer software development costs * | $ | 1,710 | | | $ | 2,260 | | | (24) | % |
*Included in cost of license fees and subscription fees.
For the three and
ninesix months ended
JanuaryOctober 31,
2018,2021, gross product research and development costs
increased 5%decreased 4% and 1%, respectively when compared to the same
periodsperiod in the previous year,
primarily due
increased headcount and related expenses.to a decrease in the use of third-party contractors. Capitalized software development costs
increased 20% and 48%, respectively, for the three and nine months ended Januarydecreased in October 31,
2018 when2021 compared to the same period
lastin the prior year, due to
timing of capitalizable project work.an increase in agile software programming that accelerates the software releases from months to weeks. We expect capitalized
productsoftware costs to be zero in fiscal 2022. For the three and six months ended October 31, 2021, amortization of capitalized software development costs
to remain consistent for the remainder of fiscal 2018 asdecreased 23% and 24%, respectively, when compared to
the third quarter of 2018, and we expect capitalized software amortization expense to be relatively stable in coming quarters.fiscal 2021 as some projects were fully amortized. 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 months ended
JanuaryOctober 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 in2021, sales and marketing expenses
to 18% fromremained flat at 19%
as a percentage of revenue
respectively. We generally include commissions on indirectwhen compared to the same period last year due to marketing cost containment. For the six months ended October 31, 2021, sales
in costand marketing expenses increased from 18% to 20% of
sales.revenue when compared to the same period last year due to increased marketing spend and variable compensation.
General and Administrative
For the three and
ninesix months ended
JanuaryOctober 31,
2018,2021, general and administrative expenses increased
by 2% and 1%, respectively, when compared to the same periods a year ago,
primarily due to
the purchase of Haloan increase in variable compensation, personnel costs and
variable compensation.insurance.
At
JanuaryOctober 31,
2018,2021, the total number of employees was
440426 compared to
386442 at
JanuaryOctober 31,
2017.2020.
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, |
| 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change |
| (in thousands) | | | | (in thousands) | | |
Supply Chain Management | $ | 6,718 | | | $ | 3,983 | | | 69 | % | | $ | 12,073 | | | $ | 8,087 | | | 49 | % |
IT Consulting | 336 | | | 103 | | | 226 | % | | 499 | | | 209 | | | 139 | % |
Other* | (4,367) | | | (3,455) | | | 26 | % | | (8,112) | | | (6,780) | | | 20 | % |
Total Operating Income | $ | 2,687 | | | $ | 631 | | | 326 | % | | $ | 4,460 | | | $ | 1,516 | | | 194 | % |
* Includes all corporate overhead and other common expenses.
Our SCM
segment’ssegment operating income increased by
63%69% and
78%49%, respectively for the three and
ninesix months ended
JanuaryOctober 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, respectively,2021, compared to the same periodperiods in the prior year primarily due to higher corporateimproved gross margins.
Our IT Consulting segment operating income increased by 226% and 139%, respectively for the three and six months ended October 31, 2021, compared to same periods last year primarily due to a decrease in expenses related to sales and third-party contractors.
Our Other segment operating loss increased by 26% and 20%, respectively for the three and six months ended October 31, 2021, when compared to the same periods in the prior year due primarily to an increase in variable compensation and
lower revenues.stock option expenses.
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 JanuaryOctober 31, 2018,2021, the increase in other income wasis mainly due primarily to a 1) higher unrealized gains on investments 2) higher interest income and 3) an exchange rate gainwhen compared to the same period last year. We recorded unrealized gains of approximately $75,000$0.8 million and realized gains of approximately $0 for the three months ended JanuaryOctober 31, 2018 when2021 from our trading securities portfolio.
The increase in other income for the six months ended October 31, 2021 is mainly due to an increase in unrealized gains of $1.2 million compared to
a loss of approximately $56,000 in$0.8 million for the same period last year. This increase was partially offset by
lower rental income whenhigher exchange rate losses of approximately $0.2 million for the six months ended October 31, 2021 compared to
$0 for the same period last
year as a result 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.
For the three and
ninesix months ended
JanuaryOctober 31,
2018,2021, our investments generated an annualized yield of approximately 1.33% and
1.37%2.98%, respectively, compared to approximately
1.59%1.69% and
1.62%3.72% for the
three and nine months ended January 31, 2017,same periods in the prior year.
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 losslosses, credit carry-forwards and credit carry-forwards.nonqualified stock options. 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, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered our U.S. statutory federal 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 of using the tax rate of 35% for the first eight months of fiscal year 2018 and the reduced tax rate of 21% for the final four months of fiscal year 2018.
During the
third quarter of 2018,three and six months ended October 31, 2021, 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$303,000 and
deferredan income
taxes on our condensed consolidated balance sheets. We remeasured our deferred taxestax benefit of $433,000, respectively, primarily due to
reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. To calculate the remeasurementdiscrete stock compensation benefits of
deferred taxes, we estimated when the existing deferred taxes will be settled or realized.$439,000 and $1.6 million, respectively, net of normal income tax expense from operations. During the three and six months ended JanuaryOctober 31, 2018,2020, we recorded an income tax benefit of $103,000 and an income tax expense of $80,000, respectively, primarily due to discrete stock compensation benefits of $38,000 and $272,000 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 19.8% in the both the three and six months ended October 31, 2021 compared to our effective tax rate of 35.5%(11.2%) and 12.5%, respectively, in the three and six months ended JanuaryOctober 31, 2017. During2020. In addition, research and development and foreign tax credits reduced our effective tax rate by 5.4% and 0% in the ninesix months ended JanuaryOctober 31, 2018, our effective rate was 22.5%2021, compared to our effective ratereductions of 31.4%10.8% and 1.3% in the ninesix months ended JanuaryOctober 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.
2020.
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
revenuesrevenue 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
Historically we have
historically funded, and
we 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 and
non-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 or
off-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
ninesix months ended
JanuaryOctober 31,
20182021 and
2017.2020. You should read this table and the discussion that follows in conjunction with our
condensed consolidated statementsCondensed Consolidated Statements of
cash flowsCash Flows contained in
“Item 1. Financial Statements”Item 1 in Part I of this
reportQuarterly Report and in our Annual Report
on Form10-Kfor
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 | |
| | | | | | | | |
2021.
| | | | | | | | | | | |
| Six Months Ended October 31, |
| 2021 | | 2020 |
Net cash provided by operating activities | $ | 7,712 | | | $ | 6,771 | |
Net cash used in investing activities | (615) | | | (534) | |
Net cash used in financing activities | (1,554) | | | (4,265) | |
Net change in cash and cash equivalents | $ | 5,543 | | | $ | 1,972 | |
For the ninesix months ended JanuaryOctober 31, 2018,2021, the net increase in cash provided by operating activities decreased when compared to the same period last year was due primarily to 1)the following: (1) an increase in purchasesnet earnings, (2) a relative smaller decrease in deferred revenue due to timing of trading securities, 2) an increaserevenue recognition, (3) a relative smaller decrease in customer accounts receivablespayable and other accruals compared to a decrease the same period last year due to timing of payments, (4) an increase in stock-based compensation expense, (5) a relative larger decrease in customer accounts receivables caused by the timing of closing customer sales and related collections, 3) an(6) a decrease in deferred income taxes and (7) a decrease in purchases of trading securities.
This increase
in the comparativecash provided by operating activities was partially offset by: (1) a relative increase in prepaid expenses when compared to a decrease in the same period in the priorlast year due to the timing of purchases, 4) an increase(2) a decrease in gain on investments compared to the same period last year, 5) lower proceeds from the maturity and sales of trading securities, 6) an increase in the relative decrease in accounts payable and other accruals due to timing of payments 7)(3) a decrease in depreciation and amortization and 8) a decrease(4) higher gains on investments than in stock-based compensation expense. This decrease was partially offset by: 1) an increase in net earnings, 2) an increase in the comparative increase in deferred revenues due to timing of revenue recognition and 3) an increase in deferred income tax compared to a decrease the same period lastprior year.
The increase in cash used in investing activities when compared to the same period in the prior year was mainly due primarily to the acquisitionan increase in purchases of Halo in the current quarter compared to the acquisition of AdapChain, Inc. in the prior year periodproperty and higher capitalized computer software development costs,equipment, which was partially offset by a decrease in purchasescapitalized computer software development costs.
The decrease in cash used in financing activities compared to the prior year was
due primarily
due to an increase in proceeds from exercise of stock options,
which was partially offset by an increase in dividends paid.
The following table shows net changes in total cash, cash equivalents, and investments, which is one measure management uses to
viewunderstand 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) |
| 2021 | | 2020 |
Cash and cash equivalents | $ | 94,201 | | | $ | 81,786 | |
Short and long-term investments | 17,163 | | | 12,829 | |
Total cash and short and long-term investments | 111,364 | | | 94,615 | |
Net increase/(decrease) in total cash and investments (six months ended October 31) | $ | 6,700 | | | $ | (61) | |
Our total activities used
moreless cash and investments during the
nine months ended
JanuaryOctober 31,
2018,2021, when compared to the prior year period,
due primarily toin 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
7065 days as of
JanuaryOctober 31,
2018,2021, compared to
6069 days as of
JanuaryOctober 31,
2017.2020. This
increasedecrease is primarily due to
billingthe timing of
billings and cash collections. Our current ratio
on January 31, 2018 was
2.33.0 to 1
on October 31, 2021 and
on January 31, 2017 was 2.4 to 1.2020.
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$111.4 million in cash and investments with no debt as of
JanuaryOctober 31,
2018,2021, 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, 2021, we have repurchased 1,053,679 shares of common stock at a cost of approximately $6.2 million. As of October 31, 2021, 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 discussion and analysis of financial condition and results of operations on our
condensed consolidated financial statements, which we have prepared in accordance with U.S.
generally accepted accounting principles.GAAP. The preparation of these
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
condensed consolidated financial statements and the reported amounts of
revenuesrevenue and expenses during the reporting period. Note 1
in the Notes to the Consolidated Financial Statements
in our Annual Report on Form10-Kfor the fiscal year ended
April 30, 2017,in our Annual Report for fiscal 2021, describes the significant accounting policies that we have used in preparing our
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 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.
Revenue Recognition. We recognizeRecognition.
Subscription. Subscription fees include Software-as-a-Service ("SaaS") revenue predominantly in accordance withfor the Software Revenue Recognition Topic of the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification.We recognize license revenues in connection with license agreements for standard proprietary software upon delivery ofright to use the software provided we deem collection to be probable,for a limited period of time in an environment hosted by the fee is fixedCompany or determinable, there is persuasive evidence ofby a third party. The customer accesses and uses the software on an arrangement, 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 ratablyas needed basis 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 paymentsInternet 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 onvia 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 dedicated line; however, the customer has no abilityright to take delivery of the software, and thesoftware. 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 The Company’s SaaS solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue from a SaaS solution is generally recognized ratably over 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 adequacyterm of the allowancearrangement.
License. Our perpetual software licenses provide the customer with a right to use the software as it exists at the time of purchase. We recognize revenue for doubtful accounts.Valuation of Long-Liveddistinct software licenses once the license period has begun and Intangible Assets. In accordance withwe have made the Intangibles-Goodwill and Other Topic of the FASB’s Accounting Standards Codification, we do not amortize goodwill and 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 comparedsoftware available to the carrying value. The impairment reviews require an analysiscustomer.
Our perpetual software licenses are sold with maintenance under which we provide customers with telephone consulting, product updates on a when and if available basis, and releases 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 Topicnew versions 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 generatedproducts previously purchased by the asset. If the carrying amountcustomer, as well as error reporting and correction services.
Professional Services and Other. Our professional services revenue consists of an asset exceeds its estimated future cash flows, we recognize an impairment charge in the amount by which the carrying amountfees generated from consulting, implementation and training services, including reimbursements 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 judgment in determining results. If other assumptions and estimates were used in our evaluations, 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 ratably based on the projected revenues associated with the related software or on a straight-line basis over three years, whichever method results in a higher level 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 madeout-pocket expenses in connection with our services. These services are typically optional to our customers, and are distinct from our software. Fees for our professional services are separately priced and are generally billed on an hourly basis, and revenue is recognized over time as the calculationservices are performed. We believe the output method of stock compensation expense. We periodically review all assumptions usedhours 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.
Reimbursements received from customers for out-of-pocket expenses were recorded in our stock option pricing model. Changes in these assumptions could have a significant impact on the amount of stock compensation expense.Income Taxes. We providerevenue and totaled approximately $12,000 and $40,000 for the effectthree and six months ended October 31, 2021 and $12,000 and $16,000 for the three and six months ended October 31, 2020, respectively
Maintenance and Support.Revenue is derived from maintenance and support services, under which we provide customers with telephone consulting, product updates on a when and if available basis, and releases of income taxesnew versions of products previously purchased by the customer, as well as error reporting and correction services. Maintenance for perpetual licenses is renewable, generally on our financial position and results of operations in accordance withan annual basis, at the Income Tax Topicoption of the FASB’s Accounting Standards Codification. Under this accounting guidance, income tax expensecustomer. Maintenance terms typically range from one to three years. Revenue related to maintenance is generally paid in advance and recognized forratably over the amountterm of income taxes payable or refundable for the current year and foragreement since the change in net deferred tax assets or liabilities resulting from eventsCompany is standing ready to provide a series of maintenance services that are recorded for financial reporting purposes in a different reportingsubstantially the same each 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 valueterm; therefore, time is the best measure 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 businessesprogress. Support services for subscriptions are included in the consolidated financial statementssubscription fees and are recognized as a component of such fees.
Indirect Channel Revenue.We record revenue from sales made through the acquisition date.indirect sales channels on a gross basis, because we control the goods or services and act as the principal in the transaction. In reaching this determination, we evaluate sales through our indirect channel on a case-by-case basis and consider a number of factors including indicators of control such as the party having the primary responsibility to provide specified goods or services, and the party having discretion in establishing prices. Sales Taxes. We account for sales taxes collected from customers on a net basis.
Significant Judgments. Many of 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 in comparable circumstances to similar customers. 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 have not historically been sold on a standalone basis, as the vast majority of all customers elect to purchase on-premise license support contracts at the time of a on-premise license purchase. Support contracts 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 given the same products are sold for a broad range of amounts (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 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 revenue. Maintenance and support contracts are generally priced as a percentage of the net fees paid by the customer to access the on-premise license.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Foreign CurrencyCurrency. In the three and ninesix months ended JanuaryOctober 31, 2018,2021, we generated approximately 20% and 20%, respectively,16% of our revenuesrevenue outside the United States. We typically make international sales through our VARs and employees located in foreign branches or our Logility branchcountries and denominate those sales typically in U.S. 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 losses of approximately $60,000 and $159,000 for the three and six months ended October 31, 2021 compared to an exchange rate gains of approximately $75,000 for both the three$145,000 and nine months ended January 31, 2018, compared to exchange rate losses of approximately $56,000 and$236,000$9,000 for the three months and nine months ended January 31, 2017, respectively.same periods in the prior year. We estimate that a 10% movement in foreign currency rates would have had the effect of creating up to a $456,000$0.4 million and $455,000$0.3 million exchange rate gain or loss for the three and ninesix months ended JanuaryOctober 31, 2018,2021, respectively. 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 JanuaryOctober 31, 20182021 was approximately $84.0$104.4 million compared to $72.8$87.7 million as of JanuaryOctober 31, 2017.2020.
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.
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 Rule
13a-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
specifiesspecified 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
chiefprincipal executive
officeofficer and
chiefprincipal 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
onForm 10-Kand 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 Rules13a-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.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently involved in legal proceedings requiring disclosure under this item.
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-Kfor
the fiscal
year ended April 30, 2017.2021. 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
Item 4. | Mine Safety Disclosures |
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
| | | | | | |
Exhibit 3.1 | | Amended and Restated Articles of Incorporation, and amendments thereto. (1) (P) |
| |
Exhibit 3.2 | | |
|
Exhibits 31.1-31.2. | | |
|
Exhibits 31.1 | | Rule13a-14(a)/15d-14(a) Certifications |
| |
Exhibits 31.2. | | Rule13a-14(a)/15d-14(a) Certifications |
| |
Exhibit 32.1. | | |
|
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.
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 3, 2021 | By: | /s/ H. Allan Dow |
Date: March 9, 2018 | | | | By: | | /s/ James C. Edenfield
|
| | | | | | James C. Edenfield |
| | | | | | H. Allan Dow Chief Executive Chairman, TreasurerOfficer and Director President (Principal Executive Officer)
|
| | | |
Date: March 9, 2018December 3, 2021 | By: | | | By: | | /s/ Vincent C. Klinges |
| | | | | | Vincent C. Klinges |
| | | | | | Chief Financial Officer
(Principal Financial Officer)
|
| | | |
Date: March 9, 2018December 3, 2021 | By: | | | By: | | /s/ Bryan L. Sell |
| | | | | | Bryan L. Sell |
| | | | | | Controller and Principal Accounting Officer
|
34