UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM10-Q

_________________

(Mark One)

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

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

2021

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

For the transition period from _________ to

_________

Commission File Number:0-12456

_________________

AMERICAN SOFTWARE, INC.

(Exact name of registrant as specified in its charter)

_________________

Georgia

58-1098795

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification Number)

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

Atlanta

Georgia

30305

(Address of principal executive offices)

(Zip Code)

(404)261-4381

(Registrant’s telephone number, including area code)

~~None~~

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

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


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

_________________

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

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

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

Large Accelerated Filer

☐

Accelerated Filer

☒

~~Large accelerated~~Non-accelerated filer

☐

~~Accelerated filer~~Smaller reporting company

☒☐

~~Non-accelerated filer~~

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

~~Smaller reporting company~~

☐

Emerging growth company

☐

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

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

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


Classes						Outstanding at ~~February 28, 2018~~December 1, 2021
Class A Common Stock, $.10 par value						~~28,199,965~~ 31,676,176 Shares
Class B Common Stock, $.10 par value						~~2,206,588~~1,821,587 Shares

~~AMERICAN SOFTWARE, INC. AND SUBSIDIARIES~~

~~Form10-Q~~

~~Quarter ended January 31, 2018~~

~~Index~~

~~Page No.~~

Table of Contents

AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Form 10-Q

Quarter ended October 31, 2021

Index


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

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


	Condensed Consolidated Balance Sheets as of ~~January~~ October 31, ~~2018~~2021 and April 30, ~~2017~~2021					3

					Condensed Consolidated Statements of Operations for the Three and ~~Nine~~ Six Months ~~ended January~~ ende d October 31, ~~2018~~2021 and ~~2017~~2020	4

		Condensed Consolidated Statements of S hare holders' Equity for the Three and Six Months ende d October 31, 2021 and 2020			4			5

					Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months ~~ended January~~ende d October 31, ~~2018~~2021 and ~~2017~~2020					5	6

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

Item 2.					Management’s Discussion and Analysis of Financial Condition and Results of Operations					17	20

Item 3.					Quantitative and Qualitative Disclosures About Market Risk					31	34

Item 4.					Controls and Procedures					32	35

Part II—Other Information

~~Part II—~~ ~~Other Information~~Item 1.		Legal Proceedings			36

Item 1A.		Risk Factors			36

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

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

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds					33	36

Item 3.					Defaults Upon Senior Securities					33	36

Item 4.					Mine Safety Disclosures					33	36

Item 5.		Other Information			36

Item 5. 6.		Exhibits			~~Other Information~~36					33

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

Signatures						34	37

Table of Contents

PART I—FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

Item 1. Financial Statements

American Software, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets ~~(unaudited)~~

(Unaudited)

(in thousands, except share data)

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

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

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


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


Total assets
   $ 163,923 $ 148,774


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

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


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


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

Common stock:

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


Total shareholders’ equity
   112,436 103,750


Commitments and contingencies

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


	October 31, 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.

Table of Contents

American Software, Inc. and Subsidiaries

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

(Unaudited)

(in thousands, except per share data)


	Three Months Ended October 31,				Six Months Ended October 31,
	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.

Table of Contents

American Software, Inc. and Subsidiaries

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

Shareholders’ Equity (Unaudited)

(in ~~thousands)~~

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

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

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

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


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


Cash flows from investing activities:

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


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


Cash flows from financing activities:

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


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


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


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

thousands, except share data)


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

Table of Contents

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.

Table of Contents

AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements—Unaudited

~~January~~

October 31, ~~2018~~

2021

A. Presentation and Summary of Significant Accounting Policies

Basis of Presentation ~~and Principles of Consolidation~~

~~Basis of Presentation~~

The accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and ~~with~~ the instructions to Form10-Q and Rule10-01 ofRegulation S-X. Accordingly, they do not include all of the information and footnotes required for complete consolidated financial statements. In the opinion of our management, these ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at ~~January~~October 31, ~~2018, the~~2021, results of operations for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017~~2020, consolidated statements of shareholders’ equity for the three and six months ended October 31, 2021 and 2020 and cash flows for the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017.~~2020. The Company’s results for the three ~~and nine~~ months ended ~~January~~October 31, ~~2018~~2021 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form10-K (the “Annual Report”) for the fiscal year ended April 30, ~~2017 (the “Annual Report”).~~

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 statements~~Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the ~~financial statements~~Condensed Consolidated Financial Statements and the reported amounts of ~~revenues~~revenue and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for ~~the~~ fiscal ~~year ended April 30, 2017~~2021 contained in the Annual Report describes the significant accounting policies that we have used in preparing our consolidated financial statements. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to revenue/~~collectability, bad debts, capitalized software costs, goodwill, intangible assets, stock-based compensation, income taxes~~reserves and ~~business combination.~~allowances. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

Principles of Consolidation

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

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.

B. Revenue Recognition

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

The Company determines revenue recognition through the following steps:

Step 1 – Identification of the Contract with the ~~Software Revenue Recognition Topic~~Customer

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

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

Our 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 are~~for 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 ranging~~range from one to three ~~years with renewal for additional periods thereafter. Maintenance fees are~~years. Revenue related to maintenance is generally ~~billed annually~~paid in ~~advance. We recognize maintenance~~

~~revenue~~advance and recognized ratably over the term of the agreement since the Company is standing ready to provide a series of maintenance ~~agreement. In situations where we bundle all or a portion~~services that are substantially the same each period over the term; therefore, time is the best measure of ~~the maintenance fee with the license fee, VSOE~~progress. 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 other~~out-of-pocket~~ ~~expenses incurred as revenue~~subscriptions are included in the ~~condensed consolidated statements of operations under services~~subscription 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 an~~as-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 consists~~as a component of ~~managed and hosting services.~~

such fees.

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

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

establishing prices.

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

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

Significant Judgments. Many of ~~amounts generated from license fee~~our contracts include multiple performance obligations. Our products and services ~~revenues. At January 31, 2018~~generally do not require a significant amount of integration or interdependency; therefore, our products and ~~April~~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.

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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 ~~the~~our software license ~~agreement, which include specified payment terms that~~contracts without providing refunds or concessions to our customers. SaaS solutions and maintenance are ~~considered normal and customary, certain payments have not yet been invoiced to the customers. Unbilled services revenues primarily occur due to~~typically billed in advance on a monthly, quarterly, or annual basis. Services are typically billed as performed. In instances where the timing of revenue recognition differs from the ~~respective billings, which occur subsequent~~timing of invoicing, we have determined that our contracts generally do not include significant financing component. The primary purpose of our invoicing terms is to provide customers with predictable ways to purchase our software and services, not to provide or receive financing. Additionally, we are applying the practical expedient to exclude any financing component from consideration for any contracts with payment terms of one year or less since we rarely offer terms extending beyond one year. The consideration in our customer contracts is fixed.

We have an unconditional right to consideration for all goods and services transferred to our customers. That unconditional right to consideration is reflected in billed and unbilled accounts receivable in the accompanying 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 ~~end~~customer and is the unit of account under Topic 606. The transaction price is allocated to each ~~reporting~~distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies and tracks the performance obligations at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract. Remaining performance obligations represent the transaction price of orders for which products have not been delivered or services have not been performed. As of October 31, 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:

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	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 ~~was~~is payable on ~~February 23, 2018~~December 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 ~~per~~Per Common Share

~~We have~~

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

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

~~The calculation~~ 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.

Table of ~~diluted~~Contents

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

share calculation for Class A ~~Common Shares, we use~~shares, the~~“if-converted”~~ Company uses the “if-converted” method. This calculation assumes that all Class B ~~Common Shares~~common shares are converted into Class A ~~Common Shares (if antidilutive)~~common shares and, as a result, assumes there are no holders of Class B ~~Common Shares~~common shares to participate in undistributed earnings.

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

shares.

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

Basic earnings per common share:

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








Total
   $ 0.18    $ 0.18    $ 0.36    $ 0.35








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








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








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








Total
   $ 0.08    $ 0.08    $ 0.15    $ 0.15








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








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








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

Three Months Ended
October 31, 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 theIf-Converted Method

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

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






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






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

~~Nine~~2021

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	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 ~~January~~October 31, ~~2018~~

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






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






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

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 ~~January~~October 31, ~~2017~~

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






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






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

~~Nine~~2020


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

Six Months Ended ~~January~~October 31, ~~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 theTwo-Class Method

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

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






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

~~Nine~~2021


	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 ~~January~~October 31, ~~2018~~

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






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

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 ~~January~~October 31, ~~2017~~

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






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

~~Nine~~2020


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

Six Months Ended ~~January~~October 31, ~~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 ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2021, we excluded options to purchase ~~12,130~~1,098,815 and ~~57,598~~704,554, Class A Common Shares, respectively, and for the three and ~~nine~~six months ended ~~January~~October 31, ~~2017,~~2020, we excluded options to purchase ~~374,439~~1,842,587 and ~~337,500~~1,426,760 Class A Common Shares, respectively, from the computation of diluted earnings per Class A

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Common Shares. We excluded these option share amounts because the exercise prices of those options were greater than the average market price of the Class A Common Shares during the applicable period. As of ~~January~~October 31, ~~2018,~~2021, we had a total of ~~3,470,017~~4,831,991 options outstanding and as of ~~January~~October 31, ~~2017,~~2020, we had a total of ~~3,230,575~~4,378,453 options outstanding.

E. ~~Acquisitions~~

~~We account for business combinations using~~Stock-Based Compensation

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

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

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

Under the terms of the Purchase Agreement, the Company acquired the assets of Halo for cash consideration paid of approximately $9.25 million, which represents a purchase price of approximately $9.95 million net of a $700,000 negative working capital adjustment, subject to certain post-closing adjustments, which included an additional negative working capital adjustment of $113,000 (recorded as a receivable), thus resulting in an adjusted purchase price consideration of $9.14 million. The Company incurred acquisition costs of approximately $73,000 and $91,000 during the three and ninesix months ended ~~January~~October 31, ~~2018,~~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 ~~direct~~date of grant using the Black-Scholes option pricing model. The forfeiture rates are estimated using historical data. We recorded stock option compensation cost of ~~fulfilling~~approximately $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 nine~~three months ended ~~January~~October 31, ~~2018~~2021 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 ~~three~~six months ended ~~January~~October 31, ~~2018~~2021 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 additional~~paid-in-capital.~~

paid-in capital.

During the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017,~~2020, we issued ~~778,129~~545,242 and ~~593,082~~277,197 shares of Class A common stock, respectively, resulting from the exercise of stock options. The total intrinsic value of options exercised during the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017~~2020 based on market value at the exercise dates was approximately ~~$2.2~~$7.6 million and ~~$1.9~~$1.6 million, respectively. As of ~~January~~October 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 ~~1.85~~2.07 years.

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. ~~Government~~government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include municipal bonds. We value these securities using market-corroborated pricing or other models that use observable inputs such as yield curves.

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The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of ~~January~~October 31, ~~2018~~2021 and April 30, ~~2017, respectively,~~2021, and ~~indicates~~indicate the fair value hierarchy of the valuation techniques we used to determine such fair value (in thousands):

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








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








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








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


	October 31, 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

G. Stock Repurchases

On August 19, 2002, our Board of Directors ~~approved a resolution authorizing~~authorized the repurchase of up to an additional 2.0 million shares of our Class A common stock. We have made and will make these repurchases through open market purchases at prevailing market prices. The timing of any repurchase will depend upon market conditions, the market price of our Class A common stock and management’s assessment of our liquidity and cash flow needs. Under this repurchase plan, ~~through January 31, 2018,~~ we have repurchased 1,053,679 shares of Class A common stock at a cost of approximately $6.2 ~~million.~~million, which had no impact on fiscal 2022. As of ~~January~~October 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.

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H. Comprehensive Income

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

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I. Industry Segments

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

CODMs evaluating performance based upon segment operating profit or loss that includes an allocation of common expenses, but excludes certain unallocated corporate expenses, which are included in the Other segment. Our CODMs review the operating results of our ~~three~~3 segments, assess performance and allocate resources in a manner that is consistent with the changing market dynamics that we have experienced. ~~As a result, in the third quarter of fiscal 2018, we updated our~~The 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 provides~~and 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 ~~allocation~~optimization, quality and ~~merchandise planning~~compliance, 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 are~~revenue 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.

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In the following table, we have broken down the intersegment transactions applicable to the three and ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 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 ~~Customer~~

Customers

No ~~one~~single customer accounted for more than 10% of total ~~revenues~~revenue for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017.~~

2020.

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K. Contingencies

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

L. Subsequent Event

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, 2018~~February 18, 2022 to Class A and Class B shareholders of record at the close of business on ~~May 11, 2018.~~

February 4, 2022.

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~~Item 2.~~

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

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

FORWARD-LOOKING STATEMENTS

This quarterly report on Form10-Q (this “Quarterly Report”) contains forward-looking statements relating to our future financial performance, business strategy, financing plans and other future events that involve uncertainties and risks. You can identify these statements by forward-looking words such as “anticipate,” “intend,” “plan,” “continue,” “could,” “grow,” “may,” “potential,” “predict,” “strive” “will,” “seek,” “estimate,” “believe,” “expect,” and similar expressions that convey uncertainty of future events or outcomes. Any forward-looking statements we make herein are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning future:

•results of operations;

•liquidity, cash flow and capital expenditures;

•demand for and pricing of our products and services;

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

•viability and effectiveness of strategic alliances;

•industry conditions and market conditions;

•acquisition activities and the effect of completed acquisitions; and

•general economic conditions.

Although we believe that the goals, plans, expectations, and prospects that our forward-looking statements reflect are reasonable in view of the information currently available to us, those statements are not guarantees of performance. There are many factors that could cause our actual results to differ materially from those anticipated by forward-looking statements made herein. These factors include, but are not limited to, continuing U.S. and global economic uncertainty, the timing and degree of business recovery, unpredictability and the irregular pattern of future ~~revenues,~~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-Q~~Quarterly Report are based upon information available to us as of the filing date of this ~~Form10-Q.~~Quarterly Report. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. We discuss certain factors in greater detail in “Business Overview” below. ~~The terms “fiscal 2018”~~

ECONOMIC OVERVIEW

For fiscal 2022, we expect the global economy to improve modestly when compared to recent periods. We believe improved economic conditions and ~~“fiscal 2017” refer~~increasingly 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, 2018~~2022, 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 continues~~The global economy is projected to ~~firm up. Global output is estimated to have grown by 3.7~~grow 5.9 percent in ~~2017, which is 0.1~~2021 and 4.9 percent in 2022 (0.1 percentage point ~~faster~~lower 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 forecasts~~downward revision for ~~2018 and 2019 have been revised upward by 0.2~~ ~~percentage point to 3.9~~ ~~percent. The revision~~2021 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 ~~concerns~~supply 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-

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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."

BUSINESS OVERVIEW

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

The Company enables enterprises to accelerate their operations from product concept to customer availability. Our 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 ~~allocation~~optimization, 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 compliance~~sourcing management and ~~enterprise resource planning for both retailers and manufacturers in the apparel, sewn products and furniture industries, and, (iii) Halo, which provides~~integrated business planning. Our platform includes advanced analytics and ~~business intelligence solutions~~is fueled by supply chain master data, allowing for the ~~supply chain market. The IT Consulting~~automation 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 ~~consists~~include 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 purchasing~~software and ~~materials management, customer order processing, financial,e-commerce~~ ~~and traditional manufacturing solutions, and (ii) unallocated~~services provided to our legacy enterprise resource planning (“ERP”) customers, as well as corporate overhead and other common expenses.

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

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 revenues~~revenue generated by the indirect channel, primarily from DMI. Costs for maintenance and services include the cost of personnel to conduct implementations and customer support, consulting, other personnel-related expenses, and agent commission expenses related to maintenance ~~revenues~~revenue generated by the indirect channel, primarily from DMI. We account for the development costs of software intended for sale in accordance with the ~~Intangibles—Goodwill and Other~~Software topic of the ~~Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification~~FASB ASC.We monitor the net realizable value of our capitalized software on a quarterly basis based on an estimate of future product ~~revenues.~~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 ~~revenues~~revenue are less than management’s current expectations, we may incur a write-down of capitalized software costs.

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

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

•

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

•

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

•

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

•

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

•

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

•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

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the uncertain value of the acquired business or assets, the difficulty of assimilating operations and personnel, integrating acquired technologies and products and maintaining the loyalty of the customers of the acquired business.

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

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

A discussion of a number of additional risk factors associated with our business is included in our Annual Report ~~on Form10-K~~for fiscal 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 date~~respect to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of reporting periods beginning after December 16, 2016, including interim reporting periods within that reporting period. The Company has performed a review of the requirements of the new revenue standard and is monitoring the activity of the FASB as it relates to specific interpretive guidance. The Company plans to adopt ASU~~2014-09,~~ as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on May 1, 2018. The Company will apply the modified retrospective transition method, which would result in an adjustment to retained earnings for the cumulative effect,recent accounting pronouncements, if any, of applying the standard to contracts in process as of the adoption date. Under this method, the Company would not restate the prior financial statements presented. Therefore, the new standard would require additional disclosures of the amount by which each financial statement line item is affected in the fiscal year 2019 reporting period.

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

~~In February 2016, the FASB issued ASUNo. 2016-02,~~~~Leases (Topic~~ ~~842)~~, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is evaluating the impact of ~~the adoption of this update~~these pronouncements on our 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 ~~revenues~~revenue and the percentage changes in those items for the three months ended ~~January~~October 31, ~~2018~~2021 and ~~2017:~~

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

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


Total revenues
   100 100 14


Cost of revenues:

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


Total cost of revenues
   43 47 5


Gross margin
   57 53 21


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


Total operating expenses
   43 44 11


Operating income
   14 9 71


Other income:

Interest income
   1 1 40
Other, net
   4 3 59


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


Net earnings
   19 % 8 % 149 %

~~Nine-Month~~2020:

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

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Six-Month Comparisons.The following table sets forth certain revenue and expense items as a percentage of total ~~revenues~~revenue and the percentage changes in those items for the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 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 ~~NINE~~SIX MONTHS ENDED ~~JANUARY~~OCTOBER 31, ~~2018~~2021 AND ~~2017~~

~~REVENUES~~

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






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






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






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

~~The 14% increase in revenues over~~2020

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	%

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	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 ~~January~~October 31, ~~2018~~2021 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 was~~year.

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 and~~subscription fees, a 5% increase in ~~maintenance revenues. The~~license 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 segment~~revenue, partially offset by a 9% decrease in ~~our IT consulting services due~~maintenance 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 ~~discounts~~discount provided, such as previous customer purchases, the number of customer sites utilizing the software, the number of modules purchased and the number of users, as well as the overall size of the contract. While all these factors may affect the discount amount of a particular contract, the overall percentage discount has not materially changed in the recent reported fiscal periods.

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

International ~~revenues~~revenue represented approximately ~~20% and 17%~~16% of total ~~revenues~~revenue in the three and six months ended ~~January~~October 31, ~~2018 and 2017, respectively.~~2021 compared to 15% for the same periods in the prior year. Our ~~revenues, in particular~~revenue, particularly our international ~~revenues,~~revenue, may fluctuate substantially from period to period, primarily because we derive most of our license and subscription fee ~~revenues~~revenue 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 ~~nine~~six months ended ~~January~~October 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

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	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 ~~revenues~~revenue increased ~~50%~~79% and 6%5%, respectively when compared to the same periods in the prior year. In the three ~~and nine~~ months ended ~~January~~October 31, ~~2018,~~2021, license fee ~~revenues~~revenue from our SCM ~~business unit~~segment increased ~~49% and 6%~~84%, ~~respectively,~~partially offset by a decrease in our Other segment of 69% when compared to the corresponding ~~periods~~period 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 ~~total~~our current license fee ~~revenues for~~revenue is generated from additional users and expanded scope from our existing on-premise customers. For the three and six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017, respectively. Our~~2020, our SCM ~~business unit~~segment 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 unit~~segment license fee ~~revenues~~revenue increased by ~~627%~~31% for the ~~three~~six months ended ~~January~~October 31, ~~2018~~2021 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 year~~primarily due to timing of ~~closing~~sales 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 ~~nine~~six months ended ~~January~~October 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 by~~year due to larger customers obtained through our direct sales channel ~~was due~~moving to ~~a larger increase~~the Cloud platform faster than those in ~~license fee revenue from~~ the ~~SCM segment’s direct~~mid-sized market that are primarily served by our indirect sales channel. For the three and six months ended ~~January~~October 31, ~~2018 and 2017,~~2021, our margins after commissions on direct sales were approximately ~~88%~~90% and ~~87%~~89%, ~~respectively. For the nine months ended January 31, 2018~~compared to 83% and ~~2017, our margins after commissions on direct sales were approximately 87%. The margins increased slightly~~84% in the ~~current period~~comparable 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 ~~January~~October 31, ~~2018~~2021 and ~~2017,~~2020, our margins after commissions on indirect sales were approximately ~~32%~~67% and ~~41%~~57%, respectively. For the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 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 when~~increased compared to the same periods in the prior year due to the mix of value-added reseller (“VAR”) commission rates. These margin calculations include only commission expense for comparative purposes and do not include other costs of license fees such as amortization of capitalized software.

Professional Services and Other ~~Revenues~~

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





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





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





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

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	%

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For the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2021, professional services and other revenue increased by 9%5% and 4%1%, respectively ~~primarily~~ due to the increased professional services ~~revenues~~and 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 ~~nine~~six months ended ~~January~~October 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 ~~revenues~~revenue 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 ~~revenues~~and 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 ~~revenues~~revenue only as we perform those services.

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

Maintenance ~~Revenues~~

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





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

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





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

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 ~~nine~~six months ended ~~January~~October 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 ~~revenues~~revenue have had a direct relationship to current and historic license fee ~~revenues,~~revenue, since ~~new~~ licenses are the ~~potential~~ source of ~~new~~ maintenance customers.

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GROSS MARGIN

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

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









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


	Three Months Ended October 31,								Six Months Ended October 31,
	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 ~~nine~~six months ended ~~January~~October 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 in~~professional 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 ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 increased by 98% and 71%, respectively, when compared to the same ~~periods~~period 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 ~~revenues~~revenue 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 compared~~from 26% to 31% for the ~~same periods in the prior year~~three 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 cloud~~SCM segment services ~~area~~increased 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 ~~has~~is 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 in~~project 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 ~~revenues~~revenue 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 ~~percentage~~increased to 43% from 41% for the ~~three~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017 remained flat at 79%. For~~2020, respectively, due to higher margin projects year to date. Our IT Consulting segment professional services gross margin increased to 21% from 16% for the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017, the gross margin percentage had a slight uptick to 79% from 77%,~~2020, respectively, ~~primarily~~ due to ~~increased maintenance revenue~~higher margin projects in the current quarter. Professional services and ~~cost containment efforts. Maintenance~~other 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 revenue~~component is maintenance staffing, which is relatively inelastic in the short term.

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EXPENSES

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

Three Months Ended October 31, Six Months Ended October 31,
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) % — %

Research and Development

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

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


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


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

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


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


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

*	~~Included in cost of license fees~~


	Three Months Ended October 31,
	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 ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2021, gross product research and development costs ~~increased 5%~~decreased 4% and 1%, respectively when compared to the same ~~periods~~period 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 January~~decreased in October 31, ~~2018 when~~2021 compared to the same period ~~last~~in 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 ~~product~~software 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 as~~decreased 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.

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Sales and Marketing

~~Sales and marketing expenses for~~

For the three months ended ~~January~~October 31, ~~2018 and 2017 remained flat at 18% as a percentage of revenue. For the nine months ended January 31, 2018 and 2017, we had a slight reduction in~~2021, sales and marketing expenses ~~to 18% from~~remained flat at 19% ~~as a percentage~~ of revenue ~~respectively. We generally include commissions on indirect~~when compared to the same period last year due to marketing cost containment. For the six months ended October 31, 2021, sales ~~in cost~~and 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 ~~nine~~six months ended ~~January~~October 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 Halo~~an increase in variable compensation, personnel costs and ~~variable compensation.~~

insurance.

At ~~January~~October 31, ~~2018,~~2021, the total number of employees was ~~440~~426 compared to ~~386~~442 at ~~January~~October 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’s~~segment operating income increased by ~~63%~~69% and ~~78%~~49%, respectively for the three and ~~nine~~six months ended ~~January~~October 31, ~~2018, respectively, compared to same period last year primarily due to higher overall revenues and higher margin cloud services.~~

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

~~Our Other segment operating loss increased 26% and 14% in the three and nine months ended January 31, 2018, respectively,~~2021, compared to the same ~~period~~periods in the prior year primarily due to ~~higher corporate~~improved 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

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

For the three months ended ~~January~~October 31, ~~2018,~~2021, the increase in other income ~~was~~is mainly due ~~primarily~~ to ~~a 1)~~ higher unrealized gains on investments ~~2) higher interest income and 3) an exchange rate gain~~when 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 ~~January~~October 31, ~~2018 when~~2021 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 when~~higher 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 ~~nine~~six months ended ~~January~~October 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.

Income Taxes

We recognize deferred tax assets and liabilities based on the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. We measure deferred tax assets and liabilities using statutory tax rates in effect in the year in which we expect the differences to reverse. We establish a deferred tax asset for the expected future benefit of net operating ~~loss~~losses, 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

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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 in~~an income tax expense ~~on our condensed consolidated statements~~ of ~~operations~~$303,000 and ~~deferred~~an income ~~taxes on our condensed consolidated balance sheets. We remeasured our deferred taxes~~tax 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 remeasurement~~discrete 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 ~~January~~October 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 ~~January~~October 31, ~~2017. During~~2020. In addition, research and development and foreign tax credits reduced our effective tax rate by 5.4% and 0% in the ~~nine~~six months ended ~~January~~October 31, ~~2018, our effective rate was 22.5%~~2021, compared to ~~our effective rate~~reductions of ~~31.4%~~10.8% and 1.3% in the ~~nine~~six months ended ~~January~~October 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.

Operating Pattern

We experience an irregular pattern of quarterly operating results, caused primarily by fluctuations in both the number and size of software license and subscription contracts received and delivered from quarter to quarter and our ability to recognize ~~revenues~~revenue 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

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 andnon-cash operating items plus the effect of changes in operating assets and liabilities, such as investment trading securities, trade accounts receivable, trade accounts payable, accrued expenses and deferred revenue. We have no debt obligations oroff-balance sheet financing arrangements, and therefore, we used no cash for debt service purposes.

The following table shows information about our cash flows and liquidity positions during the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2021 and ~~2017.~~2020. You should read this table and the discussion that follows in conjunction with our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~cash flows~~Cash Flows contained in ~~“Item 1. Financial Statements”~~Item 1 in Part I of this ~~report~~Quarterly Report and in our Annual Report ~~on Form10-K~~for ~~the~~ fiscal ~~year ended April 30, 2017.~~

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




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

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 ~~nine~~six months ended ~~January~~October 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 ~~purchases~~net earnings, (2) a relative smaller decrease in deferred revenue due to timing of ~~trading securities, 2) an increase~~revenue recognition, (3) a relative smaller decrease in ~~customer~~ accounts ~~receivables~~payable 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 comparative~~cash 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 prior~~last 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 acquisition~~an increase in purchases of ~~Halo in the current quarter compared to the acquisition of AdapChain, Inc. in the prior year period~~property and ~~higher capitalized computer software development costs,~~equipment, which was partially offset by a decrease in ~~purchases~~capitalized computer software development costs.

Table of ~~property and equipment.~~

Contents

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 ~~view~~understand net total cash generated by our activities:

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




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




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


	As of October 31, (in thousands)
	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 ~~more~~less cash and investments during the ~~nine~~ months ended ~~January~~October 31, ~~2018,~~2021, when compared to the prior year period, ~~due primarily to~~in the ~~operating results and changes in operating assets and liabilities as noted above.~~

course of normal business operations.

Days Sales Outstanding in accounts receivable were 7065 days as of ~~January~~October 31, ~~2018,~~2021, compared to 6069 days as of ~~January~~October 31, ~~2017.~~2020. This ~~increase~~decrease is primarily due to ~~billing~~the timing of billings and cash collections. Our current ratio ~~on January 31, 2018~~ was ~~2.3~~3.0 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 ~~January~~October 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 ~~revenues~~revenue and expenses during the reporting period. Note 1 ~~in the Notes~~ to the Consolidated Financial Statements ~~in our Annual Report on Form10-K~~for the fiscal year ended ~~April 30, 2017,~~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 recognize~~Recognition.

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Subscription. Subscription fees include Software-as-a-Service ("SaaS") revenue ~~predominantly in accordance with~~for 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 of~~right 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 fixed~~Company or ~~determinable, there is persuasive evidence of~~by 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 ratably~~as 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 on~~via a~~case-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 ~~ability~~right to take delivery of the ~~software, and the~~software. 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 ~~allowance~~arrangement.

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-Lived~~distinct software licenses once the license period has begun and ~~Intangible Assets~~~~. In accordance with~~we 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 analysis~~customer.

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 Topic~~new 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 amount~~customer, 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 amount~~fees 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 ~~calculation~~services are performed. We believe the output method of ~~stock compensation expense. We periodically review all assumptions used~~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. 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 provide~~revenue and totaled approximately $12,000 and $40,000 for the ~~effect~~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 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 taxes~~new 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 with~~an annual basis, at the ~~Income Tax Topic~~option of the ~~FASB’s Accounting Standards Codification~~. ~~Under this accounting guidance, income tax expense~~customer. Maintenance terms typically range from one to three years. Revenue related to maintenance is generally paid in advance and recognized ~~for~~ratably over the ~~amount~~term of ~~income taxes payable or refundable for~~ the ~~current year and for~~agreement since the ~~change in net deferred tax assets or liabilities resulting from events~~Company is standing ready to provide a series of maintenance services that are ~~recorded for financial reporting purposes in a different reporting~~substantially 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 value~~term; 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 statements~~subscription 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

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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.

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~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3 Quantitative and Qualitative Disclosures About Market Risk

Foreign ~~Currency~~Currency. In the three and ~~nine~~six months ended ~~January~~October 31, ~~2018,~~2021, we generated approximately ~~20% and 20%, respectively,~~16% of our ~~revenues~~revenue outside the United States. We typically make international sales through our VARs and employees located in foreign ~~branches or our Logility branch~~countries and denominate those sales ~~typically~~ in U.S. 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 ~~nine~~six months ended ~~January~~October 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 ~~January~~October 31, ~~2018~~2021 was approximately ~~$84.0~~$104.4 million compared to ~~$72.8~~$87.7 million as of ~~January~~October 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.

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~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Management’s Report on Internal Control Over Financial Reporting

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

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

Changes in Internal Control over Financial Reporting

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

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PART II—OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

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

~~Item 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

In addition to the other information set forth in this ~~report,~~Quarterly Report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,” of our Annual Report ~~on Form10-K~~for ~~the~~ fiscal ~~year ended April 30, 2017.~~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

Not applicable.

~~Item 4.~~

~~Mine Safety Disclosures~~

Item 4. Mine Safety Disclosures

Not applicable.

~~Item 5.~~

~~Other Information~~

Item 5. Other Information

None.

Item 6. Exhibits

~~Item 6.~~

~~Exhibits~~


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

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

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

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

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

Exhibit 32.1.			Section 906 Certifications

Exhibit 101.INS				XBRL Instance Document.

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

Exhibit 101.SCH			XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL				XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.DEF		��		XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 101.LAB				XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE				XBRL Taxonomy Extension Presentation Linkbase Document.

~~(1)~~

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

~~(2)~~

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

______________

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

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

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SIGNATURES

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

AMERICAN SOFTWARE, INC.

Date: December 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, Treasurer~~Officer and ~~Director~~

President
(Principal Executive Officer)

Date: ~~March 9, 2018~~December 3, 2021

By:

~~By:~~

/s/ Vincent C. Klinges

Vincent C. Klinges

Chief Financial Officer

(Principal Financial Officer)

Date: ~~March 9, 2018~~December 3, 2021

By:

~~By:~~

/s/ Bryan L. Sell

Bryan L. Sell

Controller and Principal Accounting Officer


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

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

Total assets	$	163,923		$	148,774

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

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

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

Total shareholders’ equity		112,436			103,750

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


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

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

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

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

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

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

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

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

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

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

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

Diluted	$	0.18	$	0.08	$	0.36	$	0.15

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

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

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


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

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

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

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

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

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

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

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


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

Total	$	0.18		$	0.18		$	0.36		$	0.35

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

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

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

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

Total	$	0.08		$	0.08		$	0.15		$	0.15

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

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

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


	Three Months Ended October 31, 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


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

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

Total liabilities assumed		(3,073	)

Net assets acquired	$	9,140


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

Total	$	63,531	$	20,529	$	—	$	84,060


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

Total	$	71,631	$	14,803	$	—	$	86,434


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

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

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

Operating income (loss) before intersegment eliminations:

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

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

Intersegment eliminations:

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

	$	—		$	—		$	—		$	—

Operating income (loss) after intersegment eliminations:

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

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

Capital expenditures:

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

	$	201		$	172		$	413		$	500

Capitalized software:

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

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

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

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

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

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


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

Total revenues		100			100			14

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

Total cost of revenues		43			47			5

Gross margin		57			53			21

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

Total operating expenses		43			44			11

Operating income		14			9			71

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

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

Net earnings		19	%		8	%		149	%


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

Total revenues		100			100			4

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

Total cost of revenues		44			49			(5	)

Gross margin		56			51			13

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

Total operating expenses		43			45			(2	)

Operating income		13			6			130

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

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

Net earnings		13	%		5	%		148	%


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

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

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


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

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

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