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American Software (AMSWA)

Participants
Vince Klinges Chief Financial Officer
Allan Dow President
Zach Cummins B. Riley FBR
Call transcript
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Operator

Good day everyone and welcome to today's second quarter fiscal year 2019 for Preliminary Earnings Results Conference Call. At this time all participants are in a listen-only mode. Later you will have the opportunity to ask questions during a Q&A session. Please note today's call is being recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Vince Klinges, Chief Financial Officer of American Software. ahead. go Please

Vince Klinges

and Software Alisa, call. everyone welcome and Thank quarter good and American second conference fiscal to you, afternoon XXXX earnings

such growth On business remind the largely and the statements the among this of underlying In statements information and is Any Software. accurate. the uncertainties after made differ in are revenues. of the services materially timely contain are of to and forward-looking assurance and results of pressures that. factors strategy. from will as acceptance the me forward-looking general These changes day. pricing President by anticipated set or to and and will there other quantified beyond irregular effective would could limited and those remarks a those strategy unpredictable this not call of for American to can from number availability prove like other be conference of I market this or some of of pattern conditions, are may competitive to these and these differ the statements give uncertainty no and the of Allan by speak developments some products on call. actual regarding products actual only I our which results products and forward-looking that are risks be forward-looking that statements competitive services, predicted and Future light and factors things the and forward-looking economic including forth include on Such cause contemplated growth cannot to risks of rate numbers a Dow, materially number There but market review and and statements. our are statements But our then could based and you Allan uncertainties will expectations be with our subject call control.

$XX to second subscription same total last quarter to million, quarter compared million $X XXXX, year our the period model. same XX% quarter for while fees at reflects were increase last look a software to revenues ended is fiscal million the compared million year same that were compared $X.X same which period, the compared the transition $XX.X growth or for $X fast XX% to year. engagement X% revenues October in this taking So million period the driving license XXXX in mostly the to XX, And last quarter to $X.X our continued the decrease increased million

services cloud the to $X.X that value increased ACV million to contract and the XX% or year. Our period annual by $XX.X current same for in last compares million quarter

for $XX.X services quarter due to to Maintenance the the and other Halo year. current acquisition quarter million and $XX.X to the million last revenues Our $XX same to the compared last million in year. were third compares quarter X% increased revenues $XX.X that million in primarily

lower quarter year was that's prior the the period total license XX% last current for due in of license The compared fee Our overall quarter, maintenance margin current that compares same for in a quarter costs quarter. the for period last in margin XX% in at cloud to revenue to were and the fees. revenues same the year. the XX% year streams quarter XX% of current combined recurring the the gross services was Taking to look and XX% our primarily compared to XX%

business. last some year lower increase due the same timing revenue compared same XX% consulting due period increased Our services to subscription and due cloud compared XX% implementation Services and our last to to in to margins the increased year from fees revenue. of in to to in margin period that's to XX% margin decreased projects IT XX%

XX% to revenue. quarter same increased compared to period increased to margin for maintenance in maintenance XX% that's the current due the Our

R&D operating primarily year at current due period headcount for total from our to of in acquisition the increased quarter. XX% compared the that's expenses, to Halo last revenues gross expenses same the were our last And period total third year. Looking XX% in

As of Halo XX% from increased current to expenses again, revenue the year of acquisition. in quarter revenues a for percentage marketing due compared sales to and XX% and prior the headcount were period, the

and and expenses were related the to expenses current revenues compares quarter there the of prior G&A Our XX% also. that the acquisition to total Halo year for from primarily to XX% due

quarter operating same So decreased $X.X ago. the compared year XX% a our income million was million current period to the for $X.X to

for adjusted which XX% last decreased $X compared period to year. Our the stock-based this excludes EBITDA million compensation to million quarter same $X.X

second to decreased to expense million $X period net share of net quarter And were compares quarter amortization of was XX% diluted GAAP or $X.XX prior for and adjusted approximately of $X.X the income $X.X $X.XX XX% the revenues same million, or diluted of revenues income $X.XX $X.X acquisitions year. diluted to $X.XX compensation the earnings year. quarter our or and exclude this stock-based for to to numbers of the related the intangible that diluted share for year quarter. last million International earnings earnings in current net last adjusted of these share expense. earnings Our and million income Adjusted income share net adjusted compared

year to the $XX.X full to year-to-date revenues last numbers total million X% the $XX.X at increased that Looking and year. million year-to-date, compares

same year, last to engagement $X.X year-to-date were to model. this $X.X period period the increase fast subscription $X.X a Our were revenues million same reflecting license million XX% million last transition $X.X decrease again continued compared to while compared XX% our software year, in fees million

$XX.X X% compared million to Our increased to services $XX.X year-to-date revenues million.

period $XX.X last to compared to $XX.X X% year. same increased million revenues million maintenance Our

to Looking at overall was last six costs overall year. for XX% our month year-to-date XX% period, margin compared the this year-to-date gross

XX% the to last increased margin compared deployments. That's X% Our license last due period fee from year-to-date to primarily fees to XX% subscription compared -- last due increased year license in SaaS fee to year XX% year. our to margin decreased to lower and gross same

our Looking same to XX% the at margin services year. year-to-date was last XX% compared period

year. to margin XX% year-to-date maintenance XX% Our was year-to-date last compared

our our XX% for expenses gross expenses the the total year, XX% of operating at compared were in year. looking So last same to period revenues R&D

As period to revenues percentage in revenue total marketing year. compared were to And our compared in year-to-date last of same same sales the and expenses XX% XX% year-to-date expenses of the year. XX% a G&A XX% period last were

EBITDA So in $X.X million XX% XX% $XX.X year-to-date operating million the to last compared to $X.X decreased Adjusted income million year. decreased compared year. last million to $X.X period year-to-date same to

$X.X earnings year. diluted net or net $X.X $X.XX share year-to-date million of GAAP million our diluted per $X.XX income last or compared earnings to was So income share

same last net adjusted was XX% compared year. the same were income earnings or year. and revenues revenues year-to-date $X.XX Our or also $X.X International period to also year-to-date last net million income and for period period million of diluted $X.X of $X.XX, the this of share

balance sheet, company's October at remains strong our million with of looking the investments So end the XX, position of cash and $XX.X XXXX. financial at approximately

quarter, million in we $X.X paid During dividends. the

Some total $XX.X million. of was balance of the or sheet accounts other a with aspects $XX.X billed receivable for unbilled million, X.X our ended

$XX.X equity Our million revenues is million. were shareholder $XXX our and deferred

XXXX our turn year. the At Dow. X.X of period like Allan October that to to and days day time, over as to was XX, XX compares current XX, of this I XX and is last October call Our sales X.X days compared the to outstanding as ratio XXXX same

Allan Dow

customer continued with customer million or achievements for our second our alignment value completing we pleased Vince. financial another contract new XX our increase trend customer's XX to community our towards to to which their in as team's first which EBITDA growth We in objectives continue different to and in the transactions achieving the evidenced This and engagement model Thank countries. objectives to acquisition increase X% [ph] of quarter, and logos $X faster these subscription over over over and year. provide continued is for quarter we software same was by XX% by period which The for which pleased We're an a buying and XXXX see adding a year. the subscription $X.X licensing applications. that to the good during use preference driven by you, the support continue solution this have model We're which revenue on-premise annual [buoy] the deliver transition customer subscriptions quarter successful XX% services the more increased can profitable the and in of was better applications. last of the internal million subscription service the growing sustained to for the resources transition is revenue our for our a the remained requires to the have fiscal financial achieve traditional long-term model preference specifically ability cloud

compared total year highlighted in to minutes services cloud period and maintenance ago. the of streams same revenue second few That's represented revenues which of in recurring quarter. the last XX% a Vince Our XX%

of We of our expect a continue effect to chain. digital business the insights the higher a in to will increased to to and this into the manage product track with deliver automated P&L. enterprise enable compounding and visibility, to to their digital that on trend our We're continued new planning planning overall the profitability create the suite better more supply from concept customers strategy In pleased predictability our growth recurring improve report to for we're future. revenue time, customer necessary digital our achieving transform and connected businesses delivery

we capabilities Magic in gained market announced XXXX needs, August achieving leaders supply for Logility of Solutions the both in the this evidence record. of to as Voyager in demand planning Quadrant As for and chain was recognition systems shift the address solutions being the important Gartner

new customers Our gain better insights decisions latest capabilities make leveraging to and are the faster.

further driving up be utilization increased continuing Looking increased segments. this also summary, to which we're retail pleased forward, overall the is the factory opportunities manufacturing This can compliance channel different and we work interest chain in strategic management omni as many tick the for in stimulated marketplace. success. in with to new vendor capacity planning is see the In quarter consumer supply results for realities solutions attributed sourcing continued our which driven by an of we're

focus to the we'd for supply the SaaS exciting will both the proud investments our competitive fuel maintain transition during open investments We're space. planning are chain and make continue is that core to to achieve delivering successful to to retail which incremental purpose to Alisa to engagement We customers. the profitability more are our on time and continue our a be role call and customers at confident The can this our to supply leadership revenue model advantage. any we a to them questions. grow and help our in continue benefits like chain results and to leverage

Operator

Our FBR. from ahead. from first Instructions] Cummins [Operator go Zach question B. Please Riley comes Certainly.

Zach Cummins

is question growth. Allan transitioning a feedback segment overall of revenue first strong some bit to seems afternoon give Can like really hearing progress we the customers Vince. SaaS what macro the good subscription of have ongoing you've It war you're trade around the in and you purchasing Good environment. and maybe the of China from making retail this activity been model. point? at with Congratulations that the really on really little potential in given specifically the some My

Allan Dow

Yes. before from leveraging But Alan. shift. help delays again that and significant delivery or navigate their really lot chain really delay seeing causing that the solution in is insights chain and their deferral or supply that this concept don't having or there. to consumer they as the pockets but certainly area, discussion that landscape those that footprint we throughout We're give people Zach, of that facing that may move to you always we're of way said extends projects a Happy to be really forward. and appreciate a a essence understand There's challenges all see move. in don't customer the them not I projects continues helps that to to some to supply solid product opportunity as

be change. see to There's static there. environment a think not I we'll can that going not

think continue respond place world effectively them that dynamics in more there. are those enough landscape and on a in help out dynamics there's them will see to supply those happening to I chain only having solution will shift to the that solid

quarters pretty that us letting to and in and ahead. us hopefully on effectively good track we engaging the coming dialogue are keeping us in close and people pipeline our So about and feel that months and grow continue

Zach Cummins

versus the I talk Can SaaS provide And in little appreciate a of additional color. opportunities license that. color bit about then the of of the the mix pipeline instance around mentioned for terms then, Great. you and you current pipeline opportunities? of

Allan Dow

it, not Yes. model think, perpetual goes, We're half upwards recently a the of first. the far answer as or calculation as I'll subscription and existing more the in our to model see it in area -- a segments I the embraced most are than or subscription as hitting probably don't be I continuing that are We're those. in to of that XX% question that they exact continuing just still the market what's related software model service licenses model. licenses, on customers We done some but -- may an extending lean and pipeline some the to way software the mix the perpetual yet. are versus the applications that so say towards in as would opportunities of already on-premise haven't occasionally find that's service

this North little we're our pipeline. pipelines actually stable We a as enjoy point our that. pipeline happy accommodate model American at quickly some them to it's growing, customer best. actually segments, Overall them than So suits more whatever having overseas growing or is are in

and upward seeing are budgets for now, people good by to and about feel getting So coming with now. projects we're on a up a aligns light season the seeing we're wrapping pretty that year that with getting budgets their up come seeing some firmed that. next slight It's calendar right year -- we're trend fiscal confirmation things great

Zach Cummins

appreciate had backlog delay last the then, for starting a your business, quarter. projects services I little new of professional some that around bit finally, color. know you've in Understand. I And a

was maybe a up related well terms with reps. there like of rates your improved as utilization seems margin it tick to So in little as

how of anticipating and utilization just you business your and will about over backlog side could services how next about professional quarters? So you're trend of the you're rates the talk feeling current couple the

Allan Dow

good. our continue utilization very an has will pipeline got is the backlog to up and to It rates. The we're at looking mix. continued trend has that It improve interesting

traditionally we're quarter a that. third which on third thing lightest -- the Christmas to feeling for the and probably So quarter going services quarter, had we Christmas good business us third us Thanksgiving really that's quarter The two holiday, year the to you'll anomaly American for we about a in for on get the quickly. where us is fall only is Year's North comparison cautionary see the this holiday blow pretty and New for weeks anyway Tuesday

last impact, when year, we'll but believe services compare or track that see we'll So for to we up be we overall this year revenue. on

Zach Cummins

of and the good Well, luck my the Understood. taking thank you with again for questions quarter. rest

Allan Dow

for us joining thanks Well, Zach.

Operator

you at have And this we Instructions] turn it [Operator or any you. additional appears Thank gentlemen, for it remarks. time. I'll no additional final to back questions

Allan Dow

afternoon. Alisa, on with look everyone again the us to thank you Have your We very much. joining speaking We'd forward like near evening. a future. appreciate in and thank call. We for joining the to us this attention good you

Operator

participation. Thank conclude conference. you. We does appreciate your This today's

any may at You disconnect great day. have time a and