American Software (AMSWA)

Vince Klinges Chief Financial Officer
Allan Dow President
Matt Pfau William Blair
Zach Cummins B. Riley FBR
Call transcript
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Good day, everyone. And welcome to today’s Fourth Quarter and Fiscal Year 2019 Preliminary Earnings Results Call for American Software. At this time, all participants are in listen-only mode. Later on you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note that today's call maybe recorded. standing you be assistance. need will I by should if any And

ahead, is turn of Klinges, go to my American call Please It pleasure Vince the now over to Software. sir. CFO

Vince Klinges

afternoon, everyone. you, fourth earnings call. [ph]. Thank And quarter Denisha to American welcome Software's Good

review call some will remarks numbers the after Software. is with Dow, Allan me that. President On and American then of Allan I the give will

other this beyond including as date. number things, expectations of are statements this control. our or would business which conference you largely a and uncertainties, call and statements on like predicted regarding some of forward-looking contain speak These I growth among our forward-looking statements But and risks that cannot statements our to forward-looking strategy are strategy. are and of to may subject be based quantified such remind Any only

and other be no Future could In of our there uncertainties, assurance pressures, the of on materially products in, underlying anticipated pattern made by, this market or will and these acceptance products and actual in be differ not the set number by and competitive unpredictable products of the but limited of factors forward-looking and revenues. services, uncertainty market from rate competitive prove that those the call. conditions, factors information timely risks are for pricing could to can and these statements. services, irregular general a forth changes and availability and light accurate. developments the growth to to, the and effective include, materially statements differ contemplated actual are results and of forward-looking economic results the those from Such There cause that

in was for and the fiscal quarter million at XXXX period $X.X $X.X looking software that million for last compared compared the same to a revenues Subscription same model. revenues the to fees million were XX% or period period same XX% to transition million, decrease for quarter quarter, in the this continued while quarter compared $X.X year last were same to year. engagement license SaaS decreased and to year, $XX.X million total the year, last million last XX% increase of reflects our the $XX.X the fourth compared So to the and $X.X

$XX.X ACV, current Our compares the quarter, cloud decreased value, million to same XX% services annual revenues other million $X.X the for Professional contract due last for to in approximately was $XX.X or we're and year. we the to projects XX% that the down that million 'XX. of in quarter last several had to large $XX.X that year. and for period increased current compares and the same implementation quarter, finishing And quarter million also that to fourth -- some

to decreased $XX.X compared $XX.X revenues maintenance million to X% Our million.

cloud maintenance Our up recurring and the that's revenue and combined for quarter, of of same XX% services from in last year. were total period current revenues streams the XX%

license current fee in compares Looking cost expense, costs, of was the relatively in the software, that and of year. the amortization compares cap The fees XX% to current license last that amortization period and the at our same margin same non-cash. XX% lower and and last is quarter to due fixed to of That's period intangibles XX% quarter margin of overall gross XX% the for that year. our was for some

XX%. allocation the have non-cash the which the cap that's last of would of total of and a was margin to XX% costs in year, margin primarily fees true-up been period software, XX% million to same increase due cap overall the due of so non-cash allocation $X the to gross a subscription Our amortization decreased million compared to of revenue, software $X.X subscription without

that's XX% of due in decreased Our XX% implementation margin year, projects. to and compared to same timing last services to the period

increased in XX% year. for the maintenance same period Our quarter margin last to the current compares that XX% and to

our expenses operating of last So, efforts. due in to gross revenues year, total R&D XX% expenses, same were and looking increased period for XX% that's the development period at compared the to current

XX% our As compared revenues, in the a $XXX,XXX was current our this sales for primarily and same last percentage marketing of conference, expenses for revenues held expenses of related and year. that's approximately for to March period customer were year, XX% to to which the quarter due

EBITDA, year operating Adjusted for compensation, this quarter prior quarter XX% expenses current to total same compared income the quarter to stock-based last for XX% year. excludes decreased G&A million year. same current to period of million were our the decreased the $X in the last XX% revenues compared quarter, million current million which and so $X.X X.X to $X.X

income So for of current net income earnings million GAAP per XX% $X.X share to our or earnings diluted the million share. increased to or diluted $X.X $X.XX compared of quarter $X.XX per net

share stock-based Our or the numbers adjusted net $X compared that And income revenues acquisitions XX% in to to or related revenues of net adjusted year $X.XX compensation amortization was million fourth per for million $X.XX compares and intangibles this exclude diluted earnings of quarter quarter. adjusted income and International of quarter total increased earnings per expense. to of share. the to the $X.X these XX% prior

compared revenues the full $XX $X.X in were $XXX.X the at period same total taking million, a increase fiscal period decreased So Subscription last when to million $XXX.X year, the to same look our 'XX same fees year over million to XX% million to last compared X% year. compared the period year. last a

year. same to $XX.X million last model. Services our SaaS continuing million engagement $X.X compared million revenues $XX.X transition to the period compared revenues to reflects $XX.X were decreased X% License million the decrease or again XX% year. last And this to in

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

the license expenses again, the year to year amortization License related of current Looking in the and the current to prior XX% the to at software margins, to or gross decreased fixed of XX% from amortization and XX-month lower period, fee to XX% cap XX% prior for related was our quarter intangibles. overall compared due for year. margin fees,

the compared due gross Our period, fee increased that's to subscription same and in increased margin to primarily deployments. XX% SaaS to XX%

Our was XX% due last services due margin XX% timing implementation from in again lower to and IT the services to to of increase our in year, business also revenue same that's and projects period unit. consulting compared

maintenance XX% Our to maintenance containment the XX% year margin year, last the and cost compared period was to for and also higher revenue, due efforts. same that's in revenue,

increased total our and R&D last to that's expenses, XX-month efforts. were XX% year revenues of same for and operating increased to compared expenses at period Looking for due the period the total gross XX% development headcount

revenues, marketing prior were XX% expenses the year for and current percentage of year compared total our XX% a to period. sales As in the

in XX% G&A additional the current year, of up for due compared to to prior year the expenses related were XX% and expenses to the that's total Halo revenues acquisition.

$XX.X year to income So, $X.X to of our XX% income compared operating the decreased million operating million. for

Our to year decreased adjusted EBITDA the for $XX.X the period to last compared million year. XX% in $XX same million

prior GAAP was share to earnings the earnings or $XX.X the per in a $X.XX diluted $X.XX income so, net million compared diluted $X.X per share And net of year. million income or

year. stock-based these share expense, compensation discrete was related to fiscal $XX.X of per to $XX.X Adjusted in compared XXXX. last And expenses exclude diluted or diluted related and related tax 'XX, of adjustments of same $X.XX period Jobs net the per amortization million, to of $X.XX earnings adjustment earnings acquisitions, million for our a Act intangible the share or income to

revenues So, international were the 'XX. of revenues our for year, full XX% compared to

end at investments Looking the approximately cash our with of financial April balance and at our $XX.X of sheet, position million XXXX. strong XX, remained

balance our our million; the our of are aspects our During we receivable and XXX.X our unbilled $XX.X quarter, $XX.X accounts for equity $X.X million out paid is of shareholder was sheet; million a dividends. total deferred in million. bills $X.X million; and revenues Other $XX.X million;

current And year. the of XXXX XX of is last XX period as The XX, the X.X days XXXX compared our as was outstanding to last compares April same April for that ratio day-sales year. days to same period X.X and XX,

I'd call to the this Allan over turn like Dow. to At time,

Allan Dow

Vince. you, Thank

in towards for to the to growth a customers' revenue the XX% delivering continued ability period. a deliver cloud We in services subscription subscription engagement evidenced over for contract XX% the and annual is by model prior the was in transition year-over-year by services value the which expertise model, trend solutions and desire the faster. the our year increase solution that value-added our The Software-as-a-Service driven

past The the this as feeling effect $XX.X last performance year our different of new still delayed seen you've value we've associated to services. with contracts contract cloud projects, million continued We're from for But numbers, QX annual year which fiscal impacted trend our this of quarter. $XX.X in cloud increased million or the in year. the fourth the upward services in in

in those the growth XX quarter, of beyond. our subscription for We fourth these securing quarter we And majority since several XXX,XXX new brings opportunities. fiscal year affected the prospects was deals already acquisition, booked delays have in logos, XXXX. ACV for fiscal 'XX confident of to performance in ACV were adding XXXX, XX ACV another new in us closed QX This XX our customer for in good which the which and in exceeded of contracts. net the of have remain While

contracts. our same the is our prior XX% approximately due quarter, total to cloud period recurring to the of the revenue maintenance fourth XX% of the in which of represented of services streams During subscription revenues, compared year and growth

in of the predictability We which the recurring expect to future, profitability. will and higher improve continue our financial trending percentage the revenue

the our strategy, We towards us marketing had market us bolstered to Executive Mac's We're segmentation that Mac and Mac sales efforts. has of influence, rates Vice has on leading in a impact accelerate industry due accelerate and will as call seeing confidence ahead. able transformation we President announced joined growth last be which targeted on is helped close an the Sales. McGary that to our years our our Global

Transforming allow learning leverage planning Looking optimized leverage uptick strategic to the autonomous depth, from capabilities by suite. we analytics, our in to a enabled solution chain projects, customers transformational continuing optimization supply their advanced continuous an machine the see their forward, supply will chain and advantage. our and are which as

supply the transition making our a competitive by to our we're Mac's make under achieve and customers to And purpose, more chain leadership for which advantage. success. core our we successful continue were focus on them to marketing progress continued help summary, investments In leveraging with sales we as our is strive encouraged we by will

customers. will our We are to the benefits profitability both our delivering to during revenue and for be transition incremental are grow, continue proud Software-as-a-Service engagement to model, we that and confident

audience. Denisha to [ph], at our this we questions the open we'd have from any may time, like call for


[Operator from Matt Please go and take ahead Blair. go Instructions] ahead. first William from We'll our question

open. is Your line

Matt Pfau

more a the about that are been sales bit has on returned So issue deals that normal elongated? have them so still first, or they What closed, have cadence the were seeing rectified. a been general it to like sounds delayed, those in cycles, you

Allan Dow

There's a That's question. Matt. good mix, a

We seeing year. are the we're this of still number seeing but shorter the now we had quarter We've got actually than seen, is fiscal some we last acceleration. over some cycle traditionally a areas closed than are contracts longer we those that that where seen have also

So, we're encouraged by that.

of helping of various the macroeconomic settling We it's us that market to has the think happening a Mac but globe, they that with regardless are that get-started-now reality need stronger had combination conditions some out impact and and conditions that of some move the things forward across the position the also a message. of

Matt Pfau

over your business? any impact, either positive or negative And on tariffs are having fears

Allan Dow

one. It's It's actually another interesting both.

that things the dynamic result as this of So new saying Brexit different think be continue is reality acceleration about are than they're just wars rather companies probably environment and of the -- realizing and going rather this trade some companies to we of a few tariffs have than that the all and a act. fearful you going to them is come when on back down, have has

has said, news little the other nervous, us us made and bit. as pause given companies wait see so we've we're that and hand, On had to this a going new

we're So, strange so actually, right seeing some environment now. a it's kind of of both

Matt Pfau

show investments have for in next key the the the segmentation additional year, other to fiscal perhaps any year? about there you also some out you deals, has on already talked of call results. areas to strategies needed strategy and investments And there partners Is would well some as as as the sign and the strategy bring started in investments upcoming of Mac fiscal larger implemented for some and terms

Allan Dow

investment sales primary the are leadership, expanding we under the is Well, Mac’s team.

come from the the forward will year end cycle, with actually So, effort that's that shortened that believe near an an us. could have investment. that sales back of We we of the impact for half year, the the on

strategically just really the are we things other of Some do how organize. we are positioned, how

which commitment, don't from resources and and requires under our there. and a effort Mac’s but place got So it of solid and investment leadership time require team, they financial we've investment, direction commitment an is in

an investing year that joint then revenue, the projects long-term got with did some because contracts, with of that to we a We've systems have which integrators, and investment and is year the of And the that, last number the into a this executed with on services actually impact that but believe related fine we're market systems we have will them been with influence were our our position. we positive doing extending trend integrators them.

going there. we're to So, continue to work

implementations. whatnot they the continue an foster it's a really those of not to on our education that forward build and more investment, that's financial and for put need team Again, effort delivering relationships to by their

Matt Pfau

update for broadly. a efforts your user Halo was big at last one have focus I just guys, your and conference. maybe That analytics And an on you more

what Just from hear interest user seeing out interesting there? And sort the customers to was of conference? feedback of you're coming what the

Allan Dow

been it's tremendous Yes, actually.

couple it So, an a of impact had ways. in

new the to first upgrades. announced integral been actually Some the that happening as well demand continued of user in conference to developments have for projects quarter that at were as here the the recent it’s stimulate incremental we

on upgrades, a were So with on as on doesn't and revenue have had moving services perpetual have those impact licenses are months will positive big customers model, nearly of that encouraged impact particularly more an ahead. in ahead keeping our but perpetual the the the and licenses quarters the who subscription some forward which the


next Riley FBR. our from take We'll go Please Instructions] from question [Operator Zach B. ahead.

is line open. Your

Zach Cummins

of a specific? it quarter. like company related just macro to starting off, more during of Just were this it Was lot overall the is it sounds some or the concerns deals issues delayed more or

Allan Dow

delay. internally No macro, there on was really going the that nothing was causing

stages macro a process, going through just approval and didn't really where and done they of the quickly. we of it's a environment projects as that had final So, up queued number were those get the

obviously, didn't particular, software the and the had substantially, they extra taking thought on so And to get to impact but a approving approved that ability able so, macro, cautious we projects, loops the done into that fourth the in the we quarter. on say of in think delayed through, are couple get them finalized were we going timeframe be get when nature just expenditures I to

Zach Cummins

pipeline can majority talk as the the about Is it then, still you of going you're the And really mix forward. of trending SaaS? opportunities towards

Allan Dow

business and also cloud projects up, us services long more transformational only and we're seeing the but that's will the think the the a so by above well the shot. the XX% as targeted We're I well. Even in towards where model. now. more is come trending back, larger our range XX% we're pipeline bolster past, in of which subscription not And XX%, revenue range model, Yes, will the help than flow margins for up improve revenue

Zach Cummins

just mentioned short time. briefly that a of Mac has in amount pretty substantial impact had a you And

you you are reps strategy? can implementing approach? all his And really this segmentation of the embracing the where So about process new, go-to-market in the are new talk sales how how new

Allan Dow

we time with his The on really about he of it. to of lot that is joined move last primary in we've to speed. able focus a and programs months in been when sales us, to the because get that, few that put emphasized was team place. those Mac positive already was he's but attention over and what been And very had Most play implementing responsibility

helped his through that. of before going background So, accelerate process us that

good we're year. entering in position new now the a So, fiscal very I think

Zach Cummins

briefly I in just out forward But you next script. know we Vince, how it that called little provide drove then, for you. of QX? you couple can the here around what one should trend in quarters? going to margin line color subscription a over more expect the in And And question dip the

Vince Klinges

cost of how methodology amortization allocated based software of of is fees selling. The cost much the you're and capitalized on Zach. between Yes, subscription license

It mix leaning and more had cloud. We estimate was be of the was sold incorrect. an towards. much we So estimate to was how the going more

some we software to cap and adjustment make So, cloud allocate fourth the in the more to had an line. quarter

forward, where year. going think As came it's in I far the XX% at for we as about

a probably year, basis the next somewhere I of end end higher we'll points probably than up think the of at maybe mid-XXs couple there. that in around


[Operator doesn't look any the it Instructions] this time. at phone we And further line like have questions on

Vince Klinges

call you to those in future. very your we you forward of Denisha all appreciate the the talking to And evening, much. time we'll near again participating attention. [ph], thank and And in this look for


your today's conclude you program. for does Thank participation. This

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