American Software (AMSWA)

Vincent Klinges CFO
Allan Dow CEO, President & Director
Matthew Pfau William Blair & Company
Zachary Cummins B. Riley Securities
Matthew Galinko Sidoti & Company
Call transcript
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Good afternoon, everyone, and welcome to today's third quarter fiscal year 2021 preliminary financial results call. [Operator Instructions]. It is now my pleasure to turn today's program over to Vince Klinges, Chief Financial Officer of American Software. Please go ahead.

Vincent Klinges

Thank you, Jamie, and good afternoon, everyone, and welcome to American Software's Third Quarter Fiscal 2021 Earnings Conference Call.

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

Allan Dow

Thank you, Vince.

continues tirelessly this to safe place of crisis pandemic all company, pandemic. number frontline individuals, been of environment end responders to we There strong. the of we and the and to more our us who to beyond expectations tunnel. path first a global Again, of want to a have to on can in battle in this normal as at adversely to our and everyone companies express the that workers I grow, the continues light stay to any want families impacted, response see to we through the gratitude healthy encourage As help and to work is incredible the the a and move personally, and behalf continue

to allowed our well serve and diversity work As we good health the a and safe has with organization, team while an maintaining blessed us of productive our have been environment. customers

global ensuing ensure there of heightened have ethical States this and environment. supply alignment Border to During the attention with that the help Protection world Customs forced treatment In supply to containing crisis, of the a action with been has the impact United imports the to the pandemic responsibility suspected workers the around and and has responsibility, the on taken labor. chains materials produced chains of seize

economic, imperatives. We these environmental, are forefront sustainability on the of addressing social and

bringing chains flow how with ensure of we to on lives. existing example on of that our results, regard is their across digital supply our daily supply their in sustaining corporate our quarter and for remained I goods responsibility the third serving team customers, And social delivering of transparency reduction our customers normal into to chain am new Just and as has customers solid and and the community community. has the in cash customer rates XX increase strong, and with hand. a on our our accounts implementation improving on of reflected customer DSOs our cloud receivable ACV on-prem collectability commitments churn the rely all help one release focused in growth to our exceed while companies new our pleased traceability generated and solution goals in remained and resulting net We our and investments

line more in during little a our holiday period seasonal the performance in quarter the third supply than segment we traditional with although our services slowdown expectations, chain originally Our was generally pronounced anticipated. was

expect continued the our virtual revenues, growth each compared the higher cloud to working work, we year. prior see revenue milestone XX% XX% strategy, a X most the future efficient is and which what trend derive segment quarter same recurring to approximately more consuming which supply have more achievement in in pleased with the services the capacity backlog revenue for in XX% resource fourth achieved of the up hand. the in When represents to we than of last we stream on services continue period for We of total combined chain now of our reported and quarters. quarter from when maintenance, We're to XXX% last

the Our was subscription for revenue XX%. the the grew growth and services in year contract third XX% quarter annual period over cloud value year-over-year in prior

virtually We and all to revenue. we're continuing activity pipelines, at in the the both continue growth the of strong size a new trending in contract to contracts subscription expect that percentage higher of considering Sales number is of a And recurring see revenue running the future, in the our result, our pace. opportunities as represent of transactions.

completed quarter, the services in third of opportunities reflecting as is subscription and XX turn, drive also backlog in This, presence. license the X or Transformational countries, pipeline are welcomed continuing number the in both transactions we as strong to customers of our projects driving new average up. the the size transactions. global the fee During well

supply to The in We a new has expected. these are resurgence chain shown solutions investments broader that economy. calendar the a agility of our of to trend speed from -- towards gross likely and year allows the seeing this spending platform that the decision-making and improve back a achieve them a quality new and we needed resiliency footprint and adopt customers to thrive

pipeline previously, fiscal we of more the mentioned during had of expected year. As our to half convert back have the we

growth of matched and achieving several to some While deliver progress subsequent levels. success In the little would have pleased longer we're our remain the exit into the closed summary, as we growth secured earlier, we a head as end the by our QX fiscal in opportunities customers. we just bookings to year new for a already little Had our strive to our of confident those XXXX. exceptional continued close, have taken QX. have year ACV in stronger value pre-COVID we Regardless, net to

incremental delivering capabilities our is as paying this in on off in like that they we who new retention confident both and after making and I'll continue to can the revenue in We're expansion are year traceability the solution. new year financial our over mission introduce in of our successful Vince, details to time profitability to results. grow will Our innovative customers customer more the time, At need years call that benefits ahead most. the provide turn is need the and be customers proud this we

Vincent Klinges

Thanks, Allan.

we the 'XX, the $X.X software $X.X million the was license XX% the year. to for Subscription while fiscal transition fees in the quarter million $X.X million So increased prior million, SaaS to year of -- me, $XX.X to revenue to model. continue third year-over-year million $X.X in That's to down period million. were from revenues as same compared year-over-year excuse last compared $XX.X

transactions license we the reminder, to did term quarter. a quarter and As expect third levels We anticipate with near decline revenues license 'XX not recent X repeat large our consistent benefited over in closure of time. this the will relatively from that remain revenue

rate rate. Similar levels improved ACV X/X our cloud remainder the was to and was million our from more new annual $XX.X So of and of period. net the in the returned million from ago value new contract increased services pandemic ACV or days Approximately existing XX% year $XX.X our consistent early to to last versus has pre-COVID quarter, from our with has customers the customers. churn

expanded We a beyond has mentioned are experienced earlier churn few encouraged in previously. customers that the the not we year

also offset unit. deliver unit, pipeline ACV services to in consulting positioned other million partially opportunities supply XX% our Allan business and in ago beyond. increased, a growth $X.X strong revenues by a TPM X% The leaving our and from $XX.X QX IT in As decrease us decreased period. and to well Professional noted, a chain our or year year-over-year management reflects X% increase decline our million

pass-through we attributable chain management service in of our amount basis, decline effect services restrictions TPM. the -- million sequential to year. travel that note reduced On revenue to note supply revenue the primarily was the in compared As to $X.X of a last reimbursements of X

revenue Our our anticipated. holiday supply we in management quarter uptick several declined quarter. robust little the than chain our in Total the this a perpetual period we season remains we implementation away a maintenance in of total the an Maintenance of supply the and as of subscription $XX.X to transition normal Still, fall from and anticipate that's quarter slightly backlog projects X% from the services same sales. XX% prior last slowly third comprised from fourth reflecting quarter in revenues revenues declined million, represented services and year-over-year license more during XX% chain recurring fees -- year. off as progressed up

to last in XX% the Our period year. same was the XX% margin period current gross compared for

capitalized Our subscription mix that's primarily and the cost in of to allocation area. fees in XX% subscription to prior software increase year were amortization to the the due period, of an compared XX%

would margin to year in amortization software software cap that of amortization of third subscription noncash and expense year the The been quarter, the XX% $XXX,XXX gross our $XXX,XXX. was of last compares XX% last period. cap Excluding have

cloud same from dollars That mix margin XX% adoption marketing XX% were coming license in reflect COVID-XX year XX% last of period and was XX%. was the R&D ago. in reflecting down the XX% maintenance XX% to Capitalized reductions our that's R&D agile and that's prior revenues G&A business and due to and margin our absolute unit. XX% and And transition period. for of expenses expect fee a were slightly revenues development the XX% due total the year relatively same lower down and XX% last of license expenses due last the of current costs Services periods. was both margin and to compares in fixed events we from levels amortization our fees Sales So The totaled -- expenses. from down period decline expenses from in only XX% $XXX,XXX, compared year, that's prior year and year, continues was $XXX,XXX And to periods. processes, to XX% compared pandemic. our of to year-over-year going-forward in in travel revenues ago. a were capitalized R&D a of expenses nominal year revenue and Gross higher year from the to TPM lower-margin marketing our versus

income XX% that compares period for a the to quarter, in same on $X.X our GAAP basis, current operating $X.X year. So million last decreased to and million the

compares Our operating amortization of to last expenses earnings basis, share. or decreased diluted compensation in that and from $X.X income compared net of was On period -- adjusted net transactions share in $X.X the an diluted period $X the noncash quarter. $X.XX per third for any $X.X yes, income year-over-year to per net the the to adjusted adjusted stock-based this decrease or prior income million expense, third compared $X.XX Adjusted income of compared reflects was quarter, million prior year the approximately net adjusted our material in of quarter. diluted year in and million related year. $X.X of for XX% $X.XX per to $X.X $X.X same XX% down million or earnings International The million income million excludes million, to XX% year the intangible of of which $X.XX share that in the share were X adjusted current period. to EBITDA acquisitions the net license revenues period. million, $X to revenues prior was lack of adjusted Adjusted earnings compares quarter and

in $X.X to revenues license adjusted diluted operating was year. million Looking down last X% was margin $X.X per the and fees million revenues. period. share down offset representing last X% EBITDA of X%, in per million, $X.X at or declined $X.X income earnings Adjusted same margin lower operating was in or an or earnings fees, million the $X.XX million by versus subscription increase income year million And a $X.XX $XX.X Adjusted X-month as in from period to from XX% same $XX.X year-to-date was the share, diluted period, million period total $X.X net services, maintenance the per year. ago $XX.X

million and $XXX.X balance quarter. Looking position cash at the of strong our sheet, our at the with remains end financial investments approximately

I'd quarter, questions. That Our last January XX, outstanding during any out of the in $X.X the the to day period to like for year. current the paid in we dividends. over for sales time, was as days this call turn And same XX million At compares XXXX, period. XX days


first We'll Pfau. Matt our [Operator take Instructions]. question from

Matthew Pfau

I close seen in line. we've off drop in customer re-openings terms purchasing to wanted a and bit just you of to across anything do and wondering behavior maybe that in cases the and that broader January getting if ask your rates, later on impacted contracts a the in of COVID little now impact December how finish about And expect and XXXX, pipeline things more potentially that substantial nature? spike

Allan Dow

quieter Christmas past. thank Matt, Allan. we than end of this us. the period, the for for December, The joining question, in was the is had Thanks and seen you ever

some think was I COVID. of that

just bit a think. deserved to to People slowed aren't exhaustion as you wanted think that well. little a work, do was break just pure commuting down I and easier a and it when some of bit I and

So board. projects The that new on and What there. turned coming seen there people better. was a the are New to up of have seeing have in Year we've across engaging their gotten where attentions effect activities we're People the them. is in approval online bit the it picked rates

the So the overall the pace anticipating rates that people up. to dropping, is think fact are spring news we've the back I that got get picking coming is of awakening, life vaccines are and the -- COVID out there, starting

attention. rate people's wise the look board gotten we're So when everything we doing. to close Projects, we're starting it's really quite busy get sales-wise, engagements, at more bit a across

silent the if challenge just forward, gets months on meetings and to type and to period. fact things be delayed if are a getting a more of doesn't but that get on process it dragging discussed they a in be is still week, so much the Directors approval get they with it through as it's not executive people together seems and And the -- of be a And and it -- may time it approval agenda what's move a that Board get X an not the cycle. get month, it's to the people sometimes discussed. just we project a to sometimes office meeting goes if for don't That deliberate together that dealing want the to out Now they're pandemic. to

their just sense? make So it Does the getting challenge that's been really getting and that of attention. people's on agenda

Matthew Pfau

these multiple are Yes, for roll transformational that I which all get on in these wanted as of maybe components when Thanks rolled over these do be it ACV? And, ask signed? in sort guess, they're roll they projects. And really How period? to into It's roll I of the multiyear out, projects does. color. do suspect helpful. sort Or could a in there I then

Allan Dow

actually Well, them taking they're whole on what's block. Yes. happening the as is

be But standpoint, from and at stock Sometimes beginning. from it's an ACV rate standpoint the the rollouts the might a geographic. commitment contractual

coming now. the entire whole block global but want it's a subscription tackling as So But of on -- of it's to course see -- got needs. It's that and more akin that coming the they scope a it's they've in they're the format that past. block the a in projects because solution global in their and addresses

is truly the up So it flowing at bigger some transactions showing the through pipeline. and on pipeline looking transactions bigger

Matthew Pfau

And move anything way around? the a own more we Got we implementation terms from we're you your either able in be the the as economies of there all about guys that in should and think business -- perspective, freely it. sales about perhaps then Okay. thinking to you changes make once impact guys may or expense reopening

Allan Dow


come people see We're folks dialogue to where office. the starting back. few are in we're think I having a

None as clients actually open few our our of don't presence for on-site still, cases, time where them voluntary office. come coming at and are to office are in outside they operate more may the here and Of showing course, of are seeing office, we're the from know. yet. us that But a you asking we in. They're kept up. people want and It's clients we've prospective office most

end the progression material anticipating least we're we're of probably will a in at that. And we back. one it see be think quarter, more the before change any I So summer, slow

I X, for to towards was be. reflected the we than of pass-through a in where the immediately we're where may swing bit of none, in going there more travel Vince as But this really it year, year backend through cost X. going we've and pick it's was but anticipate, we lot used we our of look up where really had travel mean, not back implementations I that won't little went were to to quarters the a the at there rest to So past. be calendar Matt,

Matthew Pfau


performed once So to should versus a things of that we implementations on-site? going be expect still your even portion remotely are then reopen,

Allan Dow


I all think on-site, Nothing completely we'll implementations where is to was which us, permanent we're when go -- in believe pandemic used of being we the even behind to be. I don't world a is virtual. back

Would remotely? but I'm done be think, basis. XX% of speculating, it I the I a would on be it's be it permanent going remotely work be to XX-XX? will percentage high think a done


next our We Cummins. from question will take Zach

Zachary Cummins

the to in team of the about this executive some executive quarters. you wanted can able to announced the being highlight seen just talk couple with you in that talent quarters? we've some that I past really I new of strategy some hires the the of of mean, over Allan, upgrade recent

Allan Dow

Yes. in. We've R&D activities, to some doing, really community Great the entire made embrace agile strides some leadership the future methodologies question, and putting in platform new Zach. customer leadership we're our insights from requirements. restructured that's development more operations got bringing new and to on move approach accelerate the more We've consolidating across great in what the space a accelerating

capabilities So in announced traceability that for through put new instance we place. around that Kevin's the cycle new came development whole

job great the So McGary. we're about he Mac we sales direct getting on of Mac a got doing our there. focus term, there. doing is really We've brought sales excited team. on in enterprise a leadership in Longer is really and a work focusing fantastic

markets. a the more that more team globally us And pushing some and over traditional job outside our get our more we doing is build about Europe American of there and talked nice to our on expand really and recently footprint focus around new leadership channel Western business North channel,

focus really we Shawn on has new world doing brought whole real with non-face-to-face perspective way traditional a this digital strong that been the market was super marketing job. used in kind effectively in the brought marketing the most in and which and marketing on a in, people space Shawn past. interacting which methods a of current has a we're fortunate in they're So the we In

and perspective. perspective So brought up Shawn a some us on new has digital and programs and got implemented great running

operational that's focused put really Charron execution. been we out. Keith has So most really to beneficial. him and Keith we us And and then about get recently an day-to-day an is announcement And on brought helped in expert

is with as branding spending I'm and Keith and an more the working impact really that on see operations, and on time So R&D marketing well. day-to-day strategy, starting the team to team

leadership augment the excited already So disciplines. bring they've we're we're and and the very that new but help about doing, done new to what some ideas

Zachary Cummins

That's helpful. just commentary. Thanks Allan, the start these down a it. dig in on earlier sort Got in we kind some And of could that delayed hoping you potential know you've the I seen the impact end of of could of for terms growth closed deeper ACV deals closings near little the I was a seen quarter. of of the quantified the bit thus if little have that these QX. far and you've

Allan Dow


now, I at maybe to they're license transactions a adding we're incremental are the customers one or existing add-ons doing where fee best users think their little footprint projects of bit. only all and small our extending component

little seeing been really kind in the this and just the our that So growth the range are timing as mentioned. point, mentioned, we the of had we we instead after end a historically as ones in I of have there. those back at had all in pre-pandemic the would quarter in luck we pulled transactions of the Had of that cloud in on been were I quarter, rates the

late pull-through And them later running we've have though that about -- We're on we're and implementations. and we're pipeline we're done little getting to up got anticipated, that. we're were robust on, a glad excited that even now. a in the than and seeing So working those we them we great

of to the to the but right the quarters that. basically back we we're we pandemic. really long, the it close all We anticipate starting see rates backside starting that and before So it X normal burned a that in are But did living was more on to going last pattern we're to through didn't had it think And now. get we're seen surely that we pandemic.

Zachary Cummins

speak Got the services you here sounds the it. around And down, is like I QX. forward X. saw me from just seasonal mean, tick what quarters but the And over perspective been from after about backlog utilization final in it can challenging have going a we question work assuming the should you professional I pretty past strong that the pretty expected in team. upcoming rates be typical mean, the

Allan Dow


I flat on commented I -- error think last that be we going as the and we mentioned, of we within we call, pretty to we a that were we were relatively much think had thought there. margin

was flat, substantially. slowdown, positive So pretty because had which quite dropped we the had we traditional would actually thought quite have much we

QX. So to we we Today, on -- have back of utilization didn't calendar we higher see did in last half rates that over than the last coming QX year year.

see uptick ahead. to the days So in we're going an

As able work where build influence I who projects, our And of we much news pretty some around we of we really capacity that some to good out been to level mentioned, continuing some integrators we're augment need we've others network near have capacity partnership build up in our now. We're new to well. just of going solutions. us is good the the ecosystem resources starting the plus are as systems we're running and But with critical the the on to there. at keep give marketplace these a the to see as onboard

going give some -- we're time running is months. near insight be that this to what we'll We summer. to what the see team we see at in to in closer the into we're We're to well, may busier you more seeing definitely But think people take period. see think I But we as over want So I capacity a happens blip might a see little the an coming the uptick. point. But as get in that, is summer. break. going We'll


turn just Instructions]. questions got one apologize. this We have appears at queue It Galinko. I'll I question we Matthew time. from -- further [Operator over no

Matthew Galinko

point if that of So this are levels you stream? have revenue higher any mature starting the leverage I'm subscription curious, you from on for what or hit to just kind

Allan Dow

Hey, Matt.

a If that our was you more one Could question. little would -- the catch really for And don't us? out time line I bit. mind, you your I try cutting didn't line or whole

Matthew Galinko

How right. am coming All now? I in

Allan Dow

good. It's

Matthew Galinko

All right.

forward. can leverage So lift you any pull level it to you have going you I'm curious in to from about subscription level Do your the mature subscription or this mature are touch -- margin line? margin starting

Vincent Klinges

this don't so. is I Matt, Vince. think No,

I to usage. provider think pull. actually We're them. working as provide with had to levers Microsoft with we working we some increase of who volume the is the hosting our future main We're in discounts amount

think I the And the naturally margins So the following just high probably half year of that -- anticipate as early we the help will back margin the subscription they to growing margins year. the at and grow next XXs maybe we close or piece.

don't top at point. we this part we're gross So the think of margins that at the for

Matthew Galinko

real it, And DSOs. on quick just then Got thanks.

you of the through nice at But year. sustainable current just level rate? feel how if we're do some a made the curious or progress You've

Vincent Klinges

Yes, natural in customers. pandemic. delay trend But XXs in good on we've nicely from there XX was based mid-XXs. has Couple we've our kind of ago some area, around and of just kind we because our the were high had a come natural of the down collecting quarters success been


this time. at further no have questions We

Vincent Klinges

months. to reconnecting of All in couple right. everyone you will work forward very and time a We look joining thank we'll thank and Jamie, continue Have with us. a forward this all to And for we appreciate much, good afternoon. you afternoon. your


program. Thank This you for does participation. conclude your our