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American Software (AMSWA)

Participants
Allan Dow President and CEO
Vincent Klinges CFO
Matt Pfau William Blair & Company
Zach Cummins B. Riley Securities
Call transcript
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Operator

Good day, everyone, and welcome to today’s Fourth Quarter and Fiscal Year 2021 Preliminary Financial Results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note that this call may be recorded. It is now my pleasure to turn today’s program over to Vincent Klinges, CFO of American Software.

Vincent Klinges

Amy. you, Thank and XXXX everyone, American Fourth Software’s Good Call. welcome Fiscal Earnings Quarter afternoon, to

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

Allan Dow

you, Thank Vince.

coronavirus through As project spring, the leaders’ obtaining the number business of continue grew individuals off. confidence the and to activity vaccines took escalate

As of this catastrophic woods to of this in yet not regards out the we we’re globally, all impact know, virus.

to end to to strong within can reach. of end want everyone we and stay path environment, diligent. event tragic now that of and We -- So, more encourage and this a normal a this see the is

the supply and goods retailers into disruptions; for including economically an to the of level brand the global overall responsibilities health, producers. these appropriate of diversity customers As our producers, characterize an our organization, I the good across we’ve delivery sound responsibilities categories: and achieved to to a in-person our chain awareness ensuing cases, back resiliency second, toward three meetings phenomenal heightened world. consumers of minimizing and team the level the serve with We fall, the well is blessed structure. the pandemic. throughout externally most consumer treatment of raw and chain anticipate environmental leg, have the workers we’ve allowed The entered work of as pandemic the third ethical to from of in that internally brands, and the important, opinion Having impact into us in supply the some been by post-pandemic new around has now material shifted of well. team, is my vaccination delivery; the which, the and we’ll crisis

quarter we’re announce in these economic, a regard Border customers, team whole our enabling the enabling while delivering standards bringing to responsibility the imperatives we’re implementation our we’ve am the new fourth In necessary their remained sustainable pleased generated the the doubling of I Leveraging community past fourth alignment our solutions, of expertise transformations and simultaneously have Through customers, and supply resilient impact than of transformative has more record that commitments are quarter, decade, Protection supply Throughout United level around chains. in results, and a that enabling on growth chains now are We required way. consumer with team regarding the today’s projects. In excelled. previous and our for proper experience States optimized decades forefront to new regulations. we our into to into quarter. addressing adherence pandemic, new unsurpassed high environmental Customs serving social incorporated decision-making, and in on at labor our in our these our economically to meet ensuring our latest focused a companies net customer We ACV environmental expectations.

we in increase in the we churn compared in move the conversions, on-prem to the his detail our as model the switching beyond as existing to increasing drives overall accelerate. this acceleration and to grow in significant in cloud stability more more pandemic-related in each saw revenue year’s which will customers customers, and was the commentary. uplift rise recurring in which new fourth last to fourth from return -- of Vince revenues a the on cloud, our Included converted higher recurring we XX% an services our by when In on-prem project rates. this is expect quarter’s layer see that’s last With growth quarter, provide services. comparable fourth traditional pre-pandemic the our of activity, ACV the impact quarter typically to we cloud financial quarter, number and our customer of cloud value-added

was licensing growth our and global quarter, services reflecting the In of fourth year. the completed seven countries, segment presence. welcomed strong strong performance -- fourth coming highest the services our in fiscal level supply transactions chain the the During we subscription or in customers with our at for quarter, nine in line new expectations,

of continue external resource channels. consumption which growing capacity consuming is capacity for partner work, we of including our more drive backlog hand, on consulting from to We a most have future the

internally add our As we to share plan of additional resources a greater allocate work implementation move forward, we partners. and to

With the continue services see seasonally we backlog, continuing virtual to to and leverage grow coming consulting the margin more expanding work efficient quarters. the in network, expect adjusted growing to partner and the environment, revenue

We’re revenues growth of cloud revenue XX% pleased our to to same now which compared total of in represents year. stream and approximately recurring services XX% see the continued last maintenance, in period the

very opportunities We of revenue of future, With contracts approach result, of the is to the represent projects, contract in to recurring that pipeline, number the revenue. expect transactions. our see a virtually trending activity type continuing our growth in the and the running percentage focus size subscription at our strong higher in sales a on a as of pace. we’re continue transformational and And all considering disciplined a new both

capable both of on to this In which improve quarter The in predicted as pleased the speed that We’re and towards chain fourth calendar holistically broader them seeing projects size. last we’re our trend chain in as year to emerge. Based we’re decision-making of our way. investing that thrive trend overall are what year, average with throughout These our transformational new solutions in summary, see a by and well we’re hand-in-hand the as resurgence planning strong to of the new late navigated growth has supply our our with footprint adopt and by starting pipeline driven of to the of an that projects is the performance team we of working is challenges customers the quarter economically would Company. resilient helping fiscal the agility supply Gartner achieve these reflection shown manage customers economy. pandemic. same extremely needed of the a to allows in our platform observations, rate, the an number quality to results spending industry-leading customers drive and sustainably a opportunities year, of performance in to fourth customers presented resiliency the financial The delivering need

customers our year-after-year capabilities is paying successful supply and expansion chains. making of off mission customer retention, introduce innovative as in managing sustainable Our we for more

the benefits financial to customers over our be time for profitability both, ahead who’ll I’ll need that and results. they turn provide on time, a we this our revenue can more to the Vince, Vince? are in grow most. confident are continue to At and incremental We it details delivering proud in when years call

Vincent Klinges

Allan. Thanks,

from transition million million, prior to to For the XXXX, were million, X% model. revenues down continue the $XX.X $X.X year. SaaS in while in million $X.X same the we million fees of $XX.X fiscal to fourth the fees increased quarter $X.X were to in compared as year, year-over-year Subscription last period XX% license

be the slightly we we year. seen about revenues quarter to continue license declines likely closer in transition anticipate $X.X existing throughout quarterly from over given our on Near were license million which customers, SaaS up a fees the which basis are came to model. past to principally quarter, trend, the time, Although expect term, is our to fourth a

to increased our XX% quarter, unit, million was services Our a our cloud deliver attributed growth The unit reflects remained quarter, our of We ‘XX new $XX.X of SaaS and project $X.X closure Nearly and timing from XX% rate a customers during as us an revenues chain in that’s with reflected new has services decreased a year. did XX% to business noted, and $XX.X ACV consulting revenue increase year more rate. and in million pre-COVID basis, $X.X at decrease new the unit. pipeline churn reduced opportunities and our restrictions due our levels that beyond. strong a million services consistent the XX% which from million. $XX.X increased, increase supply two similar to in sequential was the IT supply also on added reimbursements And $X million fiscal X%, excess work. of in value, primarily year chain last to to of double more ago. deals half our On ACV ACV pass-through and our than with Allan decrease leaving million ACV or in our We prior last supply travel year-over-year which in in record chain million or zero annual other services to amount ago. well-positioned TPM our XX% contract net decline versus revenues a Professional ACV was to $XX.X note our from of

implementations supply increase Our due to ACV in chain of this significantly bookings quarter. backlog the increased

companies revenues would this which And the declined an exclude in anticipate higher $X.X decline historically decline off quarter. But, rate year-over-year seen. is in converting services if with Maintenance ‘XX. consistent to from million. we cloud, the this So, XX% maintenance X%, fall than mid-single-digit the on-prem have our fiscal normal we’ve reflecting to a about more been the you uptick is for

ACV QX, also of deal. large conversion bookings As included a

our declines term. remain in revenues maintenance expect in the to elevated near we So, the

the that’s Company expect once XX% see to However, revenue, and last revenues total typically of revenue acceleration Total subscription maintenance a subscription, fees commensurate as in we our in we up together shifts growth. QX, the subscription a and X.Xx same in and uplift period revenues XX% represented of year. from X maintenance recurring of comprised a

last for increased period and versus increase due Our of gross XX% in fee current year. year, compared cap XX% amortization our that’s same margin in That’s to the subscription prior software margin primarily was expense. the due lower XX% to of subscription period revenues the XX% and of primarily to

year, last non-cash the in would higher XX% last prior $XXX,XXX and VAR the due was of to cap to period. $XXX,XXX expense the our was of lower in amortization XX%, compared XX% expense compares fee where year of and amortization and of the amortization been subscription same fees that that’s Excluding have in costs to software period License capitalized commissions. agent margin license and software XX% QX, margin primarily year,

that’s supply coming XX% and XX% year, to of higher Our mix chain revenue increased business services our a from margin due unit. margin higher last to from

margin to compared Our that’s a XX% and XX% due revenue. year primarily maintenance ago, was to lower

excuse -- prior of revenues expenses me, both XX% the were margins R&D period. for gross year and current gross at Looking total

totaled Our transition adopting last which development cloud to $XX,XXX, $XXX,XXX agile our year, that and was same the capitalized the process. R&D and reflecting in an period is expenses down from

to in year. a COVID R&D and material XX% marketing period, pandemic. current that the ago, XX% continue and any absolute primarily were the of revenues revenues our $X.X to software reflect period compensation. operating dollars to year to a million due So, for G&A marketing forward. The On quarter, to year. some XX% we million increased Sales XX% same that’s of last due and $X.X total compared last that timing the in were of period do expenses to and travel to XX% expect a going cap decline compares recording basis, not expenses in year-over-year reduction in expenses compares for and variable same GAAP this income

year to to diluted of intangibles basis, to On of acquisition XXXX. XXX% last X% a same of Total license million year, the be million was approximately of services was last income to $X.X $X.XX to share to or -- International income XX% amortization net or were year adjusted year-over-year to period $X.X $X.X of the to income or last earnings and or million related declined compared in and and diluted stock-based $X.X increase in maintenance to was an that and $X.XX per Adjusted in adjusted Our adjusted quarter. revenues Taking $X.XX prior fees EBITDA diluted XX% in million same net year. $XXX last income excludes million increased a $XXX.X compared year. million expense, diluted or compared year. fiscal $X.XX share period same by the fees, period per increased income earnings exact, per earnings X% lower operating full earnings $X.X $XX.X the revenues. fourth adjusted per adjusted quarter XX% non-cash from of million this which look in X% revenues compares revenues million adjusted $X.X of share offset quarter the $X.X to net $X.X million share net compensation down total of million, subscription at million the as

sheet, totaled million, from the million X%, margin the year. versus adjusted So, same or million adjusted Adjusted EBITDA operating quarter year obligations, operating $X.X million refer the -- performance We last million, $XXX $X.X RPO our operating of X% of down of year-over-year of as $X.X an year, we in duration the an approximately which to period $XX.X and same that’s on last income make for in agreements and period quarter, to $XX.X was $XXX.X our last platform. diluted margin remains of a our cloud a look million was income growth million Taking or and bookings net investments at customers remaining in $XX.X of compared with or up earnings commitments the that’s the balance an share, the position fourth continue increase at representing $X.XX from and per for period share longer record that year. diluted to or increase recording approximately end The financial million and per same cash $X.XX million as our our with in represents of backlog $XX strong and term total year. XX%. quarter strong the the last increase reflects RPO, exited

year. the increase period, XXXX, of is current Our last days end XX, the of XX April XX outstanding period same and as was compares that the bookings sales for at the days in days to due quarter. The to primarily increase in

turn questions. Amy? I’d the at to like quarter, the million over paid time, call of During And dividends. we $X.X this to

Operator

Pfau. we go [Operator question our first Matt ahead. And will from Please take Instructions]

Matt Pfau

for quarter. question, guys. great my Thanks taking and Hey,

as to deals similar-sized well? around look pipeline, I the ACV just that First, wanted there in some what of that customers? those. you or other existing deal two those of more on Then, new with were $X excess million. And sort in Were hit there deals are drove the at detail large size? when Maybe

Vincent Klinges

Hey Matt, complements. thank you for the question and

to then the new first the both be -- platform cases, functionality. on with those cloud where converted one existing was a half, entire So, shift both environment, we and new added well, projects they In the environment, of lift to and happen customers. to

and the capabilities. in a was it functionality amount substantial breadth of So, of increase

a what application. greenfield is other to be we’ve The termed

supply going way at a are are managing the a applications on and looking a existing with marketplace. chain a consulting new stand helping the supply their to helping this complete how to platform chain and alone, new new but them advising manage on the and in of with we new them whole viewpoint, way only them So, in not viewpoint

ultimately, current functionality applications, uplift start well. of replace a we’ll as And time, again, over. amount it’s in an the So, but in

existing expanding footprint time of to happen So be customers half the both quite question, the your this I around. And of Matt. second forgot frankly, those

wouldn’t I’d you well. question, of half mind the answer if be So, second that happy the as to to repeat

Matt Pfau

the It are just size did You the no in pipeline? that Yes, other there deals was size around deal problem. this And pipeline. of mention is increasing.

to just of So, to of have this these size? is sort understand, trying or become more of outliers commonplace are sort to going this deals

Vincent Klinges

is starting two is the pipeline, the get that done more any increase. more a there in the of in assurance given No certainly -- to transactions we’ll size Yes. continuing quarter, or number but are to

-- year year by magnitude this come we to just In happening investment. the for this projects throughout consistently quarter, maybe they that have but anticipate not through So, of ahead, hard with we’ll were of ahead, year year, every last that the magnitude us.

Matt Pfau

if deals sort within growth? these and when just and general, the to thinking obviously, sort really stand And they then, started been while, from pipeline just in future improve, guess, about increase have And then, closed I I’m of should were pipeline ACV the we’re quarter. in out, of other we that converted? large perspective? deals sort quarter, what this quarter this think had then, And trying two I sort figure Great. growth for of sequential or we net made about in takes outlook as that puts at we the going that that large about your you where forward, this think your deals deals of economic look guess, pipeline to your do as a

Allan Dow

lingered took the had second accelerated process some the projects those to the decision to one get in for a from actually Yes, it question. to mix through place. and quickly one a investment while go entire and forward large And pretty make the them good contract getting A real there. of two time,

spectrum, two we’re So, the seeing large a pickup had in pace. ends the the Overall, even in of really. deals, we the

pandemic now, to bit right in a of the get However, approvals place is to everything a coordinated working still and get it people with still done. remotely, most challenge the

we at selection although So, from in the the in that or see to as contract, radical pace even starting get haven’t shift selection all way commencement can to we’re seen of and which well. we evaluation the up pick a

first quarter bit the a feel the did So, good progress already. quarter. into first carryover we We on have good some about We’ve it. made of

that we’re running didn’t quarter. everything up fourth in was off -- clean the and And lingering. we already. those So, seeing There we’re some projects on

So nervous and we good as feel And that including an we progresses, as little out-taking think that off well. last bit some about I family. year happen of week I’m but that there’s -- the the right summer. about lot vacation awful people time take -- witnessed to our I a now,

this overall bit the a I’m really picking but summer So, wondering it’s up. year, about period,

Matt Pfau

base, any shortages customer great. does there’s on component with And with within is Okay, could chain? me. it issues create But managing that Obviously, be a a of of think that on a of And or now their distractions for having just some supply right and issues. key positive difficulty supply then, your right planning more chain lot net going helping last those are of question going people now. issues I

Allan Dow

time such of state it’s pockets having few that where good net a observation. and Matt. that’s far positive, in it’s a focus, to but just of a Overall, There’s are distress a people big couple hard between. Yes, a they’re

did it. overall, can’t the people realize people -- is think, during seeing what pandemic you just I outrun are occur

it. You’ve got outplan to

able what issues you to be think where got to rapidly. to to to quickly outrun decisions are, assess have Otherwise, are competition, available available when got those. the options about any options the make may you’ve been your didn’t that and bottlenecks you’ve You’ve fast your and got occur, be by enough. to act model able you no longer you are get because And

what supply awareness physical represent a call digital the decision the has of need act. we electronically, quick So, building possibilities, that make the able and simulate model, acute for being chain a an brought to

challenges. the outrun can’t You

to the And have outplan expertise really challenges. where that’s lies. You our

that there. the the is don’t of there next know acting view We projects going heightened disruption are always next the And so the starting investments. awareness one’s and is to transformational something brought the what coming. know and customers has overall they urgency that it’s on pandemic it they the So, make the be place, is light in these be. But know to to because what to going those or they’ve been getting

Operator

question next [Operator Instructions] Cummins. And we will from take our Zach

is line Go open. Your ahead.

Zach Cummins

an Congrats to haven’t mind taking guess, to and starting a conversions. or really of thanks the changed your on over some to quarter. really mean, customers from that I has to been I what but move customers model know incentivize existing sense for strong I’m there? Hi, in you’re really is from of customers? of what this get you perspective on-premise to just these Allan, your Allan Are changing my Vince. cloud, forcing to the dynamics questions. And the you see I that shift trying over, seeing? the magnitude of

Allan Dow

that know mentioned two all to more them. cohesive with that there’s they larger keeping we and as they place they’re manage of having adding even question, many as they shifted that. time transactions, we’ve joining platform, Great the any thinking in is want standpoint, that We’ve well they hard about happening our way it would to in from or single today, thank releases, that offered we and a spiff you the financial and a truly can realize better incentives it some had current have anything a that applications I It’s running the not us. customers them existing any it or what’s that encourage as Zach, do extra functionality, they’re up be like in for our a cases, for they’re one

it’s thinking. it they as really a drive to And for -- extend the better them. they that’s to solution So, footprint, move they a go starting view the they the because know just to that’s cloud

care better We’re them. of going to take

and that frequently, new them can advantaged available new each more the going making on on up-to-date they we’re technology release. We’re keep to get

-- going benefits to incentives, our that. not special don’t still we we’ve and enough services to to have not So, change -- moving any don’t and our we value-added has with think environment to provide associated we’ve cloud we’re just been the

little -- fairly seeing the past, from the conversion were in giving maybe a in probably asked or converting forward. anticipating you So, we’re more year in quarter looking two answer cloud. or we that per four the were past low the than But be I’m rate, a you one at rate for. that will to on-premise that conversion probably And ahead this a we’re three quarter we going should expect

still not So, at number. look crazy base you not last perspective. I was what double converting, of but half it’s It’s that guess, could it a year. our installed it from it’s

Zach Cummins

Understood. you I in when headcount given comes the capacity, capacity of right feel you’re the kind to approach investing like is That’s just in approach? what enough it do sales marketing your mean, and that of terms And then, your helpful. you have and demand seeing, And go-to-market place in now?

Allan Dow

Yes.

have of and the large enterprises, environment. well, shape during in course, that in we’ve we got model, direct past. pandemic, our in pretty America didn’t North for pull two good is We -- We think which channels think organizations I sales Europe. we’re -- in that we We’ve the about back. talked

wanted the when the expanded of to because invest, to continue we be out we and shovel-ready came We team pandemic. ready, we

able half, maybe through the first So, position, we least a the carry think us to we’re for in year. good at

which to make on that In the the some They’re ready through we’re channel, and regards onboarded, presence getting to a all have They’re local It reseller got there. takes really generating indirect working go. network. sure the us productivity to results. team They’ve we of to hard. time going our They’re pipeline. We’re get we’re them value. value-added and gives focus

expand are they’re We chain to got and standpoint, to of for maturing from are supply continuing globe really a capacity look segments solutions. starting that there. We’ve the

And So, more and got a that place. we’re to expand need some trying resource in we in. we’ve get to few where pockets fill coverage

made add implementation of year, from we’ll of network -- probably then, that resource the standpoint. probably value-added more expanding handful over course, next So, partners about we’ll of, resellers. an partner I are the And strategic the a mention

able and And will look at expanded growing generating the of they’ll that we that support that itself. I us they are to As the that can deployments. number for one, requirements activity for channel that also customers, forward, as for fulfill implement service the to mean, ecosystem and we guidance fold be have out resources they’ve and think builds well. least in on customer bring in we back us us but help those that good marketplace, got opportunities provide and half

network. double that from a the that’s of benefit So, standpoint partner

Zach Cummins

of just Got it. That’s of I helpful. was you midst And Blue being Allan, the the the wondering if with Yonder an environment? the acquired, can overall mean, you’ve I dynamics seen competitive environment? give us update of on in any sort changes in

Allan Dow

One is players. of most really ERP are A around probably the significant. that things couple

see projects. and to fulfill breadth capability even are of necessary to our just four some extent, maybe in requirements to the not supply quite depth SAP so some the today’s They and a likes of lesser space, that’s continuing We’re these Oracle and prominent chain to of and others. have the don’t in extent,

biased So, acutely some from channel. see decisions to up may continuing to we’re are towards business have for who SAP, and defections. making been move that we’re Those instance, away, picking

So, competitive evolving landscape. that’s a continuing

with the changes. there marketplace. the those there they -- though seeing picked of know and they it not by sure what company There’s now. Yonder what And out come acquired the changes are, chaos but own for will thing be We’re one those Panasonic, a we’re the changes that in little of bit rest will or Blue all from wholly where up being about sure yet acquired

And a settle little are folks time Our out. just that think sure not take it happening. I will for what’s to

here So, there’s confusion have where around what a we could that strategy some means. window just

Zach Cummins

the is provide as wondering your growth more could years? upcoming a don’t guidance, formal EBITDA sense revenue overall for I in a Vince, final if targets and but us financial my I you I of was adjusted we know mean question Understood. of margin And one. progress you just give

Vincent Klinges

generally, rates double be closer Well, growth, we maybe give Zach, adjusted side. low to on get able maybe that hoping to And should guidance, But yes, as to EBITDA don’t we percentages. the grow so. the kind to of XX% know, revenue XX% between to digits you we’re with somewhere

Operator

further that It does no have other on we line. questions the appear

Allan Dow

Amy, helping not if forward further you. joining Well, the months. us and We’ll us afternoon today. meeting on with before, right. earnings you at to a for Thank in quarter thank again, three Thank for then, call. our look you year this you fourth call fiscal All next all earnings

Operator

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

may any time. disconnect at You