American Software (AMSWA)

Allan Dow President & CEO
Vincent Klinges CFO
Matt Pfau William Blair & Company
Zach Cummins B. Riley Securities
Matthew Galinko Sidoti & Company
Call transcript
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Good day, everyone. And welcome to today's Second Quarter Fiscal Year 2022 Financial Results. At this time, all participants are in a listen only mode. Later you'll have the opportunity to ask questions during the question and answer session. [Operator instructions] Please note this call may be recorded and I will be standing by, should you need any assistance. pleasure Officer the Klinges. for my your over now Financial Chief American is to conference turn to It Software, Vincent go ahead. Please

Vincent Klinges

American Thank And fiscal good and earnings Software to XXXX you, of second afternoon, call. quarter Chloe welcome everyone.

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

Allan Dow

Thank you, Vince.

of report we us, double year first have our growth behind in achieved revenue our that segment, the quarters. fiscal growth supply in to chain pleased the the to past quarter, half And double-digit I'm returned also the second With each of total revenue two management digits. our

saw approaching line accompanied our expansion we levels strong last fees. performance had more EBITDA material from contribution the was significant by when in is which adjusted Our we now top margin, license

recent variation will our as we quarter, revenue and Although increasingly we continue given our profile some believe cloud services may be the our growth any scale cause business. norm in to margin

and ease, this accelerate. with summer we on transition activities to back in-person the exited the pandemic quarter, to starting past back Looking the began to

fragmented are delays chain the environments, experienced with completion our us, upon several of the especially to uncertainty business issues, and activities, with holiday work we the their supply engaged period in However, the in contracts. address frenzied customers

which of holistically increase and to one sustainable by transformational the to several we driven chains continues our economically and significant the secured required since actively more enterprises in to engaged a their should resilient pipeline have We others, opportunities, enable projects soon. to in supply Overall, remain conclusion come manage way.

build on post-pandemic year to RPO announce we opportunity and that a and closing relative initiate our churn results, confident of larger projects, measures. the processes predictable quarter less continue due approval services execution, a extended we scarcity is we experiencing required ACV timing In between regard these improvements a longer Although year-over-year a that we and are set of than lower to were resources customer half. to and I'm the increased second second all strong to improved our to remain backlogs. With poised little our contracts ago, pleased we for

customer to it new more before. customers, we focus our bringing continue are and on We serving existing ever community all implementation commitments efficiently delivering than our doing into companies on and

consulting With the revenue slightly services, we on margin post all were summer or and across rebound ahead in plan areas.

seeing in the a on We delivery. partners are are our continued SI services assist and and backlog more in [ph] our more increase relying to

The with holidays. extended downtime the third is for always a challenge quarter

XX% approximately chain However, represents we recurring pleased maintenance, anticipate our expansion growth and growth see to This the cloud now the the when also XX% services' consulting last of quarter in ACV services continued second compared We're the to supply margin in increase cloud in by services second which business. in year's compared in saw to revenue total year-over-year in same the year. continued period quarter. last XX% of revenues was stream driven we

to of percent to see as With return revenue community, the a recurring and rise. the of new increase cloud a in more continue total to contracts the on-prem customer and subscription traditional expect our we revenue stability

our I'll We this reflecting During look year. progress completed quarter, over quarter next to our focused the time, call in global model the Vince the our details second will we and intently to and to improvements turn expect results of fee remain five summary, on our new results. pipeline forward against financial the six second who transactions with strong provide on second presence. financial growing half and this or performance reporting the the At quarter. extend our countries, fiscal license executing In of customers welcomed through subscription we're pleased

Vincent Klinges

Thank you, Allan.

of of increased XX% $XX.X million to $XX.X and year. that's subscription the For last increase The same last to big revenue 'XX, which compared to licensed $X.X the fees, total that fiscal year. same over year was quarter second period $XX.X driver is of from year in the $X.X, period while million were revenues XX% million an

delayed. our in increased close as net during a excuse million -- close large me services to we of $X.X new a were cloud the or internal expected deals while $XX.X ACV value target we $XX.X contract million of million to couple expected ACV quarter, Our were added annual were XX% were short that ago year versus to

providing one new has mentioned, new five the a start in since XX% had and to in closed QX. Over those XX Allan of our date. a customers. new to from customers ACV was of quarter We second As quarter bringing year the added net total second of to nice us

Looking $XX.X services a to year increased at ago. million professional X% from that million $XX.X

consulting increased chain due bookings X% significantly and business in backlog recent our that supply reflects unit Our year project increase unit chain a proven our in in business a increase due over method, to our was ACV IT timing year and to worked of the increase in X% implementations quarters. of supply increase

anticipate continued we in the So of remaining during growth our year over 'XX. fiscal services year quarters

$X.X year over of and maintenance a declined cloud Our year quarter. million, cancellations which conversions, reflecting a revenues this combination rate X% includes off normal to fall

recurring of last of total XX% fees maintenance second revenues our same comprised year. from revenues the and up Our quarter represented subscription and that's period the total in XX%,

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

amortization subscription in XX% due increased to to Our period. fee that's and margin revenue year expense. to XX% increase And cap software of lower prior in subscription compared primarily the

was XX% second the would've non-cash year period year. the same $XXX,XXX in the been the period. versus last amortization amortization cap our XX% $XXX,XXX prior in of Excluding gross And subscription cap the quarter, of expense software software margin of

$XX,XXX. primarily XX% to year. the the prior was compared a lower from margin period year lower such XX% Maintenance period margin of increased and Services mix fee license XX% that's due XX% margin year last period. amortization same revenues were of as expense higher to of and costs, compared the due a and supply agent same period of of commissions both that's in was the XX% cap software for the last of [ph] XX% chain Gross staff. and R&D and negative and to last XX% total year amortization for from expense better to chain business current revenue $XXX,XXX year unit period utilization to current Our supply in expenses margin $XXX,XXX

G&A periods the a expenses sustain are chain of spend period this preparation R&D to We a me, for as increasing our revenues spend to variable XX%, half to last prior were compared our of expense, XX% transition year, revenue for R&D marketing due percentage and Sales the and current in period. in year. strong higher excuse revenue total the expenses given first adjusted performance with gross and the range. future both were XX% compensation in of primarily throughout in year supply EBITDA

income period XX% same amortization of $X.X Adjusted to year that's last subscription revenues. of license adjusted XX% quarter adjusted a share the operating in in the Adjusted to increased operating GAAP on year optimization partially $XX.X increased compared income, an $X.X million revenues of to numbers prior margin to in year. $X.XX representing in XX% last period same revenues XX% to $X.X year-over-year to to $XX.X a operating $X.X come million million to million for year same to International date to share revenues up period period a year. share last earnings earnings the income the adjusted earnings million net decline and total income net X% ago compares million $X.X which increased our date, a ago. compared XX% $X.X margin a fees to in increased expense-related was and excludes Adjusted maintenance $X.X Taking adjusted year. $X.X expense, $X.X totalled $X.X year $X.X EBITDA diluted basis, million same approximately $X.X a due same total non-cash increase in of share earnings $X.XX XX% per year year. income and offset diluted increased of this X% for per year acquisitions the for an million the by of to period last X% $X.X look $X.X or diluted primarily million or or diluted XXX% the On million year. diluted compared million stock-base quarter $X.X XXX% in income same So periods. to to Net and million per $X.X million tangible or income period million million XXX% or a from increased diluted increase compared million in net that million adjusted fees $X.XX income increase or quarter in the were services this basis, million share for adjusted from period XXX% a to EBITDA last and to of and at per operating the share current adjusted or of $X.XX net last versus second and was $X.XX X%

as agreements year-over-year record reflects in bookings million RPO continue growth Our in make refer backlog commitments increase duration our performance in quarters of the of the we XX%. cloud an to representing a $XXX platform. as to recent obligation, customers increase remaining was The strong and to term long which

at the our the Looking balance from million position cash financial time approximately and end an approximately our year. same last sheet, This quarter. million overall at to of $XX.X compared strong increase investments of the is $XXX.X with remains

current improved XXXX the Our XX compares of last day XX last sales same primarily period. due as $X.X And October dividends. paid we to in questions for was to And was the period that the outstanding call year. time, compared this days XX, this collections quarter, million days decrease and to year like At the to to in turn I'd also over during


from Matt ahead. first go Our Please question instructions] [Operator Pfau.

Matt Pfau

for Hey guys, my questions. taking thanks

a those deals your you what First the in I but the you with one, quarter. went deals what's in then there. bit could either that haven’t more the fourth little pushed if signed helpful detail It'd on or on exactly to ones And level know that competence quarter. across getting one, yet, third got closed off your provide in be just start

Allan Dow

not a they The of we approvals and really were Matt, Allan. did sitting as got joining mentioned Personally ready of a Thank and things final job ready take the more describe got the you evening. disappointing. I'll for contracts one. contracts those that than It this getting evaluation. involved negotiated but team phenomenal couple on situation the that prior. and that necessarily us this I for would in was many is frustrating,

yet And more week, handful actually. or a probably couldn't before and Thanksgiving of one approvals final in. evening a get even through couple one this and of those days So few have next kicks done hopefully we just the next the come that already other

the on with at those. and disappointing hard as into well. describe would because not both frustrating, the work and as of so we're at that it sides, Again, went our much So work team I customer only hard side, it

do them to waiting in customer a good a work on were not are for And, really couple play still got degree out on we're things So high about of really office. work in to the confidence. of many people that conditions of the those. seemed us works. We just because side. the Not around where We feel them the

it's couple behind of walk that ways and hallway requirements, us the So with to easy a and figured then not just get resource the get wrangle in but really well. we down necessary. to the approvals the group cases, as as together out And they're

really wrapped good those contracts about getting feel So, up.

Matt Pfau

then That's, it. Got if just the a give little you helpful. that's in magnitude. terms be us And maybe bit, could helpful of

You said they were large deals.

somewhere those, increase? closed had closer of been sort you closing, you planned million at least ACV a would If sequential that you ones the had to on have around $X

Allan Dow

little Plus bit higher? a

Matt Pfau

got it, hear. to it. Got Good

where customer on some on that traceability demanding as or a well of what sustainability what solution. helpful you're as would Okay. investing. in press your be Maybe detail factor And terms then, on they're Allan you commented there in becoming and they're out just seeing more bigger the release,

Allan Dow

the Yeah, a dialogue this in capturing a become, for lot still the information Mark team really and at Burstein the really standards. gathered biggest into the around verifiable, There's set of sure. known some both their capable in those US standpoint, our working in Probably members, products around appropriate and well organization the that work place put the one and be the is It's still data. are area processes European frenzied with circles got of others. and customs validation challenges hard data is It's We've they'll making getting and from Union. the standards of a that of on sure one. the challenge

amazing there So which on come to a really issue. lot to has of together on well this work been have see collaborative really going to how competitive me work companies

It's topic. hot front a is everyone's it of mind. So the

their quarters at And come arms are think the in more to expectations really demanding. the that's and starts as months see get right as people out, the that tighter get are going going around reasons, and to to And, I it, we and get all working hard For people tighter that going and tackled. it play be topic it. to strong to get are a consumer years even regulations

So really at believe the beginning I out. stages we're that Matt, of playing just

Matt Pfau

I'll Great. pass the Thanks a my lot taking line. guys questions. for


Cummins. Zach we'll ahead. move And go to next Please

Zach Cummins

on for performance quarter. my Vince strong the Yeah. across taking now and good Hi, afternoon, Allan. in Thanks congrats questions and the

think existing Just how for digging little coming conversions further, the terms perspective? a new into terms in customers opportunity versus of in with what's Allan, the ACV pipeline the you, do in of about customers you for guys fold

Allan Dow

larger there. a of be Historically, both, roughly exists to look many, XX% business a handful question. The that, of you our from where, division to adding adding many it you're and of expanding still -- new projects couple great time, existing the the components be a of thing because can as and from at general, customers. that. Yeah, scratch comes tend transactions like or be Whereas if years, tend with existing from today customer something general, or from that community trend over one little customers contract a existing the larger and newer on some into starting in those for may well. be in customers or you're things the But said mix

That this was In one from fact, is existing from a period. that last, already last an quarter we've closed from customer. holdover

about or answer a new mix, driven Zach? long by bigger overall can those Does projects that a the revenue contracts customer term. that's in question, but that on it's the you but So say is split are general, little revenue the

Zach Cummins

to the across making in had terms hoping do regards consolidating kind you morning feel this achieve you in is to And NGC. release press demand what and Yeah. extremely of resources the management Yeah. and move? like about time to you're right decision agility, by the talk out that That's now this can of just why helpful. you and

Allan Dow

be we of you and a once be when friend smart And those want every number lucky one, the lucky. with the together, do software you mine when platform? half, in to of that three in complimentary got the and say, by we and sometimes just of in had it's I that smart across agility, let's do We operation to We got Zach, lucky four started while, you we to demand to two good collective all capabilities had all our that, NGC, talking with says to you that had And we cloud, prior units. the have ago Well, and hit began really a this make with we and the do management, a about need we time, because the acquired four And business ago. years this that. platform what on hit believe at transition that to to started We transition were parallel capabilities one. we years mark. halo always this

months our it. So of to The the pandemic why last brilliant hard has XX demonstrated a mine. work wasn't at It was that decision. really went team

start be that I'm successful, So number be in faster and enterprises, of silos. our customers markets saying brilliant. the and in product thinking the meant continued the marketplace, pandemic on faster, global customers as was the of down need some products we the to We But, and to have was the the time to future here people and Thus we've that idea it as supply in the supply reality our what the and knew turnover were great any introductions hard coming, horizon accelerate an we got but I'm in about to what shorter the is length pandemic more of shorter. pace had chains that motion, the help breaking organization, of do to the set chain going successful. the order not didn't new of getting really we're things

silos and around customers the past very way our we well. chains. In the we And of So today's supply unacceptable. their were marketplace that's structured served those the operated markets

break You those got to down. barriers

rethinking teams each they have We operate teams teams of independent or synchronizing or no sourcing way chain. the lines product in have, customers divisions. customer that experience and operate around our procurement forecasting are their longer and They supply teams They're silos other. and their

on were to The So us. in leg behind to capitalize our large that small business And have where fortunate acutely our the that And of is we really not that acutely it tackling agility journey emerging how way that's as we on already demand align enterprises capabilities. needs well. last today is medium management our our set we necessary to up align structure focused business on organization we our is that to got was aligned it. today, with enterprises. the of And and in our of markets needs to could team product team focused such be with a

longer ask the a question, wanted hopefully probably than was that when answer So that's heck Zach story but you of a you helpful. that and is

Zach Cummins

additional always Extremely on the question final for front. towards And just insight Vince. helpful. that appreciate I geared me

margin, I subscription how forward of that In kind thinking a here going the of business piece terms are the guess, you, of should we subscription How XXs. scale? as remained be in to pretty the steady continues it's mid about

Vincent Klinges

to year. couple a roughly the this really bouncing slightly around we're back points next end around but half XX end get year, XX, pick Zach, the towards basis towards up XX. it'll towards to the targeting of the XX like maybe XX Yeah, should XX. It's of we're year it up It thinking of and trend

we're right of the modeling So that's it kind way now.

Zach Cummins

going for forward. thanks best of That's questions Well, and my again Understood. taking luck helpful.


Galinko. [Operator instructions] ahead. to go Please move We'll Matthew next

Matthew Galinko

of we Thanks where on getting kind on in macro are across global you, given afternoon. in transformational Hey my a whether the the type stab picking or the at puts questions. taking environment, for Maybe finish are velocity there? the in the are what can pandemic the take deals, and firstly, good and up takes those, where line we

Allan Dow

the nature The we transformational ago were the again is our few us. projects. Yeah, needs operations of think joining It's Good supply all, like driving end have. question. scenario the need they where and analysis they these the of first chain business, differently. the Matt where end realignment platform customers, much chain, to chatting chain of can when those whole they a managing minutes supply the need thank today span are asked for you for Zach really to question do a that supply of They about across

application So, well. change what brings is but software as implementation not a about a management that it's practice only and

we've operating So our side, key of today, and to been several that their our worked operate to of to on we up can to where of headlines operations that the help up the hard they so that at of some day helping tune figure And have helping one really have customers resources customer projects into. we've the consultants really out hitting sitting them how free we the that's do the some day on project. behalf, the on running

non-traditional outside we work. to We're prospects serving doing We're some loose. of So up as we're the starting idea thinking that to the those break go projects It's forward. more box.

getting see So to with results that the going we're that I loose. combined break believe we're

the around next for a milestone holidays the is United world. Now get in are But we moments. us months States have in tricky traditionally with really said Thanksgiving we're into got Christmas because here of period three the the and that as couple we strong that

do over some at days marvelous a the years we've up quarter job the our XX of customers that's and rest and people time the our quarter of needs the outta we And the a because free with of fiscal have of a from end end training come start with year can end then money year. that to of get of work a have get Christmas fresh, We New end and to is back to of spent customers cash. later XX the course, to The us. of a Year, calendar Year desire work our budget fiscal where the new blocks many good and New done

for those milestone us events another have should where we be quarter breakthrough that in out the quarter. So stand we third three

Matthew Galinko

just very the on seeing That's given, of Thanks. space. out Maybe consolidation played one some what that's the it. more you're in Got the helpful. competitive front,

Allan Dow

Yeah. this an space. interesting It's been time in

the gobbling the that taken up spend folks of think consolidations that there's and use. out just a have into play. have all some things some Not I couple companies money they successfully of really been put effective of on

competitors prominent So seen through under We've few disappear horizon. it come in they with disappear the or players from more would to them we about. Panasonic just change to private Overall, peer actually who we've structure that umbrella. horizon from ownership that the went a just the their see solutions be, up against, Yonder, star Blue really taking yet a

resumes street. hit Although more we've seen few the

historically So up we'll to and but players. as been loyal means need stepping the client where single reassessing They breakaway seeing brands, prominent We business solution, CFO And and the that ERP loyalty. become those supply a some continue to time they and to that's see, the plays away get more to we out. than see more a want CIO brand to their lock to we're they see falter they're had what what manage have continuing and chain. they

projects us. to for starting that's break So loose some

fair share all think as the to a as by the top the as out handful need of who have the our breed can't and that the best of others will and aren't take customers getting side there and us. our, there's desire with I business We're stand they So today, of their from strong the transform collective four providers side or business. probably well more some help you three

we healthy it's like very So a compete environment. effectively. the We and we're can position in

Matthew Galinko

and Thanks strong on quarter. the congrats

Allan Dow

us Appreciate evening. sir. this you, joining Thank you


are at there instructions] time. does [Operator And this appear, questions further it no

Allan Dow

thank I third joined in appreciate progress and our three Chloe, evening American your attention an for this months to call much for again you update everyone Software quarter. in you us look all. on bye. So us and evening. We this the forward you the interest giving ahead Thank with the call. again, so in Bye thank helping want who


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