American Software (AMSWA)

Allan Dow President & CEO
Vincent Klinges CFO
Matt Pfau William Blair & Company
Zach Cummins B. Riley Securities
Anja Soderstrom Sidoti & Co
Call transcript
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Good day, everyone and welcome to today's Third 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 today's call may be recorded and I will be standing by, should you need any assistance. It is now my pleasure to turn the conference over to the CFO of American Software, Vince Klinges. ahead. go Please

Vincent Klinges

and Software's Chloe everyone welcome and Thank quarter good of American third call. fiscal to you, afternoon, XXXX earnings

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

Allan Dow

I and teens. supply report company whole, second am the revenue we as again our segment well it digit the chain growth accelerating digit pleased quarter Vince. you, in for was growth Thank a that double achieved up of with QX to into the double

anticipate additional business, top and very growth by in sensitive. which significant across the 'XX strong and expansion business of our in project was Our growth the seasonally a gained we from including work segments, project quarter healthy of backlog We achieved rates scale cloud hand. is with IT services high and performance accompanied year margin consultancy EBITDA our adjusted fiscal the efficiency in utilization the in very continued fourth line as cloud the all strong and revenue

the space, However EBITDA In and we in technical year onboarded employee and year services, invest with people R&D. sales, we a and level competitive cloud calendar far very so successfully events expansion will be as spite retention, tempered travel expanding a ahead, quarter team to in in-person of expected. higher the of in hiring marketing this across and needs, and the the supply a in market, about especially demands chain operations labor dozen filling continue

then keep business to for to 'XX growth months ahead of our fulfil and to we'll expect few need also that in We pace in up align first half in next year that needs year. to to plan pace next the repeat the of expected the the hiring fiscal of

frenzied environments, extended activities to supply issues. uncertainty Looking world engaged address and business the fragmented are back quarter, lingering customers the their and on the past of our the in chain have pandemic working impact events

with as were staffing the see two early to in able secure continue larger QX. projects organizations to approvals QX slipped grapple contract shortages. in that chain We from IT We delays supply the and

approach due Overall, for spite enterprises our the required to our increase in projects persist pipeline a holistically progress continues to chains to augmentation quarters. way. economically delays anticipate some of driven their prescriptive resilient staff in efforts, we by more some in supply several to sustainable transformational and However, that enable manage may

half a that Although continued and to I'm that to to fiscal to confident backlog. retention, ongoing 'XX. our opportunity Due ACV our strong of bill predictable closing approval fiscal our efforts year and to the improvement closing and over poised carry a on first increased little due improved into announce larger and longer we our we the timing the execution these a set pleased remain rate less customer of is sequential contracts between in were the processes, and our for RPO services conclusion

in more on relying customers, team Our a existing our on into our in our and community backlog is customer commitments SI than assist focused on companies ever our implementation new and increase and partners serving before. delivering are We're services seeing efficiently bringing to more continued delivery. more

rates the third With cloud revenues XX% the driven teams, high the in and was cloud recurring anticipate expansion by we the across in to growth revenue chain now consulting also in supply quarter the third compared services pleased services utilization period which and This behind to which will in stream services year's last same we XX% last increase holiday margin deliver to of continued date approximately year. total saw our XX% our all year continued the when business. compared period services a quarter. us, see represents of We're year-over-year in ACV to maintenance, growth

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

transactions of summary, strong next new model year with our quarter, third In reflecting in improvements performance the presence. customers year. through and subscription third licensee and the and this into pleased XX During results of we to countries, expect extend financial fiscal or the our quarter welcomed global we're four the completed remainder

shaping likely the standout and period the pipeline QX quarters $X to year, the in excess closure the We intently is quarter of look it pandemic benefited forward two contracts had net like of of be culminated we reporting and against new initial last be progress ACV of strongest the edition focused quarter in million. slow growing ACV to which up remain of is fourth from accumulation quarter large our through executing this year, While our to four not next quarter. on

this financial results. turn So over on to I'll our the call back details at who time, provide the will Vince

Vincent Klinges

Thanks, Allan.

from last XX% year. What's a same total that the period million, fiscal quarter increased $XX.X the license the is to of $XX.X million For third increase to 'XX, million, $X fees, compared year-over-year the revenue driving which period increased to $X.X revenues while subscription same last also software $XX.X were XX% year. XX%

period. timing to to in a net increase new $X.X value XX% fall to year during of method other from million XX% XX% work. ACV this normal of our million was proven consulting our Professional and ago in Over project services a SCM reflects the million Our ACV in contract ago. reflecting year-over-year that's $XX.X year our or unit versus added new the to customers. increase ACV off from million net $X.X million $XX.X $XX.X annual a due and due a XX% Maintenance XX% had We $X.X also revenues year-over-year business increase million, increased to business of The declined revenues we the also quarter. XX% project our unit, work rate and increase IT quarter. increased

period of last subscription revenues that's recurring revenues, represented of and comprised total year. XX% revenues, total So XX% maintenance to same fees compares

versus gross software to same XX% period of prior primarily of License Our the for that's revenues due last year revenue cap XX% increased $XXX,XXX the Subscription in in the to margin year. the period year due third increase XX% ization period excluding quarter, compared would've expense, year. XX% of last that's same and margin gross period. to the software last was higher XX% year or up last expenses. non-cash year same $XXX,XXX and of fee margin compared current for period XX% from last the subscription the and XX% the our and in lower period increased same expense lower the primarily to And XX% in in amortization in margin to been fee subscription software cap amortization amortization and to cap was gross that's

a services compared business, higher in business margin IT as to growth supply margin to method, to Our XX% increased XX% year strong chain our last unit. our well the as proven both due staffing --

period last and Our was XX% last XX% the maintenance current XX% were to and XX% in that Gross the expenses that to compares third R&D of for period the same period for same the compares in total revenues year. quarter year. margin

and period the of the total year, to $X.X Also XXX% both GAAP this to quarter com in period year. basis, the same revenues sales on of $X.X and quarter increased current periods. last compares for compared to XX% that were income expenses Our G&A million a XX% and marketing last operating for XX% our expenses in were revenues million same

in third So compares increased to million in share adjusted of were and of net or to share net which last $X year. an the for adjusted of million same share compared in million increased same $X.X revenues the XX% year. our income income $X.XX adjusted earnings $X.X quarter period $X.X approximately diluted net earnings XX% basis, the XX% that diluted earnings $X.XX the that last compares and million net income period adjusted for the $X.X per and of increased increased quarter excludes income or or revenues of the to to non-cash On International to year share. diluted total per income from period to $X.X XX% Adjusted amortization to EBITDA adjusted XX% XXX% in $X.X our compared and related year. acquisitions to of diluted intangible stock-based earnings $X.XX operating expense, million or period last last million compensation in of adjusted expense this same $X.XX million $X.X million same

to the XXXX, that's partially increase period services, to XX% increase and by a XX% primarily ended January a a decline year in XX% to in in total due date million For offset nine $XX subscription a and X% month million, our increased fees in revenues fees XX, revenues. for to and year-over-year license X% $XX.X increase

this compared was representing operating date adjusted X% of period last rating $X.X So to and million XX% our to year an same in $XX.X the million margin or income year.

strong of position The investments balance end at XX%. reflects months XX% year increase our year-over-year an RPO the of million or remains past at last cloud with This of ago approximately our represents period RPO $XXX sheet, of from customers or which the remaining that $X.X duration the to bookings increased obligation million an of as million Taking look income, X.X% the compared excited to EBITDA platform. we margin growth this period and Adjusted $XX.X quarter record and million over up $XXX.X make in term per the EBITDA $X.XX or cash to quarter. this and representing our net performance continue diluted longer million to share an to is agreements million adjusted increase diluted adjusted strong totalled year. a in $XX.X compared Our the to increase commitments backlog the We year. our in a were period approximately in refer and share our finance of same of $XX last per same the $X.XX as XX%. with XX

our year. paid delays we I'd of same like compares quarter this collections to and XX some and days outstanding and and to over the that daily primarily At days During increase compared to $X.X period of to due timing XX, million was January last year when of to sales turn time, in dividends call XXXX the XX the in billing as is this questions. last


Pfau. our first Matt Please go ahead. [Operator instructions] we'll take And from question

Matt Pfau

normal to thanks delays for quarter. a and just perspective. return there commentary in question on closure bit around of drivers follow the what my be on are to to the going the from more what taking to what's to deal a cadence little and then get guys, a on detail and needs perhaps helpful Hey terms Wanted good would happen deal up it more

Allan Dow

driven to the quarters spend, a where ground getting to going. desire they've experienced this a they've budget, project they They've you they've put Matt, concerns is ability that resources we funding, got contract. just adequate speak, of the got for the have don't to can to but until the so Allen, boots to to the committed really got couple folks staffing don't get Yeah, thanks for row It have the got want on in really a question. now a by get spend the

they started. delays place people are and until roles those critical bit projects a waiting unpredictable. in get get up free little filled calendar they're their So Those

this that unpredictable. Sometimes is and it's in hiring timeframe side hired involving people the market shortage on get labor their we're a to onboarded in little

made down of anticipated So magnitude projects the we completion the that's of this happened end couple in we done We extended here quarter. of that didn't into of hard a But on the the nearly fourth some getting just progress QX a beginning those had already. there couple we're but have at and were us at come some what to quarter of quarter, order them QX. to the working that and third didn't in those getting

a So unpredictable. it's little

are going when We're on some and they I later to office, it. and around in get the folks work person, back the we're get of topics in do bring think anticipating. their in I that'll and spring some help think sitting table to these stability back can people to which

good a summer with to it, So predictable. Matt, get eye more maybe we'll this

Matt Pfau

recently or that And a while then on resulting is potential That economic clients slowdown holding to that's deal deals obviously up? in but out what hearing ask sort very all? then there your for then Great. wanted have concerns with closures from the are that economy now, front? more inflation any Are pipeline you been are And around there impacting concerns concerns, geopolitical at and some the you of helpful. that

Allan Dow

or know all from that chain pendulum is times yet. went we on quick working upward grappling The we're we've on one we booming three for this in other projects trend fashion, with swung pandemic the state time an been maybe was with it's marketplace. and as of in best to fresh. but how people the the are spiral way going projects pretty like over But, stuff, is whatever change, an stuff, that that is decades whether geopolitical for Not one ridden the change a of on because and are deal awfully the downward in to supply when ours,

see really up but If impact slows it So tighten economy short on and don't I we'll a think term then the nothing impact, the down may term. spending, Matt. longer any be people yet,

as in topic of seen haven't We a discussion come that yet.

Matt Pfau

and the sustainability machine guys you to in press and important that me learning you goals. those initiatives initiatives release becoming what for for of release seeing were one in last And and it. driving Got companies demand sustainability your the achieving more you could on talked sustainability what referencing about have you software. you're press AI terms in Maybe just expand

Allan Dow


cost at there by to long sure How this possible get really a been forever products driven been the the lowest delivery have the chains So time. term. economic supply goods. That's Yeah. place right to it get and of you make on

focus more which impact? is on around Over and, is the the of that, a more And process, or environment. the part the been sustainability is years XX and more or environmental been, on the one years been driven last but looking has impact What there's initiatives. five at environmental maybe of six and it's just comes global the to the which economic more as less impact visibility

and are issue the So proper then the adamant labor use around come recent world. of and really up a more more about around has at, people standards that labor

that's important an So initiative.

and announced on times now, year has in acting taking that been product announced People several we are really Our and hold. traceability earlier have the it we deployed it.

of their challenges proper and able to them can play. sourced on the to their look do, to getting into with supply handle and that we're being chain through coming sure be are get back helping those are regulations they so make they overcome are -- what responsibly customers standards. People labor the some need a products Now that and

component are to on address trying So providers those alone, a products this needs be really driving are of come it's the initiatives. of on really marketplace. traceability we're about, and some people to that are that There working responsible opportunities and it's number standalone

Matt Pfau

Appreciate Great. Thanks it. guys.

Allan Dow

Thank you, Appreciate it. sir.


Please from ahead. Cummins. question take go Zach we'll our And next

Zach Cummins

QX Congrats seeing like processes. touch on approval just finish good kind environment on here this bit and I of the and so into Hi, strong to far execute the Allan, what's little some line given quarter a the some to you Yeah. afternoon. moved curious challenges with and deals getting through ones confidence in can year? able strongest the more close results were in seen some I to QX but you're still the the to and what ACV It you've you across really wanted of delayed here of QX. of really now the put were these those, have that in end sounds up QX that was

Allan Dow

our several got contracts we've got We've them belt. executed. already under Yeah,

all So getting the Zach, and magnitude and get projects just timing first events we're to we're of number off negotiated getting a the those in lot way folks, the the not through then the and there. relative of with phase quite the sequence month, but we're contracts kicked on to transactions of of pipeline there going the movement and and

hit are to us get very, right short but we that we that something get out play be contracts unless could done, it of very level are just the play And maybe timing already we'll fairly have that confidence to around happen, give there, crazy, that the which that completed we'll the momentum strong performance. the ones that that's deals active -- now. into So, really momentum always term able

Zach Cummins

this on and this the upon of of considering go base environment? helpful. how shortages that's some the sort Is end some your just is existing deals? at of are delayed of about to you're to of deal approach causing any how in And of closing and project just you differentiated trying trying timelines seeing curious some staffing focus to some really the trying Understood here, I'm of a guys close through the really those relationships? more there these challenging navigate expand customers you

Allan Dow

to focus internal more great They're done say they've great others. expanding existing couple lot things. that more of make is same a our we've haven't practices but with in sure that some customers. where our the I that to footprint of work of but place. underway projects is with with but they're have customers a changed customers existing labor wouldn't Yeah, we Traceability most predominantly, we dealing trying a predominantly, issues -- existing example got good their

to the impact to trying can projects done customers get to couple a forward We we've they're that backfill the proposals to in the that's deploy putting forward challenges those we're that on work and they up minimize support customer. the in client standalone. we the of done. their given of get of solution, to from any by things the the So otherwise can't in to internally we're the staff so that still very week. moving historically statement order relative and trying labor relative minimizing steps that their prescriptive facing, that put need We to that it a really may on and work project labor done the We're on but impact amount time staffing been is have the burden effectively do we're existing putting offering a minimize

we little we've size XX smaller more launching be up and actions they're lot to couple months, other a of bite project They're about to smaller If then feel make at about customers really And a there. talked times to those something done going a is get we're couple The breaking taking those scrutiny that's into to they're project. this more of just thing chunks. hesitant into we've projects. a XX the sure months taking So deploy. going and a looking XX or better the

that it and impact we've most taken do going. that return So give biggest and you a up. let's the on we important to the the will first project path minimize break say, get their investment thing can a What's

a plus several fourth to quarter that we're That of any we going out one was those my a less earlier. of won't going of deals this the transactions. higher getting getting the have So chance have loose by a There's comment maybe million We in but flow last we're those in or commitments. them of had play broken and to few see those quarter that year.

hopefully that for covered So Zach. you, I point

Zach Cummins

color all front. appreciate absolutely on Yeah, the that additional

during in question So, more even for that that final thank around events team the whether planned you're your pretty you about me, Can that you for talk people. bolster are and Allan the additional that what's really tough you're internal what investments about, travel the is particular you from looking and any attract more hosting person script hiring talk environment? talent of, and to is in that just of ways some kind headcount been area there to your hiring you're a be looking

Allan Dow

in that things, appears. of events couple to person going there Yeah, more are be

gone and in marketing flipped conferences So few be kinds customer investor analyst to of things are conference them our have events, have People person. back. of person. coming and in those A

getting looking you're well, by to airplane back on the me as it, So way. forward the

minimal to we mostly next get on not the going in level last and that's welcoming back the but year, the are half So happen. almost very they prior nonexistent people back don't back the anticipate on were going us travel, We're site. to go I that of through we'll back first certainly internal two years, to site. were pandemic, They're but travel, to

impact more be going we're is bigger in on So the going really more and getting investment there. The organization. our engagements to

got develop some invest to these deeper some people strong We are in think that go more of -- to our in to every to need on little need we we have footprint. in that subscription business elements in support we cloud there out in, headcount in cloud scale getting We've bring We that to of business still area. plans R&D want support really our more to some we business, need our the If expand areas. applications we're them. our order but expand requires business a plan,

to order with our in expanding expanding adding but headcount revenue more North in region. as well. every staff sales So expanding in into going globally. Asia. that. means We're in some that to there. R&D We're We're team our bring do back percent Europe a America. we're of investment line We're in that expanding R&D, to as got to We're expanding keep investment growth We're going continuing our here into we

So In we've got headcount pull that, to got that support addition marketing services into backlog area. to we we order make, of our business, even we to want and SIs investment, we though in can need from there's we implementation rely are individuals a team on support process. predominance our SIs, need doing our the even to when their the work of them

going business. to our we're staffing up in So services be

untouched there's an that's of from investment business So area standpoint. that not our

we good do do. of great our culture sustainability, very of got Longevity then compensation impact live all we competitive We've evidence at it's exciting the improving world environmental on is -- through second first I our the the chains love and our world. people, Traceability, by what an fact Well, our of chain those in. question is think compete? all, structure. things customers impact here of on environment are our a to able we're be supply about impact your of staff The team the working space. have business, to that. through successfully a a customers, feel The We part feel half Supply thriving why they members was we people that to The want good. to this growing are company. good efficiency

open our They're successful in. people. part we've They to attract we're we far to the been coming and So so team roles filling able at, at of want be have.

Zach Cummins

here It's and really the quarter. helpful. questions Understood. best Appreciate luck taking of coming you my in

Allan Dow

much joining very Zach. us afternoon. right, All Thanks this for


ahead. move next We'll instructions] go Soderstrom. Please [Operator Anja to

Anja Soderstrom

you Hi, and my quarter. taking for questions on great a thank congratulations

about in First you but talent, to that? offset able you're the curious, talking wage and attracting you're going hiring you're in how I'm a inflation how of be to or do lot and absorb playing that see successful

Allan Dow

Anja. a yeah, certainly have talent and Well compensation well requisite deserved, deserves there to in inflation right is

that. in So, good question

We choice, fairly compensated. to have are that sure no make but people

going So that get our going up the we bottom to as we're that impact, and through business, step grow scale we to plate That's an sure make to is the but have line efficiency. the happens.

Our really our do efficiency work services instance, This is team the methodology customers. at for hard to with improve the helps. trying of working we prescriptive

make work on efficiency So We our for cloud even more we just we've In a It's getting a base done dollar deployment. our not get we're fair on there. to a the out basis. dollar business, for through lot those can factors. got customer a natural sure on cost one expanding basis, though have compensation scale one

On higher have we the get though, even cloud do money, we cost in So business. the inflation. our from efficiencies where through spend we scale

We these did we're year that's because I we not at commentary we can in of we investments think some mentioned So, earlier, can't, last inflation. budget. but making, all it's my that don't a balanced that of of anticipate we as pace grow EBIT the same

impact They're them to nine in just productive. sales for in of to of over that's term. fully out couple It get in the of Some six people business going advance months board getting model. quarters. the takes an We to longer the be next have

put down want get a So make the money return on now. that to we investment. We'll the investment we'll and

Anja Soderstrom

Okay. also on That's that. from Thank expect speak you. the color. little those you in color more bit release. curious good can you just then And your we press give and what about about partnerships us a Can mentioned

Allan Dow

projects gain success. and Yeah, of and are are same getting we us to up deployed with very working Good with Good that aligned them up getting the seeing getting on the Yeah. of question. is the efficiency important. hard world customer objectives follow have really way effectiveness the We're much close we partners systems and the and They're running question. project.

going. in education and we objectives. very the We've getting with our have and done pretty alignment some process good their objectives, investments So onboarding the good objectives, prospect

consultants getting are certified go. trained So ready to their and

exciting. on that's job. when willing can so They're So very get the investment been to they -- to that be them them the put get to in effective educated they're there

as opportunities that aware new of. nice us we So to synergies. well They're weren't otherwise introducing

So projects. running we're the and which up our phase but much one successfully phase along bodes that's If up we of two objective and and getting efficiently tackling up customers well really is these spinoff effect breaking effectively, part and growth model. that, for is a that that's exciting primary get live phase of two, and then that the do and nice quicker, running comes an that for

Anja Soderstrom

me. Thank That for all you. was

Allan Dow

All Anja. you, good afternoon Thank right. a way. the you, evening for Have by

Anja Soderstrom

likewise. you, Thank Yeah.


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

Allan Dow

today much thank on us look for joining earnings to very quarter. afternoon right, the questions, participants especially speaking follow this you for helping ones. discuss All with the forward Thank you and to and We in to you your the next appreciate our all and again some up us results so time Chloe. good the call


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

and any disconnect may wonderful You time have a afternoon.