Subscription Fee Growth of 18% and Adjusted EBITDA Margin of 14% in Q4

American Software, Inc. (NASDAQ:AMSWA) today reported preliminary financial results for the fourth quarter and fiscal year 2023.

Key Fourth Quarter Financial Highlights:

Subscription fees were $13.0 million for the quarter ended April 30, 2023, an 18% increase compared to $11.1 million for the same period last year.
Total revenues for the quarter ended April 30, 2023 decreased 14% to $29.9 million, compared to $34.6 million for the same period of the prior year, principally due to a decline in services and license fee revenue.
Recurring revenue streams for Maintenance and Cloud Subscriptions were $21.2 million or 71% of total revenues in the quarter ended April 30, 2023 compared to $19.8 million or 57% of total revenues in the same period of the prior year.
Maintenance revenues for the quarter ended April 30, 2023 decreased 7% to $8.2 million compared to $8.8 million for the same period last year reflecting the shift to cloud revenue as a client preference.
Professional services and other revenues for the quarter ended April 30, 2023 decreased 32% to $8.0 million compared to $11.7 million for the same period last year. The decline was primarily driven by a 43% decrease in non-core project revenue in our IT Consulting business unit. For the Supply Chain business, professional services revenues for the quarter ended April 30, 2023 decreased by 23% to $4.6 million when compared to $6.0 million in the same period last year due to lower project work and outsourcing of some services to partners.
Software license revenues were $0.7 million for the quarter ended April 30, 2023 compared to $3.1 million in the same period last year.
Operating earnings for the quarter ended April 30, 2023 were $2.3 million compared to $5.5 million for the same period last year.
GAAP net earnings for the quarter ended April 30, 2023 were $2.9 million or $0.08 per fully diluted share compared to $3.6 million or $0.10 per fully diluted share for the same period last year.
Adjusted net earnings for the quarter ended April 30, 2023, which excludes non-cash stock-based compensation expense and amortization of acquisition-related intangibles, were $4.1 million or $0.12 per fully diluted share compared to $4.4 million or $0.13 per fully diluted share for the same period last year.
EBITDA was $3.0 million for the quarter ended April 30, 2023 compared to $6.4 million for the same period last year.
Adjusted EBITDA was $4.3 million for the quarter ended April 30, 2023 compared to $7.5 million for the same period last year. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, income tax expense and non-cash stock-based compensation expense.

Key Fourth Quarter of Fiscal Year 2023 highlights:

Clients & Channels

Notable new and existing customers placing orders with the Company in the fourth quarter include: Annex Products Pty Ltd., CertainTeed LLC., DecoPac, Inc, Farmlands Cooperative Society Ltd., Heidelberg Materials US Inc., ICL, Inc., Libbey Glass LLC, Tilly's Inc. and Yazaki, Inc.
During the quarter, SaaS subscription and software license agreements were signed with customers located in the following eight countries: Australia, Belgium, Mexico, New Zealand, Norway, Sweden, the United Kingdom and the United States.

Company & Technology

Announced in February, Allan Dow, president of Logility, Inc., and Elaine Videau, director of planning for Tillamook County Creamery Association, a farmer-owned co-op, were two winners of this year's Food Logistics' Rock Stars of the Supply Chain award. This annual award program recognizes influential individuals in the industry whose achievements, hard work and vision have shaped the global cold food supply chain.
In March, Allan Dow, president of Logility, Inc. and Marti Kirsch, EVP marketing for Logility, Inc. were announced as winners of the 2023 Pros to Know award by Supply and Demand Chain Executive. This annual award recognizes outstanding executives whose accomplishments offer a roadmap for other leaders looking to leverage their supply chain for competitive advantage.
In August, Logility was recognized with the Gartner Peer Insights "Voice of the Customer" award for Supply Chain Planning Solutions. This Gartner research document synthesizes Gartner Peer Insights' customer feedback on supply chain planning solutions for a specific 18-month period to offer peer perspective.

Key Fiscal 2023 Year to Date Financial Highlights:

Subscription fees were $50.4 million for the twelve months ended April 30, 2023, a 20% increase compared to $42.1 million for the same period last year.
Total revenues for the twelve months ended April 30, 2023 were $123.7 million compared to $127.6 million for the same period last year. Excluding our non-core IT Consulting business unit, total revenues from our Supply Chain Management segment increased 2% compared to the same period last year.
Recurring revenue streams for Maintenance and Cloud Services were $85.0 million and $78.7 million or 69% and 62% of total revenues for the twelve-month periods ended April 30, 2023 and 2022, respectively.
Maintenance revenues for the twelve months ended April 30, 2023 were $34.6 million, a 6% decrease compared to $36.6 million for the same period last year.
Professional services and other revenues for the twelve months ended April 30, 2023 decreased 17% to $35.9 million compared to $43.5 million for the same period last year.
Software license revenues were $2.8 million compared to $5.4 million for the same period last year.
For the twelve months ended April 30, 2023, the Company reported operating earnings of approximately $10.5 million compared to $13.2 million for the same period last year.
GAAP net earnings were approximately $10.4 million or $0.31 per fully diluted share for the twelve months ended April 30, 2023 compared to $12.8 million or $0.37 per fully diluted share for the same period last year.
Adjusted net earnings for the twelve months ended April 30, 2023, which exclude stock-based compensation expense and amortization of acquisition-related intangibles were $15.2 million or $0.45 per fully diluted share, compared to $16.0 million or $0.47 per fully diluted share for the same period last year.
EBITDA was $13.7 million for the twelve months ended April 30, 2023 compared to $17.3 million for the same period last year.
Adjusted EBITDA was $18.9 million for the twelve months ended April 30, 2023 compared to $21.3 million for the twelve months ended April 30, 2022. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, income tax expense and non-cash stock-based compensation.

The overall financial condition of the Company remains strong, with cash and investments of approximately $115.5 million. During the fourth quarter of fiscal year 2023, the Company paid shareholder dividends of approximately $3.7 million.

"We endured a number of macroeconomic headwinds throughout the past year and were pleased to deliver adjusted EBITDA above our original guidance entering FY ‘23," said Allan Dow, CEO and President of American Software. "While we have seen signs that the economic challenges facing our customers are beginning to abate, our initial outlook for FY '24 reflects some conservatism as we manage through the current uncertainty. However, we remain confident in the long-term growth prospects of our business given the secular tailwinds from digital supply chain transformation and our platform expansion."

Fiscal Year 2024 Financial Outlook

Total revenues of $120.0 million to $126.0 million, including total recurring revenues of $88.0 million to $92.0 million.
Adjusted EBITDA of $19.0 million to $21.0 million.

About American Software, Inc.

Atlanta-based American Software, Inc. (NASDAQ:AMSWA), through its operating entity Logility delivers an innovative AI-powered platform that enables enterprises to accelerate their digital supply chain transformation from product concept to client availability via the Logility® Digital Supply Chain Platform, a single platform spanning Product, Demand, Inventory, Supply, Sourcing, Deploy, Corporate Responsibility Environment, Social and Governance (ESG) and Network Optimization aligned with Integrated Business Planning.

Serving clients such as Big Lots, Bunzl Australasia, Carter's, Destination XL, Glen Raven, Hostess, Husqvarna Group, Jockey International, Johnson Controls, Parker Hannifin, Red Wing Shoe Company, Spanx and Taylor Farms; our solutions are marketed and sold through a direct sales team as well as an indirect global value-added reseller ("VAR") distribution network.

Fueled by supply chain master data, allowing for the automation of critical business processes through the application of artificial intelligence and machine learning algorithms to a variety of internal and external data streams, the comprehensive Logility portfolio delivered in the cloud includes advanced analytics , supply chain visibility, demand, inventory and replenishment planning, Sales and Operations Planning (S&OP), Integrated Business Planning (IBP), supply and inventory optimization, manufacturing planning and scheduling, network design and optimization (NDO), retail merchandise and assortment planning and allocation, product lifecycle management (PLM), sourcing management, vendor quality and compliance, and product traceability. For more information about Logility, please visit www.logility.com. Logility is a wholly-owned subsidiary and operating entity for American Software, Inc. (NASDAQ:AMSWA). You can learn more about American Software at www.amsoftware.com, or by calling (404) 364-7615 or emailing kliu@amsoftware.com.

Operating and Non-GAAP Financial Measures

The Company includes non-GAAP financial measures (EBITDA, adjusted EBITDA, adjusted net earnings and adjusted net earnings per share) in the summary financial information provided with this press release as supplemental information relating to its operating results. This financial information is not in accordance with, or an alternative for, GAAP-compliant financial information and may be different from the operating or non-GAAP financial information used by other companies. The Company believes that this presentation of EBITDA, adjusted EBITDA, adjusted net earnings and adjusted net earnings per share provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, and income tax expense. Adjusted EBITDA represents GAAP net earnings adjusted for amortization of intangibles, depreciation, interest income & other, net, income tax expense and non-cash stock-based compensation expense.

Forward Looking Statements

This press release contains forward-looking statements that are subject to substantial risks and uncertainties. There are a number of factors that could cause actual results or performance to differ materially from what is anticipated by statements made herein. These factors include, but are not limited to, continuing U.S. and global economic uncertainty and the timing and degree of business recovery; the irregular pattern of the Company's revenues; dependence on particular market segments or customers; competitive pressures; market acceptance of the Company's products and services; technological complexity; undetected software errors; potential product liability or warranty claims; risks associated with new product development; the challenges and risks associated with integration of acquired product lines, companies and services; uncertainty about the viability and effectiveness of strategic alliances; the Company's ability to satisfy in a timely manner all Securities and Exchange Commission (SEC) required filings and the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted under that Section; as well as a number of other risk factors that could affect the Company's future performance. For further information about risks the Company could experience as well as other information, please refer to the Company's current Form 10-K and other reports and documents subsequently filed with the SEC. For more information, contact: Kevin Liu, American Software, Inc., (626) 657-0013 or email kliu@amsoftware.com.

Logility® is a registered trademark of Logility, Inc. Other products mentioned in this document are registered, trademarked or service marked by their respective owners.

AMERICAN SOFTWARE, INC.
Consolidated Statements of Operations Information
(In thousands, except per share data, unaudited)

			Fourth Quarter Ended							Twelve Months Ended
			April 30,							April 30,
				2023		2022		Pct Chg.			2023		2022	Pct Chg.
Revenues:
	Subscription fees		$	13,021	$	11,061		18	%	$	50,412	$	42,066	20	%
	License fees			727		3,101		(77	%)		2,752		5,390	(49	%)
	Professional services & other			7,993		11,725		(32	%)		35,938		43,476	(17	%)
	Maintenance			8,173		8,762		(7	%)		34,557		36,621	(6	%)
		Total Revenues		29,914		34,649		(14	%)		123,659		127,553	(3	%)

Cost of Revenues:
	Subscription services			4,149		3,324		25	%		15,831		13,383	18	%
	License fees			164		507		(68	%)		705		1,104	(36	%)
	Professional services & other			5,969		7,807		(24	%)		26,423		30,306	(13	%)
	Maintenance			1,652		1,456		13	%		6,409		6,965	(8	%)
		Total Cost of Revenues		11,934		13,094		(9	%)		49,368		51,758	(5	%)
Gross Margin				17,980		21,555		(17	%)		74,291		75,795	(2	%)
Operating expenses:
	Research and development			4,547		4,296		6	%		17,767		17,600	1	%
	Sales and marketing			5,250		5,633		(7	%)		22,184		22,867	(3	%)
	General and administrative			5,888		6,116		(4	%)		23,684		21,960	8	%
	Amortization of acquisition-related intangibles			25		53		(53	%)		106		212	(50	%)

		Total Operating Expenses		15,710		16,098		(2	%)		63,741		62,639	2	%
Operating Earnings				2,270		5,457		(58	%)		10,550		13,156	(20	%)
Interest Income & Other, Net				1,028		(778	)	nm			2,336		681	243	%
Earnings Before Income Taxes				3,298		4,679		(30	%)		12,886		13,837	(7	%)
Income Tax Expense				431		1,098		(61	%)		2,465		1,055	134	%
Net Earnings			$	2,867	$	3,581		(20	%)	$	10,421	$	12,782	(18	%)
Earnings per common share: (1)
	Basic		$	0.08	$	0.11		(27	%)	$	0.31	$	0.38	(18	%)
	Diluted		$	0.08	$	0.10		(20	%)	$	0.31	$	0.37	(16	%)

Weighted average number of common shares outstanding:
		Basic		33,916		33,587					33,761		33,365
		Diluted		33,993		34,266					33,992		34,305

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AMERICAN SOFTWARE, INC.
NON-GAAP MEASURES OF PERFORMANCE
(In thousands, except per share data, unaudited)

		Fourth Quarter Ended								Twelve Months Ended
		April 30,								April 30,
			2023			2022		Pct Chg.			2023			2022		Pct Chg.
NON-GAAP Operating Earnings:
Operating Earnings (GAAP Basis)		$	2,270		$	5,457		(58	%)	$	10,550		$	13,156		(20	%)
	Amortization of acquisition-related intangibles		233			53		340	%		834			212		293	%
	Stock-based compensation		1,240			1,045		19	%		5,184			3,955		31	%
NON-GAAP Operating Earnings:			3,743			6,555		(43	%)		16,568			17,323		(4	%)

Non-GAAP Operating Earnings, as a % of revenue			13	%		19	%				13	%		14	%


		Fourth Quarter Ended								Twelve Months Ended
		April 30,								April 30,
			2023			2022		Pct Chg.			2023			2022		Pct Chg.
NON-GAAP EBITDA:
Net Earnings (GAAP Basis)		$	2,867		$	3,581		(20	%)	$	10,421		$	12,782		(18	%)
	Income Tax Expense		431			1,098		(61	%)		2,465			1,055		134	%
	Interest Income & Other, Net		(1,028	)		778		nm			(2,336	)		(681	)	243	%
	Amortization of intangibles		447			768		(42	%)		2,030			3,394		(40	%)
	Depreciation		324			201		61	%		1,129			745		52	%
EBITDA (earnings before interest, taxes, depreciation and amortization)			3,041			6,426		(53	%)		13,709			17,295		(21	%)

	Stock-based compensation		1,240			1,045		19	%		5,184			3,955		31	%
Adjusted EBITDA		$	4,281		$	7,471		(43	%)	$	18,893		$	21,250		(11	%)

EBITDA, as a percentage of revenues			10	%		19	%				11	%		14	%

Adjusted EBITDA, as a percentage of revenues			14	%		22	%				15	%		17	%


		Fourth Quarter Ended								Twelve Months Ended
		April 30,								April 30,
			2023			2022		Pct Chg.			2023			2022		Pct Chg.
NON-GAAP EARNINGS PER SHARE:
Net Earnings (GAAP Basis)		$	2,867		$	3,581		(20	%)	$	10,421		$	12,782		(18	%)
	Amortization of acquisition-related intangibles (2)		199			39		410	%		667			164		307	%
	Stock-based compensation (2)		1,057			765		38	%		4,141			3,053		36	%
Adjusted Net Earnings		$	4,123		$	4,385		(6	%)	$	15,229		$	15,999		(5	%)

Adjusted non-GAAP diluted earnings per share		$	0.12		$	0.13		(8	%)	$	0.45		$	0.47		(4	%)

		Fourth Quarter Ended								Twelve Months Ended
		April 30,								April 30,
			2023			2022		Pct Chg.			2023			2022		Pct Chg.
NON-GAAP Earnings Per Share
Net Earnings (GAAP Basis)		$	0.08		$	0.10		(20	%)	$	0.31		$	0.37		(16	%)
	Amortization of acquisition-related intangibles (2)		0.01			-		-		$	0.02			0.01		100	%
	Stock-based compensation (2)	$	0.03			0.03		0	%	$	0.12			0.09		33	%
Adjusted Net Earnings		$	0.12		$	0.13		(8	%)	$	0.45		$	0.47		(4	%)


		Fourth Quarter Ended								Twelve Months Ended
		April 30,								April 30,
			2023			2022		Pct Chg.			2023			2022		Pct Chg.
Amortization of acquisition-related intangibles
	Cost of Subscription Services	$	208		$	-		-		$	729		$	-		-
	Operating expenses		25			53		(53	%)		106			212		(50	%)
Total amortization of acquisition-related intangibles		$	233		$	53		340	%	$	835		$	212		294	%

Stock-based compensation
	Cost of revenues	$	66		$	58		14	%	$	244		$	246		(1	%)
	Research and development		139			107		30	%		576			380		52	%
	Sales and marketing		143			145		(1	%)		711			607		17	%
	General and administrative		892			735		21	%		3,653			2,722		34	%
Total stock-based compensation		$	1,240		$	1,045		19	%	$	5,184		$	3,955		31	%


(1) - Basic per share amounts are the same for Class A and Class B shares. Diluted per share amounts for Class A shares are shown above. Diluted per share for Class B shares under the two-class method are $0.08 and $0.31 for the three and twelve months ended April 30, 2023, respectively. Diluted per share for Class B shares under the two-class method are $0.11 and $0.38 for the three and twelve months ended April 30, 2022, respectively.

(2) - Tax affected using the effective tax rate excluding a discrete item related to excess tax benefit for stock options for the three and twelve month periods ended April 30, 2023 of 14.8% and 20.1% and 26.8% and 22.8% for the three and twelve month periods ended April 30, 2022, respectively.

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AMERICAN SOFTWARE, INC.
Consolidated Balance Sheet Information
(In thousands)
(Unaudited)
			April 30,			April 30,
				2023			2022

Cash and Cash Equivalents			$	91,600		$	110,690
Short-term Investments				23,451			16,826
Accounts Receivable:
	Billed			25,405			20,619
	Unbilled			2,604			2,989
Total Accounts Receivable, net				28,009			23,608
Prepaids & Other				7,081			5,067
Current Assets				150,141			156,191

Investments - Non-current				486			-

PP&E, net				6,444			3,654
Capitalized Software, net				391			1,586
Goodwill				29,558			25,888
Other Intangibles, net				2,143			147
Deferred Sales Commissions - Non-current				1,659			2,050
Lease Right of Use Assets				442			935
Other Non-current Assets				4,685			2,384
Total Assets			$	195,949		$	192,835

Accounts Payable			$	2,427		$	2,506
Accrued Compensation and Related costs				4,281			6,918
Dividend Payable				3,756			3,700
Operating Lease Obligation - Current				411			541
Other Current Liabilities				2,328			1,871
Deferred Revenues - Current				43,124			41,953
Current Liabilities				56,327			57,489

Operating Lease Obligation - Non-current				65			461
Deferred Tax Liability - Non-current				-			1,772
Other Long-term Liabilities				223			137
Long-term Liabilities				288			2,370

		Total Liabilities		56,615			59,859

Shareholders' Equity				139,334			132,976

Total Liabilities & Shareholders' Equity			$	195,949		$	192,835


AMERICAN SOFTWARE, INC.
Condensed Consolidated Cashflow Information
(In thousands)
(Unaudited)

			Twelve Months Ended
			April 30,
				2023			2022

		Net cash provided by operating activities	$	524		$	29,020

		Purchases of property and equipment, net of disposals		(3,922	)		(934	)
		Purchase of business, net of cash acquired		(6,500	)		-

		Net cash used in investing activities		(10,422	)		(934	)

		Dividends paid		(14,833	)		(14,632	)
		Proceeds from exercise of stock options		5,641			8,578

		Net cash used in financing activities		(9,192	)		(6,054	)

		Net change in cash and cash equivalents		(19,090	)		22,032
		Cash and cash equivalents at beginning of period		110,690			88,658

		Cash and cash equivalents at end of period	$	91,600		$	110,690

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American Software Reports Fourth Quarter and Fiscal Year 2023 Results