American Software Inc (AMSWA) Reports Mixed Q2 2024 Financial Results Amid Strategic Shifts

  • Subscription fees increased 8% year-over-year in Q2, reaching $13.4 million.

  • Total revenue for Q2 was down 6% year-over-year, with a significant drop in service and maintenance fees.

  • The adjusted EBITDA margin was 16% of revenue from continuing operations in Q2.

  • AMSWA continues to strengthen its focus on innovation in the supply chain with strategic acquisitions and divestments.

On November 16, 2023, American Software Inc (NASDAQ:AMSWA) released its 8-K filing detailing financial results for the second quarter of fiscal year 2024. The company reported an 8% increase in subscription fees, which amounted to $13.4 million for the quarter ending Oct. 31, 2023. However, total revenue fell 6% to $25.7 million compared to the same period last year, primarily due to a decrease in service and maintenance fees.

Financial performance summary

AMSWA’s recurring revenue streams, which include maintenance and cloud subscriptions, were $21.5 million, or 84% of total revenue in the quarter, up from 78% a year earlier. Despite this increase in the share of recurring revenue, maintenance revenue fell 8% to $8.1 million, and professional services and other revenue saw a significant decline of 26% to $4.0 million. The decrease in professional services and other income was mainly due to lower project work and the outsourcing of some services to partners.

Operating income for the quarter was $1.2 million, down significantly from $2.6 million in the same period last year. GAAP net income from continuing operations also fell to $0.6 million, or $0.02 per share. fully diluted share compared to $1.9 million or $0.06 per fully diluted share in the same period last year. Adjusted net income from continuing operations, which excludes non-cash stock-based compensation expense and amortization of acquisition-related intangible assets, was $2.9 million, or $0.08 per share. fully diluted share, down slightly from $3.2 million or $0.09 per share. fully diluted share. for the same period last year.

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Strategic development and Outlook

AMSWA has been actively transforming its business, as highlighted by the acquisition of Garvis BV, a SaaS startup specializing in AI-native demand forecasting. This acquisition is expected to enhance AMSWA’s supply chain planning capabilities. In addition, the company divested its information technology consulting firm, The Proven Method, and implemented a share repurchase program that purchased 430,576 shares at an average price of $11.20 per share.

For fiscal year 2024, AMSWA has updated its financial outlook from continuing operations and expects total revenue of $100.0 million to $104.0 million, with adjusted EBITDA of $14.5 million to $16.0 million.

Key points in balance sheet and cash flow

The company’s balance sheet remains robust, with cash and investments totaling approximately $83.9 million. AMSWA continued to return value to shareholders, paying dividends of approximately $3.8 million during the quarter. Net cash provided by operating activities for continuing operations was $6.4 million for the six months ended October 31, 2023.

In conclusion, while AMSWA experienced growth in subscription fees, the overall decline in revenue and lower earnings reflects the challenges of changing service models and strategic realignments. The company’s focus on supply chain innovation and AI-powered solutions positions it for future growth in a rapidly evolving industry.

For more detailed information, investors and stakeholders are encouraged to review the full financial statements and management comments in the 8-K filing.

Contact persons for financial information and press inquiries may be directed to Vincent C. Klinges, Chief Financial Officer of American Software, Inc., at (404) 264-5477.

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Explore the full 8-K earnings release (here) from American Software Inc for additional details.

This article first appeared on GuruFocus.