Logility Supply Chain Solutions, Inc.(LGTY) - 2025 Q2 - Quarterly Report

Part I—Financial Information This section presents the company's unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements The unaudited condensed consolidated financial statements for the period ended October 31, 2024, show a decrease in total assets and a slight decline in total shareholders' equity compared to April 30, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 31, 2024 | Apr 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $44,589 | $59,512 | | Total current assets | $107,728 | $118,696 | | Total assets | $180,503 | $192,444 | | Deferred revenue | $38,057 | $47,621 | | Total liabilities | $50,408 | $61,963 | | Total shareholders' equity | $130,095 | $130,481 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended Oct 31, 2024 | Three Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2024 | Six Months Ended Oct 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $25,286 | $25,690 | $51,478 | $51,591 | | Subscription fees | $14,522 | $13,358 | $29,313 | $27,121 | | Gross margin | $16,509 | $16,401 | $33,977 | $33,258 | | Operating income | $1,036 | $1,229 | $2,880 | $2,621 | | Net earnings | $1,738 | $2,363 | $3,791 | $5,111 | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended, in thousands) | Cash Flow Activity | Oct 31, 2024 | Oct 31, 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(7,321) | $8,054 | | Net cash used in investing activities | $(280) | $(23,697) | | Net cash used in financing activities | $(7,322) | $(12,082) | | Net change in cash and cash equivalents | $(14,923) | $(27,725) | - On August 20, 2024, the Company eliminated its Class B Common Stock by reclassifying each share into 1.2 shares of Common Stock, resulting in a $3.8 million reduction to net earnings attributable to common stockholders for EPS calculation purposes[30][59] Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies and events, including reclassification of Class B common stock, revenue recognition, and details on the acquisition of Garvis AI and divestiture of The Proven Method - As of October 31, 2024, the company has remaining performance obligations of approximately $120.0 million, expecting to recognize about 52% of this amount as revenue over the next 12 months[46] - In September 2023, the company acquired Garvis AI Limited for approximately $25.0 million in cash, with the purchase price allocation including $16.2 million to goodwill and $9.0 million to current technology[75][77][78] - The company disposed of its IT staffing firm, The Proven Method (TPM), in September 2023 for approximately $2.1 million in cash, with TPM's results presented as discontinued operations[29][80] Segment Operating Income (in thousands) | Segment | Three Months Ended Oct 31, 2024 | Three Months Ended Oct 31, 2023 | Six Months Ended Oct 31, 2024 | Six Months Ended Oct 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Supply Chain Management | $6,143 | $5,597 | $12,731 | $11,768 | | Other | $(5,107) | $(4,368) | $(9,851) | $(9,147) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance amidst a stable but underwhelming global economic environment, focusing on the SCM segment's increased operating income and the shift to a SaaS model - The company's core business is its Supply Chain Management (SCM) segment, leveraging a SaaS cloud-based platform with AI and machine learning, serving approximately 550 clients in 80 countries[115][116][121] - The company views the challenging global macro-economic environment as a potential driver for clients to upgrade technology systems to improve productivity, which may result in an improved selling environment for its software[110] Results of Operations For the three months ended October 31, 2024, total revenue decreased by 2% year-over-year, while for the six-month period, it was flat, driven by subscription fee growth offsetting declines in legacy revenue streams Revenue by Type - Three Months Ended Oct 31 (in thousands) | Revenue Type | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Subscription fees | $14,522 | $13,358 | 9% | | License | $73 | $229 | (68)% | | Professional services and other | $3,617 | $4,003 | (10)% | | Maintenance | $7,074 | $8,100 | (13)% | | Total revenue | $25,286 | $25,690 | (2)% | Revenue by Type - Six Months Ended Oct 31 (in thousands) | Revenue Type | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Subscription fees | $29,313 | $27,121 | 8% | | License | $314 | $518 | (39)% | | Professional services and other | $7,487 | $7,689 | (3)% | | Maintenance | $14,364 | $16,263 | (12)% | | Total revenue | $51,478 | $51,591 | 0% | - The SCM segment's operating income increased by 10% for the three months and 8% for the six months ended October 31, 2024, compared to the prior year, driven by higher subscription revenue and lower operating expenses[170][171] - Total gross margin percentage increased slightly from 64% to 65% for the three-month period and from 64% to 66% for the six-month period, primarily due to higher margins on license fees and subscriptions[152] Liquidity, Capital Resources and Financial Condition The company maintains a strong financial position with $84.2 million in cash and investments and no debt, despite a negative operating cash flow for the six months ended October 31, 2024 - The company has no debt obligations or off-balance sheet financing arrangements[180] - Net cash used in operating activities for the six months ended Oct 31, 2024, was $7.3 million, compared to $8.1 million provided by operating activities in the same period last year, mainly due to increased purchases of trading securities and changes in deferred revenue and deferred taxes[182] - As of October 31, 2024, the company had $84.2 million in cash and investments and believes its liquidity is sufficient for the next twelve months[188] - Days Sales Outstanding (DSO) improved to 61 days as of October 31, 2024, down from 72 days a year prior, indicating better cash collections[187] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency exchange rates and interest rates, with approximately 22% of revenue generated outside the U.S., but does not engage in hedging - Approximately 22% of revenue for the three and six months ended October 31, 2024, was generated outside the United States, exposing the company to foreign currency risk, though it does not currently use hedging instruments[192] - The company has no debt and manages interest rate risk on its investment portfolio, valued at approximately $80.1 million, by investing in high-credit-quality, short-maturity instruments[193] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of October 31, 2024, with a previously disclosed material weakness fully remediated - Management concluded that disclosure controls and procedures were effective as of October 31, 2024[199] - A previously disclosed material weakness related to ineffective controls over the reconciliation of several key accounts was fully remediated as of July 31, 2024[200][201][202] Part II—Other Information This section covers legal proceedings and updates on risk factors Item 1. Legal Proceedings The company reports that it is not currently involved in any legal proceedings that would require disclosure - The company is not currently involved in any material legal proceedings[205] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the company's risk factors were reported during the quarter[206]