American Software(US:AMSWA)2025-02-28 17:11Mergers and Acquisitions - Logility Parent disposed of its 100% equity interest in The Proven Method for approximately $2.1 million in cash in September 2023[24]. - Logility Parent entered into a Merger Agreement with Aptean, where each share of Logility Parent's common stock will be converted into the right to receive $14.30 in cash upon completion of the merger[28]. - The merger is expected to be completed in the second quarter of calendar year 2025, subject to regulatory approvals and other closing conditions[32]. - Logility Parent's Board of Directors unanimously approved the Merger Agreement, determining it to be fair and in the best interests of shareholders[29]. - On September 18, 2023, the company disposed of its IT staffing firm, TPM, for approximately $2.1 million, allowing a focus on core supply chain planning business[75]. - Logility, Inc. acquired Garvis AI Limited for approximately $25.0 million, with $16.2 million allocated to goodwill[73]. - The acquisition of Garvis is expected to enhance Logility's supply chain management platform with the new Demand AI+ solution, integrating AI for demand forecasting[72]. Revenue Recognition and Financial Performance - The Company recognizes revenue from Software-as-a-Service (SaaS), licenses, professional services, and maintenance, with SaaS revenue generally recognized ratably over the term of the arrangement[37][38]. - Revenue from perpetual software licenses is recognized once the license period has begun and the software is made available to the client[39]. - Logility Parent's revenue recognition practices include billing for SaaS solutions and maintenance in advance, typically on a monthly, quarterly, or annual basis[45]. - The Company has an established history of collecting under the terms of its software license contracts without providing refunds or concessions[45]. - Total revenues for the three months ended January 31, 2025, were $25.0 million, a slight decrease from $25.5 million for the same period in 2024, representing a decline of about 2%[51]. - Domestic revenue for the three months ended January 31, 2025, was $19.4 million, compared to $20.0 million in the same period of 2024, reflecting a decrease of approximately 3.2%[51]. - International revenue for the three months ended January 31, 2025, was $5.6 million, slightly up from $5.5 million in the same period of 2024, showing a marginal increase of about 1.8%[51]. - Total revenue for the nine months ended January 31, 2025, was $76,485,000, a slight decrease of 0.8% compared to $77,127,000 for the same period in 2024[92]. - For the three months ended January 31, 2025, Supply Chain Management segment revenue was $24,192,000, a decrease of 2.2% from $24,741,000 in the same period of 2024[92]. - The Other segment reported a revenue of $815,000 for the three months ended January 31, 2025, compared to $795,000 in the same period of 2024, reflecting a growth of 2.5%[92]. Deferred Revenue and Commissions - Deferred revenue as of January 31, 2025, was $38.1 million, down from $47.6 million as of April 30, 2024, indicating a decrease of approximately 20%[48]. - The aggregate amount of transaction price allocated to remaining performance obligations was approximately $111.0 million, with an expectation to recognize revenue on about 55% of these obligations over the next 12 months[48]. - Total deferred commissions as of January 31, 2025, were $2.0 million, down from $2.5 million as of April 30, 2024, indicating a decrease of 20%[51]. Earnings and Losses - Basic loss per share for the three months ended January 31, 2025, was $(0.08), consistent with the same period in 2024[60]. - Diluted loss per share for Class A common shares for the three months ended January 31, 2025, was also $(0.08)[61]. - The company recorded total stock-based compensation costs of approximately $1.4 million for stock options and $0.2 million for RSUs during the three months ended January 31, 2025[79]. - Total operating loss for the three months ended January 31, 2025, was $(3,513,000), a decrease of 531% compared to an operating income of $815,000 in the same period of 2024[157]. Cash Flow and Liquidity - Net cash used in operating activities for the nine months ended January 31, 2025, was $(13,843,000), compared to $7,916,000 provided in the same period of 2024[169]. - Cash and cash equivalents decreased to $34,359,000 as of January 31, 2025, from $55,854,000 a year earlier, while total cash and short-term investments increased slightly to $79,274,000 from $78,308,000[173]. - Days Sales Outstanding in accounts receivable improved to 82 days as of January 31, 2025, from 86 days a year earlier, indicating better cash collection timing[174]. Expenses - Research and development expenses increased to $4,748,000 for the three months ended January 31, 2025, representing 19% of total revenue, compared to 18% in the prior year[151]. - Sales and marketing expenses rose to $6,164,000 for the three months ended January 31, 2025, accounting for 25% of total revenue, compared to 20% in the prior year[151]. - General and administrative expenses increased significantly to $9,164,000 for the three months ended January 31, 2025, representing 37% of total revenue, compared to 23% in the prior year[151]. - Sales and marketing expenses as a percentage of revenue increased from 20% to 25% for the three months ended January 31, 2025, and from 21% to 22% for the nine months, primarily due to an accrual of $1.1 million related to the Starboard Acquisition earnout target[154]. - General and administrative expenses as a percentage of revenue increased from 23% to 37% for the three months ended January 31, 2025, and from 22% to 27% for the nine months, mainly due to $3.5 million related to the Merger Agreement[155]. Market and Economic Conditions - The Company anticipates that the challenging global macro-economic environment will require clients to improve productivity and profitability by upgrading their technology systems[104]. - The International Monetary Fund projects global growth at 3.3% for both 2025 and 2026, which is below the historical average of 3.7%[103]. - The company has been affected by inflation, leading to increased costs of employee compensation and operating expenses[183]. Client Base and Market Position - No single client accounted for more than 10% of total revenue for the three and nine months ended January 31, 2025, indicating a diversified client base[93]. - Logility is recognized as a Leader in the 2024 Gartner Magic Quadrant for Supply Chain Planning Solutions, highlighting its strong vision and execution capabilities[112]. - The company serves approximately 500 clients across 80 countries, focusing on key verticals such as apparel, food and beverage, and consumer packaged goods[114]. Investment and Financial Management - The fair market value of the company's investment portfolio was approximately $72.9 million as of January 31, 2025, down from $73.9 million as of January 31, 2024[180]. - The company manages interest rate risk by maintaining a portfolio of high credit quality investments with relatively short average maturities[180]. - Future investment income may fall short of expectations due to interest rate fluctuations and stock market volatility[182].