American Software(AMSWA) - 2022 Q3 - Quarterly Report

Part I—Financial Information Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended January 31, 2022 and 2021 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Jan 31, 2022 | Apr 30, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $98,355 | $88,658 | | Total current assets | $148,711 | $136,623 | | Total assets | $186,050 | $177,157 | | Liabilities & Equity | | | | Total current liabilities | $51,911 | $50,664 | | Total liabilities | $55,171 | $54,766 | | Total shareholders' equity | $130,879 | $122,391 | Condensed Consolidated Statements of Operations Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $32,422 | $27,683 | $92,904 | $82,842 | | Gross Margin | $18,950 | $15,261 | $54,240 | $44,319 | | Operating Income | $3,239 | $935 | $7,699 | $2,451 | | Net Earnings | $2,940 | $2,311 | $9,201 | $5,037 | | Diluted EPS | $0.09 | $0.07 | $0.27 | $0.15 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Nine Months Ended Jan 31 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,050 | $13,933 | | Net cash used in investing activities | ($801) | ($1,065) | | Net cash used in financing activities | ($3,552) | ($5,961) | | Net change in cash and cash equivalents | $9,697 | $6,907 | Notes to Condensed Consolidated Financial Statements - As of January 31, 2022, the company had approximately $129 million in remaining performance obligations, with about 46% expected to be recognized as revenue over the next 12 months[38] - The company's business is organized into three operating segments: Supply Chain Management (SCM), IT Consulting, and Other, with SCM being the largest contributor to both revenue and operating income[75][76] Revenue and Operating Income by Segment - Nine Months Ended Jan 31, 2022 (in thousands) | Segment | Revenue | Operating Income | | :--- | :--- | :--- | | Supply Chain Management | $75,692 | $19,531 | | IT Consulting | $15,544 | $1,005 | | Other | $1,668 | ($12,837) | | Total | $92,904 | $7,699 | - No single customer accounted for more than 10% of total revenue for the three and nine months ended January 31, 2022 and 2021[81] - On February 16, 2022, the Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on May 20, 2022[84] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, including revenue growth, gross margin, liquidity, and critical accounting policies Comparison of Results of Operations Total Revenue Comparison (in thousands) | Period | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Three Months Ended Jan 31 | $32,422 | $27,683 | 17% | | Nine Months Ended Jan 31 | $92,904 | $82,842 | 12% | - The increase in revenue was primarily driven by significant growth in subscription fees, which rose 45% for the quarter and 49% for the nine-month period, reflecting the successful transition to a cloud subscription model[109][112] - Maintenance revenue decreased by 10% for the quarter and 9% for the nine-month period, mainly due to customer attrition in the SCM segment as clients transition from on-premise licenses to cloud subscriptions[118] Gross Margin Percentage Comparison | Revenue Stream | Q3 2022 | Q3 2021 | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Subscription fees | 68% | 59% | 68% | 58% | | License fees | 76% | 46% | 74% | 14% | | Professional services | 30% | 24% | 29% | 23% | | Maintenance | 80% | 81% | 80% | 82% | | Total Gross Margin | 57% | 55% | 58% | 53% | - Operating income for the SCM segment increased by 53% for the nine months ended Jan 31, 2022, compared to the prior year, primarily due to improved gross margins[133][136] Liquidity, Capital Resources and Financial Condition - The company has no debt obligations or off-balance sheet financing arrangements[140] - As of January 31, 2022, the company had $114.8 million in cash and investments and believes its liquidity is sufficient for at least the next twelve months[147] - Days Sales Outstanding (DSO) increased to 77 days as of January 31, 2022, from 65 days a year prior, due to the timing of billings and collections[146] Critical Accounting Policies and Estimates - A key area of judgment is determining the standalone selling price (SSP) for products and services, using a residual approach for on-premise licenses rarely sold alone[156][157] Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, primarily from foreign currency and interest rate fluctuations - Approximately 16% of revenue was generated outside the United States, where a hypothetical 10% movement in foreign currency rates could result in a gain or loss of up to $0.4 million for the quarter[159] - The company has no debt, and interest rate risk on its investment portfolio, valued at approximately $105.7 million, is managed by holding high-credit-quality, short-maturity instruments[160] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of January 31, 2022 - Based on an evaluation, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[166] - There were no changes in internal control over financial reporting during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control[167] Part II—Other Information Legal Proceedings The company reports that it is not currently involved in any legal proceedings that would require disclosure under this item - The company is not currently involved in legal proceedings requiring disclosure[169] Risk Factors This section refers readers to the risk factors disclosed in the company's Annual Report for fiscal 2021, confirming that no material changes have occurred since that filing - There have been no material changes to the risk factors as previously disclosed in the company's Annual Report for fiscal 2021[170] Unregistered Sales of Equity Securities and Use of Proceeds The company reports that there were no unregistered sales of equity securities during the period - None reported for the period[170] Exhibits This section lists the exhibits filed with the Form 10-Q, which include corporate governance documents, certifications by the CEO and CFO, and XBRL data files - The report includes exhibits such as Amended and Restated Articles of Incorporation, By-Laws, Rule 13a-14(a)/15d-14(a) Certifications, Section 906 Certifications, and various XBRL documents[171]