UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM10-Q

_________________

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, ~~2018~~

2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to

_________

Commission File Number:0-12456

_________________

AMERICAN SOFTWARE, INC.

(Exact name of registrant as specified in its charter)

_________________



Georgia		58-1098795
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

470 East Paces Ferry Road, N.E., Atlanta, Georgia		30305
(Address of principal executive offices)		(Zip Code)

(404)261-4381

(Registrant’s telephone number, including area code)

~~None~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	AMSWA	NASDAQ Global Select Market

_________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, an emerging growth company or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “emerging growth company” and “smaller reporting company” inRule 12b-2 of the Exchange Act.



Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐


		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange act. ☐

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Classes	Outstanding at December ~~5, 2018~~	3, 2019
Class A Common Stock, $.10 par value		~~29,135,044~~30,131,746 Shares
Class B Common Stock, $.10 par value		1,821,587 Shares

AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Form 10-Q

~~10-Q~~

Quarter ended October 31, ~~2018~~

2019

Index


				~~Page No.~~
~~Part I—Financial Information~~

Page No
Part I—Financial Information

Item 1.			Financial Statements (Unaudited)



		Condensed Consolidated Balance Sheets as of October 31, ~~2018~~2019 and April 30, ~~2018~~2019	3		3


		Condensed Consolidated Statements of Operations for the Three and Six Months ended October 31, ~~2018~~2019 and ~~2017~~2018	4

	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months ended October 31, 2019 and 2018	5
			4

		Condensed Consolidated Statements of Cash Flows for the Six Months ended October 31, ~~2018~~2019 and ~~2017~~2018	7		5


		Notes to Condensed Consolidated Financial Statements – Unaudited	8		6


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	22		23


Item 3.		Quantitative and Qualitative Disclosures About Market Risk	36		36


Item 4.		Controls and Procedures	37		37


Part II—Other Information

~~Item 1.~~		~~Legal Proceedings~~			38
Item 1.	Legal Proceedings	38
~~Item 1A.~~		~~Risk Factors~~			38
Item 1A.	Risk Factors	38

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	38		38


Item 3.		Defaults Upon Senior Securities	38		38


Item 4.		Mine Safety Disclosures	38		38


Item 5.		Other Information	38		38

Item 6.	Exhibits	38
~~Item 6.~~		~~Exhibits~~			38

Signatures					39

PART I—FINANCIAL INFORMATION


Item 1.	Financial Statements

American Software, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

   October 31,
2018 April 30,
2018
ASSETS
Current assets:

Cash and cash equivalents
   $ 50,933 $ 52,794
Investments
   29,816 26,121
Trade accounts receivable, less allowance for doubtful accounts of $172 at October 31, 2018 and $159 at April 30, 2018:

Billed
   17,427 18,643
Unbilled
   3,104 3,375
Prepaid expenses and other current assets
   6,568 6,592


Total current assets
   107,848 107,525
Investments—noncurrent
   1,925 8,893
Property and equipment, net of accumulated depreciation of $28,963 at October 31, 2018 and $28,644 at April 30, 2018
   3,609 3,034
Capitalized software, net of accumulated amortization of $26,311 at October 31, 2018 and $24,113 at April 30, 2018
   9,618 9,728
Goodwill
   25,888 25,888
Other intangibles, net of accumulated amortization of $9,449 at October 31, 2018 and $8,255 at April 30, 2018
   3,926 5,120
Other assets
   3,776 2,777


Total assets
   $ 156,590 $ 162,965


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Accounts payable
   $ 1,475 $ 1,974
Accrued compensation and related costs
   2,829 6,310
Dividends payable
   3,405 3,367
Other current liabilities
   1,362 1,246
Deferred revenue
   29,395 33,226


Total current liabilities
   38,466 46,123
Deferred income taxes
   2,929 2,615
Long-term deferred revenue
   —   147
Other long-term liabilities
   1,107 1,496


Total liabilities
   42,502 50,381
Shareholders’ equity:

Common stock:

Class A, $.10 par value. Authorized 50,000,000 shares: 33,721,076 and 29,132,444 shares issued and outstanding respectively at October 31, 2018 and 33,141,760 and 28,553,128 shares issued and outstanding respectively at April 30, 2018
   3,372 3,314
Class B, $.10 par value. Authorized 10,000,000 shares: 1,821,587 shares issued and outstanding at October 31, 2018 and 2,057,390 shares issued and outstanding at April 30, 2018; convertible into Class A Common Shares on aone-for-one basis
   182 205
Additionalpaid-in capital
   135,150 131,258
Retained earnings
   943 3,366
Class A treasury stock, 4,588,632 shares at October 31, 2018 and April 30, 2018, at cost
   (25,559 ) (25,559 )


Total shareholders’ equity
   114,088 112,584


Commitments and contingencies

Total liabilities and shareholders’ equity
   $ 156,590 $ 162,965



	October 31, 2019			April 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	62,684		$	61,288
Investments	31,493			24,710
Trade accounts receivable, less allowance for doubtful accounts of $109 at October 31, 2019 and $153 at April 30, 2019:
Billed	15,432			18,819
Unbilled	2,682			1,475
Prepaid expenses and other current assets	6,812			6,210
Total current assets	119,103			112,502
Investments—noncurrent	494			2,484
Property and equipment, net of accumulated depreciation of $29,644 at October 31, 2019 and $29,327 at April 30, 2019	3,505			3,585
Capitalized software, net of accumulated amortization of $31,877 at October 31, 2019 and $28,740 at April 30, 2019	9,816			11,063
Goodwill	25,888			25,888
Other intangibles, net of accumulated amortization of $11,618 at October 31, 2019 and $10,643 at April 30, 2019	1,759			2,732
Lease right of use assets	2,401			—
Deferred sales commissions—noncurrent	1,881			1,546
Other assets	1,731			1,510
Total assets	$	166,578		$	161,310
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,846		$	2,448
Accrued compensation and related costs	4,097			2,561
Dividends payable	3,505			3,434
Operating lease obligations	775			—
Other current liabilities	688			1,375
Deferred revenue	32,563			33,283
Total current liabilities	43,474			43,101
Deferred income taxes	3,382			3,514
Long-term operating lease obligations	1,769			—
Other long-term liabilities	87			88
Total liabilities	48,712			46,703
Shareholders’ equity:
Common stock:
Class A, $.10 par value. Authorized 50,000,000 shares: 34,630,682 and 30,042,050 shares issued and outstanding respectively at October 31, 2019 and 33,979,739 and 29,391,107 shares issued and outstanding respectively at April 30, 2019	3,463			3,398
Class B, $.10 par value. Authorized 10,000,000 shares: 1,821,587 shares issued and outstanding at October 31, 2019 and April 30, 2019; convertible into Class A Common Shares on a one-for-one basis	182			182
Additional paid-in capital	145,554			138,315
Retained (deficit)	(5,774		)	(1,729		)
Class A treasury stock, 4,588,632 shares at October 31, 2019 and April 30, 2019, at cost	(25,559		)	(25,559		)
Total shareholders’ equity	117,866			114,607
Commitments and contingencies
Total liabilities and shareholders’ equity	$	166,578		$	161,310

See accompanying notes to condensed consolidated financial statements—unaudited.

American Software, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

   Three Months Ended
October 31,    Six Months Ended
October 31,
   2018 2017    2018 2017
Revenues:

License
   $ 2,012 $ 2,449    $ 3,714 $ 6,464
Subscription Fees
   3,341 2,041    6,509 3,660
Professional Services and other
   11,056 11,008    22,064 21,431
Maintenance
   11,624 10,839    23,145 21,667




Total revenues
   28,033 26,337    55,432 53,222




Cost of revenues:

License
   1,760 1,651    3,474 2,966
Subscription Fees
   1,289 903    2,356 1,749
Professional Services and other
   8,103 7,488    16,771 14,761
Maintenance
   2,214 2,288    4,412 4,516




Total cost of revenues
   13,366 12,331    27,013 23,992




Gross margin
   14,667 14,006    28,419 29,230




Research and development
   3,332 2,643    7,007 5,151
Sales and marketing
   5,304 4,437    10,484 9,670
General and administrative
   4,408 3,616    8,601 7,155
Amortization of acquisition-related intangibles
   97 68    194 391




Total operating expenses
   13,141 10,764    26,286 22,367




Operating income
   1,526 3,242    2,133 6,863
Other (expense)/income:

Interest income
   524 354    1,027 717
Other, net
   (714 ) 322    (464 ) 558




Earnings before income taxes
   1,336 3,918    2,696 8,138
Income tax expense
   93 1,438    68 2,933




Net earnings
   $ 1,243 $ 2,480    $ 2,628 $ 5,205




Earnings per common share^(a):

Basic
   $ 0.04 $ 0.08    $ 0.09 $ 0.17




Diluted
   $ 0.04 $ 0.08    $ 0.08 $ 0.17




Cash dividends declared per common share
   $ 0.11 $ 0.11    $ 0.22 $ 0.22




Shares used in the calculation of earnings per common share:

Basic
   30,926 29,906    30,825 29,788




Diluted
   31,477 30,229    31,412 30,110



	Three Months Ended October 31,						Six Months Ended October 31,
	2019			2018			2019			2018
Revenues:
License	$	1,046		$	2,012		$	2,824		$	3,714
Subscription fees	5,492			3,341			9,950			6,509
Professional services and other	10,826			11,056			20,963			22,064
Maintenance	10,846			11,624			21,856			23,145
Total revenues	28,210			28,033			55,593			55,432
Cost of revenues:
License	1,007			1,760			2,387			3,474
Subscription fees	2,610			1,289			4,735			2,356
Professional services and other	7,543			8,103			14,948			16,771
Maintenance	1,864			2,214			3,715			4,412
Total cost of revenues	13,024			13,366			25,785			27,013
Gross margin	15,186			14,667			29,808			28,419
Research and development	4,209			3,332			7,537			7,007
Sales and marketing	5,148			5,304			10,727			10,484
General and administrative	4,908			4,408			9,729			8,601
Amortization of acquisition-related intangibles	78			97			175			194
Total operating expenses	14,343			13,141			28,168			26,286
Operating income	843			1,526			1,640			2,133
Other income:
Interest income	400			524			875			1,027
Other, net	312			(714		)	362			(464		)
Earnings before income taxes	1,555			1,336			2,877			2,696
Income tax (benefit)/expense	(204		)	93			(34		)	68
Net earnings	$	1,759		$	1,243		$	2,911		$	2,628
Earnings per common share (a):
Basic	$	0.06		$	0.04		$	0.09		$	0.09
Diluted	$	0.05		$	0.04		$	0.09		$	0.08
Cash dividends declared per common share	$	0.11		$	0.11		$	0.22		$	0.22
Shares used in the calculation of earnings per common share:
Basic	31,609			30,926			31,440			30,825
Diluted	32,310			31,477			32,066			31,412

______________

(a)

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 earnings per share for Class B shares under thetwo-class method are ~~$0.04~~$0.06 and ~~$0.08~~$0.04 for the three months ended October 31, 2019 and 2018, and ~~2017,~~$0.10 and $0.09 ~~and $0.17~~ for the six months ended October 31, ~~2018~~2019 and ~~2017,~~2018 respectively. See Note DE to the Condensed Consolidated Financial Statements.

See accompanying notes to condensed consolidated financial statements—unaudited.

American Software, Inc. and Subsidiaries

~~Condensed~~

Consolidated Statements of ~~Cash Flows~~Shareholders’ Equity (Unaudited)

(in ~~thousands)~~

   Six Months Ended
October 31,
   2018 2017
Cash flows from operating activities:

Net earnings
   $ 2,628 $ 5,205
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization
   3,711 2,705
Stock-based compensation expense
   841 793
Net loss (gain) on investments
   312 (381 )
Deferred income taxes
   (265 ) 761
Changes in operating assets and liabilities:

Purchases of trading securities
   (6,456 ) (14,057 )
Proceeds from maturities and sales of trading securities
   9,417 8,452
Accounts receivable, net
   2,162 3,243
Prepaid expenses and other assets
   242 (1,758 )
Accounts payable and other liabilities
   (4,333 ) (2,734 )
Deferred revenue
   (3,457 ) (1,709 )


Net cash provided by operating activities
   4,802 520


Cash flows from investing activities:

Capitalized computer software development costs
   (2,088 ) (2,617 )
Purchases of property and equipment, net of disposals
   (894 ) (212 )


Net cash used in investing activities
   (2,982 ) (2,829 )


Cash flows from financing activities:

Proceeds from exercise of stock options
   3,086 4,079
Dividends paid
   (6,767 ) (6,529 )


Net cash used in financing activities
   (3,681 ) (2,450 )


Net change in cash and cash equivalents
   (1,861 ) (4,759 )
Cash and cash equivalents at beginning of period
   52,794 66,001


Cash and cash equivalents at end of period
   $ 50,933 $ 61,242

thousands, except share data)



	Common stock						Additional paid-in capital		Retained earnings/deficit			Treasury stock			Total shareholders’ equity
	Class A			Class B
For the Three Month Ended October 31, 2018	Shares	Amount		Shares	Amount

Balance at July 31, 2018	33,673,376	$	3,367	1,821,587	$	182	$	134,292	$	3,105		$	(25,559	)	$	115,387
Proceeds from stock options exercised*	47,700	5		—	—		415		—			—			420
Stock-based compensation	—	—		—	—		443		—			—			443
Net earnings	—	—		—	—		—		1,243			—			1,243
Dividends declared	—	—		—	—		—		(3,405		)	—			(3,405		)
Balance at October 31, 2018	33,721,076	$	3,372	1,821,587	$	182	$	135,150	$	943		$	(25,559	)	$	114,088
For the Three Month Ended October 31, 2019
Balance at July 31, 2019	34,131,239	3,413		1,821,587	182		140,195		(4,028		)	(25,559		)	114,203
Proceeds from stock options exercised	499,443	50		—	—		4,856		—			—			4,906
Stock-based compensation	—	—		—	—		503		—			—			503
Net earnings	—	—		—	—		—		1,759			—			1,759
Dividends declared	—	—		—	—		—		(3,505		)	—			(3,505		)
Balance at October 31, 2019	34,630,682	$	3,463	1,821,587	$	182	$	145,554	$	(5,774	)	$	(25,559	)	$	117,866

*Amounts adjusted for rounding

See accompanying notes to condensed consolidated financial statements—unaudited.

American Software, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (Unaudited)

(in thousands, except share data)



	Common stock								Additional paid-in capital		Retained earnings/deficit			Treasury stock			Total shareholders’ equity
	Class A			Class B
For the Six Month Ended October 31, 2018	Shares	Amount		Shares		Amount

Balance at April 30, 2018	33,141,764	$	3,314	2,057,390		$	205		$	131,258	$	3,366		$	(25,559	)	$	112,584
Cumulative effect of the adoption of Topic 606	—	—		—		—			—		1,753			—			1,753
Proceeds from stock options exercised*	343,509	35		—		—			3,051		—			—			3,086
Conversion of Class B shares into Class A shares*	235,803	23		(235,803	)	(23		)	—		—			—			—
Stock-based compensation	—	—		—		—			841		—			—			841
Net earnings	—	—		—		—			—		2,628			—			2,628
Dividends declared*	—	—		—		—			—		(6,804		)	—			(6,804		)
Balance at October 31, 2018	33,721,076	$	3,372	1,821,587		$	182		$	135,150	$	943		$	(25,559	)	$	114,088
For the Six Month Ended October 31, 2019
Balance at April 30, 2019	33,979,739	$	3,398	1,821,587		$	182		$	138,315	$	(1,729	)	$	(25,559	)	$	114,607
Proceeds from stock options exercised	650,943	65		—		—			6,293		—			—			6,358
Stock-based compensation	—	—		—		—			946		—			—			946
Net earnings	—	—		—		—			—		2,911			—			2,911
Dividends declared*	—	—		—		—			—		(6,956		)	—			(6,956		)
Balance at October 31, 2019	34,630,682	$	3,463	1,821,587		$	182		$	145,554	$	(5,774	)	$	(25,559	)	$	117,866

*Amounts adjusted for rounding

See accompanying notes to condensed consolidated financial statements—unaudited.

American Software, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)



	Six Months Ended October 31,
	2019			2018
Cash flows from operating activities:
Net earnings	$	2,911		$	2,628
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	4,428			3,711
Stock-based compensation expense	946			841
Net (gain)/loss on investments	(356		)	312
Deferred income taxes	(131		)	(265		)
Changes in operating assets and liabilities:
Purchases of trading securities	(21,412		)	(6,456		)
Proceeds from maturities and sales of trading securities	16,975			9,417
Accounts receivable, net	2,180			2,162
Prepaid expenses and other assets	(1,160		)	242
Accounts payable and other liabilities	389			(4,333		)
Deferred revenue	(720		)	(3,457		)
Net cash provided by operating activities	4,050			4,802
Cash flows from investing activities:
Capitalized computer software development costs	(1,890		)	(2,088		)
Purchases of property and equipment, net of disposals	(238		)	(894		)
Net cash used in investing activities	(2,128		)	(2,982		)
Cash flows from financing activities:
Proceeds from exercise of stock options	6,358			3,086
Dividends paid	(6,884		)	(6,767		)
Net cash used in financing activities	(526		)	(3,681		)
Net change in cash and cash equivalents	1,396			(1,861		)
Cash and cash equivalents at beginning of period	61,288			52,794
Cash and cash equivalents at end of period	$	62,684		$	50,933

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes, net of refunds	$	260		$	370
Supplemental disclosures of noncash operating, investing and financing activities:
Accrual of dividends payable	$	3,505		$	3,405

See accompanying notes to condensed consolidated financial statements—unaudited.

AMERICAN SOFTWARE, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements—Unaudited

October 31, ~~2018~~

2019

A. Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form10-Q and Rule10-01 ofRegulation S-X. Accordingly, they do not include all of the information and footnotes required for complete consolidated financial statements. In the opinion of our management, these ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at October 31, ~~2018,~~2019, results of operations for the three and six months ended October 31, 2019 and 2018, consolidated statements of shareholders’ equity for the three and ~~2017~~six months ended October 31, 2019 and 2018 and cash flows for the six months ended October 31, ~~2018~~2019 and ~~2017.~~2018. The Company’s results for the three and six months ended October 31, ~~2018~~2019 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form10-K (the “Annual Report”) for the fiscal year ended April 30, ~~2018.~~2019. The terms “fiscal ~~2019”~~2020” and “fiscal ~~2018”~~2019” refer to our fiscal years ending April 30, 2020 and 2019, ~~and 2018,~~ respectively.

The preparation of these ~~consolidated financial statements~~Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for ~~the~~ fiscal ~~year ended April 30, 2018~~2019 contained in the Annual Report describes the significant accounting policies that we have used in preparing our consolidated financial statements. On an ongoing basis, we evaluate our estimates, including but not limited to those related to revenue/collectability, stock-based compensation, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions. The accompanying condensed consolidated balance sheet as of April 30, 2018 and the condensed consolidated statements of operations for the three and six months and cash flows for the six months ended October 31, 2017 have not been revised for the effects of Topic 606 and are therefore not comparable to the October 31, 2018 period.

Principles of Consolidation

The accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements include the accounts of American Software, Inc. (“American Software”) and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

Adoption of New Accounting Standard

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU")No. ~~2014-09,~~2016-02, ~~Revenue from Contracts with Customers~~~~(Topic 606)~~Leases, which ~~replaces the existing revenue recognition guidance. The Company adopted the~~established new revenue standard effective May 1, 2018 using the modified retrospective transition method. Under this method, the Company elected to apply the cumulative effect method to contracts that are not complete as of the adoption date. The Company’s total revenue impact is $1.2 million, with approximately 70% impacting the fiscal year ending April 30, 2019, which is the result of recognizing revenue for the license component of its term licenses and certain perpetual license contracts that were previously recognized over time due to the lack of vendor-specific objective evidence (VSOE) of fair value at the~~point-in-time~~ at which control of the software license is transferred to the customer, rather than ratably over the term of the contract. In addition, under the new standard, the Company will capitalize a portion of sales commission expenses and recognize them ratably over the associated period of economic benefit which the Company has determined to be six years, which has an impact of $1.1 million. As a result, the cumulative impact due to the adoption of the new revenue standard on the opening consolidated balance sheet was an increase in opening retained earnings, with a corresponding increase to contract assets and a decrease in deferred revenue.

The following table presents the cumulative effect of adjustments, net of income tax effects, to beginning consolidated balance sheet accounts for the new accounting standard adopted by the Company on the first day of fiscal 2019:

   April 30,
2018 Topic 606 May 1,
2018
   (in thousands)
ASSETS
Current assets:

Cash and cash equivalents
   $ 52,794 $ —   $ 52,794
Investments
   26,121 —   26,121
Trade accounts receivable, net

Billed
   18,643 —   18,643
Unbilled
   3,375 440 3,815
Prepaid expenses and other current assets
   6,592 126 6,718


Total current assets
   107,525 566 108,091
Investments—Noncurrent
   8,893 —   8,893
Property and equipment, net
   3,034 —   3,034
Capitalized software, net
   9,728 —   9,728
Goodwill
   25,888 —   25,888
Other intangibles, net
   5,120 —   5,120
Other assets
   2,777 1,325 4,102


Total assets
   $ 162,965 $ 1,891 $ 164,856


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Accounts payable
   $ 1,974 $ —   $ 1,974
Accrued compensation and related costs
   6,310 —   6,310
Dividends payable
   3,367 —   3,367
Other current liabilities
   1,246 80 1,326
Deferred revenue
   33,226 (521 ) 32,705


Total current liabilities
   46,123 (441 ) 45,682
Deferred income taxes
   2,615 579 3,194
Long-term deferred revenue
   147 —   147
Other long-term liabilities
   1,496 —   1,496


Total liabilities
   50,381 138 50,519
Shareholders’ equity:

Common stock:

Class A
   3,314 —   3,314
Class B
   205 —   205
Additionalpaid-in capital
   131,258 —   131,258
Retained earnings
   3,366 1,753 5,119
Class A treasury stock
   (25,559 ) —   (25,559 )


Total shareholders’ equity
   112,584 1,753 114,337


Total liabilities and shareholders’ equity
   $ 162,965 $ 1,891 $ 164,856

~~The following table summarizes the effects of adopting~~FASB Accounting Standards Codification ("ASC") Topic ~~606 on the Company’s condensed consolidated balance sheet as of October 31, 2018:~~

   As reported
under Topic 606 Adjustments Balances under
Prior GAAP
   (in thousands)
ASSETS
Current assets:

Cash and cash equivalents
   $ 50,933 $ —   $ 50,933
Investments
   29,816 —   29,816
Trade accounts receivable, net
   —
Billed
   17,427 —   17,427
Unbilled
   3,104 (389 ) 2,715
Prepaid expenses and other current assets
   6,568 (251 ) 6,317


Total current assets
   107,848 (640 ) 107,208
Investments—Noncurrent
   1,925 —   1,925
Property and equipment, net
   3,609 —   3,609
Capitalized software, net
   9,618 —   9,618
Goodwill
   25,888 —   25,888
Other intangibles, net
   3,926 —   3,926
Other assets
   3,776 (1,191 ) 2,585


Total assets
   $ 156,590 $ (1,831 ) $ 154,759


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Accounts payable
   $ 1,475 $ —   $ 1,475
Accrued compensation and related costs
   2,829 —   2,829
Dividends payable
   3,405 —   3,405
Other current liabilities
   1,362 (80 ) 1,282
Deferred revenue
   29,395 619 30,014


Total current liabilities
   38,466 539 39,005
Deferred income taxes
   2,929 (584 ) 2,345
Long-term deferred revenue
   —   —   —
Other long-term liabilities
   1,107 —   1,107


Total liabilities
   42,502 (45 ) 42,457
Shareholders’ equity:

Common stock:

Class A
   3,372 —   3,372
Class B
   182 —   182
Additionalpaid-in capital
   135,150 —   135,150
Retained earnings
   943 (1,786 ) (843 )
Class A treasury stock
   (25,559 ) —   (25,559 )


Total shareholders’ equity
   114,088 (1,786 ) 112,302


Commitments and contingencies

Total liabilities and shareholders’ equity
   $ 156,590 $ (1,831 ) $ 154,759

~~The following table summarizes the effects of adopting Topic 606 on the Company’s condensed consolidated statement of operations for the three months ended October 31, 2018:~~

   As reported
under Topic 606    Adjustments    Balances under
Prior GAAP
      (in thousands, except
per share amounts)
Revenues:

License
   $ 2,012    $ 391    $ 2,403
Subscription Fees
   3,341    2    3,343
Professional Services and other
   11,056    46    11,102
Maintenance
   11,624    —      11,624






Total revenues
   28,033    439    28,472






Cost of revenues:

License
   1,760    —      1,760
Subscription Fees
   1,289    —      1,289
Professional Services and other
   8,103    —      8,103
Maintenance
   2,214    —      2,214






Total cost of revenues
   13,366    —      13,366






Gross margin
   14,667    439    15,106






Research and development
   3,332       3,332
Sales and marketing
   5,304    63    5,368
General and administrative
   4,408    —      4,408
Amortization of acquisition-related intangibles
   97    —      97






Total operating expenses
   13,141    63    13,204






Operating income
   1,526    376    1,902
Other income:

Interest income
   524    —      524
Other, net
   (714 )    —      (714 )






Earnings before income taxes
   1,336    376    1,712
Income tax expense
   93    71    164






Net earnings
   $ 1,243    $ 305    $ 1,548






Earnings per common share:

Basic
   $ 0.04    $ 0.01    $ 0.05






Diluted
   $ 0.04    $ 0.01    $ 0.05

~~The following table summarizes the effects of adopting Topic 606 on the Company’s condensed consolidated statement of operations for the six months ended October 31, 2018:~~

   As reported
under Topic 606    Adjustments    Balances under
Prior GAAP
      (in thousands, except
per share amounts)
Revenues:

License
   $ 3,714    $ (55 )    $ 3,659
Subscription Fees
   6,509    4    6,513
Professional Services and other
   22,064    106    22,170
Maintenance
   23,145    —      23,145






Total revenues
   55,432    55    55,487






Cost of revenues:

License
   3,474    —      3,474
Subscription Fees
   2,356    —      2,356
Professional Services and other
   16,771    —      16,771
Maintenance
   4,412    —      4,412






Total cost of revenues
   27,013    —      27,013






Gross margin
   28,419    55    28,474






Research and development
   7,007       7,007
Sales and marketing
   10,484    93    10,577
General and administrative
   8,601    —      8,601
Amortization of acquisition-related intangibles
   194    —      194






Total operating expenses
   26,286    93    26,379






Operating income
   2,133    (38 )    2,095
Other income:

Interest income
   1,027    —      1,027
Other, net
   (464 )    —      (464 )






Earnings before income taxes
   2,696    (38 )    2,658
Income tax expense (benefit)
   68    (5 )    63






Net earnings
   $ 2,628    $ (33 )    $ 2,595






Earnings per common share:

Basic
   $ 0.09    $ —      $ 0.09






Diluted
   $ 0.08    $ —      $ 0.08

The Company’s net cash provided by operating activities for the six months ended October 31, 2018 did not change due to the adoption of Topic 606. The following table summarizes the effects of adopting Topic 606 on the financial statement line items of the Company’s condensed consolidated statement of cash flows for the six months ended October 31, 2018:

   As reported
under Topic 606    Adjustments    Balances under
Prior GAAP
      (in thousands)
Net earnings (loss)
   $ 2,628    $ (33 )    $ 2,595
Deferred income taxes
   $ (265 )    $ (5 )    $ (270 )
Changes in operating assets and liabilities:

Accounts receivable, net
   $ 2,162    $ (51 )    $ 2,111
Prepaid expenses and other assets
   $ 242    $ (9)    $ 233
Accounts payable and other liabilities
   $ (4,333 )    $ —      $ (4,333 )
Deferred revenue
   $ (3,457 )    $ 98    $ (3,359 )
Net cash provided by operating activities
   $ (3,023 )    $ —      $ (3,023 )

~~In February 2016, the FASB issued ASUNo. 2016-02,~~~~Leases (Topic~~ ~~842)~~842 ("ASC 842"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, a lessee is required to recognize assets and liabilities for leases with lease terms of more than 12 months.

Consistent under previous guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike previous guidance, which required only capital leases to be recognized on the balance sheet, the new standard requires both types of leases to be recognized on the balance sheet. ASC 842 also requires disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the Condensed Consolidated Financial Statements.

The ~~ASU~~new lease standard is effective for ~~annual periods~~public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ~~Early~~The Company adopted ASC 842 on May 1, 2019, using the modified retrospective method and utilized the optional transition method under which the Company continues to apply the legacy guidance in ASC 840, Leases, including its disclosure requirements, in the comparative period presented. Therefore, the adjustment to recognize the Company’s

leases on the Condensed Consolidated Balance Sheet related to the adoption of the ~~update is permitted.~~new standard was recorded as of the adoption date and prior periods were not restated.

As part of the adoption of ASC 842, the Company elected to adopt certain of the optional practical expedients, including the package of practical expedients which, among other things, gives us the option to not reassess: 1) whether expired or existing contracts are or contain leases; 2) the lease classification for expired or existing leases; and 3) initial direct costs for existing leases. The Company ~~currently expects that most~~also elected the practical expedient to not record lease right-of-use (“ROU”) assets and lease obligations for leases with terms of 12 months or less. Finally, the Company also elected the practical expedient to not separate lease and non-lease components, which allows it to account for lease and non-lease components as a single lease component. The Company did not elect the hindsight practical expedient in its ~~operating~~determination of the lease ~~commitments will be subject to~~term for existing leases; therefore, the original lease terms, as determined under ASC 840, were used in the calculation of the Company’s initial ASC 842 lease liabilities.

Adoption of the new standard ~~and recognized as~~resulted in the recognition of operating lease ROU assets of approximately $2.7 million, current operating lease liabilities of approximately $0.7 million and~~right-of-use~~ ~~assets upon adoption.~~

long-term operating lease liabilities of approximately $2.1 million as of May 1, 2019.

The adoption had no impact on retained deficit, the Condensed Consolidated Statements of Operations, or the Condensed Consolidated Statements of Cash Flows. See Note C for further discussion of the Company’s leases.

B. Revenue Recognition

We recognize revenue when we transfer control of the promised goods or services to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We derive our revenue from software licenses; maintenance services; consulting, implementation and training services; and~~software-as-a-service~~ Software-as-a-Service (“SaaS”), which includes a subscription to our software as well as maintenance, hosting and managed services.

The Company determines revenue recognition through the following steps:

Step 1 – Identification of the Contract with the Customer

Step 2 – Identification of Promised Goods and Services and Evaluation of Whether the Promised Goods and Services are Distinct Performance Obligations

Step 3 – Determination of the Transaction Price

Step 4 – Allocation of the Transaction Price to Distinct Performance Obligations

Step 5 – Attribution of Revenue for Each Distinct Performance Obligation

Nature of Products and Services.

Licenses. Our perpetual software licenses provide the customer with a right to use the software as it exists at the time of purchase. We recognize revenue for distinct software licenses once the license period has begun and we have made the software available to the customer.

Our perpetual software licenses are sold with maintenance under which we provide customers with telephone consulting, product updates on a when and if available basis, and releases of new versions of products previously purchased by the customer, as well as error reporting and correction services.

Subscription ~~Fees.~~Fees. Subscription fees includeSaaS revenues for the right to use the software for a limited period of time in an environment hosted by the Company or by a third party. The customer accesses and uses the software on anas-needed basis over the Internet or via a dedicated line; however, the customer has no right to take delivery of the software without incurring a significant penalty. The underlying arrangements typically include a single fee for the service that is billed monthly, quarterly or annually. The Company’s SaaS solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue from a SaaS solution is generally recognized ratably over the term of the arrangement.

Professional Services and ~~other~~.Other. Our services revenue consists of fees generated from consulting, implementation and training services, including reimbursements ofout-pocket expenses in connection with our services. Services are typically optional to our customers, and are distinct from our software. Fees for our services are separately priced and are generally billed on an hourly basis, and revenue is recognized over time as the services are performed. We believe the output method of hours worked provides the best depiction of the transfer of our services since the customer is receiving the benefit from our services as the

work is performed. The total amount of expense reimbursement included in professional services and other revenue was approximately ~~$388,000~~ $0.5 million

and ~~$719,000~~$0.9 million for the three and six months ended October 31, 2019, respectively and approximately $0.4 million and $0.7 million for the three and six months ended October 31, 2018, ~~respectively, and approximately $421,000 and $947,000 for the three and six months ended October 31, 2017,~~ respectively.

~~Maintenance~~.

Maintenance. Revenue is derived from maintenance under which we provide customers with telephone consulting, product updates on a when and if available basis, and releases of new versions of products previously purchased by the customer, as well as error reporting and correction services. Maintenance for perpetual licenses is renewable, generally on an annual basis, at the option of the customer. Maintenance terms typically range from one to three years. Revenue related to maintenance is generally paid in advance and recognized ratably over the term of the agreement since the Company is standing ready to provide a series of maintenance services that are substantially the same each period over the term; therefore, time is the best measure of progress.

Indirect Channel Revenue.We record revenues from sales made through the indirect sales channels on a gross basis, because we control the goods or services and act as the principal in the transaction. In reaching this determination, we evaluated sales through our indirect channel on acase-by-case basis and considered a number of factors including indicators of control such as the party having the primary responsibility to provide specified goods or services and the party having discretion in establishing prices.

Sales ~~Taxes~~.Taxes. We account for sales taxes collected from customers on a net basis.

Significant Judgments.Our contracts with customers typically contain promises to transfer multiple products and services to a customer. Judgment is required to determine whether each product and service is considered to be a distinct performance obligation that should be accounted for separately under the contract. We allocate the transaction price to distinct performance obligations based on their relative standalone selling price (“SSP”). We estimate SSP primarily based on the prices charged to customers for products or services sold on a standalone basis, or by using information such as market conditions and other observable inputs. However, the selling prices of our software licenses are highly variable or uncertain. Therefore, we estimate SSP for software licenses using the residual approach, determined based on total transaction price less the SSP of other products and services promised in the contract. When performing relative selling price allocations, we use the contract price as the estimate of SSP if it falls within the Company’s range estimate of SSP, since any point within the range would be a valid price point on a standalone basis. If the contract price falls outside of the range of SSP, the Company will use the nearest point in the SSP range in its relative selling price allocation.

Contract Balances.Timing of invoicing to customers may differ from timing of revenue recognition and these timing differences result in receivables, contract assets (unbilled accounts receivable), or contract liabilities (deferred revenue) on the Company’s Condensed ~~consolidated balance sheets.~~Consolidated Balance Sheets. Fees for our software licenses are generally due within 30 days of contract execution. We have an established history of collecting under the terms of our software license contracts without providing refunds or concessions to our customers. SaaS solutions and maintenance are typically billed in advance on a monthly, quarterly, or annual basis. Services are typically billed as performed. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with predictable ways to purchase our software and services, not to provide or receive financing. Additionally, we are applying the practical expedient to exclude any financing component from consideration for any contracts with payment terms of one year or less since we rarely offer terms extending beyond one year. The consideration in our customer contracts is fixed.

We have an unconditional right to consideration for all goods and services transferred to our customers. That unconditional right to consideration is reflected in billed and unbilled accounts receivable in the accompanying ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheets in accordance with ~~FASB Accounting Standards Codification (“ASC”)~~ASC Topic 606.

Deferred revenue consists of amounts collected prior to having completed the performance of maintenance, SaaS, hosting, and managed services. We typically invoice customers for cloud subscription and support fees in advance on a monthly, quarterly or annual basis, with payment due at the start of the cloud subscription or support term. During the three months ended October 31, 2019, we recognized $14 million of revenue that was included in the deferred revenue balance as of July 31, 2019. During the six months ended October 31, ~~2018,~~2019, we recognized ~~$13~~$23 million of revenue that was included in the deferred revenue balance as of April 30, ~~2018, as adjusted for Topic 606, at the beginning of the period.~~

   October 31,
2018    May 1,
2018
Contract Balances:

Contract assets, current
   $ 3,104    $ 3,815
Contract assets, long-term
   1,394    332




Total contract assets
   $ 4,498    $ 4,147




Deferred revenue, current
   $ 29,395    $ 32,705
Deferred revenue, long-term
   —      147




Total deferred revenue
   $ 29,395    $ 32,852




2019.

October 31,
2019 April 30,
2019
(in thousands)
Contract Balances:
Contract assets, current $ 2,682
$ 1,475
Total contract assets $ 2,682
$ 1,475

Deferred revenue, current $ 32,563
$ 33,283
Total deferred revenue $ 32,563
$ 33,283

Remaining Performance Obligations.A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Topic 606. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies and tracks the performance obligations at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract. Remaining performance obligations represent the transaction price of orders for which products have not been delivered or services have not been performed. As of October 31, ~~2018,~~2019, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately ~~$54~~$76 million. The Company expects to recognize revenue on approximately ~~three-quarters~~two-thirds of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter.

Disaggregated Revenue. The Company disaggregates revenue from contracts with customers by geography, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s revenue by geography is as follows:

   Three Months Ended
October 31,    Six Months Ended
October 31,
   2018    2017    2018    2017
Revenues:

Domestic
   $ 22,502    $ 20,996    $ 44,454    $ 42,542
International
   5,531    5,341    10,978    10,680








   $ 28,033    $ 26,337    $ 55,432    $ 53,222

~~Practical Expedients and Exemptions.~~ There are several practical expedients and exemptions allowed under Topic 606 that impact the timing of revenue recognition and the Company’s disclosures. Below is a list of practical expedients the Company applied in the adoption and application of Topic 606:

~~-The Company does not evaluate a contract for a significant financing component if payment is expected within one year or less from the transfer of the promised items to the customer.~~

-The Company does not disclose the value of unsatisfied performance obligations for contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed (apply to



	Three Months Ended October 31,				Six Months Ended October 31,
	2019		2018		2019		2018
	(in thousands)				(in thousands)
Revenues:
Domestic	$	22,763	$	22,502	$	44,174	$	44,454
International	5,447		5,531		11,419		10,978
	$	28,210	$	28,033	$	55,593	$	55,432

~~time-and-material~~ ~~engagements).~~

Contract ~~costs.~~Costs. The Company capitalizes the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission). The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all of the following criteria:


a.	The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify.


b.	The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.


c.	The costs are expected to be recovered.

Certain sales commissions incurred by the Company were determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the economic benefit period. These deferred commission costs are classified as current ornon-current based on the timing of when the Company expects to recognize the expense. The current andnon-current portions of deferred commissions are included in prepaid expenses and ~~other current assets and other long-term assets,~~deferred sales commissions—noncurrent, respectively, in the Company’s ~~condensed consolidated balance sheets.~~Condensed Consolidated Balance Sheets. Total deferred commissions at October 31, ~~2018~~2019 and April 30, ~~2018~~2019 were ~~$2.3~~$2.9 million and ~~$2.5~~$2.3 million, respectively. Amortization of sales commissions was $0.4 million and $0.7 million for the three ~~months ended October 31, 2018~~ and ~~$0.6 million for the~~ six months ended October 31, ~~2018,~~2019, respectively, which is included in sales and marketing expense in the accompanying ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations.~~Operations. No impairment losses were recognized during the periods.

C. Leases

The Company’s operating leases are primarily related to facility leases for administration and sales. The operating leases have terms ranging from three to five years. While each of the leases includes renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities. The Company does not have any finance leases.

Balance sheet information related to operating leases is as follows (in thousands):



	October 31, 2019
Assets
Right of use assets	$	2,401

Liabilities
Current lease liabilities	775
Long-term lease liabilities	1,769
Total liabilities	$	2,544

Lease cost information related to operating leases is as follows (in thousands):



	Three Months Ended October 31, 2019
Lease cost
Operating lease cost	$	194
Short-term lease cost	142
Variable lease cost	54
Total lease cost	$	390



	Six Months Ended October 31, 2019
Lease cost
Operating lease cost	388
Short-term lease cost	294
Variable lease cost	110
Total lease cost	$	792

Lease costs are primarily included in "Selling and marketing" and "General and administrative" expenses in the Company’s Condensed Consolidated Statements of Operations.

The impact of the Company's leases on Condensed Consolidated Statement of Cash Flows is presented in the operating activities section, which mainly consisted of cash paid for operating lease liabilities of approximately $0.5 million and the amortization of the right of use assets and operating lease obligations of $10,000 during the six months ended October 31, 2019. The Company did not modify any existing leases or execute any new leases during the three and six months ended October 31, 2019.

Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:



	October 31, 2019
Weighted average remaining lease term	3.7 years
Weighted average discount rate	3.5	%

The following table summarizes the maturity of the Company’s operating lease liabilities as of October 31, 2019 (in thousands):



FY2020	$	397
FY2021	775
FY2022	701
FY2023	470
FY2024	346
Thereafter	20
Total operating lease payments	$	2,709
Less imputed interest	(165		)
Total operating lease liabilities	$	2,544

Future minimum lease payments under noncancelable operating leases (due to existence of renewal or escalation clauses) with initial or remaining lease terms in excess of one year as of April 30, 2019 are as follows (in thousands):



Years ended April 30:
2020	$	847
2021	790
2022	706
2023	433
2024	317
Thereafter	17
	$	3,110

The Company leases to other tenants a portion of its headquarters building that it owns in Atlanta, Georgia. The leases expire at various dates through March 2022. Lease income is included in "Other, net" in the Company’s Condensed Consolidated Statements of Operations and totaled approximately $54,000 and $111,000 for the three and six months ended October 31, 2019. Lease payments to be received as of October 31, 2019 are as follows (in thousands):



FY2020	$	93
FY2021	105
FY2022	55
FY2023	—
FY2024	—
Total	$	253

Future minimum lease rentals receivable under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of April 30, 2019 are as follows (already included or prorated at the Company’s occupied building) (in thousands):



Years ended April 30:
2020	$	194
2021	105
2022	55
2023	—
2024	—
Thereafter	—
	$	354

D. Declaration of Dividend Payable

On August ~~22, 2018,~~21, 2019, our Board of Directors declared a quarterly cash dividend of $0.11 per share of our Class A and Class B common stock. The cash dividend iswas payable on December ~~5, 2018~~6, 2019 to Class A and Class B shareholders of record at the close of business on November ~~19, 2018.~~

D.22, 2019.

E. Earnings Per Common Share

~~We have~~

The Company has two classes of common ~~stock: Class A Common Shares and~~stock. Class B ~~Common Shares. Our Class B Common Shares~~common shares are convertible into Class A ~~Common Shares~~common shares at ~~any time,~~anytime, on aone-for-one basis. Under ~~our~~the Company’s Articles of Incorporation, if ~~we declare~~ dividends are declared, holders of Class A ~~Common Shares~~common shares shall receive a $0.05 dividend per share prior to the Class B ~~Common Shares~~common shares receiving any dividend and holders of Class A ~~Common Shares~~common shares shall receive a dividend at least equal to Class B ~~Common Shares~~common shares dividends on a per share basis. As a result, ~~we have~~the Company has computed the earnings per share in ~~accordance~~compliance with the Earnings Per Share ~~within the Presentation~~ Topic of the FASB ASC, which requires companies that have multiple classes of equity securities to use the~~“two-class”~~ “two-class” method in computing earnings per share.

For ~~our~~the Company’s basic earnings per share calculation, ~~we use~~ the~~“two-class”~~ Company uses the “two-class” method. Basic earnings per share are calculated by dividing net earnings attributable to each class of common stock by the weighted average number of shares outstanding. All undistributed earnings are allocated evenly between Class A and B ~~Common Shares~~common shares in the earnings per share calculation to the extent that earnings equal or exceed $0.05 per share. This allocation is based on management’s judgment after considering the dividend rights of the ~~two classes~~two-classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B ~~Common Shares into~~shares to Class A ~~Common Shares.~~

shares. If Class B shares convert to Class A shares during the period, the distributed net earnings for Class B shares is calculated using the weighted average common shares outstanding during the period.

~~The calculation of diluted~~

Diluted earnings per share is ~~similar~~calculated similarly to ~~the calculation of~~ basic earnings per share, except that the calculation includes the dilutive effect of the assumed exercise of options issuable under ~~our~~the Company’s stock incentive plans. For ~~our~~the Company’s diluted earnings per share calculation for Class A ~~Common Shares, we use~~shares, the~~“if-converted”~~ Company uses the “if-converted” method. This calculation assumes that all Class B ~~Common Shares~~common shares are converted into Class A ~~Common Shares (if antidilutive)~~common shares and, as a result, assumes there are no holders of Class B ~~Common Shares~~common shares to participate in undistributed earnings.

For ~~our~~the Company’s diluted earnings per share calculation for Class B ~~Common Shares, we use~~shares, the~~“two-class”~~ Company uses the “two-class” method. This calculation does not assume that all Class B ~~Common Shares~~common shares are converted into Class A ~~Common Shares.~~common shares. In addition, this method assumes the dilutive effect ifof Class A stock options ~~are~~were converted to Class A ~~Common Shares~~shares and the undistributed earnings are allocated evenly to both Class A and B ~~Common Shares~~shares including Class A ~~Common Shares~~shares issued pursuant to those converted stock options. This allocation is based on management’s judgment after considering the dividend rights of the ~~two classes~~two-classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B ~~Common Shares~~shares into Class A ~~Common Shares.~~

shares.

The following tables set forth the computation of basic earnings per common share and diluted earnings per common share (in thousands except for per share amounts):

Basic earnings per common share:

   Three Months Ended
October 31, 2018    Six Months Ended
October 31, 2018
   Class A
Common
Shares    Class B
Common
Shares    Class A
Common
Shares    Class B
Common
Shares
Distributed earnings
   $ 0.11    $ 0.11    $ 0.22    $ 0.22
Undistributed losses
   (0.07 )    (0.07 )    (0.13 )    (0.13 )








Total
   $ 0.04    $ 0.04    $ 0.09    $ 0.09








Distributed earnings
   $ 3,200    $ 205    $ 6,396    $ 409
Undistributed losses
   (2,033 )    (129 )    (3,927 )    (250 )








Total
   $ 1,167    $ 76    $ 2,469    $ 159








Basic weighted average common shares outstanding
   29,104    1,822    28,959    1,866

   Three Months Ended
October 31, 2017    Six Months Ended
October 31, 2017
   Class A
Common
Shares    Class B
Common
Shares    Class A
Common
Shares    Class B
Common
Shares
Distributed earnings
   $ 0.11    $ 0.11    $ 0.22    $ 0.22
Undistributed losses
   (0.03 )    (0.03 )    (0.05 )    (0.05 )








Total
   $ 0.08    $ 0.08    $ 0.17    $ 0.17








Distributed earnings
   $ 3,064    $ 249    $ 6,078    $ 505
Undistributed losses
   (768 )    (65 )    (1,269 )    (109 )








Total
   $ 2,296    $ 184    $ 4,809    $ 396








Basic weighted average common shares outstanding
   27,589    2,317    27,448    2,340

Three Months Ended
October 31, 2019
Six Months Ended
October 31, 2019
Class A
Common
Shares

Class B
Common
Shares

Class A
Common
Shares

Class B
Common
Shares
Distributed earnings $ 0.11
$ 0.11
$ 0.22
$ 0.22
Undistributed losses (0.05 ) (0.05 ) (0.13 ) (0.13 )
Total $ 0.06
$ 0.06
$ 0.09
$ 0.09
Distributed earnings $ 3,303
$ 202
$ 6,552
$ 403
Undistributed losses (1,645 ) (101 ) (3,810 ) (234 )
Total $ 1,658
$ 101
$ 2,742
$ 169
Basic weighted average common shares outstanding 29,787
1,822
29,618
1,822

Three Months Ended
October 31, 2018 Six Months Ended
October 31, 2018
Class A
Common
Shares

Class B
Common
Shares

Class A
Common
Shares

Class B
Common
Shares
Distributed earnings $ 0.11
$ 0.11
$ 0.22
$ 0.22
Undistributed losses (0.07 ) (0.07 ) (0.13 ) (0.13 )
Total $ 0.04
$ 0.04
$ 0.09
$ 0.09
Distributed earnings $ 3,200
$ 205
$ 6,396
$ 409
Undistributed losses (2,033 ) (129 ) (3,927 ) (250 )
Total $ 1,167
$ 76
$ 2,469
$ 159
Basic weighted average common shares outstanding 29,104
1,822
28,959
1,866

Diluted EPS for Class A Common Shares Using the If-Converted Method

~~If-Converted~~Three Months Ended October 31, 2019 ~~Method~~



	Undistributed & Distributed Earnings to Class A Common Shares		Class A Common Shares	EPS*
Per Basic	$	1,658	29,787	$	0.06
Common Stock Equivalents	—		701	—
	1,658		30,488	0.05
Class B Common Share Conversion	101		1,822	—
Diluted EPS for Class A Common Shares	$	1,759	32,310	$	0.05

Six Months Ended October 31, 2019



	Undistributed & Distributed Earnings to Class A Common Shares		Class A Common Shares	EPS*
Per Basic	$	2,742	29,618	$	0.09
Common Stock Equivalents	—		626	—
	2,742		30,244	0.09
Class B Common Share Conversion	169		1,822	—
Diluted EPS for Class A Common Shares	$	2,911	32,066	$	0.09

Three Months Ended October 31, 2018

   Undistributed
& Distributed
Earnings to
Class A
Common
Shares    Class A
Common
Shares    EPS*
Per Basic
   $ 1,167    29,104    $ 0.04
Common Stock Equivalents
   —      552    —






   1,167    29,656    0.04
Class B Common Share Conversion
   76    1,822    —






Diluted EPS for Class A Common Shares
   $ 1,243    31,478    $ 0.04



	Undistributed & Distributed Earnings to Class A Common Shares		Class A Common Shares	EPS*
Per Basic	$	1,167	29,104	$	0.04
Common Stock Equivalents	—		552	—
	1,167		29,656	0.04
Class B Common Share Conversion	76		1,822	—
Diluted EPS for Class A Common Shares*	$	1,243	31,478	$	0.04

Six Months Ended October 31, 2018



	Undistributed & Distributed Earnings to Class A Common Shares		Class A Common Shares	EPS*
Per Basic	$	2,469	28,959	$	0.09
Common Stock Equivalents	—		587	—
	2,469		29,546	0.08
Class B Common Share Conversion	159		1,866	—
Diluted EPS for Class A Common Shares	$	2,628	31,412	$	0.08

~~Three Months Ended October 31, 2017~~

   Undistributed
& Distributed
Earnings to
Class A
Common
Shares    Class A
Common
Shares    EPS*
Per Basic
   $ 2,296    27,589    $ 0.08
Common Stock Equivalents
   —      323    —






   2,296    27,912    0.08
Class B Conversion
   184    2,317    —






Diluted EPS for Class A Common Shares
   $ 2,480    30,229    $ 0.08

~~Six Months Ended October 31, 2017~~

   Undistributed
& Distributed
Earnings to
Class A
Common
Shares    Class A
Common
Shares    EPS*
Per Basic
   $ 4,809    27,448    $ 0.17
Common Stock Equivalents
   —      322    —






   4,809    27,770    0.17
Class B Conversion
   396    2,340    —






Diluted EPS for Class A Common Shares
   $ 5,205    30,110    $ 0.17

Diluted EPS for Class B Common Shares Using the Two-Class Method

~~Two-Class~~Three Months Ended October 31, 2019 ~~Method~~



	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares	EPS*
Per Basic	$	101	1,822	$	0.06
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares	3		—	—
Diluted EPS for Class B Common Shares	$	104	1,822	$	0.06

Six Months Ended October 31, 2019



	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares	EPS*
Per Basic	$	169	1,822	$	0.09
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares	6		—	—
Diluted EPS for Class B Common Shares	$	175	1,822	$	0.10

Three Months Ended October 31, 2018

   Undistributed
& Distributed
Earnings to
Class B
Common
Shares    Class B
Common
Shares    EPS*
Per Basic
   $ 76    1,822    $ 0.04
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares
   2    —      —






Diluted EPS for Class B Common Shares
   $ 78    1,822    $ 0.04



	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares	EPS*
Per Basic	$	76	1,822	$	0.04
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares	2		—	—
Diluted EPS for Class B Common Shares	$	78	1,822	$	0.04

Six Months Ended October 31, 2018

   Undistributed
& Distributed
Earnings to
Class B
Common
Shares    Class B
Common
Shares    EPS*
Per Basic
   $ 159    1,866    $ 0.09
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares
   —      —      —






Diluted EPS for Class B Common Shares
   $ 159    1,866    $ 0.09

~~Three Months Ended~~



	Undistributed & Distributed Earnings to Class B Common Shares		Class B Common Shares	EPS*
Per Basic	$	159	1,866	$	0.09
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares	—		—	—
Diluted EPS for Class B Common Shares	$	159	1,866	$	0.09

*Amounts adjusted for rounding

For the three and six months ended October 31, ~~2017~~

   Undistributed
& Distributed
Earnings to
Class B
Common    Class B
Common
Shares    EPS*
Per Basic
   $ 184    2,317    $ 0.08
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares
   —      —      —






Diluted EPS for Class B Common Shares
   $ 184    2,317    $ 0.08

~~Six Months Ended October 31, 2017~~

   Undistributed
& Distributed
Earnings to
Class B
Common    Class B
Common
Shares    EPS*
Per Basic
   $ 396    2,340    $ 0.17
Reallocation of undistributed earnings from Class A Common Shares to Class B Common Shares
   1    —      —






Diluted EPS for Class B Common Shares
   $ 397    2,340    $ 0.17

*	~~Amounts adjusted~~2019, we excluded options to purchase 12,174 and 330,620 Class A Common Shares, respectively, and for ~~rounding~~

~~For~~ the three and six months ended October 31, 2018, we excluded options to purchase 12,000 and 6,065 ~~Class A Common Shares, respectively, and for the three and six months ended October 31, 2017, we excluded options to purchase 1,184,124 and 1,105,521~~ Class A Common Shares, respectively, from the computation of diluted earnings per Class A Common Shares. We excluded these option share amounts because the exercise prices of those options were greater than the average market price of the Class A Common Shares during the applicable period. As of October 31, 2019, we had a total of 4,333,117 options outstanding and as of October 31, 2018, we had a total of 4,119,923 options ~~outstanding and as of October 31, 2017, we had a total of 3,440,512 options~~ outstanding.

F. Stock-Based Compensation

During the six months ended October 31, ~~2018~~2019 and ~~2017,~~2018, we granted options for ~~1,189,000~~1,063,000 and ~~884,000~~1,189,000 shares of Class A common stock, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The forfeiture rates are estimated using historical data. We recorded stock option compensation cost of ~~approximately $443,000~~approximately$0.5 million and ~~$477,000~~$0.4 million and income tax ~~excess~~ benefits of approximately ~~$12,000~~$411,742 and ~~shortfall of $47,000~~$12,000 from option exercises during the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, respectively. We recorded stock option compensation cost of approximately ~~$841,000~~$0.9 million and ~~$793,000,~~$0.8 million and income tax ~~excess~~ benefits of approximately ~~$286,000~~$0.5 million and ~~$80,000~~$0.3 million from option exercises during the six months ended October 31, ~~2018~~2019 and ~~2017,~~2018, respectively. We record stock-based compensation expense on a straight-line basis over the vesting period directly to additional paid-in capital.

~~paid-in~~ ~~capital.~~

During the six months ended October 31, ~~2018~~2019 and ~~2017,~~2018, we issued ~~343,000~~650,943 and ~~482,000~~343,713 shares of Class A common stock, respectively, resulting from the exercise of stock options. The total intrinsic value of options exercised during the six months ended October 31, ~~2018~~2019 and ~~2017~~2018 based on market value at the exercise dates was approximately ~~$1.9~~$3.2 million and ~~$1.3~~$1.9 million, respectively. As of October 31, ~~2018,~~2019, unrecognized compensation cost related to unvested stock option awards approximated ~~$5.4~~$7.0 million, which we expect to recognize over a weighted average period of ~~2.04~~2.03 years.

G. Fair Value of Financial Instruments

We measure our investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. A number of factors affect market price observability, including the type of asset or liability and its characteristics. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1—Quoted prices for identical instruments in active markets.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following is a general description of the valuation methodologies we use for financial assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash Equivalents—Cash equivalents include investments in government obligation based money-market funds, other money market instruments and interest-bearing deposits with initial terms of three months or less. The fair value of cash equivalents approximates its carrying value due to the short-term nature of these instruments.

Marketable Securities—Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. ~~Government~~government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include municipal bonds. We value these securities using market-corroborated pricing or other models that use observable inputs such as yield curves.

The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of October 31, ~~2018~~2019 and April 30, ~~2018, respectively,~~2019, and ~~indicates~~indicate the fair value hierarchy of the valuation techniques we used to determine such fair value (in thousands):

   October 31, 2018
   Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Balance
Cash equivalents
   $ 43,193    $ —      $ —      $ 43,193
Marketable securities
   9,676    22,065    —      31,741








Total
   $ 52,869    $ 22,065    $ —      $ 74,934








   April 30, 2018
   Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Balance
Cash equivalents
   $ 46,972    $ —      $ —      $ 46,972
Marketable securities
   11,125    23,889    —      35,014








Total
   $ 58,097    $ 23,889    $ —      $ 81,986



	October 31, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	57,698	$	—	$	—	$	57,698
Marketable securities	12,478		19,509		—		31,987
Total	$	70,176	$	19,509	$	—	$	89,685



	April 30, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	56,645	$	—	$	—	$	56,645
Marketable securities	11,002		16,192		—		27,194
Total	$	67,647	$	16,192	$	—	$	83,839

H. Stock Repurchases

On August 19, 2002, our Board of Directors authorized the repurchase of up to an additional 2.0 million shares of our Class A common stock. We have made and will make these repurchases through open market purchases at prevailing market prices. The timing of any repurchase will depend upon market conditions, the market price of our Class A common stock and management’s assessment of our liquidity and cash flow needs. Under this repurchase plan, ~~through October 31, 2018,~~ we have repurchased 1,053,679 shares of Class A common stock at a cost of approximately ~~$6.2 million.~~$6.2 million, which had no impact on fiscal 2020. As of October 31, ~~2018,~~2019, under all repurchase plans previously authorized, including this most recent plan, we have repurchased a total of 4,588,632 shares of common stock at a cost of approximately $25.6 million.

I. Comprehensive Income

We have not included ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~comprehensive income~~Comprehensive Income in the accompanying unaudited ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements since comprehensive income and net earnings presented in the accompanying ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~operations~~Operations would be substantially the same.

J. Industry Segments

FASB ASC 280,Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of a public entity about which separate financial information is available that is evaluated regularly by the chief operating decision makers (“CODMs”), or decision making group, in deciding how to allocate resources and in assessing performance. Our CODMs are our Principal Executive Officer ~~(“PEO”)~~ and our President. While our CODMs are apprised of a variety of financial metrics and information, we manage our business primarily on a segment basis, with the CODMs evaluating performance based upon segment operating profit or loss, with certain corporate and other common expenses included in the Other segment. Our CODMs review the operating results of our three segments, assess performance and allocate resources in a manner that is consistent with the changing market dynamics that we have experienced. We recently updated our operating segments to reflect the fact that we provide our software solutions through three major operating segments, which are further broken down into a total of six major product and service groups. The three operating segments are (1) Supply Chain Management (“SCM”), (2) Information Technology (“IT”) Consulting and (3) Other.

~~The~~

Our primary operating units under our SCM segment ~~primarily consists of~~include Logility, which is a leading provider of collaborative supply chain optimization and advanced retail planning solutions that help medium, large and Fortune 500 companies transform their supply chain operations to gain a competitive advantage and which is recognized for its high-touch approach to customer service, rapid implementations and industry-leading return on investment (ROI). The SCM segment also includes (i) Demand Management, Inc (“DMI”)Inc., ~~which delivers affordable,easy-to-use~~ ~~SaaS supply chain planning solutions designed to increase forecast accuracy, improve customer service and reduce inventory to maximize profits and lower costs, (ii)~~ New Generation Computing, Inc. (“NGC”), ~~which is a leading provider of cloud-based supply chain~~Demand Management, Inc. (“DMI”), and ~~product lifecycle management solutions for brands, retailers and consumer products companies, and (iii)~~ Halo Business Intelligence (“Halo”). Logility and NGC are wholly-owned subsidiaries of American Software; DMI is a wholly-owned subsidiary of Logility; and Halo is a division of Logility. In addition to our core SCM software business, we also offer technology staffing and consulting services through our wholly-owned subsidiary, The Proven Method, Inc., ~~which is an advanced analytics software provider leveraging an innovative blend of artificial intelligence and machine learning technology to drive greater supply chain performance.~~in the IT Consulting segment. The Other segment consists of ~~(i) American Software ERP, which provides purchasing~~software and ~~materials management, customer order processing, financial,e-commerce~~ ~~and traditional manufacturing solutions, and (ii)~~services provided to our legacy enterprise resource planning (“ERP”) customers, as well as corporate overhead and other common expenses.

Previously, we maintained three operating segments: (1) SCM, (2) IT and (3) Enterprise Resource Planning (“ERP”). As a result of the organizational realignment during the third quarter of fiscal 2018, NGC was repositioned out of the ERP segment and into the SCM segment. There were no changes to the IT segment. Certain prior year amounts have been recast to conform to fiscal 2019 presentation. The change in reportable segments had no effect on our previously reported consolidated financial position or results of operations.

All of our revenues are derived from external customers. We do not have any intersegment revenue. Our income taxes and dividends are paid at a consolidated level. Consequently, it is not practical to show these items by operating segment.

In the following table, we have broken down the intersegment transactions applicable to the three and six months ended October 31, ~~2018~~2019 and ~~2017~~2018 (in thousands):

   Three Months Ended
October 31,    Six Months Ended
October 31,
   2018    2017    2018 2017
Revenues:

Supply Chain Management
   $ 22,114    $ 21,178    $ 43,572 $ 43,064
IT Consulting
   5,222    4,596    10,579 8,965
Other
   697    563    1,281 1,193






   $ 28,033    $ 26,337    $ 55,432 $ 53,222






Operating income (loss) before intersegment eliminations:

Supply Chain Management
   $ 3,973    $ 4,669    $ 7,040 $ 9,582
IT Consulting
   396    357    755 591
Other
   (2,843 )    (1,784 )    (5,662 ) (3,310 )






   $ 1,526    $ 3,242    $ 2,133 $ 6,863






Intersegment eliminations*:

Supply Chain Management
   —      —      —   —
IT Consulting
   —      —      —   —
Other
   —      —      —   —






   —      —      —   —






Operating income (loss) after intersegment eliminations:

Supply Chain Management
   $ 3,973    $ 4,669    $ 7,040 $ 9,582
IT Consulting
   396    357    755 591
Other
   (2,843 )    (1,784 )    (5,662 ) (3,310 )






   $ 1,526    $ 3,242    $ 2,133 $ 6,863






Capital expenditures:

Supply Chain Management
   $ 52    $ 57    $ 124 $ 81
IT Consulting
   —      4    1 6
Other
   128    17    769 125






   $ 180    $ 78    $ 894 $ 212






Capitalized software:

Supply Chain Management
   $ 1,204    $ 1,330    $ 2,088 $ 2,617
IT Consulting
   —      —      —   —
Other
   —      —      —   —






   $ 1,204    $ 1,330    $ 2,088 $ 2,617






Depreciation and amortization:

Supply Chain Management
   $ 1,828    $ 1,273    $ 3,554 $ 2,605
IT Consulting
   2    2    4 4
Other
   83    46    153 96






   $ 1,913    $ 1,321    $ 3,711 $ 2,705






Earnings (loss) before income taxes:

Supply Chain Management
   $ 4,008    $ 4,718    $ 7,058 $ 9,792
IT Consulting
   396    357    755 591
Other
   (3,068 )    (1,157 )    (5,117 ) (2,245 )






   $ 1,336    $ 3,918    $ 2,696 $ 8,138

*	~~Fiscal 2018 recast to adjust for corporate overhead and other common expenses, which were no longer allocated starting in fiscal 2019.~~



	Three Months Ended October 31,						Six Months Ended October 31,
	2019			2018			2019			2018
Revenues:
Supply Chain Management	$	23,487		$	22,114		$	45,834		$	43,572
IT Consulting	4,158			5,222			8,536			10,579
Other	565			697			1,223			1,281
	$	28,210		$	28,033		$	55,593		$	55,432
Operating income (loss):
Supply Chain Management	$	4,360		$	3,973		$	8,211		$	7,040
IT Consulting	(12		)	396			166			755
Other	(3,505		)	(2,843		)	(6,737		)	(5,662		)
	$	843		$	1,526		$	1,640		$	2,133
Capital expenditures:
Supply Chain Management	$	44		$	52		$	75		$	124
IT Consulting	—			—			—			1
Other	84			128			163			769
	$	128		$	180		$	238		$	894
Capitalized software:
Supply Chain Management	$	605		$	1,204		$	1,890		$	2,088
IT Consulting	—			—			—			—
Other	—			—			—			—
	$	605		$	1,204		$	1,890		$	2,088
Depreciation and amortization:
Supply Chain Management	$	2,089		$	1,828		$	4,241		$	3,554
IT Consulting	1			2			3			4
Other	93			83			184			153
	$	2,183		$	1,913		$	4,428		$	3,711
Earnings (loss) before income taxes:
Supply Chain Management	$	4,480		$	4,008		$	8,516		$	7,058
IT Consulting	(12		)	396			166			755
Other	(2,913		)	(3,068		)	(5,805		)	(5,117		)
	$	1,555		$	1,336		$	2,877		$	2,696

K. Major Customers

No ~~one~~single customer accounted for more than 10% of total revenues for the three and six months ended October 31, ~~2018~~2019 and ~~2017.~~

K.2018.

L. Contingencies

We ~~more often than not~~generally indemnify our customers against damages and costs resulting from third-party claims of patent, copyright or trademark infringement associated with use of our products. Historically, we have not been required to make any payments under such indemnifications. However, we continue to monitor the conditions that are subject to ~~the indemnifications~~indemnification to identify whether it is probable that a loss has occurred, and would recognize any such losses when those losses are estimable. In addition, we warrant to our customers that our software products operate substantially in accordance with ~~the software products’~~their specifications. Historically, we have

incurred no costs related to software product warranties and we do not expect to incur such costs in the future, and as such we have made no accruals for software product warranty costs. Additionally, we are involved in various claims arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our financial position or results of operations.

M. Subsequent Event

On November ~~15, 2018,~~12, 2019, our Board of Directors declared a quarterly cash dividend of $0.11 per share of our Class A and Class B common stock. The cash dividend is payable on February ~~22, 2019~~21, 2020 to Class A and Class B shareholders of record at the close of business on February ~~8, 2019.~~

7, 2020.


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report on Form10-Q (this “Quarterly Report”) contains forward-looking statements relating to our future financial performance, business strategy, financing plans and other future events that involve uncertainties and risks. You can identify these statements by forward-looking words such as “anticipate,” “intend,” “plan,” “continue,” “could,” “grow,” “may,” “potential,” “predict,” “strive” “will,” “seek,” “estimate,” “believe,” “expect,” and similar expressions that convey uncertainty of future events or outcomes. Any forward-looking statements we make herein are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning future:

results of operations;

liquidity, cash flow and capital expenditures;

demand for and pricing of our products and services;

annual contract value (“ACV”);

viability and effectiveness of strategic alliances;

industry conditions and market conditions;

acquisition activities and the effect of completed acquisitions; and

general economic conditions.

Although we believe that the goals, plans, expectations, and prospects that our forward-looking statements reflect are reasonable in view of the information currently available to us, those statements are not guarantees of performance. There are many factors that could cause our actual results to differ materially from those anticipated by forward-looking statements made herein. These factors include, but are not limited to, continuing U.S. and global economic uncertainty, the timing and degree of business recovery, unpredictability and the irregular pattern of future revenues, dependence on particular market segments or customers, competitive pressures, delays, product liability and warranty claims and other risks associated with new product development, undetected software errors, market acceptance of our products, technological complexity, the challenges and risks associated with integration of acquired product lines, companies and services, as well as a number of other risk factors that could affect our future performance. All forward-looking statements included in this Quarterly Report are based upon information available to us as of the filing date of this Quarterly Report. We undertake no obligation to update any of these forward-looking statements for any reason. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. We discuss certain factors in greater detail in “Business Overview” below.

ECONOMIC OVERVIEW

Corporate capital spending trends and commitments are the primary determinants of the size of the market for business software. Corporate capital spending is, in turn, a function of general economic conditions in the U.S. and abroad and in particular may be affected by conditions in global credit markets.

In October ~~2018,~~2019, the International Monetary Fund (“IMF”) provided an update to the World Economic Outlook ~~(“WEO”)~~ for ~~the 2018 and 2019 world economic growth forecast.~~2019. The update noted that,“Global growth is ~~projected~~forecast at ~~3.7~~3.0 percent for ~~2018– 19—~~2019, its lowest level since 2008–09 and a 0.3 percentage point downgrade from the April 2019 World Economic Outlook. Growth is projected to pick up to 3.4 percent in 2020 (a 0.2 percentage point ~~lower~~downward revision compared with April), reflecting primarily a projected improvement in economic performance in a number of emerging markets in Latin America, the Middle East, and emerging and developing Europe that are under macroeconomic strain. Yet, with uncertainty about prospects for ~~both years than forecast~~several of these countries, a projected slowdown in ~~April. In~~China and the United States, ~~momentum is still strong as fiscal stimulus continues~~and prominent downside risks, a much more subdued pace of global activity could well materialize. To forestall such an outcome, policies should decisively aim at defusing trade tensions, reinvigorating multilateral cooperation, and providing timely support to ~~increase, but the forecast for 2019 has been revised down due~~economic activity where needed. To strengthen resilience, policymakers should address financial vulnerabilities that pose risks to ~~recently announced trade measures, including the tariffs imposed on $200~~ billion of US imports from China. Growth projections have been marked down for the euro area and the United Kingdom, following surprises that suppressed activity in early 2018. Among emerging market and developing economies, the growth prospects of many energy exporters have been lifted by higher oil prices, but growth was revised down for Argentina, Brazil, Iran, and Turkey, among others, reflecting country-specific factors, tighter financial conditions, geopolitical tensions, and higher oil import bills. China and a number of Asian economies are also projected to experience somewhat weaker growth in ~~2019 in~~ the ~~aftermath of the recently announced trade measures.”~~

medium term. Making growth more inclusive, which is essential for securing better economic prospects for all, should remain an overarching goal."

For fiscal ~~2019,~~2020, we expect the global economy to improve modestly when compared to the prior year. We believe information technology spending will incrementally improve over the long term as increased global competition forces companies to improve productivity by upgrading their technology systems, which could result in an improved selling environment. Although this

improvement could slow or regress at any time, due in part to concerns in global capital markets and general economic conditions, we believe that our organizational and financial structure will enable us to take advantage of any sustained economic rebound. Customers continue to take long periods to evaluate discretionary software purchases.

We believe improved economic conditions may be driving some businesses to focus on achieving more process and efficiency enhancements in their operations and to invest in solutions that improve operating margins, rather than make large infrastructure-type technology purchases. If this trend continues, we believe it may tend to favor solutions such as our supply chain solutions, which are designed to provide a more rapid return on investment and are targeted at some of the largest profit drivers in a customer’s business.

BUSINESS OVERVIEW

American Software was incorporated as a Georgia corporation in 1970. We develop, market and support a portfolio of software and services that deliver enterprise management and collaborative supply chain solutions to the global marketplace. We have designed our software and services to bring business value to enterprises by supporting their operations over intranets, extranets, client/servers or the Internet. References to “the Company,” “our products,” “our software,” “our services” and similar references include the appropriate business segment actually providing the product or service.

The ~~SCM segment primarily consists of~~Company enables enterprises to accelerate their operations from product concept to customer availability. Our four brands - Logility, ~~which is~~Demand Solutions, Halo and NGC Software - provide a ~~leading provider of collaborative~~single platform spanning eight supply chain process areas, including demand optimization, inventory optimization, supply optimization, retail optimization, quality and advanced retail planning solutions that help medium, large and Fortune 500 companies transform their supply chain operations to gain a competitive advantage and which is recognized for its high-touch approach to customer service, rapid implementations and industry-leading return on investment (ROI). The SCM segment also includes (i) DMI, which delivers affordable,~~easy-to-useSoftware-as-a-Service~~ (SaaS) supply chain planning solutions designed to increase forecast accuracy, improve customer service and reduce inventory to maximize profits and lower costs, (ii) NGC, which is a leading provider of cloud-based supply chain andcompliance, product lifecycle management, ~~solutions for brands, retailers~~sourcing management and ~~consumer products companies, and (iii) Halo, which is an~~integrated business planning. Our platform includes advanced analytics ~~software provider leveraging an innovative blend~~and is 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.

Our primary operating units under our SCM segment include Logility, Inc., New Generation Computing, Inc. (“NGC”), Demand Management, Inc. (“DMI”), and Halo Business Intelligence (“Halo”). Logility and NGC are wholly-owned subsidiaries of American Software; DMI is a wholly-owned subsidiary of Logility; and Halo is a division of Logility. In addition to our core SCM software business, we also offer technology ~~to drive greater supply chain performance.~~staffing and consulting services through our wholly-owned subsidiary, The Proven Method, Inc., in the IT Consulting segment. The Other segment consists of ~~(i) American Software ERP, which provides purchasing~~software and ~~materials management, customer order processing, financial,e-commerce~~ ~~and traditional manufacturing solutions, and (ii)~~services provided to our legacy enterprise resource planning (“ERP”) customers, as well as corporate overhead and other common expenses.

We derive revenues primarily from four sources: software licenses, subscriptions, professional services and other, and maintenance. We generally determine software license and SaaS fees based on the depth of functionality, contractual term, number of production deployments, users and/or sites licensed and/or subscribed. Professional services and other revenues consist primarily of fees from software implementation, training, and consulting services. We bill primarily under time and materials arrangements and recognize revenues as we perform services. SaaS and maintenance agreements typically are for aone- to three-year term, commencing at the time of the initial contract. We generally bill these fees, monthly, quarterly and annually in advance under agreements with terms of one to three years, and then recognize the resulting revenues ratably over the term of the agreement. Deferred revenue represents payments or billings for subscriptions ~~software licenses,~~and services and maintenance in advance of the time we recognize the related revenues.

Our cost of revenue for licenses and subscriptions includes amortization of capitalized computer software development costs, amortization of acquired developed technology, royalties paid to third-party software vendors, and agent commission expenses related to ~~license~~ revenues generated by the indirect channel, primarily from DMI. Costs for maintenance and services include the cost of personnel to conduct implementations and customer support, consulting, other personnel-related expenses, and agent commission expenses related to maintenance revenues generated by the indirect channel, primarily from DMI. We account for the development costs of software intended for sale in accordance with the Software topic of the FASB ASC.We monitor the net realizable value of our capitalized software on a quarterly basis based on an estimate of future product revenues. We currently expect to fully recover the value of the capitalized software asset recorded on our ~~condensed consolidated balance sheet;~~Condensed Consolidated Balance Sheets; however, if future product revenues are less than management’s current expectations, we may incur a write-down of capitalized software costs.

Our selling expenses mainly include the salary and commissions paid to our sales professionals, along with marketing, promotional, travel and associated costs. Our general and administrative expenses mainly include the salary and benefits paid to executive, corporate and support personnel, as well as facilities-related costs, utilities, communications expenses, and various professional fees.

We currently view the following factors as the primary opportunities and risks associated with our business:

•

~~Dependence on Capital Spending Patterns.~~ There is risk associated with our dependence on the capital spending patterns of U.S. and international businesses, which in turn are functions of economic trends and conditions over which we have no control.

•

~~Acquisition Opportunities.~~ There are opportunities for selective acquisitions or investments to expand our sales distribution channels and/or broaden our product offering by providing additional solutions for our target markets.

•

~~Acquisition Risks.~~ There are risks associated with acquisitions of complementary companies, products and technologies, including the risks that we will not achieve the financial and strategic goals that we contemplate at the time of the transaction. More specifically, in any acquisition we will face risks and challenges associated with the uncertain value of the acquired business or assets, the difficulty of assimilating operations and personnel, integrating acquired technologies and products and maintaining the loyalty of the customers of the acquired business.

•

~~Competitive Technologies.~~ ~~There is a risk that our competitors may develop technologies that are substantially equivalent or superior to our technology.~~

•

~~Competition in General.~~ There are risks inherent in the market for business application software and related services, which has been and continues to be intensely competitive; for example, some of our competitors may become more aggressive with their prices and/or payment terms, which may adversely affect our profit margins.

Acquisition Opportunities. There are opportunities for selective acquisitions or investments to expand our sales distribution channels and/or broaden our product offering by providing additional solutions for our target markets.

Dependence on Capital Spending Patterns. There is risk associated with our dependence on the capital spending patterns of U.S. and international businesses, which in turn are functions of economic trends and conditions over which we have no control.

Acquisition Risks. There are risks associated with acquisitions of complementary companies, products and technologies, including the risks that we will not achieve the financial and strategic goals that we contemplate at the time of the transaction. More specifically, in any acquisition we will face risks and challenges associated with the uncertain value of the acquired business or assets, the difficulty of assimilating operations and personnel, integrating acquired technologies and products and maintaining the loyalty of the customers of the acquired business.

Competitive Technologies. There is a risk that our competitors may develop technologies that are substantially equivalent or superior to our technology.

Competition in General. There are risks inherent in the market for business application software and related services, which has been and continues to be intensely competitive; for example, some of our competitors may become more aggressive with their prices and/or payment terms, which may adversely affect our profit margins.

A discussion of a number of additional risk factors associated with our business is included in our Annual Report for ~~the~~ fiscal ~~year ended April 30, 2018.~~2019. Additional information and other factors that could affect future financial results may be included, from time to time, in our filings with the Securities and Exchange Commission (“SEC”).

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements, if any, and the impact of these pronouncements on our consolidated financial statements, if any, see Note A in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

COMPARISON OF RESULTS OF OPERATIONS

Three-Month Comparisons.The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage changes in those items for the three months ended October 31, ~~2018~~2019 and ~~2017:~~

   Three Months Ended October 31,
   Percentage of Total
Revenues Pct. Change in
Dollars
   2018 2017 2018 vs. 2017
Revenues:

License
   7 % 9 % (18 )%
Subscription Fees
   12 % 8 % 64 %
Professional Services and other
   39 % 42 % —   %
Maintenance
   42 % 41 % 7 %


Total revenues
   100 % 100 % 6 %


Cost of revenues:

License
   6 % 6 % 7 %
Subscription Fees
   5 % 3 % 43 %
Professional Services and other
   29 % 29 % 8 %
Maintenance
   8 % 9 % (3 )%


Total cost of revenues
   48 % 47 % 8 %


Gross margin
   52 % 53 % 5 %


Research and development
   12 % 10 % 26 %
Sales and marketing
   19 % 17 % 20 %
General and administrative
   16 % 14 % 22 %
Amortization of acquisition-related intangibles
   —   % —   % 43 %


Total operating expenses
   47 % 41 % 22 %


Operating income
   5 % 12 % (53 )%


Other income:

Interest income
   2 % 1 % 48 %
Other, net
   (3 )% 1 % (322 )%


Earnings before income taxes
   4 % 14 % (66 )%
Income tax expense
   —   % 5 % (94 )%


Net earnings
   4 % 9 % (50 )%


2018:

Three Months Ended October 31,

Percentage of Total
Revenues

Pct. Change in
Dollars
2019 2018 2019 vs. 2018
Revenues:
License 4 % 7 % (48 )%
Subscription fees 19 % 12 % 64 %
Professional services and other 38 % 39 % (2 )%
Maintenance 39 % 42 % (7 )%
Total revenues 100 % 100 % — %
Cost of revenues:
License 4 % 6 % (43 )%
Subscription fees 9 % 5 % 102 %
Professional services and other 26 % 29 % (7 )%
Maintenance 7 % 8 % (16 )%
Total cost of revenues 46 % 48 % (3 )%
Gross margin 54 % 52 % 4 %
Research and development 15 % 12 % 26 %
Sales and marketing 18 % 19 % (3 )%
General and administrative 17 % 16 % 11 %
Amortization of acquisition-related intangibles — % — % nm
Total operating expenses 50 % 47 % 9 %
Operating income 4 % 5 % (45 )%
Other income:
Interest income 1 % 2 % (24 )%
Other, net 1 % (3 )% (144 )%
Earnings before income taxes 6 % 4 % 16 %
Income tax (benefit)/expense (1 )% — % nm
Net earnings 7 % 4 % 42 %

nm - not meaningful

Six-Month Comparisons. ~~Comparisons.~~The following table sets forth certain revenue and expense items as a percentage of total revenues and the percentage changes in those items for the six months ended October 31, ~~2018~~2019 and ~~2017:~~

   Six Months Ended October 31,
   Percentage of Total
Revenues Pct. Change in
Dollars
   2018 2017 2018 vs. 2017
Revenues:

License
   7 % 12 % (43 )%
Subscription Fees
   12 % 7 % 78 %
Professional Services and other
   40 % 40 % 3 %
Maintenance
   41 % 41 % 7 %


Total revenues
   100 % 100 % 4 %


Cost of revenues:

License
   6 % 6 % 17 %
Subscription Fees
   4 % 3 % 35 %
Professional Services and other
   31 % 28 % 14 %
Maintenance
   8 % 8 % (2 )%


Total cost of revenues
   49 % 45 % 13 %


Gross margin
   51 % 55 % (3 )%


Research and development
   13 % 10 % 36 %
Sales and marketing
   19 % 18 % 8 %
General and administrative
   16 % 13 % 20 %
Amortization of acquisition-related intangibles
   —   % 1 % (50 )%


Total operating expenses
   48 % 42 % 18 %


Operating income
   3 % 13 % (69 )%


Other income:

Interest income
   2 % 1 % 43 %
Other, net
   (1 )% 1 % (183 )%


Earnings before income taxes
   4 % 15 % (67 )%
Income tax expense
   —   % 6 % (98 )%


Net earnings
   4 % 9 % (50 )%

2018:



	Six Months Ended October 31, 2019
	Percentage of Total Revenues				Pct. Change in Dollars
	2019		2018		2019 vs. 2018
Revenues:
License	5	%	7	%	(24	)%
Subscription fees	18	%	12	%	53	%
Professional services and other	38	%	40	%	(5	)%
Maintenance	39	%	41	%	(6	)%
Total revenues	100	%	100	%	—	%
Cost of revenues:
License	4	%	6	%	(31	)%
Subscription fees	9	%	4	%	101	%
Professional services and other	26	%	31	%	(11	)%
Maintenance	7	%	8	%	(16	)%
Total cost of revenues	46	%	49	%	(5	)%
Gross margin	54	%	51	%	5	%
Research and development	14	%	13	%	8	%
Sales and marketing	19	%	19	%	2	%
General and administrative	18	%	16	%	13	%
Amortization of acquisition-related intangibles	—	%	—	%	nm
Total operating expenses	51	%	48	%	7	%
Operating income	3	%	3	%	(23	)%
Other income:
Interest income	1	%	2	%	(15	)%
Other, net	1	%	(1	)%	(178	)%
Earnings before income taxes	5	%	4	%	7	%
Income tax (benefit)/expense	—	%	—	%	nm
Net earnings	5	%	4	%	11	%

nm - not meaningful

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND SIX ~~MONTHS~~ ENDED OCTOBER 31, ~~2018~~2019 AND ~~2017~~

2018

REVENUES

   Three Months Ended October 31,
         % of Total Revenue
   2018    2017    % Change 2018 2017
   (in thousands)
License
   $ 2,012    $ 2,449    (18 )% 7 % 9 %
Subscription Fees
   3,341    2,041    64 % 12 % 8 %
Professional Services and other
   11,056    11,008    —   % 39 % 42 %
Maintenance
   11,624    10,839    7 % 42 % 41 %






Total revenues
   $ 28,033    $ 26,337    6 % 100 % 100 %

   Six Months Ended October 31,
         % of Total Revenue
   2018    2017    % Change 2018 2017
   (in thousands)
License
   $ 3,714    $ 6,464    (43 )% 7 % 12 %
Subscription Fees
   6,509    3,660    78 % 12 % 7 %
Professional Services and other
   22,064    21,431    3 % 40 % 40 %
Maintenance
   23,145    21,667    7 % 41 % 41 %






Total revenues
   $ 55,432    $ 53,222    4 % 100 % 100 %



	Three Months Ended October 31,
							% of Total Revenue
	2019		2018		% Change		2019		2018
	(in thousands)
License	$	1,046	$	2,012	(48	)%	4	%	7	%
Subscription fees	5,492		3,341		64	%	19	%	12	%
Professional services and other	10,826		11,056		(2	)%	38	%	39	%
Maintenance	10,846		11,624		(7	)%	39	%	42	%
Total revenues	$	28,210	$	28,033	—	%	100	%	100	%



	Six Months Ended October 31,
							% of Total Revenue
	2019		2018		% Change		2019		2018
	(in thousands)
License	$	2,824	$	3,714	(24	)%	5	%	7	%
Subscription fees	9,950		6,509		53	%	18	%	12	%
Professional services and other	20,963		22,064		(5	)%	38	%	40	%
Maintenance	21,856		23,145		(6	)%	39	%	41	%
Total revenues	$	55,593	$	55,432	—	%	100	%	100	%

For the three months ended October 31, ~~2018, the 6% increase in revenues over the three months ended~~2019 compared to October 31, ~~2017 was~~2018 revenues remained relatively flat attributable primarily to a 64% increase in subscription fees that were partially offset by a 48% decrease in license revenues, a 7% decrease in maintenance revenues and to a ~~lesser extent a 7% increase~~2% decrease in ~~maintenance~~professional fees and other revenues, when compared to the same period last year. ~~This increase was partially offset by a 18% decrease in license revenues.~~

For the six months ended October 31, ~~2018, the 4% increase in revenues over the six months ended~~2019 compared to October 31, ~~2017 was~~2018 revenues remained flat attributable primarily to a ~~78%~~53% increase in subscription fees that were partially offset by a 24% decrease in license revenues, ~~and to~~ a ~~lesser extent a 7% increase~~6% decrease in maintenance revenues and a ~~3% increase~~5% decrease in professional ~~services~~fees and other revenues, when compared to the same period last year. ~~This increase was partially offset by a 43% decrease in license revenues.~~

Due to intense competition in our industry, we sometimes discount license fees from our published list price. Numerous factors contribute to the amount of the discount provided, such as previous customer purchases, the number of customer sites utilizing the software, the number of modules purchased and the number of users, as well as the overall size of the contract. While all these factors may affect the discount amount of a particular contract, the overall percentage discount has not materially changed in the recent reported fiscal periods.

The change in our revenues from period to period is primarily due to the volume of products and related services sold in any period and the number of products or modules purchased with each sale.

International revenues represented approximately ~~20%~~19% and 21% of total revenues in the three and six months ended October 31, ~~2018 and 2017, respectively.~~2019, respectively, compared to 20% for the same periods in the prior year. Our revenues, ~~in particular~~particularly our international revenues, may fluctuate substantially from period to period, primarily because we derive most of our license fee revenues from a relatively small number of customers in a given period.

License Revenues

   Three Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 1,932    $ 2,438    (21 )%
Other
   80    11    627 %





Total license revenues
   $ 2,012    $ 2,449    (18 )%

   Six Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 3,614    $ 6,442    (44 )%
Other
   100    22    355 %





Total license revenues
   $ 3,714    $ 6,464    (43 )%



	Three Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	1,017	$	1,932	(47	)%
Other	29		80		(64	)%
Total license revenues	$	1,046	$	2,012	(48	)%



	Six Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	2,724	$	3,614	(24	)%
Other	100		100		—	%
Total license revenues	$	2,824	$	3,714	(24	)%

For the three and six months ended October 31, ~~2018,~~2019, license fee revenues decreased ~~18%~~48% and ~~43%~~24%, respectively, when compared to the same period in the prior year. In the three and six months ended October 31, ~~2018,~~2019, license fee revenues from our SCM segment decreased ~~21%~~47% and ~~44%~~24%, respectively, when compared to the corresponding periods in the prior year due to ~~an increase in sales~~our transition of new and existing business into the cloud subscription model compared to the historical on premise software model. The majority of our ~~products on Logility’s cloud services platform that require~~current license fee revenue ~~to be deferred over the life of the contracted period, which~~ is ~~typically one to three years.~~generated from additional users and scope from our existing customers. For the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, our SCM segment constituted approximately ~~96%~~97% and ~~100%~~96% of total license fee revenues, respectively. For the six months ended October 31, ~~2018~~2019 and ~~2017,~~2018, our SCM segment constituted approximately ~~97%~~96% and ~~100%~~97% of total license fee revenues, respectively. Our Other segment license fee revenues ~~increased~~decreased by ~~627%~~64% and ~~355%,~~ remained flat,

respectively, for the three and six months ended October 31, ~~2018~~2019 when compared to the same period in the prior year primarily due to timing of additional sales to our existing ERP customers.

The direct sales channel provided approximately ~~93%~~92% and ~~91%~~94% of license fee revenues for the three and six months ended October 31, ~~2018,~~2019, compared to approximately ~~60%~~93% and ~~76%~~91% in the comparable periods last year. The increase in the percentage of sales by our direct sales channel for the six month period was due to our indirect channel selling proportionately more SaaS than license contracts compared to our direct channel. For the three and six months ended October 31, ~~2018,~~2019, our margins after commissions on direct sales were approximately ~~85%~~86% and ~~88%~~89%, compared to ~~91%~~85% and ~~86%~~88% in the comparable periods last year. The ~~decrease~~increase in margins is due to the mix of sales commission rates based on each individual salesperson’s quotas and related achievement. For the three months ended October 31, ~~2018~~2019 and ~~2017,~~2018, our margins after commissions on indirect sales were approximately ~~60%~~54% and ~~43%~~60%, respectively. For the six months ended October 31, ~~2018~~2019 and ~~2017,~~2018, our margins after commissions on indirect sales were approximately ~~55%~~54% and ~~37%~~55%, respectively. The indirect channel margins for the current quarter ~~increased~~decreased compared to the same periods in the prior year due to the mix of value-added reseller (“VAR”) commission rates. These margin calculations include only commission expense for comparative purposes and do not include other costs of license fees such as amortization of capitalized software.

Subscription Fees

   Three Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 3,341    $ 2,041    64 %





Total Subscription Fees revenues
   $ 3,341    $ 2,041    64 %

   Six Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 6,509    $ 3,660    78 %





Total Subscription Fees revenues
   $ 6,509    $ 3,660    78 %



	Three Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	5,492	$	3,341	64	%
Total subscription fees revenues	$	5,492	$	3,341	64	%



	Six Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	9,950	$	6,509	53	%
Total subscription fees revenues	$	9,950	$	6,509	53	%

For the three and six months ended October 31, ~~2018,~~2019, subscription fees revenues increased by 64% and ~~78%~~53%, respectively, primarily due to an increase in the ~~increased subscription fees revenues from our SCM segment which increased sales~~number of contracts, contracts with a higher Annual Contract Value, as well as an increase in multi-year contracts. This is evidence of our ~~products on our~~successful transition to the cloud ~~services platform that require revenue to be deferred over the life of the contracted period, which is typically one to three years.~~

subscription model.

For the six months ended October 31, ~~2018,~~2019, cloud services ACV increased approximately ~~46%~~55% to ~~$14.5~~$22.4 million compared to ~~$9.9~~$14.5 million in the same period of the prior year due to increased sales of our products on our ~~Cloud Services~~cloud services platform that require revenue to be deferred over the life of the contracted period, which is typically one to three years. ACV is a forward-looking operating measure used by management to better understand cloud services (SaaS and other related cloud services) revenue trends within our business, as it reflects our current estimate of revenue to be generated under existing client contracts in the forward12-month period.

Professional Services and ~~other revenues~~

   Three Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 5,553    $ 6,228    (11 )%
IT Consulting
   5,222    4,596    14 %
Other
   281    184    53 %





Total Professional Services and other revenues
   $ 11,056    $ 11,008    —   %





Other Revenues

   Six Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 10,999    $ 12,068    (9 )%
IT Consulting
   10,579    8,965    18 %
Other
   486    398    22 %





Total Professional Services and other revenues
   $ 22,064    $ 21,431    3 %



	Three Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	6,440	$	5,553	16	%
IT Consulting	4,158		5,222		(20	)%
Other	228		281		(19	)%
Total professional services and other revenues	$	10,826	$	11,056	(2	)%



	Six Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	11,932	$	10,999	8	%
IT Consulting	8,536		10,579		(19	)%
Other	495		486		2	%
Total professional services and other revenues	$	20,963	$	22,064	(5	)%

For the three and six months ended October 31, ~~2018,~~2019, professional services and other revenues ~~were flat~~decreased by 2% and ~~increased by 3%~~5%, respectively, due to the ~~increased~~decreased professional services and other revenues from our Other and IT Consulting segments. This ~~increase~~decrease was partially offset by ~~a decrease~~an increase in professional services and other revenues from our SCM segment. For the three and six months ended October 31, ~~2018,~~2019, our Other segment’s revenues decreased 19% and increased ~~53% and 22%~~2%, respectively when compared to the same periods last year. For the three and six months ended October 31, ~~2018,~~2019, our IT Consulting segment’s revenues ~~increased 14%~~decreased 20% and ~~18%~~19% when compared to the same periods in the prior year due to ~~an increase~~a decrease in project work from existing ~~and new~~ customers. For the three and six months ended October 31, ~~2018,~~2019, our SCM segment’s revenues ~~decreased 11%~~increased 16% and 9%8%, respectively, primarily ~~because certain~~due to a ramp up of implementation project work ~~ended~~ during the ~~quarter before new projects could start.~~quarter. We have observed that there is a tendency for services and other revenues, other than from IT Consulting, to lag changes in license and subscription revenues by one to three quarters, as new licenses and subscriptions in one quarter often involve implementation and consulting services in subsequent quarters, for which we recognize revenues only as we perform those services.

Maintenance Revenues

   Three Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 11,288    $ 10,471    8 %
Other
   336    368    (9 )%





Total maintenance revenues
   $ 11,624    $ 10,839    7 %

   Six Months Ended October 31,
   2018    2017    % Change
   (in thousands)
Supply Chain Management
   $ 22,450    $ 20,894    7 %
Other
   695    773    (10 )%





Total maintenance revenues
   $ 23,145    $ 21,667    7 %



	Three Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	10,537	$	11,288	(7	)%
Other	309		336		(8	)%
Total maintenance revenues	$	10,846	$	11,624	(7	)%



	Six Months Ended October 31,
	2019		2018		% Change
	(in thousands)
Supply Chain Management	$	21,228	$	22,450	(5	)%
Other	628		695		(10	)%
Total maintenance revenues	$	21,856	$	23,145	(6	)%

For the three and six months ended October 31, ~~2018,~~2019, maintenance revenues ~~increased~~decreased 7% and 6%, respectively when compared to the same periods in the prior year. Our SCM maintenance revenue ~~increased 8%~~decreased 7% and 7%5% for the three and six months ended October 31, ~~2018,~~2019, when compared to the same periods last ~~year due primarily to our recent Halo acquisition in the third quarter of fiscal 2018 and improved customer retention.~~year. The SCM segment accounted for 97% of total maintenance revenues for the three and six months ended October 31, ~~2018~~2019 and ~~accounted for 97% and 93%~~ for the same periods in the prior year. Typically, our maintenance revenues have had a direct relationship to current and historic license fee revenues, since new licenses are the potential source of new maintenance customers.

GROSS MARGIN

The following table provides both dollar amounts (in thousands) and percentage measures of gross margin:

   Three months ended October 31, Six months ended October 31,
   2018    2017    2018    2017
Gross margin on license fees
   $ 252    13 % $ 798    33 % $ 240    6 % $ 3,498    54 %
Gross margin on subscription fees
   2,052    61 % 1,138    56 % 4,153    64 % 1,911    52 %
Gross margin on professional services and other
   2,953    27 % 3,520    32 % 5,293    24 % 6,670    31 %
Gross margin on maintenance
   9,410    81 % 8,550    79 % 18,733    81 % 17,151    79 %









Total gross margin
   $ 14,667    52 % $ 14,006    53 % $ 28,419    51 % $ 29,230    55 %



	Three months ended October 31,								Six months ended October 31,
	2019		%		2018		%		2019		%		2018		%
Gross margin on license fees	$	39	4	%	$	252	13	%	$	437	16	%	$	240	6	%
Gross margin on subscription fees	2,882		53	%	2,052		61	%	5,215		52	%	4,153		64	%
Gross margin on professional services and other	3,283		30	%	2,953		27	%	6,015		29	%	5,293		24	%
Gross margin on maintenance	8,982		83	%	9,410		81	%	18,141		83	%	18,733		81	%
Total gross margin	$	15,186	54	%	$	14,667	52	%	$	29,808	54	%	$	28,419	51	%

For the three and six months ended October 31, ~~2018,~~2019, our total gross margin percentages ~~decreased~~increased when compared to the same periods in the prior year primarily due to our ~~lower~~higher margins on ~~license fee~~maintenance revenue and professional services and other revenue, partially offset by ~~higher~~lower margins on subscription fees and ~~maintenance~~license fee revenue.

Gross Margin on License Fees

License fee gross margin percentage for the three and six months ended October 31, ~~2018~~2019 decreased and increased, respectively, when compared to the same period in the prior year. License fee gross margin percentage tends to be directly related to the level of license fee revenues due to the relatively fixed cost of computer software amortization expense, amortization of acquired software and the sales mix between our direct and indirect channels.

Gross Margin on Subscription Fees

Our gross margin percentage on subscription fees revenues ~~increased~~decreased from ~~56% and 52% for the three and six months ended October 31, 2017 to~~ 61% and 64% for the three and six months ended October 31, 2018 to 53% and 52% for the three and six months ended October 31, 2019, respectively, primarily due to ~~the~~an increase in ~~subscription revenue, combined with a lower incremental increase in cost.~~

capitalized software amortization expense and hosting expense.

Gross Margin on Professional Services and Other

Our gross margin percentage on professional services and other revenues ~~decreased~~increased from ~~32% for the three months ended October 31, 2017 to~~ 27% for the three months ended October 31, ~~2018. Our gross margin percentage on professional services and other revenues decreased from 31%~~2018 to 30% for the ~~six~~three months ended October 31, ~~2017 to~~2019, and increased from 24% for the six months ended October 31, ~~2018.~~2018 to 29% for the six months ended October 31, 2019. This ~~decrease~~increase was primarily due to ~~lower~~higher gross margins in our SCM segment services of ~~28%~~37% and ~~32%~~28% for the three months ended October 31, 2019 and 2018, and ~~2017,~~34% and 23% ~~and 31%~~ for the six months ended October 31, ~~2018~~2019 and ~~2017,~~2018, respectively, due to ~~lower~~higher billing utilization from several large projects ending during the quarter. Our Other segment professional services gross margin ~~increased~~decreased from ~~28%~~51% to ~~51%~~46% for the three months ended October 31, 2018 and ~~2017,~~2019, respectively, and increased from ~~33%~~45% to ~~45%~~51% for the six months ended October 31, 2018 and ~~2017,~~2019, due to higher margin projects ~~in the current quarter.~~year to date. Our IT Consulting segment professional services gross margin ~~increased~~decreased from ~~23%~~24% to ~~24%~~19% for the three months ended October 31, 2018 and ~~2017,~~2019, respectively, and ~~21%~~24% to ~~24%~~20% for the six months ended October 31, 2018 and ~~2017,~~2019, respectively, due to ~~higher~~lower margin projects in the current quarter. Professional services and other gross margin is directly related to the level of services and other revenues. The primary component of cost of services and other revenues is services staffing, which is relatively inelastic in the short term.

Gross Margin on Maintenance

Maintenance gross margin percentage for the three and six months ended October 31, ~~2018~~2019 increased to ~~81%~~83% from ~~79%~~81% when compared to the same periods last year due to ~~an increase in maintenance revenue.~~cost containment efforts. The primary cost component is maintenance staffing, which is relatively inelastic in the short term.

EXPENSES

   Three Months Ended October 31, Six Months Ended October 31,
   2018 2017    % of Revenues 2018    2017    % of Revenues
   2018 2017    2018 2017
   (in thousands)    (in thousands)
Research and development
   $ 3,332 $ 2,643    12 % 10 % $ 7,007    $ 5,151    13 % 10 %
Sales and marketing
   $ 5,304 $ 4,437    19 % 17 % $ 10,484    $ 9,670    19 % 18 %
General and administrative
   $ 4,408 $ 3,616    16 % 14 % $ 8,601    $ 7,155    16 % 13 %
Amortization of acquisition-related intangible assets
   $ 97 $ 68    —   % —   % $ 194    $ 391    —   % 1 %
Other (expense)/income, net
   $ (190 ) $ 676    (1 )% 2 % $ 563    $ 1,275    1 % 2 %
Income tax expense
   $ 93 $ 1,438    —   % 5 % $ 68    $ 2,933    —   % 6 %

Three Months Ended October 31, Six Months Ended October 31,
2019 2018 % of Revenues 2019 2018 % of Revenues
2019 2018 2019 2018
(in thousands) (in thousands)
Research and development $ 4,209
$ 3,332
15 % 12 % $ 7,537
$ 7,007
14 % 13 %
Sales and marketing $ 5,148
$ 5,304
18 % 19 % $ 10,727
$ 10,484
19 % 19 %
General and administrative $ 4,908
$ 4,408
17 % 16 % $ 9,729
$ 8,601
18 % 16 %
Amortization of acquisition-related intangible assets $ 78
$ 97
— % — % $ 175
$ 194
— % — %
Other income, net $ 712
$ (190 ) nm
(1 )% $ 1,237
$ 563
2 % 1 %
Income tax (benefit)/expense $ (204 ) $ 93
nm
— % $ (34 ) $ 68
nm
— %

nm - not meaningful

Research and Development

Gross product research and development costs include allnon-capitalized and capitalized software development costs. A breakdown of the research and development costs is as follows:

   Three Months Ended October 31,
   2018 2017 % Change
   (in thousands)
Total capitalized computer software development costs
   $ 1,204 $ 1,330 (9 )%
Percentage of gross product research and development costs
   27 % 34 %
Total research and development expense
   $ 3,332 $ 2,643 26 %


Percentage of total revenues
   12 % 10 %
Total gross research and development expense and capitalized computer software development costs
   $ 4,536 $ 3,973 14 %
Percentage of total revenues
   16 % 15 %
Total amortization of capitalized computer software development costs *
   $ 1,145 $ 892 28 %
   Six Months Ended October 31,
   2018 2017 % Change
   (in thousands)
Total capitalized computer software development costs
   $ 2,088 $ 2,617 (20 )%
Percentage of gross product research and development costs
   23 % 34 %
Total research and development expense
   $ 7,007 $ 5,151 36 %


Percentage of total revenues
   13 % 10 %
Total gross research and development expense and capitalized computer software development costs
   $ 9,095 $ 7,768 17 %
Percentage of total revenues
   16 % 15 %
Total amortization of capitalized computer software development costs *
   $ 2,198 $ 1,763 25 %

*	~~Included in cost of license fees and subscription fees.~~



	Three Months Ended October 31,
	2019			2018			% Change
	(in thousands)
Total capitalized computer software development costs	$	605		$	1,204		(50	)%
Percentage of gross product research and development costs	13		%	27		%
Total research and development expense	4,209			3,332			26	%
Percentage of total revenues	15		%	12		%
Total gross product research and development expense and capitalized computer software development costs	$	4,814		$	4,536		6	%
Percentage of total revenues	17		%	16		%
Total amortization of capitalized computer software development costs *	$	1,650		$	1,145		44	%



	Six Months Ended October 31,
	2019			2018			% Change
	(in thousands)
Total capitalized computer software development costs	$	1,890		$	2,088		(9	)%
Percentage of gross product research and development costs	20		%	23		%
Total research and development expense	$	7,537		$	7,007		8	%
Percentage of total revenues	14		%	13		%
Total gross product research and development expense and capitalized computer software development costs	$	9,427		$	9,095		4	%
Percentage of total revenues	17		%	16		%
Total amortization of capitalized computer software development costs *	$	3,137		$	2,198		43	%

*Included in cost of license fees and subscription fees.

For the three and six months ended October 31, ~~2018,~~2019, gross product research and development costs increased ~~14%~~6% and ~~17%~~4%, respectively, when compared to the same periods in the previous year due partially to ~~the recent Halo acquisition in the third quarter of fiscal 2018~~increased variable compensation and ~~increased headcount~~infrastructure costs in our SCM segment. We expect capitalized product development costs to decrease due to timing of projects and we expect capitalized software amortization expense to be relatively stable in the coming quarters. Costs included in gross product development are salaries of product development personnel, hardware lease expense, computer software expense, telephone expense and rent.

Sales and Marketing

For the three and six months ended October 31, ~~2018,~~2019, sales and marketing expenses decreased 3% and increased ~~20% and 8%, respectively, when compared to the same periods a year ago, primarily due to increased headcount in our SCM segment.~~

~~General and Administrative~~

~~For the three and six months ended October 31, 2018, general and administrative expenses increased 22% and 20%~~2%, respectively, when compared to the same periods a year ago, primarily due to the ~~recent Halo acquisition~~timing of marketing costs.

General and Administrative

For the three and six months ended October 31, 2019, general and administrative expenses increased 11% and 13%, respectively, when compared to the same periods a year ago, primarily due to an increase in ~~the third quarter of fiscal 2018.~~

variable compensation and to a lesser extent legal fees.

At October 31, ~~2018,~~2019, the total number of employees was ~~452~~411 compared to ~~390~~452 at October 31, ~~2017.~~

2018.

Operating Income/(Loss)

   Three Months Ended October 31, Six Months Ended October 31,
   2018 2017 % Change 2018 2017 % Change
   (in thousands) (in thousands)
Supply Chain Management
   $ 3,973 $ 4,669 (15 )% $ 7,040 $ 9,582 (27 )%
IT Consulting
   396 357 11 % 755 591 28 %
Other*
   (2,843 ) (1,784 ) 59 % (5,662 ) (3,310 ) 71 %


Total Operating Income
   $ 1,526 $ 3,242 (53 )% $ 2,133 $ 6,863 (69 )%



	Three Months Ended October 31,								Six Months Ended October 31,
	2019			2018			% Change		2019			2018			% Change
	(in thousands)								(in thousands)
Supply Chain Management	$	4,360		$	3,973		10	%	$	8,211		$	7,040		17	%
IT Consulting	(12		)	396			nm		166			755			(78	)%
Other*	(3,505		)	(2,843		)	23	%	(6,737		)	(5,662		)	19	%
Total Operating Income	$	843		$	1,526		(45	)%	$	1,640		$	2,133		(23	)%

nm - not meaningful


*	Includes all corporate overhead and other common ~~expenses in fiscal 2019.~~ expenses.

Our SCM segment operating income ~~decreased~~increased by ~~15%~~10% and ~~27%~~17% in the three and six months ended October 31, ~~2018~~2019, respectively, compared to the same periods in the prior year primarily due to ~~the recent Halo acquisition~~an overall increase in ~~the third quarter of fiscal 2018.~~

revenues and improved gross margins.

Our IT Consulting segment’s operating income ~~increased~~decreased by ~~11%~~103% and ~~28%~~78% for the three and six months ended October 31, ~~2018~~2019, respectively, compared to same periods last year primarily due to ~~increased~~decreased revenues and gross margins.

Our Other segment operating loss increased by ~~59%~~23% and ~~71%~~19% for the three and six months ended October 31, ~~2018~~2019, respectively, when compared to the same periods in the prior year ~~because all~~due to an increase in corporate ~~overhead and common~~ expenses, ~~are included in this segment in fiscal 2019.~~

primarily variable compensation.

Other Income

Other income is comprised of net interest and dividend income, rental income, exchange rate gains and losses, and realized and unrealized gains and losses from investments. For the three and six months ended October 31, ~~2018,~~2019, the ~~decrease~~increase in other income is mainly due to higher unrealized ~~losses~~gains on investments when compared to the same periods last year. We recorded realized losses of approximately ~~$700,000~~$93,000 and ~~$312,000~~$365,000 and unrealized gains of approximately $386,000 and $721,000 for the three and six months ended October 31, 2019, respectively, from our trading securities portfolio. We recorded realized losses of approximately $157,000 and $205,000 and unrealized losses of approximately $543,000 and $107,000 the three and six months ended October 31, 2018 respectively, from our trading securities portfolio. ~~We recorded gains of approximately $268,000 and $381,000 the three and six months ended October 31, 2017, respectively, from our trading securities portfolio.~~

For the three and six months ended October 31, ~~2018,~~2019, our investments generated an annualized yield of approximately ~~1.32%~~1.29% and ~~1.40%~~1.35%, respectively, compared to approximately ~~1.30%~~1.32% and ~~1.38%~~1.40% for the three and six months ended October 31, ~~2017,~~2018, respectively.

Income Taxes

We recognize deferred tax assets and liabilities based on the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. We measure deferred tax assets and liabilities using statutory tax rates in effect in the year in which we expect the differences to reverse. We establish a deferred tax asset for the expected future benefit of net operating loss and credit carry-forwards. Under the Income Tax Topic of the FASB

ASC, we cannot recognize a deferred tax asset for the future benefit of our net operating losses, tax credits and temporary differences unless we can establish that it is “more likely than not” that the deferred tax asset would be realized.

During the three and six months ended October 31, 2019, we recorded an income tax benefit of $204,000 and $34,000, respectively, primarily due to discrete stock compensation benefits of $412,000 and $472,000 respectively, net of normal income tax expense from operations. During the three and six months ended October 31, 2018, we recorded income tax expense of $93,000 and $68,000, respectively, primarily due to discrete stock compensation benefits of $12,000 and $286,000 respectively, net of normal income tax expense from operations. ~~After~~Before adjusting for these discrete tax benefits, our effective tax rate would have been ~~7.9%~~13.4% and ~~13.1%~~15.3%, respectively, in the three and six months ended October 31, ~~2018~~2019 compared to our tax effective rate of ~~36.7%~~7.9% and ~~36.0%~~13.1% in the three and six months ended October 31, 2017. The Tax Cuts and Jobs Act enacted on December 22, 2017, which lowered our U.S. statutory federal income tax rate from 35% to 21%, was the primary driver of the reduction in our effective tax rate.2018. In addition, research and development and foreign tax credits reduced our effective tax rate by 8%8.1% and 3%1.4%, respectively, in the six months ended October 31, ~~2018,~~2019, compared to reductions of 2%8.0% and 1%3.0%, respectively, in the six months ended October 31, ~~2017.~~

2018.

Operating Pattern

We experience an irregular pattern of quarterly operating results, caused primarily by fluctuations in both the number and size of software license and subscription contracts received and delivered from quarter to quarter and our ability to recognize revenues in that quarter in accordance with our revenue recognition policies. We expect this pattern to continue.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION

Sources and Uses of Cash

We have historically funded, and continue to fund, our operations and capital expenditures primarily with cash generated from operating activities. The changes in net cash that our operating activities provide generally reflect the changes in net earnings andnon-cash operating items plus the effect of changes in operating assets and liabilities, such as investment trading securities, trade accounts receivable, trade accounts payable, accrued expenses and deferred revenue. We have no debt obligations oroff-balance sheet financing arrangements, and therefore, we used no cash for debt service purposes.

The following table shows information about our cash flows and liquidity positions during the six months ended October 31, ~~2018~~2019 and ~~2017.~~2018. You should read this table and the discussion that follows in conjunction with our ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~cash flows~~Cash Flows contained in ~~“Item 1”~~Item 1 in Part I of this Quarterly Report and in our Annual Report for ~~the~~ fiscal ~~year ended April 30, 2018.~~

   Six Months Ended
October 31,
(in thousands)
   2018    2017
Net cash provided by operating activities
   $ 4,802    $ 520
Net cash used in investing activities
   (2,982 )    (2,829 )
Net cash used in financing activities
   (3,681 )    (2,450 )




Net change in cash and cash equivalents
   $ (1,861 )    $ (4,759 )

2019.



	Six Months Ended October 31, (in thousands)
	2019			2018
Net cash provided by operating activities	$	4,050		$	4,802
Net cash used in investing activities	(2,128		)	(2,982		)
Net cash used in financing activities	(526		)	(3,681		)
Net change in cash and cash equivalents	$	1,396		$	(1,861	)

For the six months ended October 31, ~~2018,~~2019, the net ~~increase~~decrease in cash provided by operating activities when compared to the same period last year was due primarily to the following:

(1) ~~a decrease~~an increase in purchases of trading securities, (2) a relative ~~decrease~~increase in prepaid expenses when compared to the same period in the prior year due to the timing of purchases and (3) ~~an increase in depreciation and amortization, (4)~~ higher ~~proceeds from the maturity and sales of trading securities, (5) a gain~~gains on investments compared to ~~a loss~~lower gains in the same period last ~~year and (6) an increase in stock-based compensation expense.~~

year.

This ~~increase~~decrease in cash provided by operating activities was partially offset by: (1) ~~a decrease in net earnings,~~higher proceeds from the maturity and sales of trading securities, (2) a relative ~~decrease in deferred revenue due to timing of revenue recognition, (3) a relative decrease~~increase in accounts payable and other accruals due to timing of payments, (3) a relative increase in deferred revenue due to timing of revenue recognition, (4) an increase in depreciation and amortization, (5) an increase in net earnings, (6) a decrease in deferred income tax, (7) an increase in stock-based compensation expense and (8) a relative decrease in customer accounts receivables caused by the timing of closing customer sales and related ~~collections and (5) a~~collections.

The decrease ~~in deferred income tax.~~

~~The increase~~ in cash used in investing activities when compared to the same period in the prior year was mainly due ~~primarily~~ to ~~an increase~~decreases in purchases of property and ~~equipment, partially offset by lower~~ capitalized computer software development costs.

The ~~increase~~decrease in cash used in financing activities compared to the prior year was due primarily to an increase in ~~dividends paid, partially offset by a decrease in~~ proceeds from exercise of stock ~~options.~~

options, which was partially offset by an increase in dividends paid.

The following table shows net changes in total cash, cash equivalents, and investments, which is one measure management uses to understand net total cash generated by our activities:

   As of October 31,
(in thousands)
   2018    2017
Cash and cash equivalents
   $ 50,933    $ 61,242
Short and long-term investments
   31,741    29,773




Total cash and short and long-term investments
   $ 82,674    $ 91,015




Net (decrease) increase in total cash and investments (six months ended October 31)
   $ (5,134 )    $ 1,227



	As of October 31, (in thousands)
	2019		2018
Cash and cash equivalents	$	62,684	$	50,933
Short and long-term investments	31,987		31,741
Total cash and short and long-term investments	$	94,671	$	82,674
Net increase (decrease) in total cash and investments (six months ended October 31)	$	6,189	$	(5,134	)

Our total activities used ~~more~~less cash and investments during the six months ended October 31, ~~2018,~~2019, when compared to the prior year period, primarily due to normal business operations.

Days Sales Outstanding in accounts receivable were 58 days as of October 31, 2019, compared to 66 days as of October 31, ~~2018, compared to 57 days as of October 31, 2017.~~2018. This increase is primarily due to the timing of billings and cash collections. Our current ratio on October 31, ~~2018~~2019 was ~~2.8~~2.7 to 1 and on October 31, ~~2017~~2018 was ~~2.7~~2.8 to 1.

Our business in recent periods has generated substantial positive cash flow from operations, excluding purchases and proceeds of sale of trading securities. For this reason, and because we had ~~$82.7~~$95.0 million in cash and investments with no debt as of October 31, ~~2018,~~2019, we believe that our sources of liquidity and capital resources will be sufficient to satisfy our presently anticipated requirements during at least the next twelve months for working capital, capital expenditures and other corporate needs. However, at some future date we may need to seek additional sources of capital to meet our requirements. If such need arises, we may be required to raise additional funds through equity or debt financing. We do not currently have a bank line of credit. We can provide no assurance that bank lines of credit or other financing will be available on terms acceptable to us. If available, such financing may result in dilution to our shareholders or higher interest expense.

On August 19, 2002, our Board of Directors approved a resolution authorizing the repurchase of up to an additional 2.0 million shares of our Class A common stock. We have made and will make these repurchases through open market purchases at prevailing market prices. The timing of any repurchase will depend upon market conditions, the market price of our common stock and management’s assessment of our liquidity and cash flow needs. Under this repurchase plan, through October 31, ~~2018,~~2019, we have repurchased 1,053,679 shares of common stock at a cost of approximately $6.2 million. As of October 31, ~~2018,~~2019, under all repurchase plans previously authorized, including this most recent plan, we have repurchased a total of 4,588,632 shares of common stock at a cost of approximately $25.6 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have based the foregoing discussion and analysis of financial condition and results of operations on our ~~condensed consolidated financial statements,~~Condensed Consolidated Financial Statements, which we have prepared in accordance with U.S. ~~generally accepted accounting principles.~~GAAP. The preparation of these ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements in our Annual Report for ~~the~~ fiscal ~~year ended April 30, 2018,~~2019, describes the significant accounting policies that we have used in preparing our ~~consolidated financial statements.~~Condensed Consolidated Financial Statements. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to revenue/collectability, stock-based compensation and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

We believe the critical accounting policies listed below affect significant judgments and estimates used in the preparation of the ~~condensed consolidated financial statements.~~

Condensed Consolidated Financial Statements.

Revenue Recognition. For information with respect to revenue recognition policy, see ~~Notes A and~~Note B in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

~~Stock-Based Compensation~~. We estimate the value of options granted on the date of grant using the Black-Scholes option pricing model. Management’s judgments and assumptions related to volatility, the expected term and the forfeiture rate are made in connection with the calculation of stock-based compensation expense. We periodically review all assumptions used in our stock option pricing model. Changes in these assumptions could have a significant impact on the amount of stock-based compensation expense.

Income Taxes. We provide for the effect of income taxes on our financial position and results of operations in accordance with the Income Tax Topic of the FASB ASC. Under this accounting guidance, income tax expense is recognized for the amount of income taxes payable or refundable for the current year and for the change in net deferred tax assets or liabilities resulting from

events that are recorded for financial reporting purposes in a different reporting period than recorded in the tax return. Management must make significant assumptions, judgments and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against our net deferred tax asset. Our judgments, assumptions and estimates relative to the current provision for income tax take into account current tax laws, our interpretation of current tax laws, allowable deductions, and projected tax credits. Changes in tax law or our interpretation of tax laws could significantly impact the amounts provided for income taxes in our financial position and results of operations. Our assumptions, judgments and estimates relative to the value of our deferred tax assets take into account our expectations of the amount and category of future taxable income. Actual operating results and the underlying amount and category of income in future years, which could significantly increase tax expense, could render inaccurate our current assumptions, judgments and estimates of recoverable net deferred taxes.


Item 3.3	Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency. In ~~each of~~ the three and six months ended October 31, ~~2018,~~2019, we generated approximately ~~20%~~19% and 21% of our revenues outside the United States. We typically make international sales through our VARs and employees located in foreign ~~branches or Logility~~countries and denominate those sales in U.S. dollars, British pounds sterling or euros. However, expenses incurred in connection with these sales are typically denominated in the local currencies. We recorded exchange rate losses of approximately ~~$108,000~~$0.1 million and ~~of $355,000~~$0.2 million for the three and six months ended October 31, ~~2018, respectively,~~2019 compared to an exchange rate loss of approximately ~~$41,000~~$0.1 million and ~~a gain of $400~~$0.4 million for the ~~three months and six months ended October 31, 2017, respectively.~~same periods in the prior year. We estimate that a 10% movement in foreign currency rates would have had the effect of creating up to a ~~$387,000~~$0.3 million and $0.4 million exchange rate gain or loss for the three and six months ended October 31, ~~2018.~~2019. We have not engaged in any hedging activities.

Interest Rates and Other Market Risks. We have no debt, and therefore limit our discussion of interest rate risk to risk associated with our investment profile. We manage our interest rate risk by maintaining an investment portfolio of trading investments with high credit quality and relatively short average maturities. These instruments include, but are not limited to, money-market instruments, bank time deposits, and taxable andtax-advantaged variable rate and fixed rate obligations of corporations, municipalities, and national, state, and local government agencies, in accordance with an investment policy approved by our Board of Directors. These instruments are denominated in U.S. dollars. The fair market value of these instruments as of October 31, ~~2018~~2019 was approximately ~~$74.9~~$89.7 million compared to ~~$86.6~~$74.9 million as of October 31, ~~2017.~~

2018.

We also hold cash balances in accounts with commercial banks in the United States and foreign countries. These cash balances represent operating balances only and are invested in short-term time deposits of the local bank. Such operating cash balances held at banks outside the United States are denominated in the local currency and are minor.

Many of our investments carry a degree of interest rate risk. When interest rates fall, our income from investments in variable-rate securities declines. When interest rates rise, the fair market value of our investments in fixed-rate securities declines. In addition, our investments in equity securities are subject to stock market volatility. Due in part to these factors, our future investment income may fall short of expectations or we may suffer losses in principal if forced to sell securities, which have seen a decline in market value due to changes in interest rates. We attempt to mitigate risk by holding fixed-rate securities to maturity, but, if our liquidity needs force us to sell fixed-rate securities prior to maturity, we may experience a loss of principal.

Inflation.Although we cannot accurately determine the amounts attributable thereto, we have been affected by inflation through increased costs of employee compensation and other operational expenses. To the extent permitted by the marketplace for our products and services, we attempt to recover increases in costs by periodically increasing prices.


Item 4.	Controls and Procedures

Management’s Report on Internal Control Over Financial Reporting

Our disclosure controls and procedures (as defined in Rule13a-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”)) are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding disclosure.

Our principal executive officer and principal financial officer, with the assistance of our Disclosure Committee, have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our ~~annual report on Form10-K~~Annual Report and ~~quarterly reports on Form10-Q.~~Quarterly Reports. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report.

Changes in Internal Control over Financial Reporting

We adopted and implemented Topic 606 in the first quarter of fiscal 2019, which impacted our condensed consolidated balance sheet and our ongoing revenue recognition. See Notes A and B within the Notes to Condensed Consolidated Financial Statements for more information on the impact of adopting Topic 606 and ongoing considerations. In connection with the adoption of Topic 606, we modified our internal control over financial reporting (as this term is defined in Rules

~~13a-15(f)~~ ~~and15d-15(f)~~ ~~under the Exchange Act), including our accounting policies and procedures, operational processes and documentation practices. These modifications included:~~

~~updates to our policies and procedures for revenue recognition, including assessment of SSP and documentation processes related to meeting the new criteria for revenue recognition;~~

~~changes to our contract review controls to take into account the new criteria for recognizing revenue, with specific focus on assessing whether the allocation objective is met;~~

~~the addition of controls for reviewing recoverability of contract assets and reevaluation of our significant contract judgments and estimates on a periodic basis; and~~

~~the addition of controls to address related required disclosures, including processes to evaluate changes in contract assets and liabilities and disaggregation of revenue.~~

~~Other than as described above relating to the adoption of Topic 606, there~~There have not been noany changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~most recent~~ fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION


Item 1.	Legal Proceedings

We are not currently involved in legal proceedings requiring disclosure under this item.


Item 1A.	Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors disclosed in Item 1A, “Risk Factors,” of our Annual Report for ~~the~~ fiscal ~~year ended April 30, 2018.~~2019. There have been no material changes to the risk factors as previously disclosed in such Annual Report.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

~~None~~

None.


Item 3.	Defaults Upon Senior Securities

Not applicable.


Item 4.	Mine Safety Disclosures

Not applicable.


Item 5.	Other Information

None.

~~Item 6.~~

~~Exhibits~~


Item 6.	Exhibits



Exhibit 3.1		Amended and Restated Articles of Incorporation, and amendments thereto. (1) (P)

Exhibit 3.2		Amended and RestatedBy-Laws dated May 18, 2009. (2)

Exhibits 31.1-31.2.		Rule13a-14(a)/15d-14(a) Certifications

Exhibit 32.1.		Section 906 Certifications

Exhibit 101.INS		XBRL Instance Document.

Exhibit 101.SCH		XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

Exhibit 101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

______________


(1)	Incorporated by reference herein. Filed by the Company as an exhibit to its Quarterly Report filed on Form10-Q for the quarter ended October 31, 1990. (P) Filed in paper format.


(2)	Incorporated by reference herein. Filed by the Company as Exhibit 3.1 to its Quarterly Report filed on Form10-Q for the quarter ended January 31, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		AMERICAN SOFTWARE, INC.

Date: December ~~7, 2018~~	6, 2019	By:	/s/ ~~James C. Edenfield~~
Date: December ~~7, 2018~~		By:		James C. Edenfield
			James C. Edenfield Executive Chairman, Treasurer and Director (Principal Executive Officer)

Date: December ~~7, 2018~~	6, 2019	By:	/s/ ~~Vincent C. Klinges~~
Date: December ~~7, 2018~~		By:		Vincent C. Klinges
			Vincent C. Klinges Chief Financial Officer (Principal Financial Officer)

Date: December ~~7, 2018~~	6, 2019	By:	/s/ ~~Bryan L. Sell~~
Date: December ~~7, 2018~~		By:		Bryan L. Sell
			Bryan L. Sell Controller and Principal Accounting Officer


	October 31, 2018			April 30, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	50,933		$	52,794
Investments		29,816			26,121
Trade accounts receivable, less allowance for doubtful accounts of $172 at October 31, 2018 and $159 at April 30, 2018:
Billed		17,427			18,643
Unbilled		3,104			3,375
Prepaid expenses and other current assets		6,568			6,592

Total current assets		107,848			107,525
Investments—noncurrent		1,925			8,893
Property and equipment, net of accumulated depreciation of $28,963 at October 31, 2018 and $28,644 at April 30, 2018		3,609			3,034
Capitalized software, net of accumulated amortization of $26,311 at October 31, 2018 and $24,113 at April 30, 2018		9,618			9,728
Goodwill		25,888			25,888
Other intangibles, net of accumulated amortization of $9,449 at October 31, 2018 and $8,255 at April 30, 2018		3,926			5,120
Other assets		3,776			2,777

Total assets	$	156,590		$	162,965

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,475		$	1,974
Accrued compensation and related costs		2,829			6,310
Dividends payable		3,405			3,367
Other current liabilities		1,362			1,246
Deferred revenue		29,395			33,226

Total current liabilities		38,466			46,123
Deferred income taxes		2,929			2,615
Long-term deferred revenue		—			147
Other long-term liabilities		1,107			1,496

Total liabilities		42,502			50,381
Shareholders’ equity:
Common stock:
Class A, $.10 par value. Authorized 50,000,000 shares: 33,721,076 and 29,132,444 shares issued and outstanding respectively at October 31, 2018 and 33,141,760 and 28,553,128 shares issued and outstanding respectively at April 30, 2018		3,372			3,314
Class B, $.10 par value. Authorized 10,000,000 shares: 1,821,587 shares issued and outstanding at October 31, 2018 and 2,057,390 shares issued and outstanding at April 30, 2018; convertible into Class A Common Shares on aone-for-one basis		182			205
Additionalpaid-in capital		135,150			131,258
Retained earnings		943			3,366
Class A treasury stock, 4,588,632 shares at October 31, 2018 and April 30, 2018, at cost		(25,559	)		(25,559	)

Total shareholders’ equity		114,088			112,584

Commitments and contingencies
Total liabilities and shareholders’ equity	$	156,590		$	162,965


	Six Months Ended October 31,
	2018			2017
Cash flows from operating activities:
Net earnings	$	2,628		$	5,205
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		3,711			2,705
Stock-based compensation expense		841			793
Net loss (gain) on investments		312			(381	)
Deferred income taxes		(265	)		761
Changes in operating assets and liabilities:
Purchases of trading securities		(6,456	)		(14,057	)
Proceeds from maturities and sales of trading securities		9,417			8,452
Accounts receivable, net		2,162			3,243
Prepaid expenses and other assets		242			(1,758	)
Accounts payable and other liabilities		(4,333	)		(2,734	)
Deferred revenue		(3,457	)		(1,709	)

Net cash provided by operating activities		4,802			520

Cash flows from investing activities:
Capitalized computer software development costs		(2,088	)		(2,617	)
Purchases of property and equipment, net of disposals		(894	)		(212	)

Net cash used in investing activities		(2,982	)		(2,829	)

Cash flows from financing activities:
Proceeds from exercise of stock options		3,086			4,079
Dividends paid		(6,767	)		(6,529	)

Net cash used in financing activities		(3,681	)		(2,450	)

Net change in cash and cash equivalents		(1,861	)		(4,759	)
Cash and cash equivalents at beginning of period		52,794			66,001

Cash and cash equivalents at end of period	$	50,933		$	61,242


	April 30, 2018			Topic 606			May 1, 2018
				(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	52,794		$	—		$	52,794
Investments		26,121			—			26,121
Trade accounts receivable, net
Billed		18,643			—			18,643
Unbilled		3,375			440			3,815
Prepaid expenses and other current assets		6,592			126			6,718

Total current assets		107,525			566			108,091
Investments—Noncurrent		8,893			—			8,893
Property and equipment, net		3,034			—			3,034
Capitalized software, net		9,728			—			9,728
Goodwill		25,888			—			25,888
Other intangibles, net		5,120			—			5,120
Other assets		2,777			1,325			4,102

Total assets	$	162,965		$	1,891		$	164,856

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,974		$	—		$	1,974
Accrued compensation and related costs		6,310			—			6,310
Dividends payable		3,367			—			3,367
Other current liabilities		1,246			80			1,326
Deferred revenue		33,226			(521	)		32,705

Total current liabilities		46,123			(441	)		45,682
Deferred income taxes		2,615			579			3,194
Long-term deferred revenue		147			—			147
Other long-term liabilities		1,496			—			1,496

Total liabilities		50,381			138			50,519
Shareholders’ equity:
Common stock:
Class A		3,314			—			3,314
Class B		205			—			205
Additionalpaid-in capital		131,258			—			131,258
Retained earnings		3,366			1,753			5,119
Class A treasury stock		(25,559	)		—			(25,559	)

Total shareholders’ equity		112,584			1,753			114,337

Total liabilities and shareholders’ equity	$	162,965		$	1,891		$	164,856


	As reported under Topic 606			Adjustments			Balances under Prior GAAP
				(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	50,933		$	—		$	50,933
Investments		29,816			—			29,816
Trade accounts receivable, net					—
Billed		17,427			—			17,427
Unbilled		3,104			(389	)		2,715
Prepaid expenses and other current assets		6,568			(251	)		6,317

Total current assets		107,848			(640	)		107,208
Investments—Noncurrent		1,925			—			1,925
Property and equipment, net		3,609			—			3,609
Capitalized software, net		9,618			—			9,618
Goodwill		25,888			—			25,888
Other intangibles, net		3,926			—			3,926
Other assets		3,776			(1,191	)		2,585

Total assets	$	156,590		$	(1,831	)	$	154,759

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,475		$	—		$	1,475
Accrued compensation and related costs		2,829			—			2,829
Dividends payable		3,405			—			3,405
Other current liabilities		1,362			(80	)		1,282
Deferred revenue		29,395			619			30,014

Total current liabilities		38,466			539			39,005
Deferred income taxes		2,929			(584	)		2,345
Long-term deferred revenue		—			—			—
Other long-term liabilities		1,107			—			1,107

Total liabilities		42,502			(45	)		42,457
Shareholders’ equity:
Common stock:
Class A		3,372			—			3,372
Class B		182			—			182
Additionalpaid-in capital		135,150			—			135,150
Retained earnings		943			(1,786	)		(843	)
Class A treasury stock		(25,559	)		—			(25,559	)

Total shareholders’ equity		114,088			(1,786	)		112,302

Commitments and contingencies
Total liabilities and shareholders’ equity	$	156,590		$	(1,831	)	$	154,759


	October 31, 2018		May 1, 2018
Contract Balances:
Contract assets, current	$	3,104	$	3,815
Contract assets, long-term		1,394		332

Total contract assets	$	4,498	$	4,147

Deferred revenue, current	$	29,395	$	32,705
Deferred revenue, long-term		—		147

Total deferred revenue	$	29,395	$	32,852


	Three Months Ended October 31, 2018						Six Months Ended October 31, 2018
	Class A Common Shares			Class B Common Shares			Class A Common Shares			Class B Common Shares
Distributed earnings	$	0.11		$	0.11		$	0.22		$	0.22
Undistributed losses		(0.07	)		(0.07	)		(0.13	)		(0.13	)

Total	$	0.04		$	0.04		$	0.09		$	0.09

Distributed earnings	$	3,200		$	205		$	6,396		$	409
Undistributed losses		(2,033	)		(129	)		(3,927	)		(250	)

Total	$	1,167		$	76		$	2,469		$	159

Basic weighted average common shares outstanding		29,104			1,822			28,959			1,866


	Three Months Ended October 31, 2017						Six Months Ended October 31, 2017
	Class A Common Shares			Class B Common Shares			Class A Common Shares			Class B Common Shares
Distributed earnings	$	0.11		$	0.11		$	0.22		$	0.22
Undistributed losses		(0.03	)		(0.03	)		(0.05	)		(0.05	)

Total	$	0.08		$	0.08		$	0.17		$	0.17

Distributed earnings	$	3,064		$	249		$	6,078		$	505
Undistributed losses		(768	)		(65	)		(1,269	)		(109	)

Total	$	2,296		$	184		$	4,809		$	396

Basic weighted average common shares outstanding		27,589			2,317			27,448			2,340


	October 31, 2018
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	43,193	$	—	$	—	$	43,193
Marketable securities		9,676		22,065		—		31,741

Total	$	52,869	$	22,065	$	—	$	74,934


	April 30, 2018
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
Cash equivalents	$	46,972	$	—	$	—	$	46,972
Marketable securities		11,125		23,889		—		35,014

Total	$	58,097	$	23,889	$	—	$	81,986