AMSWA - Earnings call transcript Q2 2018 | Logility Supply Chain Solutions, Inc.

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Operator

Good day everyone and welcome to today's American Software second quarter of fiscal year 2018 preliminary earnings results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during a Q&A session. Please note, today's call is being recorded and I will be standing by, should you need any assistance. It is now my pleasure to turn the conference over to Vince Klinges, Chief Financial Officer of American Software. sir. ahead, go Please

Vince Klinges

and quarter everyone conference of Elise American call. welcome Software's second fiscal good you and afternoon to Thank XXXX earnings

revenues. forward-looking pricing be and of assurance that services, timely pattern no competitive acceptance and prove and information forward-looking the underlying made uncertainties, and the effect Any and American our to give on a based expectations forward-looking regarding, of products to include, number some those strategy. the On Dow, after could forth differ and general may statements subject developments changes such there quantified statements some by that. growth or the availability only me contain will date. this with to and of cause to, number those anticipated or are market I limited unpredictable for from differ remarks business that and as call. of Software. materially a would among other this conditions, these first, predicted uncertainties, and materially uncertainty of and contemplated call Such like results products forward-looking numbers of the will statements be Future not pressures the the largely could statements and light competitive speak review beyond that of actual statements. economic you These forward-looking be control. I other but statements, set this which factors of products Allan actual and to is the these then and strategy accurate. and can including of But growth services, irregular things, the In will factors results are risk remind call rate from and of President are our are market and cannot Allan on are conference risks in There our our

in look period period X% at $XX.X a revenues to other same were $X.X XXXX for year to fiscal cloud increased and that quarter. prior revenue compared same quarter current taking increased last to $XX decreased License $XX.X million. $X.X year. the our the to offset that's value is as to Services to XX% such compared period and to, Total other quarter current million the million year. and due the X% approximately by million we $X.X or annual So same million compared to last services streams was for services. increased cloud the the which million quarter by fees partially That ACV for second contract for $X.X million compared revenue to XXX%

ACV total comprised two components. is the of So

Software-as-a-Service and to million to same last year. SaaS compared last second services and ACV as $XX.X that to Maintenance during increased year. XX% hosting $XX.X revenues X% million million ACV managed And period same The the first is $X.X to the increased compared component or one year. of last million during approximately million million the increased $X.X which is to cloud $X.X XXX% $X.X other period such services compared

of to compares maintenance and quarter period last XX% were in combined same the for recurring year. and streams revenues So current services our total of that revenue the XX% cloud

XX% The increased compared cost. year in for the at the quarter XX% to Looking overall current gross prior margin to quarter.

XX% from license indirect decreased year license mix margin fees fees last same compared quarter to the channel. and for to fee more to in Our the of and our that's lower due primarily period license sales the current XX%

prior the in margin the for Maintenance business in improvements. sales XX% revenues the cloud improved to increased margin that units due containment prior increase higher year year to margin All current Our quarter also increased for XX% higher to quarter to to their services. and XX% of maintenance the improved compared and utilization the cost margin XX% compares to quarter and due current rates in quarter.

operating expenses. at Looking

Our was gross XX% for R&D were expenses it XX%. Last of period. total the revenues current year

percentage million of revenue and that and year. share sales prior if year XX% were XXX% last or $XXX,XXX earnings last revenues that period period income second expense. $X.XX for diluted year. marketing $X.X $X.X to of adjusted $X compensation, to the in current compensation last the These due amortization year. per excludes were income take in per adjusted increased quarter quarter to adjusted was quarter to that's share period net which year. of $XXX,XXX spread prior and the sales earnings the XX% of acquisitions current to revenue, and stock-based income of same or revenues a increased compares Adjusted that are the over current that net the earnings and you to fact or expenses for compares SaaS $X.XX share revenue. XX% of related per G&A to $X million the share quarter. $X.XX to that diluted diluted license or lower the of compares the same and last intangible and EBITDA, expense primarily expenses compares for numbers period As from for diluted $X.XX the exclude Adjusted $X.X commissions income quarter total of earnings the XXX% that current for quarter stock-based year GAAP this XX% lower $XXX,XXX Operating and and to SaaS to million fees compares net and million commissions million increased for

year. and of to period quarter were XX% current prior this total revenues Our international the compares that for the XX% approximately revenues

and last the it XX, year-to-date, compares decreased the to six million months or same October $XX.X that basically X% $XX.X in ended year. Looking million to XXXX at period

million year. the Our in last compared that's period and license fees $X.X $X.X to decreased to same XX% million

to $XX.X Our services and X% to million $XX.X revenues increased compares year-to-date that million.

last year. $XX.X Our to million maintenance increased to X% compared $XX.X revenues million

current was year. XX% The cost. up gross overall year-to-date the from at and Looking last XX% that's for margin period

XX% decreased margin and XX% to to primarily fees compared license to lower due fees. that's license Our

due year was higher services. Our service margin to XX% of XX% that's period in the margin compared cloud same to and last

Our maintenance margin from maintenance efforts. year higher period up and to of the cost same and that's revenues due XX% was containment and XX% that's also last year-to-date in

our Looking expenses. at operating

were revenues R&D gross six last for period expenses same year. total XX% month the was of Our that and as the

for period percentage revenues XX% total marketing both in same were revenue, of year. a for As XX% expenses sales XX% expenses were of and periods. compared the current G&A to period last the

and of $X.X same million income EBITDA $XX.X operating period year. million $X.X million compares in last the and operating compares to increased year-to-date that Adjusted last year-to-date to So the to XXX% XX% to income million $X.X year. to that increased

increased revenues end company's of with when year. of from compared period approximately million last total GAAP of year-to-date that's $XX at same XX% diluted share The up our year-to-date the earnings at of remains XX% or net the million cash a balance compares $X.XX last and that position were $X.XX per net share. net year. revenues year. So $X.XX or sheet. which income and strong $XX.X that in the earnings to of income period look diluted per earnings income per $X.X Adjusted financial investments and and $X.XX million XX, income diluted or International same compares XXXX, Taking million to the $X.X period to net year-to-date October for the of was $X.X same million $X.X or was share million last

the quarter, we $X.X in paid During million dividends.

current $XXX for of sheet $XX.X both total a Some million. billed aspects $XX.X our and receivables revenues of million, accounts our other million. $X.X Deferred $XX.X is are our million unbilled and equity balance are was million shareholder for long-term

current I of was up call Our to compares days period over October X.X year XX, XXXX sales ratio last XX XX in to like would Dow. to and XXXX period turn the that this as as of compared in October to last same days Allan year. to days outstanding X.X At the our and same the time, is XX,

Allan Dow

Vince. you, Thank

First, I few of cover you want on in inevitable am I for from cold a to I the airplanes. voice. get today. will But the that things, apologize two effects the advance being important things lingering suffering my

time I will few earlier the this and announced a will make we we First quarter the that spend on week. on second results some comments then acquisition

Vince, compared first quarter the from the continued contracts as quarter has accelerate fiscal and transition Software-as-a-Service year predicted, we this to very another the when second heard and you last As strong of fiscal to to had year. of quarter

our contract move. the As very Vince in revenue jumped indicated, year's annual significant a QX. value the last recognized of Software-as-a-Service over XXX% That's quarter

of contract perpetual confusion the transition changes to equivalent more this SaaS to profile, our SaaS to some we see cause value. is well regards licensing our the may the and As There the exact are to difficult discussed contract compared to no translation it historic making performing revenue perpetual how in model. we value progress in of the before, have

license based that However, if perpetual an SaaS the QX license an contracts, as up approximation, on we have estimated licensed had been would estimate the revenue XX%. contracts year-over-year been

are you we second So can as very results. pleased strong quarter with understand, our

of efficiency we when bias user administer our and exists. continue ratio customers to Another in the contracts their QX but driven on sign manage by second assurance will trend, the quarter. that a in to because customers, right model our contracts to Considering still to performance towards in year's of future fiscal Software-as-a-Service a contracts. is and That's shifted our for based the team XX% contracts to SaaS. the transition SaaS has better system measure and being were is last preference subscription the improved experience close only end a clear There will definitely this of we only customer's and XX% year the fiscal that no preferring model, is in this as is forward do progression XX% this market what's the of SaaS towards higher which solutions. rate of model this, level compared of the leveraging new look adoption This perpetual that QX year, of

to delivery On improved horizon performance, ultimately high performance. in conversion value achieved our in the of over visibility of model our are predictability Software-as-a-Service provides XXX% a contract fees and earnings. spanning operational greater the increase also which forward-looking operating delivers more The subscription expanding result financial portfolio we subscription margins. with The will a services we model means substantial

foreseeable This to expect rising track on reported, while engagement with future. practices several model the the achievement XX% skills now a transition investments As strategic community. in organizational strategy fulfill the accelerating our Software-as-a-Service industry. enabled by of to the total individual products, that that Overall, our and rare been we transition are Vince continue for of are we development in report customer to we of has recurring to profitability, of revenue needs software our pleased towards revenue also our years and is

expertise quarter and offerings a planning support Our strong cloud-based the strategic our the business results and investments were solutions fully million. and to the supply our approximately of to for customers automated customers investments provide our end become indicated enterprise and that $XX part for already connected Vince operating at towards foundation sufficient necessary the migrate visibility, us gives room increased a a model can This cash chain product new and in enhance of service achieve. environment.

Business strategic Halo which the of talk let's Monday Speaking morning. past announced investments, we about this acquisition of the Intelligence

speed intelligence customers that our profitable talent analytics, take algorithmic chain and otherwise they management, performance, chain artificial shortage market. supply and planning, to advanced supply advantage their able operating improve may capabilities hampered to the overcome our growth have their were vendor As supply in advancements to of compliance chain

years driven that and plus experiencing However, supply artificial with base, new respond may same have and and and skills supply shopping. businesses to omnichannel with with new of be capabilities opportunities to chain our formula time insight extended XX are we is a the qualified customers chain data the there customer dynamics over and occurring supply not are we solutions has artificial into from believe the trends. online resources success. disruptions even These winning last bring to provider chain demand the the to their impacting lack supply embedded global are to ways intelligence needs realities ability how intelligence what from into the capabilities in now, successfully market new and customer the that specific more will by focus into an accelerate artificial any working a to supply of deep that to their best they chain market a our change portfolio performance. provide analytics in over chain These experience explosion combining enhance have skill the our capabilities to at been in that and to we the supply pace we of opportunities, understanding to space, radically superior them with chain of influence used the identified platform the Halo business the their advanced data accelerating data to of capabilities our Until an address be chain developed supply solution Halo optimization XX transition a chain brings master operational respond deep knowledge. operation team that sets to intelligence performance management. number By of being enhance available our and years customer's of supply

agility management learning the acquisition, is data process. leveraged machine First, their of chain reliability validation improve transformation supply gaining data to master and and in

insights new algorithms, digital performance by trend supply that artificial Second, from applying drive improve syndicated unstructured intelligence of may And customer and efficiency. structured replacing indicators business growth. their leading gain with customers more by chain can to both reduce proprietary profitable and which the leveraging impact advanced and improve inventory can the significantly accuracy service thus knowledge customers responsiveness costs, data, and

forging sign portfolio. that move solutions are summary, our to the contracts. conditions acquisition and continuing this our are to to team's closely of sales progress In economic pipeline solution new monitor the we healthy to ground this global We our powerful and talent with combination brings

We very remain of pleased results the from optimistic the year ahead fiscal the about potential overall for second quarter are and XXXX. balance with our

exceed achieve on growth we believe customers. SaaS incremental and during deliver customer's engagement model transition We our profitable truly that our to continue to benefits continue a to can will that to to focus mission our expectations

to excited further differentiate and value. of this may market we at really are that have. future like Halo, we any in time, We acquisition delivery about the for call the and of accelerates recent the enhance supply our would which will the Elise, position chain open questions shareholder

Operator

[Operator Instructions].

comes Our from with Please Sidoti. first question Galinko Matthew ahead. go

Matthew Galinko

us congrats the pipeline Curious, you could you was? Can cloud of guys quarter way and or Hi. update pulled the with on back just any license. only last of quarter. really strong the pipeline on of Good the last on afternoon start mix if if sort quarter? it's we touched between the directionally you it's Or shifts that, give where if an in saw if it from aggressive and

Allan Dow

with and pipeline we that quarters, accelerate. Relative the answer will for the of one quarter The am model the bit. is towards that that where excited last that equivalent we actually in to we that in continue has little I given to I actually are seeing nudge Allan. a rate able mix bias to the continued is you. perpetual of overall which the to that Matt, were SaaS had are to to close maintain license we Software-as-a-Service up couple quite past contracts,

So did SaaS more a our it it in as pipeline has than even total now of in opportunities last quarter. the the percentage

Matthew Galinko

high-end by a of bit little mid-market? Great. kind All that can you And versus then right. segment

Allan Dow

at It's of chains, to or very the the of organizational of They the thought relative supply the it's pretty market there size in even bigger surprising of quite across the case. marketplace. SaaS resistant higher the not segments of advanced companies, actually. is frankly which complexity complexity, end I all rest right fact me. more chain the When to may the be in companies size board, we the to consistent the and the supply the with the are model market, that's more look

Matthew Galinko

me. One All Great. right. more from

deal do you this any it how any, extremely functionality to long Or integrate point? Halo's visibility you Just products? you your point, expect it's know to at that this on have for at I do fresh into take but

Allan Dow

the each ability segments our solution today Halo the ahead a done course. diligence to we be the at software still are during There due is of the are energy the applications. actual of The work come of to alongside certainly put of would time of leverage before, and that will many actually the of into business comment But that lot how us, aspects see that we and process, solution. didn't capabilities synergistic into current about. work I thought

The to first months deliverables using only technology So board having be is, I we away similar from in thing things the there. and used. probably been And within the to have year out consistent customer we in it's across to the are few embedded the the capability one actually and for nice have a universally think of then the is look what an acquisition. past, going we

be to is easy. transition this going So quite

Matthew Galinko

All it. Thank Got right. you.

Operator

[Operator you. Thank Instructions].

go will We to B. go Kevin Riley next Please with FBR. Liu ahead.

Kevin Liu

on you of overall question, be the any then backdrop, business seeming bit of deals to terms guess like Good of Or just you to in whether seeing the you with a are And more the more everything cycle? parts as pretty speaking if these are a about can whether first SaaS economy I Hi. happen in come your come you curious strong? little afternoon. just what side, talk overall in is sales favorable trying feel generally you are kind there consider weak? seeing of

Allan Dow

in is questions Allan. consistent Kevin. with Again, the two think, are for this cycle, questions. Thanks The the there, I So sales past.

seeing shift. not a are We dramatic

of seeing diligence that in is We of any due the are marketplace. a kind spending around still lot there

years, to the last through for of some approval but a the in the process case cycles that's So and of cases couple quarters softness. get to last frankly. Relative been couple couple quite the of maybe

think out the we strong. conditions seeing the I that consistent are are and economic It's think upward with that the very I with it's North there. general American market trend is consistent

market. as nearly fast We is, deterioration what as not Europe, are the we I any in guess although haven't American North accelerating it's seen seeing probably

lot is said, European even still And markets market. not investments of soft, with still a some the there. the quite market are good But a emerging making of that

in international our reported of and projects numbers, is we there. of ratio the compared that the reflection and to of sophistication complexity up the that's and ongoing they think past As investments making a some the those sales are still I of maybe are

Kevin Liu

the you as revenues a doing share respect were can BI were just what anything Got from SaaS or they I they if it. acquisition. like? And model sales business perspective, just terms primarily Halo with annual am curious And look well? to perpetual in of their

Allan Dow

They for Kevin. XX about it years, have been at

to saw revenue ago, they significantly business focus we several So like license hadn't supply we they to and $X going that, a And that perpetual investment good same million, on trends just the chain that stream. model, many They the were software historically seeing plus to Software-as-a-Service previously a a market. a announced it's companies, their We but what million go had million shifted after out years are about over but standpoint, a about made get adjustments shifted $X really model. $X working revenue is capital question. they a From we of that.

Kevin Liu

Got is it. this And one for maybe then Vince. just lastly,

towards think anything being We by how out. with to I are guys commission low down? spread highlighted you surprised that there drove it particular the else Was just in this expense and marketing actually sales SaaS, benefits that shift the quarter? it got

Vince Klinges

folks Kevin, the commissions, was deferral of and yes, a headcount, few are sales we down majority too. on marketing the the but

Kevin Liu

on up ramp plans And of up then, maybe just are sales following there over to the force quarters? hiring coming the kind that

Allan Dow

we been good are Yes. market. in and A the question. very ramped Already

the in have we North tight. America pretty is here market challenges the is of One

market. are So even are And in add segment of to additional the every some organization, in bit we a But our we the headcount. challenging. looking ramping is

resume. call anybody that's us send So your is please on if there interested, the

Kevin Liu

quarter. for the the thanks strong congrats Well, taking question and on Great.

Allan Dow

Thank you.

Operator

appears remarks. I speakers further Thank time. our back this for additional it no at will we turn any you. It have questions to

Allan Dow

afternoon participation we we had appreciate for support joining wrap your you this think Well, up to us We little who appreciate for certainly I thank I everyone to clarity, as thank questions afternoon. and that. the we and want well. call us the get a for those for the more this Elise, will

Operator

participation. appreciate conference. your Thank you This does gentlemen. We conclude today's

You may great have disconnect any at day. a time and

Logility Supply Chain Solutions (LGTY) 30 Nov 172018 Q2 Earnings call transcript