- Earnings call transcript Q2 2023

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Operator

Good day, everyone, and welcome to today's Second Quarter FY '23 Preliminary Financial Results. [Operator Instructions] Please note, this call may be recorded. assistance. It is now my pleasure to turn the conference over to Vince Klinges, CFO, American Software. Please go ahead.

Vince Klinges

welcome Software's and Fiscal Quarter everyone, Results. XXXX afternoon, to Second American of Good

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

Allan like for to over turn our time, the to remarks. call this at I'd So opening

Allan Dow

results that Vince. EBITDA pleased mostly our revenue in the line the on revenue cover in we report strong which revenue revenue maintained I'll discussion. of second to I'm with solid you, delivering that detail our recurring We delivered in segment revenue growth in was later Chain exception adjusted retention and that in services professional revenue. expectations of year-over-year. Thank quarter in Management X% have our more year-over-year rate, was a maintenance our subscription Total XX% a revenue very represents Supply XX% our achieved up total thus with

expansion our both fall. macroeconomic consulting Our IT solid conditions coming is professional the top continued in pullback the In by more and the sensitive decline margin, which sequentially business, adjusted and principally EBITDA regard line to into services, our year-over-year. performance in the accompanied was in we saw started to decline

Chain slowdown and flexibility we've easily. to projects which with Once clients will delays some the of deferred experienced demands delivering we the in partners, we've to which return addition, calendar the Supply turn gives year. into continue through up. anticipate In projects we holiday segment, our in our a projects shift been that we more number fortunate of expect period, are have the more us Furthermore, starting from resources market new

suite. fit footprint. integrated one us The for portfolio this and from rapid we're an community find has for we pipeline to of other acquisition, acquisition a team least to client a both acquisitions before one our to of expected, capacity The most of everything be to leaves the planning a on optimization, announced to with not seeing year. strategic clearly quarter, the if that been as opportunities the our as see network a growing over first the strategic our at productive the fantastic expansion as During with. stand-alone more, pursue design recent we objective in came We has fiscal this part work our with regard success embraced well end more our with Starboard strategy,

current all pressures of continue to in the inflationary number and slowed only also fiscal delayed These capture consumer start major in expansion the a aware, of markets. but events, of business We've pipeline a and have projects. in recession continuation and signs subscription on are slowed the revenue not you're dates the some seeing uncertainty services moderation of goods retail revenue geopolitical to delays As the some see our started year. stir

for professional believe services, guidance revenue fiscal it's adjust 'XX. our we're prudent the million. $XXX.X in to to market our between we $XXX.X guidance primarily reduction fall fiscal million resetting to Given Due our a and conditions, current for expectations year

delayed low $XX.X of to million. projects impacts the in Given recognize and our original $XX.X the recurring expect of approach timing the end which when we we revenue between subscription guidance and of start land million backlog, see revenues, our

new we $XX confident of to the effectively, more on target are pleased $XX expect with supply improvements segment of new quarter markets, chain year. for half performance Supply million. recessionary second our in our the our financial need as fiscal and a in to during this of reflecting our extend and to pace the expectations we growth million we Chain year. range and await results we measured to In we're pressure a clarity the Overall, summary, clients, of more EBITDA Finally, remainder competing reaccelerate solutions the expect increasing model our in the investment the so adjusted remain in we're

Our pipeline is steady.

the solutions. transformative ever our time, I'll see At as to this opportunity. we is provide market Our in results. turn over long-term competitive call the details who Vince, bullish will for position chain strong, as need our financial We remain supply on and

Vince Klinges

Allan. Thanks,

was while period million same 'XX, fees million primarily software quarter second same from a million, $XX.X the last the total period were in $XX.X by that which $X.X revenues to the year, X% year. For fees, compared of XX% increase increased year-over-year license $X.X million, to $XX.X subscription fiscal in last year driven were million

decreased X% supply a the work. project a year-over-year Proven decrease Services the to our year million unit in in our and from of was Professional $XX.X a ago. consulting which Method, unit, Our decrease XX% timing by IT impacted $X.X business in period reflects million XX% same decrease This chain

declined Our $X.X year-over-year in same X% rate total last for quarter, a fees, comprised maintenance million, to second of maintenance period compares represented and the reflecting total revenues XX% revenues, the that year. to And revenues recurring normal quarter. XX% of falloff subscription this

year. increased margin versus period gross XX% period the current XX% to Our same the last for in

software XX% in $XXX,XXX our the and of XX% prior noncash amortization XX% versus margin subscription would intangible $XXX,XXX second expense current Our was have of last subscription both prior period. gross year And excluding the the of quarter, margin for was fee And year in amortization been year. cap period.

last Our to license service XX% XX% XX% our from and to margins to primarily was lower fee XX% margin the compared decreased revenues. year, due last in period year, same

XX% prior R&D prior increased were maintenance period. Our to total expenses XX% margin for Gross compared revenues the of XX% in for period. year quarter the and current year to the current

$X.X some compared due quarter marketing This year a for expenses of and or excludes stock to expense-related million and the share XX% computer ago. period in year-to-date. G&A EBITDA operating net in the XX% and option income per current period and And compared the higher adjusted this to increased to $X.XX International the last the the million, earnings compared a period. diluted IT expenses year. diluted million of approximately period $X.X look basis, $X.XX for net XX% costs. to income recruiting adjusted year. total per same sales last GAAP adjusted was Adjusted expense, Taking stock-based quarter year. amortization Net period to to were X% net operating last to decreased earnings compensation $X.X X% increased insurance, XX% million million were in our On incentive income revenues of of this year. year. $X.X prior to $X.X XX% second infrastructure in $X.X increased million in noncash per same million of revenues that million, compares last and from last share expense, $X.XX, compared $X.X at $X.XX Adjusted quarter which numbers XX% or compares a On acquisitions million diluted revenues, total million or of of share of quarter, income an to income to basis, decreased $X.X last our year. $X.X or earnings of year to XX% diluted the XX% adjusted same to to XX% the same income adjusted share that were per compared Our $X.X revenues intangible

is EBITDA adjusted $X were subscription Adjusted $X.XX million compared of X% $X.X to Adjusted and our same XX% $X.X year. share million, EBITDA remaining revenues increased million. million. Adjusted in represents XX% period -- by to period or million a compared X% to to to RPO, $XX.X declined increased operating last the to $XX.X million and performance margin year-to-date to $X.X We in to same or of maintenance $XX.X $X.X XX% XX% our the representing a the year. $XXX margin services had million margin $X.X per in net in the ago, or that total million decline same with per to totaled or License XX%. to last share $XX.X million million. an diluted exited compared $X.X which an fees of backlog, Our a operating due income $X.XX fees year of a reference Professional million, XX% period in revenues quarter million. increased we the diluted X% obligations, income to increase

shorter Our as our from the it to short-term total on prior year, actually and recent same from is well. last period relatively X% up RPO from was increased due deals, duration noted RPO was the sequentially which year flat contract

the Looking at sheet. balance

strong $XXX.X cash financial at approximately Our the end million the position investments remains of and of quarter. with

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

the that last due is delays as year. timing was outstanding and same the quarter period sales days increase and compares this And compared end days, year. of of XX of to collections the some last billings primarily to days in XX Our to

looking guidance. we're indicated, Allan at As our

was range raising despite guidance revenue And to $XXX.X professional for million lower-margin services, the provided guidance revenue We million, of reduction are in including of the to beginning primarily to adjusted consulting indicated, in million year. recurring the a EBITDA We decline expected of is anticipate due revenue our $XXX.X as of $XX.X business. the now at $XX.X million. we reduction our expectations of majority our our revenue $X million which IT a guidance to the attributable Allan fiscal

than company we $XX last -- into couple million quarter. million anticipated this to to of across that's up pace adjusted call At our raising we more million and EBITDA, turn questions. $XX time, reflects -- over range This are from headcount to I'd like gradual expansion a million, year the $XX For year. guidance coming to the $XX the to prior a

Operator

Galinko. And first Instructions] question [Operator our take Matthew from we'll

Matthew Galinko

like I expect end sounds to the you of confidence commentary, to the guess that in, me, in it come sounds calendar year. back the some

deals I that understand forward start I the guess, did gives move are that of So as confidence year? going you we through to what balance this correctly? And again calendar moving

Allan Dow

Yes, this through exactly a Matthew, it's than get just the confidence to got in January. going time back for reason with, said, to actually they take season. That's we're in negotiating with it catch. up dialogue good few a The We're little is we they've we sooner what clients, starting anticipated the back at convey. and had Allan. now cases. holiday projects pause. people that want in that prospective We And come or wanted contracts to pick to a

then come revisit ready, it and the we'll year. the first get Let's of

confidence. that us given what's that's So

delays. to Does wholesale timing been in undescribed We cancellations they help? It's rally fairly the the and about when that get haven't seen want conversations troops or the specific of going.

Matthew Galinko

making the know reception And on do into or you customers? what sales it I how little for with expect that? then of to the beginning go that I point existing is guess, Starboard. Starboard, And pipeline follow-up, stand-alone through a into But bit the your having can a the you start Terrific. as build sales you at detail, touched more

Allan Dow

of little bit a Yes, both, actually.

down fairly on So new talked transactions already done we -- we second of in in that a our underway. about a We the doubled contracts quarter. first we And early number results, that quarter few completed. we've

projects fact, data couple In that in got of that rapid provide. and for due early quarter design the the were those in-house can time product the already The up we've and them were that running. a we implementation rather there availability line is of to

And where since that time the We've probably suite the spoke, tripled more transactions got we've we've pipeline So we've done the -- already. was up them -- out I a there. integrated and we say, we last in couple running. would

And reinitiating to rather add-ons, new base logo reception new projects then it for a as a say right very would campaigns campaigns to number those we bring in strong. weapon the and more and I where of our using to effectively that as a outreach to leveraging competitive it community is overall, try on trying installed So mine do we're even now in well. are and board discussions

excited really The great. So about is that. team

comments, on Our team that The mentioned into for getting And to of marvelous prior was job a we're the at R&D the earlier acquisition. as adopted game platform. done of really suite. just we're us has my the team that Logility here has integrating acquisition -- ahead prepared the in it I

excited about that So one.

Operator

Miller. Will comes from next Our question

Will Miller

Matt is Willow for on This Pfau.

pausing about contributing cycle is challenges to to still the the projects So being following Or your you you projects client up were elongation. due to due sales seeing again, delayed now? holidays. this comments Previously, primarily staffing to holidays clients due this? Are mentioned

Allan Dow

New Welcome see still We some the call. staffing you. joining so much question. there. for in thank Thank us. to you challenges Will,

more all a people a mode the we're number market are I walking number year where door on their we of of A in the the a become new of all to in out the probably anticipate into coming think resources diminish, roles. we're will going -- that available probably will little settle plentiful. into people

of and just positions, experienced doing we projects. to some more they're will be now to The job. that So related fill we of able reference clients to good a those delays our that anticipate are timing

business the them. brand owners. well, this Our on direct-to-consumer clients goods. for as -- consumer of we year focus time retail, focus And through the most We is on important

and on, to You season, TV consumers begging you watch for come going everyone's come out. into what's the know the holiday

all -- there So an it's of view. kind hands-on-deck

client Let's the the perspective. season in we'll holiday through focus back our from on then strong, getting up year. finishing the pick year And new

So getting kind we're feedback that's of the now. right

to and new any to thing. more of economics do their holiday So can it's related distractions they without this on best desire projects, probably in sort season the

in give clarity my help, does Does So Willow? that that some comments?

Will Miller

question. Yes, helpful. more that's definitely And just one

-- So response to sequential in this and the expansion. EBITDA margin to increase is

on you So Was intentional? you moderating pull to headcount. any macro expenses? are mentioned looking that Given softer the back environment,

Allan Dow

conservative get come on you'll -- we're Well, you us, as to know all expenses. to know we're

board we've scrubbing we've estate. at to on We've real anything to moved the can been we So we so we see look hybrid the across less ranks are. where everyone, need successfully, model, like a

So we've able a costs kind us software by cost is in lease, some principal #X overhead far, But reduce of the areas. as for headcount cost. It's, been those to our our of organization.

a had trying accelerate a So not as point, still we for. anticipated. originally dozen made decision At move. it's quickly recruit we got that And we've as conscious a just cautionary we're roles to couple to open this of

forward joining folks new announcing be We'll year. us into happening. as new that see the You'll we go

little a The being conservative. hits posture we're If a recession haven't rather organization. team, it credibility we we are folks just bringing conservative mode. will to the but So on in and more we'd cutback contributors our hard, think, to a and down, good the very hits and that valuable be than be lend in we're shut

hire. we So folks hang the sure to we we make want on to

while what couple the we market. happens posture conservative next a just it's retail months and of see So wait the out with

Operator

our comes Zach [Operator from next Instructions] And question Cummins.

Zach Cummins

talk been business? on like going of of overall on there. moving the some more subscription It sounds pipeline just you maybe can Allan, the there's the about side parts

reduction can the give of you insight of business? the any your to kind curious, pipeline Just cycles the professional know is into guidance but side year for this in the us services, related on much deal the I subscription of

Allan Dow

It's the made the kind all. balanced retracting -- Sure. Yes, holding We're kind probably off. not now, for a comment more quick I pipeline deserves of question. dialogue. seeing Thanks at We're is of a in there. little clarifying we're right This line. our

ahead. the got pipeline of ahead as lying as us, we've a healthy the both for coming year So well still quarter for

We've that. that have We're feel about coming We are still things actively through we and both from new good stuff do falling So some cancellations. in. out, recruiting. closing got

in we're -- balance now. it's So right

So pipeline keeping we're we're but and pipeline, the steady. not growing the expanding

fiscal We of calendar it's companies. year that, the working got the of most and with year, get time and a noting pickup in Now the we the when come and that we the I and the prospective holidays, see to the which in for budgets. of all think a start new is sudden, the worthy usually off They've projects clients an is back after are their see budgets, this holidays. usually approvals dust got year they from our authorized activity pipeline. uptick work, the on on They

spite for still lot saying, budget. of calendar right we So number is we're good important a say and few the still going most much a of will I But of year know February stronger ahead that the of would more where are to what us. me seeing and be month me probably period, we'll indication that another give we're folks in confident a now, January, there's on the a be time that time or stand weeks in dialogue, period give

strength feel factor. we timing it's we market which of still good, It's this why So be strong. commented Demand a is -- there. just on the is earlier about will

Zach Cummins

your are dynamics a that Method the kind impacting of Understood. in but larger customers? a it bit of the That’s just business? matter Proven what noncore decline know that seen into of dig of that can coming of the are business, lower And some you Is little from part we’ve business? I helpful. deeper it’s a some Or volume the

Allan Dow

not active have trying very projects less been – of of and that those. the so number replenishment have actually the was few. We’ve Turnover with our clients then any reliance thing we on the we density to expand and Yes. a less primary that team of given

got what footprint And don’t today, supply want on of pick business. are And bringing done in we’ve to push improving that that that an starting needs expanded for we the has real in effectively. be business. the We a few call relative with them healthy new also prospective margin the earlier a opportunities but there. are team Vince think a frankly, We’ve similar ago, folks, So and to up I clients chain on minutes margin, to a good expanding. had out margins and online it dialogue year. was some were quite about pace saying a had that resources a some I the new anticipating consulting

So a people but a been significant of coming bit was decline into projects set on. business, we’ll kind think don’t we continued see level it fall a that the that turned in as they’ve over working of

Zach Cummins

for me question Understood. That’s is helpful. events. geared towards And final

In here margin? gross for year-over-year, quarter downtick terms margin Or some of takes in this the a the kind impacts we in in this and quarter? was both subscription any puts of subscription gross what there onetime saw of and are sequentially

Vince Klinges

– that Zach. have kind sometimes there of Yes, that the to environment. we that the those when up Yes, we are – some to sometimes with correlate business on that the start Azure timing on And revenue taking of hosting doesn’t make customers. to step investments

on little there. So goes there’s kind that adjustment short-term of a

subsequent up that to margins tick will anticipate quarters. in start we So the the

Zach Cummins

year. it. helpful. for the of of luck the Got Best rest That’s here

Allan Dow

us. for Thanks Zach. Thanks, joining

Operator

question Soderstrom. last from Anja comes our And

Anja Soderstrom

of this a the projects? a of is have also a the them delaying just see but just do Or in matter it at you point? about I'm already. you're delay been Some size projects, of talking But addressed moderation curious,

Allan Dow

material of the and contract the thank change actually backlog joining or the to the in scope, are contracts for in in the Anja, have No. of projects rate pay in size We relative No that. start that you us. slated January. under

that So the that subscription the revenue. we was impact on part of had

in off the will new year. So those running get kick coming formally and

it's so it's not topic, timing a really -- or size much So a scale.

Anja Soderstrom

the And it of should have about first how CapEx, the we of then the picked think investing in? in a remainder half. been Okay. in up year? terms you bit And for that What

Vince Klinges

this Yes. Vince. is Anja,

X working to move a sixth We our have to better ready our out actually things. up to there give environment. We're them building R&D floor get folks

opposed as of other of Microsoft in the some one things as for the how actually some they the we're in. spend that's to pay cloud. So with a And cost the to do, we some thing is where investing kind did and bought working of the the restructure of services having as we're we relationship far CapEx licenses

So that's quarter. That's we did did. first the -- what in that we

one-offs. So those are pretty events X much that's --

I anticipate the So would CapEx down go going spending forward, significantly. to

Operator

program And it or now no appears will to speakers closing our questions any at for over we have further I back time. the turn remarks. this additional

Allan Dow

appreciate you, you forward this the time a Well, in few thank joining evening. everyone, for and to with months. a we afternoon, us. look again good speaking We Have

Operator

today's Thank you, ladies and concludes gentlemen. conference. This

disconnect. may You now

Logility Supply Chain Solutions (LGTY) 18 Nov 222023 Q2 Earnings call transcript