Logility Supply Chain Solutions (LGTY) 19 Nov 202021 Q2 Earnings call transcript

Good afternoon, everyone, and welcome to today's Second Quarter Fiscal Year 2021 Preliminary Financial Results Call. [Operator Instructions] It is now my pleasure to turn today's program over to; Vince Klinges, CFO of American Software. Please go ahead.

Thank you, Jamie, and good afternoon, everyone, and welcome to American Software's Second Quarter of Fiscal 2021 Earnings Call.

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

Vince. you, Thank

and we've crisis frontline work year. battle to gratitude we safe emotional stay the of tirelessly As resurging Personally, healthy all our individuals, workers us have continue contentious grapple to all the the first regarding keep strong. and behalf express to through impacted. But that with adversely the all financial the want a encourage been we pandemic experienced I health to to the responders, and families to and in political level coaster, everyone know continue company, who this we to companies arena, uncertainty many roller and and want of we on as

named I and of safe while about balanced new and results, As community. existing the rate our Disruption diversity we how an team Rx how net with historically. where about first we team solid second environment. us levels amazing allowed implementations to make leveraged growth. our have our on how to We been generated well many work into conference regard our maintaining our In returned our customer stories am and the platform. was has new in team of customers bringing have October, pleased ever remained our And a as to insights hear nominal churn to held it decisions companies has to our members' seen expected, customer good our health, the inspirational serve quarter ongoing We power productive solution serving virtual our accelerating focused ACV we've unleash blessed organization, with customers customers, so

ends the impact mitigating demand regained We customers the this drive amount new pandemic prospects. as of had in on for spectrum staggered of more existing dealt interest community. and turn, on in well future driving and services more record for customer Our continue success has event, have the as our performance with with stimulated explosive customers momentum turnout products and This, across has to had tremendous creating backlog work. is to projects collaboration for high retail. for bricks-and-mortar a We which growth both global managing this a the incremental new

expect virtual revenue remain project calendars. backlog quarter more relatively the quarter. strategy, the second as pronounced While work the expect than we near to slowdown which services typically to is much to third a virtual prior third holiday it we in a we implementation flat work quarter, due strong experience the in conditions, years, here seasonal providing in less flexible compared our With XXX% to be

of services and total our where revenues, are streams approximately We XX% the recurring revenue strategy achievement. for now to that on paying is milestone off, focus a pleased cloud see represents cloud-first a maintenance

period Our contract annual over quarter value prior in for cloud second year year-over-year subscription services in the grew XX% growth the XX%. was revenue and the

for percentage is on result, at And to contracts. the preference based size expect Sales pipelines, of continuing subscription of we're in We recurring of the and revenue pace. its running see in number the a opportunities continue strong higher activity growth the our as strong both the in the trending a transactions. to future

to will transactions pipeline an speed pleased presence. regarding the are our that and as in the in economy. the customers. for deliver confident to projects and year needed drive and upward number the are quarter, that achieve allows We as We we our that Transformational backlog of improve thrive we six fiscal countries, reflecting the the projects second services new welcomed as nine customers to completed quality platform half are by global or strong in see agility radically customers resiliency license will values new continued to our we we of fee trend for success be well second In decision-making we initiating. to new progress exceptional in see them subscription strive this summary, as of adopt our continuing

year-after-year making and customer in as mission services. retention innovative paying Our of expansion our customers is more we introduce successful off new

incremental the I'll delivering to we they this it a in We are the confident both to years results. grow At details continue provide be need will who customers ahead to Vince, turn time, revenue that our proud and to call and financial benefits in most. on when our can time the profitability are over

current that XXXX same for Allan. million last in last fiscal year. $XX.X quarter, Thanks, the $XX.X to quarter excuse were to period of total the period the same year, revenues Comparing compares million -- XX and -- second the me

$X.X for in increased that our mentioned, year. Allan million and to subscription the $X quarter, As to compares last XX% million same the period fees

our to compared million to prior While current period. software year XX% quarter million license $X.X for $X decreased the the

the same contract services period in value million approximately the last by compared to cloud ACV, year. to million increased for Our annual or $XX.X XX% quarter, current $XX.X

earlier improved levels. as consistent was pre-COVID As elevated the and pandemic Allan in churn rate our mentioned, from the seen with rates the

Our business of note of of quarter in to than same project last a work. unit, million professional result IT revenues in in slowly the compared million time our method, other increase XX% took number our our due timing partially August. remain supply consulting to decrease vacation supply current several But We services proven a $XX.X implementations to quarter, offset unit, chain robust. in for year backlog decreased XX% that the X% progressed and the customers a as unit more our anticipated by $XX.X in as chain projects a

zero $X.X million also period. lower of to perpetual revenues in of amount on $XX.X million, travel the recognized prior decreased falloff from year pass-through and levels to the revenues. the license restrictions stemming Additionally, reduced the to rate to Maintenance normal million, new $XX.X reimbursements X% we compared compared

revenues higher the the So compared our transition the in in streams quarter, to in subscription XX% was cloud for the in a percentage the revenues period year. year. this Costs the current maintenance period revenue to to period We the revenue combined we and recurring to XX% overall recurring compared current same model. services as of quarter, last due trend believe total margin last of cloud XX% XX% for same were gross is

cost, about have software in of allocation XX% it to of and compared software. revenue margins amortization current which the relatively would to exclude license period XX% fee such to due compared -- same a period the subscription in Our fee last to for XX% fee gross margin, quarter primarily XX% amortization was $XXX,XXX cap compared lower been increased negative expenses. a included non-cash revenue. X% last margin in the of XX% as of fixed and subscription Subscription to increase same the the the of period due last cap year, When the license in little over same amortization to to that's million you year, $X.X gross year

in business for unit period, the the the in last XX% XX% same margin, to well our margin last the higher period, period to as primarily current to utilization revenue that's the service current due XX% Maintenance decreased lower professional supply compared our same as was margin from services proven lower seasonality. mix XX% to compared And due of chain year. method, year. coming unit to Our period of in

were the R&D at period period. of Looking compared our year in gross operating the total prior current to for XX% XX% revenues expenses our expenses,

stock-based for As to the the higher due conference a percentage excludes $X.X current to last total million decreased of period, G&A the prior were to the revenues XX% to headcount. XX% period period current increased income this of expenses $X.X to million the year. million primarily compared year. decreased last year in for same from period compared in XX% our $X.X the XX% quarter to Operating revenue, period compared this in to XX% the of year. same last EBITDA, expenses this same quarter sales and XX% quarter and Adjusted which compared to expenses million that's marketing revenues $X.X and costs were period, in compensation, customer related

of GAAP or was share net and and expense. last diluted these XX% earnings adjusted compares to diluted that numbers intangible million $X.XX the diluted Adjusted $X.X exclude $X.XX and acquisitions of Our period $X.X income amortization $X.X in adjusted earnings of related million of share or of adjusted $X.XX, or compares per and share $X.XX, had decreased to million compensation income earnings net million $X.X year -- of that income same expense last stock-based net to earnings year.

international So in period this our quarter compares revenues. revenues last to That XX% the of approximately same XX% total year. were

$X.X year, is million last or revenues six-month Again, decrease increased a million for year. were SaaS Total $XX.X our the million million, at the period transition period million reflecting October to $XX.X to XX% year. $X.X license XX, year-to-date Subscription to same year-to-date revenues last $XX software the period this ended to compared or basically compared same fees period were XXXX. $XX.X while compared engagement to same XX% million model. last Looking

decreased revenues to $XX $XX.X year. services last to X% compared million Our million

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

year-to-date last to year. for Looking Overall, margin period XX% at current was costs. compared XX% gross the

to increased our and from in fees, XX%, to Our to same compared last the gross while fee margin lower decreased license to period fee X% that's margin subscription last license XX% XX% year, year. due

was year, to in increases from service the same due unit. XX% and TBM business last Our period services revenue that's lower-margin our margin compared XX% to in

year. last year-to-date period the XX% to in was margin maintenance same Our XX% compared

of at expenses XX% last our operating were year. compared same the expenses, XX% gross to revenues year-to-date in Looking period total R&D

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

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

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

balance other of aspects sheet. the Some

million Our million a receivables. for was receivable of accounts billed, accounts unbilled million $X.X $XX.X was $XX.X of total

and was shareholder $XX.X Our equity million, our million. $XXX.X deferred revenues

quarter as last the Our X.X of current of ratio the X, X in same increased compared the to end period to year.

same Our XX, compared XX outstanding to year. current as the days period XXXX, in the sales October of days for was XX last days period

at to this call open we'd like time, for the questions. Jamie, So

[Operator Instructions] from comes Our question Cummins. first Zach

Your line is open.

customer some any taking the the you've your of the at of afternoon, Good customer your new you I in quarter. just Hi. Thanks Allan lead conference I in the just bounce off, business ACV about base? even in Vince. and curious, seen Allan, with here from first questions. can potential And customer and talk see for existing your my Yeah. Disruption expansion feedback virtual get was number mean, RX. terms back follow-through, nice of to of

event. Sure tremendous thing. a It Yeah. was

travel the we physical said, turnout, three in excited of even it's about were As held course, here North easier I and much to that, to traditionally of it predominance we in the seen have event But an more and times what community. participate virtual had we And the the to the in when because a than America, customers little event. a have past about had to record on airplane in best events. get global is balanced times. a much also it America. engage of in of But this a allowed We us North more is it's being

turnout the managing in using prospective current had for event just people applications, – of disruptions we've general, theme and around not the but aren't customers, participated disruption, and a the experiencing. record also We managing currently around been the who ones that was the

So customer a presentations a great had it heavy was of draw. We going on. level

we have to with and an their excitement some that conversation been engaged conversations that to be existing of speaking, the what speaking customers some folks activity who the some had. have that that existing customers the they've able has we've project, already predominantly impact That going on the with were that to and about is at we're with directly and some onto enthusiasm customers. benefits been were about. those would drawn talking of resulted put So seen interest reap prospective accelerated kind But they were customers, acceleration – pipeline subsequently from from They a level. that get we've of able

all, I new we've with there. the has So first been thank question. the existing customers for from impact think seen acceleration, some really far you of an out Zach, for so us, I But joining and think interest thank overall, you

some terms what cycles. to Understood. know, of I seen I in sales recent due in to the That's going just of other longer to was some then as chain cycles And players sales point, planning pandemic. highlighted curious in the to supply cycles you've months? what sales some you've have in space helpful. that in instances, was I curious, terms here be seen

there's and Zach. – to question, it. It's great prongs Yeah, two

where engaging particularly traditional, in are First larger history. contract approvals. longer accelerated we transactions, attribute that we're little and capabilities They're It's point truly approvals even final the process a on seeing that to getting maybe around to probably the a where seeing and of I start like to all, And The decision of we're bit cycles getting contracting the off the for process than challenging. the approval, final a side in engaged. short the that's really to financial historically decisions without a is, opportunities and up the all getting they've of legal decision, an there's need contracting to cycle, that's they had only that seen going. four each quickly, and not and through something interesting engagement, been but kick and got the now, -- been -- way I we quarter, bubbled we've acted couple model that's and that that projects it quickly, bit and mean, in actually when The they supply team to offer. working They're with to going having the to to people each do you just get that's all the in have attention. the a row It's an on challenges ability face moved that level people living in a way at of implementation the review contracting the focus chain on work had project, case quickly. project, a flip getting their three that's making the months, we very higher and was those few get really quarters in running to excited. They're

see So, it's they really people been can when kind how motivated. work of are amazing to quick

to vacation believe chain likely can know like of on there then struggles the management here, tends being QX helpful. utilization but sounds slower, could seasonally with on you a be terms just still people side, model? That's be that but it speak of especially virtual I Understood. in services, And mean, rates? I professional this And I year supply not case full the the given some to your few

to seeing are as that. Yes, as harder pushing that people we're are continuing not hard that holidays out work. believe the but project that to far that laying -- we truly We're is the where plans seeing a little from we're and believe,

people having actually willing travel, productive not just to or week some that are take extra the work. to day and think do nature partial I of

see put but we in and airplane as anticipate won't flying the we'll do that an want we and to it how on anticipate the our when it was project be cases, the So, basically clients to -- dramatic plays getting and do had out, they When come as consultants to it or out past, many the as just they were suspension. in that, well. didn't office hit travel week, in holiday the you do

it, degree -- a came call, but of some dramatic not So, past. of talked had the the to as be last out We we on think was seasonality there's there'll about -- summer, we as that. in the

the brake. we have brake, the to but people on ask just I a in think, had were of slowdown were like we kind we on the because saw anticipated It under is of you Zach, but to want been reality may that went felt lot people question, a summer not pressure.

what to got come little did we where in churn had slowed in turnover that restarting they had were back the get and down. that We some ending new pretty in been so And Given new take ones a we we've break projects a some and back good teens projects. projects speed. We getting had on to through.

the some it into as the it new quite with come So, lingering up strong hoped be But and quarter will projects. here we we didn't holidays in think back had holidays. as second starting strong the

will earlier, I what do think do can be on based I -- relatively QX to we flat said it So, I as deliver.

me. that plans how but new pretty coming on quarters. talent sales you in I for then now? just marketing spend was helpful know your context. demand in in August, feeling given just I sales and of are that's all the key you question brought in seeing terms right some for place, capacity just you're final in Understood, And curious the

think a key we position pipelines are have team where members them, But are bring still individuals. that. think room them busy. in we'll do we I Yes, not The -- I something don't dramatic double for in. full. We're some like for When need or any we looking growth. find to down we're sales

across But challenging key it's forward. as to resources. plans to So speed we're still holiday you board people sit few logically on is get as to a right people and the this for table little -- period It's specifically tilt in soon get looking find work here get [ph] difficult as can't because a and environment looking in and up and we it ramped through we our can can to roles the our way up. we'll growth do the

Great. That's taking Allan season. the coming for best And my luck an again, of have helpful. enjoyable question and Thanks hopefully holiday quarter. in you

you. Thank Yes, likewise for Zach. again. joining Thank you us

Our comes from next Pfau. Matt question

Your line is open.

for tick as flushed in going that this over forward? around customers customers and good financially this or quarters, been Hey be the guys. Wanted taking distressed across metric do expectation out base, several kind you to Thanks other a look potential pre-COVID we're you level you here that pre-COVID financial now where And some and of with next my state off any that of have of in back kind your the out is up think more returned that make to see churn do are start the question. could to do levels. customer -- distress

Again, on Yes, engaging at they're today, they're customers ball. We us. They're a for are joining don't users, look the active out thanks. you working there Matt, it. Allan busy. and that They're as great crystal we with us thank here. But have question.

couple financial and can as so much think can't condition, dramatic the prediction that. best. they're we as look in probably and we quarter as of a don't although But we level So at we see solid we of churn quarters reporting, a we're their get out, can see out next make about as we that's a about visibility or

behind we there. So It activity acceleration us. got it of lot -- think looks out There's a think we we've this and promising.

pretty position that a we relative good we're think to now rate settling. in So churn

things you unpredictability the of It's season the of people's terms of into here. distraction. getting obviously deals the getting could higher as across or that a attention level in one one the than of a challenges mentioned holiday And potentially normal, Great. move line we be and is and

of is unpredictability you're So deals with in that close its you ability I on software in. creating the too, to quarter your helps how guys and are plans obviously thinking your that them. about the adjusting impact to offset terms current here and guess, And in then, that,

do dynamics guys? those impact sort of So you X how

think year reasons third scenario. allocated. you couple a the the for money always us one, what we're a -- So is one historically quote. on first that companies, – of then that quarter most user a seeing reasons and I X for to and the budgeted has I of that's been Number one is, well, in positive or end have extent And been the losing it's that actually,

if attention and leverage a they've people's got get project, to commitment companies, they've the ball forward. So that they'll move use the and progressed to

December we the that good is instance, that situation. it use think a one money for that's or lose year-end So because quite season,

is year decisions, coming that with projects, available. stages. legal And those a So we'll move the piece of done opportunities new have the the little you final have progressed through as other money beginning made those Then the we the work. leverage can to nice who best

them soon paper, the As put the sign new hands they on they then the books. the budget their to it ability can as put it to in get have fiscal and year, on

the of early up, always a for is for end which us, we'll software fiscal people closing a see bump to bit calendar ready we act and then, got the company. of event to And ready trued go course, on oftentimes, of So in it. all We've are have there every where January.

lot closing year that. you I'm standpoint. it. be three got good with we where good. will like it around pretty at year/fiscal finalization We've the a is that. trials calendar deal traditional year, look that. a model, pipeline next The look of feel of We number on a So up Yes, companies, And strong. will of are queued about this They fiscal applications think year strong A next projects for number and we've got a for of from budgeting. us for need

good chain their dollars and people market in putting market and year to the execute feeling I'm general about supply actually So need ability that our the in to ahead. in

I So still times, half said for think, we've quite as several half second the of year the us us, the fiscal for looks second good.

it. Got

at Okay. the then fees the to it products. majority fees was a understanding quarter, that license license the of my in step already guess are existing And decent looking that from the using down conversations sequentially. is licensed I And prior sales those our were customers

is more you stepped just are it it to is that So customers move the timing, product? over or cloud existing down, seeing

were Yes, we're where seeing they no quarter. the did worth new on-premise transactions all customers what call model a move dramatic over, we're past point, at and we of in we existing shift, not fee customers, this we from not an license are – lift the but seeing

where an new the future, seeing uptick, a people their in small small, existing a still everything the And With eye capabilities customers we together that cloud. the in are potentially are a extending of We bringing have shift. under put an maybe the then relatively acceleration, minor in cloud. footprint uptick doing actually

or it's perspective. if of of minds they'll solidification cloud-first new even the existing set we're a it think they I the do in the customers seeing of – our strategy. In our put the anything where overall, cloud-first capabilities, new So

a guys. had all for my I Great. lot Thanks questions. taking That’s

Have joining for a Thank good you evening so again, much. thank and us. Thanks. you

further [Operator over Vince time. Klinges questions back Instructions] program will at this remarks. we It for to have now closing appears no turn I the

again We thank is forward for Allan, we for future. your participation you with on Thank in again near call, you, actually. appreciate all hosting. But you our speaking and the us. all. all look Jamie, This joining thank earnings to you

This does Thank our your you conclude for call. participation.

time. at disconnect may any You