Logility Supply Chain Solutions (LGTY) 24 Aug 222023 Q1 Earnings call transcript

Good day, everyone, and welcome to today's First Quarter Fiscal Year '23 Preliminary Financial Results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note, today's call may be 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, CFO of American Software.

Glory. you, Thank everyone, fiscal afternoon to Software's American And earnings and conference quarter XXXX call. first good welcome

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

to you, Thank expectations. Vince. our results that were report line I'm first with pleased in quarter

such, the Supply the We Management guidance the revenue meet we X% call. growth on services. Chain months last achieved consulting track our pressure where quiet downward year-over-year segment we're As we in traditionally summer on to provided on during see

technology at Our our XX% on trust growth to stay especially growth and by are us emerging them in solid clients encouraged subscription remained the our we revenue help pipeline trends. and place in continued of top the

especially of In we the our across and competitive work. accompanied of continued supply continued timely the a that margin, fiscal of spite stuff all anticipating in in Our backlog on a labor to expand year. growth space, expansion a top to growth cloud line prior We and XX% the of adjusted expansion a revenue was with healthy our chain significant business EBITDA basis. technical project in year 'XX the in team XX% performance market, strong needs and our which anticipate increased the very from are with business we're can aspects continuing

pandemic, some store slowdown continuation continue recession not pipeline seen business events, uncertainty, impact have signs the lingering any of the now the of world expansion. Although and pressures to of we inflationary major in

and rates. mindful close However, extension we're the for an potential of

operations. possible. approvals and of clients we're be get on the contract in to continue with soon So signed shortages IT organizations keep the timing supply hard to while track primary Staffing the with how struggling as chain implement as grapple contract working as to to impact and projects projects on day-to-day

sustainable as manage their last in been that period and this our pleased strong for and ahead. in the economically any another demand increase continued to poised our recurring few way revenues in which disruptions clients QX. uncertainty. driven execution, never cloud impact clients to approximately that to for relative between are needs larger seen in Overall, not improved by we're a decision-making the more year informed revenue a facing need of we've to and for quarters. of and we're see Overall, in services confident rapid However, and resilient holistically pipeline has the of a material We the stream represents change growth supply opportunity fiscal and our set continues total remain maintenance, chains XX%

in the of a rise see stability revenue recurring our as increase to community, percent to cloud expect on-prem revenue of contracts total time. continued new the With the continue we and and subscription client over

quarter, first our recent we the acquisition. most announced During

ahead team we're So July an a pipeline beat integration logistics on been the to the The work I want there. not The opportunities has the to in from their We client update has plan strategy over and network with did embraced that optimization of progress on accelerating are Starboard brief inherited. we and that had design our miss pipeline than faster our fantastic community in work logistics operations. company and we fulfillment one came we the optimize for I help say opportunity offer stand were with. a in that e-commerce anticipated. would closed to opportunities

a the to we end was of the of We rapidly closed solution the company win through parts dollar network services one projects design This optimization prior that quarter. attached with and multi-billion to growing acquisition. is automotive also the Logility successfully

of strategy suite, blending we soon immediately as our board. were planning the for they As part enables network on design presented

to how to live, in acquired insights will on We will on an and best of provide one to regards leaves to not us productive a of an the for fiscal success operations, The turn in iterative our and to insights capacity optimization After solution to network more our design with pipeline leverage the design integrated our design design We're year. which a more them on streamline an objective planning on building network least everything the acquisition one expected, be planning this companies other with of the we logistics pursue we'll give portfolio footprint. the the the and see strategic to integrate end early how at on acquisitions process. executing solution optimization to with manage to expansion clearly this have if fit rapid go solution. track find with before

total I in million be between $XX As back we're our the on come between to opening guidance $XXX.X which will million results, in mentioned line in we million is and $XX comments, our and based performance with be EBITDA and QX my confident provided in adjusted to for $XXX revenues June, million. in

summary, fall and of expansion revisions effect as recurring this of we're report. the intently improvements pleased will with our in in We season this XX% our to our on pipeline a As any to of the remainder we on our we the look the reporting with in next into better full traditional, focused forward provide remain growing performance model continued results quarter. progress position November be to In revenue during and first fiscal our executing the quarter busy close expect to financial and guidance comes extend milestone, year. against

chains I'll we our the turn the attract who clients and to is introduce financial expansion, our making retention supply of that to of paying call partners. our parallel Vince, details we new over managing client in sustainable mission results. in -- will innovative while on year-after-year clients this off capabilities time, provide community for successful more Our At

Thank Allan. you,

was For subscription both 'XX, the revenues the million, that our drive last was the first that $XX.X XX% X% were -- a fees to in quarter of of million year, which million. $XX.X from fiscal period increase increased year-over-year which same $XX.X

compared million $X.X fees license million last software $X.X same were in period the to Our year.

X% and increase The increase and in services revenues declined project a our a our other an by X% was X% professional the reflecting IT from to method proven million year-over-year X% maintenance $XX supply million, Our chain $X.X increase $X.X staffing in a ago work. year normal to rate. reflects increased of which period. revenues The year-over-year million impacted unit fall-off timing business,

total XX% subscription same that year. in XX% maintenance for recurring the last revenues the fees comprised first period and total the of and represented to So compares quarter of revenues

Looking at last XX% in same current increased compares year. to for and XX% to gross the that margin, it the period period

period. to for of first And last in of the in cap revenue in of primarily and software prior and expense fee XXX,XXX gross year amortization have software that's lower been non-cash expense software the excluding the $XXX,XXX due was increase subscription subscription would XX%last year quarter XX% versus cap XX% last subscription period increased to cap compared year same margin margin amortization and our year. amortization XX% the to Our of the

to to business. partially the fee higher staffing XX% up same lower chain that's license XX% XX% unit our offset last to increased XX% rates by also of it margin our period to was services our So year. And IT at our compared due utilization and in last supply year from billing and was margin

the last margin the quarter XX% were the was year. XX% maintenance that's and year period current revenues and quarter in the period R&D compared last to in XX% XX% Our XX% revenues for same of period same same were in of the XX% last total sales to expenses our current the marketing compared expenses for year. the and to period Gross compared for first

and compensation, variable also G&A quarter and revenues and the and insurance, year Our Starboard last to this expenses acquisition. current was due of legal fees software XX% option related total costs, our to computer compared XX% incentive recruiting were for higher to stock

earnings XX% So an diluted quarter million net income of our to last $X.X earnings XX% $X.X adjusted increased net related expense, income $X.X diluted decreased compares in to compares of last adjusted of year. last adjusted On the million first on our to million $X $X.X XX%, million to expense of share basis share increased or And a and revenues XX% share or decreased EBITDA to excludes slightly adjusted diluted were this per XX% of $X.X $X.XX year. $X.XX to Adjusted for diluted income earnings $X.X operating per for last year. and $X.XX million this the total of to compensation compared same in compared year. GAAP $X.X period to adjusted million million same million period that net quarter acquisitions which operating XX% XX% income or increased share stock-based the year. revenues million up same non-cash income period $X.X International quarter Net $X.XX income basis, year. of basis, intangible million $X.X to our compared on from amortization to last earnings to that adjusted per and last

remaining what was as obligation $XXX this million. backlog, performance we to referred quarter Our or

at million at Looking financial strong investments our approximately at the with the the position remains quarter. cash of sheet, balance $XXX.X and end

a purchased also company $X.X $X.X design network we in Starboard, quarter, paid optimization for and we the million During dividends. million

of And improvement the the compared and the that and same was from annual end period we reaffirming the to our billings days provided when the of the collections fiscal we're to year. due Our of quarter as guidance, mentioned, guidance XX year. sales XX days primarily year. Allan as last This outstanding, last timing at compares that fiscal in to days 'XX was decrease beginning of

to revenues range. adjusted I'd and And then the the of as of includes million turn company we some to this questions. for At planned time, $XX any range are also and $XX and million revenue talent, travel So, like million. as over we support higher to range reflects in $XXX.X $XX.X as across marketing on this million $XXX such an This call basis, recurring million anticipate well compensation million expenses. EBITDA expansion guiding the costs the to to growth to to other $XX headcount retain

first Please Matt we'll And from Pfau. our question go ahead. Instructions] [Operator take

I is the are of to that guys. the what guess what into of in components terms transformational perhaps given are getting size macro Great. the Thanks questions, out there wondering from any there? for wanted you're And is, pipeline in of deals broken I'm perspective, my change ask, some deal seeing taking I concerns a there? some

or three good but but pandemic the as is consistency moved smaller we've I years - we that's couple into of question. with last quarters, the think We've we've climate. exited Matt, the seen four than basically as ago, consistent this here, new and Yes, were it

number have really results. it plan, large take to say I'd do chunk of it's the some getting are seeing time We in to a pretty want in term with of have who long-term So the the folks pipeline that but bite-sized short a couple we just are consistent last type and a the focus on transactions projects, transformational of but quarters. chance

then one? the on it. conjunction also You you signed that deal was Got interesting, Starboard in with acquisition, certainly plan an And independent the Logility. which and seems what that signed then is go-to-market one

that just you're longer-term? maybe go-to-market about the with So understand thinking how us help

like do we applications We from clients - portfolio. nothing stops has with suite. There the inter-dependence an standalone doing we'll we that much have really to projects Yes. it is the tightly continue other But this do attached -- we're plowing with in design is in real that any certainly the we see the of as a planning coupled to the is planning network that us here anywhere two really crafting we're with we have solution and ground interoperate. where new add suite application and those value to to a -- strategy

then make where change the the the an a to it's And other basis how or planning once you decision into the the design planning readily to you flowing network So feeding flowing network if comes network presents for the analysis up design provide make is the risk network real time a immediately how on will products available doing -- through update likewise, network itself. in data application application necessary that so a the design, translate application. for opportunity back way, into the are is something design

company of doing that vision completely unique forefront struggled So capabilities that the excited marketplace. on it's about we're set very that the the that's of today. saw for the in one that. that and opportunity I we're is a automotive Nobody with mentioned, things And else of years as they

real acquisition. going growth the -- driver to we and accelerated this So think behind the model that's be behind

that. excited we're about So very

Got And more of one comment year. for one to last me, on just find acquisition the before about the the then you. end wanting

some So -- had one. this you basically before been that would two fiscal it it be, I made you mean your within since time had year had and last

sort quality change are of been driving or become while for just you So are little of of sell out willingness when terms assets it's there a you bit on that now? in pause to that's seeing acquisitive to a valuations, a more

Yes, I is a comes this in good there everything think tell friend me three.

four it's, give you So yes, to going answers. I'm yes. and probably But yes

we dialogue We've which to for an a for valuation, tremendous So engage yes, board. and of to the a a the willingness seen acquisition we've consummate seen transaction in us. ultimately realignment see across the

just a talked the is to like around position And think Starboard -- for point there in as You all is We resources think that for capital seen we are extend an then that acquisition. debt. as we and no that opportunities have But we there And right will valuations the there that grow positive against making for cash the the we that the we're more go forward. marketplace capital model. actually our portfolio us And with one well. well. are fourth believe ready. out growth are deploy We very acquisitions difference the about the strategic that move make some tuck-in as continuing it think to future us our

really those one actually. limit act moves two, driving now more would four right wouldn't are we both. ourselves probably So to we our found things and we If coming on together

Thanks it. my a guys. Appreciate Got questions. lot taking

Thank joining you, Matt. for us. Thank you

our from take Matthew Galinko. go we'll question Please ahead. And next

on with my Hi. your And help us through getting the I'm I the deal hire about curious and Thanks plans, look hiring this some level how for there provided congrats you being might of confidence to labor done. taking comments know the but against the your question. cadence year. on market? timing able

you is easier right very Matthew, was today now ago. than it the actually. months actually, few we're it's are We to question. What for confident thank a hire seeing

factors, and resource on where of ready a they're some move, month July we of in interviewing people for we're the make matter got they've the and very come out in, through very more or I we've for need rest in carry we we're a that we getting people calendar in had this that from decisions us quickly have May or them candidates back the closing that and us think got is August to got pool year. to behind coming vacations, June good of worse loading couple there of joining were

So really that good. feels

labor I join. to for quality exciting chain are space, category think looking of in they some the a stable good they're good-quality that us about an companies. is people learning doing in the space, organization. learn we're read and as shifting, exciting market We're supply put companies We're us. I things about

attractive very we're So successful. we're quite and

ability once we of community and get to First to highly consider pulling for them on right then successful of resources actually a come ones. - find us our all, join diverse is the to we're us

in guess, that I pipeline existing conversions you customer hear can highlighted, the to maintenance point? then the see in few this cloud of of And the about base. some does anything that I cloud quarters? of prepared environment talk revenue over And conversions And but factors change didn't at converted your you mix -- the macro the given maybe the to Thanks. you remarks next pipeline any how the

as and we moving today Yes, where that quarter we - three. the went shift did there first in five moving will last probably as far call what the clients do on-prem to of fiscal those we if year, transactions are back out over, lift for you in

are improvement. Those XX% numbers small. almost that's So

we or to than things, are we attract to quarter by one and folks. is relative eight pressure think It's under like something that. I of that half up dozen to don't move yes, will believe But accelerate that to kind more anything, math maybe to a that. retain will are two our see So that trend, ability maybe like do against seven, I continue the clients driven a being I if more

a less strategic to like pressure So applications, inclined they applications to organization continue operate IT very are ours, their on-premise. of lot and is under

a We new is move continuing time it to play, as they the we those components to latest to to And shift, way. to release. new add is those chance add at a that put So capabilities that to upgrade in capabilities, they get the perfect accelerate. cloud the and mix trend

more cloud-based deliver and are operations more those our putting So, to to both clients to of responsibility and drivers to move over day. day pushing the in hands

think seeing profile to around in the drive. don't has are the don't two continue anxiety really those the we're the I other factors turmoil - So think from to think economic think going - I anything the much, materially I I changed those factors.

right, All thank you.

Thank joining and thank your you, us. questions Appreciate you Sure. for Matthew.

next Zach Please ahead. move we'll go Cummins. to And

good thinking into Hi, maybe Allan. headwinds, Congrats of and can And my you're Yes. just off some your commentary there customer variety the the entire questions. general know trying is you about their Vince but pace a the get around and for overall taking of a afternoon, little on closures the of investments customers sense of building deeper across are script seeing quarter chain? supply I solid sentiment. Allan, that how mean thanks of macro deal just dive bit in customer just I in base? to a

think high adding nice with really years one for revenue that clients recurring they're the rates retention working sticks. now, expanding Yes, are that and those - we've we But carries a on capabilities. is the forward trend been really us, new have us. positive footprint for retention I their is really What that

the We've gone haven't on number design, of their as base presentation. pipeline add back the an that to the extension with the that in We contracts yet are to got a now gone we've to closing network them for with footprint. to installed them instance

pretty from our example run lot base. So business consistent XX% installed to into roughly the a of of back coming ability base. one the where that's is sell We're rate of project installed still just our

we're balance, XX% base. And we've XX% coming mix, represents the So it's the that about of project other the logos into healthy putting we've half of the new got new got from work. a installed

that's believe a we ratio. So healthy

for You been the XX long know, been here space. at supply in I've this enough chain around and years

of and close in from couple and the and base, the see a recessionary projects work the times of of adding clients that still seeing the a normal in change a a up. market the we've more recessions, ground pipeline doing more look installed towards coming that past. or We're to strong is and brand still we've trend market past in Here the mix a, down That less seen new rate there. yet, not we still bit investing to seen new a us, trend

one think the quarter least that this we us, the in now, as middle will the at that next mix retain XX-XX go. we of ahead of So, of we're

as you impact the activity anxious going and So close it's when news, the quite don't the now. rate, a then on. in pipeline I for at exciting. got pause it but look and we've Like moment, right you that the activity our everyone we're watch I just see makes

keep we're to it excited just So rolling.

building a pretty the transactions seen there new Understood. meaningful Blue any the of I just of curious some couple of in has competitive Yonder acquired. the in And you I'm changes seen commentary, notable in just quarters, been landscape overall if off last have with of much set customer some change. know being the space overall competitive have the

that No, there. providers all in the I Blue still proposition are of value differentiates others I those pretty all most the and we notable those think our Yonder - consistent, so, have breed best out that us marketplace are there, unique play think the markets and we [indiscernible] are trend,

best just re-providers. have are pace keeping the of of the see of up that they're just that's are entrenched aren't it, suit today things at manage either more and capabilities so very to marketplace and they getting or supply ERP capability popping is those that of they the providers and a which up continue clear We with aren't the the less don't depth recognition opportunities don't less considered change, the believe in I to being winning complexity that not where the that necessary well chains, dynamics

to most We've starting don't dramatic We trend back sometime the thing. seen that's it back. swinging way. other So, see that the probably

So, it looks like continuing. the is trend

side? of the and year meaningful the for me, the assume probably towards but geared is for Starboard And there current kind revenue question on Understood. for anything more final guidance Vince,

its customer Zach, I for fairly acquired really we current was time the acquire because when Starwood didn't small. at think base it we now,

not that of lot into building putting some revenue a acquired, we the post-acquisition, going that we're it more. and we forward have start of more if current customer anticipation the guidance, So, from base meaningful do will but revenue

So, for the we'll how effects the guidance that see to be year. watching mid-year about for that

helpful. That's again my for best rest luck Well, Understood. thanks of taking quarter. and the of the questions with

Zach. you, and for for Thank Thanks joining thanks questions. the

[Operator next Soderstrom. Instructions] move We'll Anja ahead. to go Please

and my Hi, you questions congratulations and on good afternoon for good a taking thank performance.

And so I'm just a little bit - questions asked already.

to How So, capability a Starwood had on follow-up come at acquisition? about looking I'm that just adding the been your around acquisition. you while did are and for how that and thoughts specific the or

say It a to in clearly it's the the We Anja, that had quarters mode. planning talking us be acquisition good question. get or back can about that maybe we market thought and this think so for going ago three we was where good coming were one together. landscape is right to I was luck - great we that

actually helping four that top time, team strategic We of joined identified team idea Starboard were there. have those the together network rise put a list thought one to in list we of was top of the areas the it moves team on the of About important, members did in. the fit that this most the our our move an whose in we've and and from one got forward since outreach strategic would design same of us how at

together, of, can identified reached it's team to partnership moving We for us where what started to us, an fantastic we planning were potential around investigate luck into partnership kind and to beat acquisition. they a a got you already tighter had good right come a we ready. now, we and punch market good had the in we the but a accelerating that's partnership them out and and than And the have the really So, marketplace, just evolved us.

and fortune coming together. planning good So, all luck good good and

And Okay, again that. sounds good. congrats on

to sort you able to other this So do what alternative of to time times this? to anticipate excel be or all this

one is no is. our candidate base that is for in a There this, installed not everybody

all presenting these flow So a going of the number actively they where one, we got less around of it, change don't days. maybe back that's stable If almost clients. products, and they've are chain to appetite but supply for nobody this much there is our

a and product or something had is that sets single of chain, that. space, but so you network part had materials design stable that could only everyone in has chain, around or from probably requirements and about dynamics place very into supply is less like line come unique very If coming the of raw supply prominent our even one manufacturing the this

So didn't, to ability that gating the is the is an client team -- use go right the there other now appetite in hopes they anything Probably to a bigger to when plant - will that Starboard take - of is getting takes But us didn't on we bring other big the table. ours their there attention seed sometime soon in way, that. as new today factor their just to the base face. maybe that in over the is Also portfolio. we challenge

shore a actively is rest with came the other are to really is exciting them of there back already portfolio a the they were back client and and that the and but handful double, picked base. very have component into are we've it partners their leveraging to partners, a been couple a well rest really that portfolio about folks and new position of we on over didn't as our new we some the as there partner able the of engaged how excited active taking up SI thing to meaningful add So network clients we've up of today of that

in outlined I really, just there synergies four powerful. or that that three is there So, really are

all for Thank exciting. That was you. very sounds It Okay. me.

for Thank you, Anja us. you and joining thank

there Instructions] are further no this questions [Operator does at And appear, it time.

time us with you year. a you joined Thank the remainder our afternoon. forward updates you the your appreciate thank helping and with afternoon. all Have much future on participants and call so look Gloria, the today. speaking for future for that this of Okay. good in the the to us We again near

conclude today's This your program. does Thank for participation. you

evening. wonderful a have and time any at disconnect may You