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AS

AMERICAN SOFTWARE INC (AMSWA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue was $26.192M, up 1% YoY; GAAP diluted EPS was $0.06 and adjusted diluted EPS was $0.12, with adjusted EBITDA of $4.618M and an 18% adjusted EBITDA margin, reflecting disciplined cost management amid protracted sales cycles .
  • Subscription fees rose 7% YoY to $14.791M; recurring revenue was 84% of total, while maintenance fell 11% due to prior divestitures and cloud conversions; operating earnings increased 32% to $1.844M .
  • Management maintained FY2025 guidance: total revenues $104–$108M, recurring $87–$89M, adjusted EBITDA $15.0–$16.4M; reiterated confidence in achieving original guidance as pipeline expands .
  • Call commentary highlighted stronger international mix (22% of revenue), higher maintenance margin (82%), and RPO of ~$125M (+13% YoY), supporting visibility despite elongated cycles .

What Went Well and What Went Wrong

What Went Well

  • Subscription momentum: Subscription fees +7% YoY to $14.791M; recurring revenue sustained at 84% of total, underscoring durable revenue mix .
  • Operating leverage: Operating earnings +32% YoY to $1.844M; adjusted EBITDA +26% YoY to $4.618M with an 18% margin, indicating cost discipline .
  • Strategic positioning and pipeline: “Our Q1 performance was consistent with our internal expectations… expansion of our late-stage pipeline… confident in achieving our original guidance for fiscal year 2025.” — Allan Dow, CEO .

What Went Wrong

  • Maintenance revenue decline: Maintenance -11% YoY to $7.290M, reflecting divestiture impacts and customer cloud migrations .
  • Services softness YoY: Professional services & other +5% YoY in Q1, but the two prior quarters showed declines due to lower project work and outsourcing to SIs; Q4 services were -23% YoY .
  • GAAP net income down YoY: Net earnings from continuing operations decreased to $2.054M (vs. $2.615M), pressured by lower interest income and higher tax expense despite improved operating earnings .

Financial Results

MetricQ3 FY2024Q4 FY2024Q1 FY2025
Total Revenues ($USD Millions)$25.536 $25.388 $26.192
GAAP Diluted EPS ($USD)$0.12 $0.07 $0.06
Adjusted Diluted EPS ($USD)$0.19 $0.12 $0.12
Operating Earnings ($USD Millions)$0.815 $0.672 $1.844
EBITDA ($USD Millions)$2.449 $1.470 $3.032
Adjusted EBITDA ($USD Millions)$4.035 $3.070 $4.618
Gross Margin ($USD Millions)$16.446 $16.718 $17.468
Recurring Revenue (% of total)86% 85% 84%

Segment revenue breakdown:

Revenue Component ($USD Millions)Q3 FY2024Q4 FY2024Q1 FY2025
Subscription Fees$14.114 $14.059 $14.791
Maintenance$7.727 $7.428 $7.290
Professional Services & Other$3.418 $3.741 $3.870
License Fees$0.277 $0.160 $0.241

KPIs:

KPIQ3 FY2024Q4 FY2024Q1 FY2025
Cash & Investments ($USD Millions)~$78.3 ~$83.8 ~$92.0
Dividend Paid ($USD Millions)~$3.8 ~$3.7 ~$3.7
International Revenue (% total)N/AN/A22%; prior-year quarter 18%
Remaining Performance Obligations (RPO, $USD Millions)N/AN/A~$125; +13% YoY
Recurring Revenue ($USD Millions)$21.8 $21.5 $22.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenuesFY2025$104.0–$108.0M $104.0–$108.0M Maintained
Recurring RevenuesFY2025$87.0–$89.0M $87.0–$89.0M Maintained
Adjusted EBITDAFY2025$15.0–$16.4M $15.0–$16.4M Maintained
Quarterly Dividend per ShareQ1 FY2025N/A$0.11 declared (Aug 21, 2024) New declaration

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2024)Previous Mentions (Q4 FY2024)Current Period (Q1 FY2025)Trend
AI/Technology InitiativesExpanded AI/ML in platform; vendor compliance, inventory, manufacturing enhancements Introduced GenAI; DemandAI+ and InventoryAI+ launched; Gartner MQ Leader Additional GenAI and Decision Command Center launched in May; Gartner MQ Leader recognition reinforced Continued AI-first expansion; improving pipeline quality
Sales Cycles/MacroNot explicitly cited in PREntering FY2025 with macro headwinds expected to weigh on near-term decisions Sales cycles remained protracted due to economic uncertainty and seasonality Persistent lengthening cycles; cautious demand backdrop
Cloud ConversionsN/ARising client interest in cloud conversions to leverage new AI capabilities Maintenance decline partly driven by client conversions to cloud; focus on cloud services sales Ongoing shift to cloud model
Regional MixN/AN/AInternational revenue 22% vs 18% prior-year quarter Increasing international contribution
RPO/Bookings VisibilityN/AN/ARPO ~$125M, +13% YoY Improving forward revenue visibility

Management Commentary

  • “Our Q1 performance was consistent with our internal expectations and reflected disciplined cost management in a skittish selling environment… [We are] confident in achieving our original guidance for fiscal year 2025.” — Allan Dow, CEO .
  • CFO highlighted mix and margins: maintenance margin at 82%, international revenue at 22% of total (vs. 18% prior year), and RPO ~$125M (+13% YoY), supporting visibility despite protracted sales cycles .
  • “Operating income was $1.8M… up from $1.4M due to higher revenues and improved gross margins. Adjusted EBITDA was $4.6M… adjusted net income was $4.1M ($0.12 per diluted share).” — CFO prepared remarks .

Q&A Highlights

  • Analysts focused on sales cycle duration and conversion timing; management reiterated elongated cycles but noted stronger late-stage pipeline and confidence in FY2025 guidance .
  • Questions on cloud migration cadence and its impact on maintenance and services; management emphasized ongoing conversions and prioritization of cloud-hosted realm for self-managed clients .
  • Clarity on revenue mix, margin trajectory, and international exposure; CFO cited maintenance margin improvement and international revenue increase, implying resilient mix .

Estimates Context

  • S&P Global consensus data was unavailable at the time of analysis due to a mapping issue, so beat/miss vs. estimates cannot be formally assessed using S&P Global consensus (S&P Global data unavailable).
  • Given reported adjusted EPS of $0.12 and total revenue of $26.192M, models may consider higher adjusted EBITDA margin and stronger recurring mix, but formal estimate revisions should be evaluated once S&P Global consensus is accessible .

Key Takeaways for Investors

  • Subscription-led growth and higher operating leverage are offsetting macro-driven deal elongation; sustained recurring mix supports near-term stability .
  • Cloud conversions and GenAI feature launches strengthen the competitive position of Logility’s platform; Gartner MQ Leader status is a credible external validation .
  • Visibility improving: RPO ~$125M (+13% YoY) and rising international contribution provide support for H2 execution despite an uneven demand backdrop .
  • Cash/investments of ~$92M and ongoing dividends ($0.11 declared; ~$3.7M paid in Q1) enable shareholder returns while funding product investments .
  • Near-term trading: Watch for pipeline conversion updates and any acceleration in subscription growth; margins should benefit from mix and cost discipline. Medium-term thesis: AI-first supply chain planning and cloud migrations expand TAM and embed AMSWA more deeply in customer workflows, supporting durable ARR and operating leverage .

Additional relevant press releases:

  • Q1 FY2025 press release (Logility/AMSWA site; full PDF): “American Software Reports First Quarter of Fiscal Year 2025 Results” .
  • Earnings call transcript (external sources): Seeking Alpha and MarketScreener mirrors .

Prior two quarters press releases for trend analysis:

  • Q4 FY2024 press release (with FY2025 guidance introduction): subscription +8% YoY; total revenue $25.388M; adjusted EPS $0.12; adjusted EBITDA $3.070M .
  • Q3 FY2024 press release: subscription +9% YoY; total revenue $25.536M; adjusted EPS $0.19; adjusted EBITDA $4.035M .