Executive Summary

Q2 FY2024 revenue from continuing operations was $25.7M, down 6% YoY as maintenance and professional services declined; adjusted EBITDA margin expanded to 16% while EBITDA margin held at 10% .
The company updated FY2024 guidance lower following divestitures, to revenue of $100–$104M (recurring $85–$88M) and adjusted EBITDA of $14.5–$16.0M; prior guidance had been $120–$126M (recurring $88–$92M) and adjusted EBITDA $19–$21M .
GAAP diluted EPS from continuing operations was $0.02; total diluted EPS including discontinued operations was $0.07, reflecting gains from divestitures this quarter .
Capital allocation actions included repurchase of 430,576 shares at ~$11.20 and payment of $3.8M in dividends; cash and investments ended ~ $83.9M, underscoring balance sheet strength as transformation to a pure-play supply chain SaaS continues .

What Went Well and What Went Wrong

What Went Well

Subscription fees grew 8% YoY to $13.4M, and recurring revenue rose to 84% of total, signaling ongoing mix shift toward SaaS .
Adjusted EBITDA from continuing operations was $4.1M (16% margin), up sequentially in margin terms, supported by cost discipline and higher recurring mix .
Strategic repositioning advanced: closed acquisition of AI-native Garvis (DemandAI+), launched InventoryAI+, divested non-core Proven Method and Transportation Rating Solutions, and executed buybacks; CEO: “We have positioned the company to concentrate on delivering modern, breakthrough technology to the supply chain industry” .

What Went Wrong

Total revenue fell 6% YoY to $25.7M on a sharp decline in professional services (-26% YoY) and maintenance (-8% YoY), with licenses also weaker (-67% YoY) .
Operating income from continuing operations fell to $1.2M (from $2.6M YoY) as gross margin dollars declined and interest & other swung negative, pressuring GAAP EPS from continuing operations to $0.02 .
FY2024 guidance was reduced meaningfully post-divestitures, implying lower scale and profitability trajectory near term versus initial plan .

Financial Results

Consolidated performance vs prior periods

Metric	Q4 FY2023	Q1 FY2024	Q2 FY2024
Revenue from continuing operations ($USD Millions)	$29.914	$29.168	$25.690
GAAP Diluted EPS – Total ($USD)	$0.08	$0.08	$0.07
GAAP Diluted EPS – Continuing Ops ($USD)	N/A	N/A	$0.02
Operating Income from continuing ops ($USD Millions)	$2.270	$1.567	$1.229
EBITDA Margin %	10%	8%	10%
Adjusted EBITDA Margin %	14%	13%	16%
Recurring Revenue ($USD Millions)	$21.2	$21.9	$21.5
Recurring Revenue as % of Total	71%	75%	84%

Notes:

Q2 FY2024 includes discontinued operations gains; continuing-ops EPS isolates underlying business performance .
Recurring revenue comprises maintenance plus cloud subscriptions .

Segment/Revenue Mix (Q2 FY2024 vs Q2 FY2023)

Category	Q2 FY2023 ($M)	Q2 FY2024 ($M)	YoY %
Subscription fees	$12.326	$13.358	+8%
License fees	$0.688	$0.229	-67%
Professional services & other	$5.435	$4.003	-26%
Maintenance	$8.830	$8.100	-8%
Total revenues	$27.279	$25.690	-6%

KPIs and Balance Sheet Highlights

KPI	Q2 FY2024
Adjusted EBITDA ($M)	$4.086; 16% margin
EBITDA ($M)	$2.506; 10% margin
Cash & Cash Equivalents	$62.971M
Short-term Investments	$20.917M
Cash + Investments (approx)	~$83.9M
Deferred Revenue – Current	$38.310M
Share repurchases	430,576 shares at ~$11.20 average
Dividends paid (quarter)	~$3.8M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY2024	$120.0–$126.0M	$100.0–$104.0M	Lowered
Total Recurring Revenue	FY2024	$88.0–$92.0M	$85.0–$88.0M	Lowered
Adjusted EBITDA	FY2024	$19.0–$21.0M	$14.5–$16.0M	Lowered

Management attributed guidance updates to strategic transactions (divestitures) and business mix evolution amid transformation toward AI-native supply chain solutions .

Earnings Call Themes & Trends

Note: The Q2 FY2024 earnings call transcript could not be retrieved due to a document system inconsistency. Themes below reflect disclosed commentary across the last two quarters of press releases.

Topic	Previous Mentions (Q4 FY2023, Q1 FY2024)	Current Period (Q2 FY2024)	Trend
AI/Technology initiatives	Platform expansion; secular tailwinds from digital supply chain transformation; ESG features; SOC 2 audit	Acquisition of Garvis (DemandAI+), launch of InventoryAI+; emphasis on generative AI in demand forecasting	Accelerating AI-driven roadmap
Supply chain/macro	Macro headwinds in FY2023; conservative FY2024 initial outlook	“Supply chain planning is entering a significant transformation” driven by tech and workforce shifts	Cautious-to-constructive narrative
Product performance	Recurring mix up; subscription growth strong	Subscription +8% YoY; recurring 84% of revenue	Positive mix shift continues
Capital allocation	Dividends; planned buybacks	Executed buybacks; paid ~$3.8M dividends in Q2	Active deployment
Corporate actions	None noted in Q4; buyback plan in Q1	Divested non-core units; repositioning to core supply chain SaaS	Portfolio focus increasing

Management Commentary

Allan Dow (CEO): “Our company transformation continued in the second quarter with several key events such as the acquisition of AI-native demand forecasting pioneer Garvis, the divestitures of two non-core businesses… We have positioned the company to concentrate on delivering modern, breakthrough technology to the supply chain industry” .
Q1 tone (CEO): “Amid ongoing economic uncertainty, we delivered results consistent with our expectations and remain on track to achieve our initial outlook for FY ‘24… We plan to opportunistically repurchase shares… several strategic actions that we believe will create significant value” .
Q4 FY2023 tone (CEO): “We endured a number of macroeconomic headwinds… remain confident in the long-term growth prospects… given the secular tailwinds from digital supply chain transformation and our platform expansion” .

Q&A Highlights

The Q2 FY2024 earnings call transcript could not be read due to a document retrieval inconsistency; as a result, Q&A highlights and any intra-quarter guidance clarifications are unavailable from the transcript source [7: error shown via retrieval attempts].

Estimates Context

Wall Street consensus estimates from S&P Global were attempted but unavailable for AMSWA due to missing CIQ mapping in the SPGI dataset; therefore, reported results could not be benchmarked versus S&P consensus for Q2 FY2024 [SpgiEstimatesError on GetEstimates].
Values retrieved from S&P Global were unavailable; note explicitly that estimates comparison is not provided due to data mapping limitations.

Key Takeaways for Investors

Mix shift intact: recurring revenue reached 84% with subscription growth (+8% YoY), supporting margin resilience despite top-line softness in services and maintenance .
Guidance reset reflects portfolio pruning: FY2024 ranges were lowered post-divestitures, clarifying near-term scale while sharpening focus on core AI-native supply chain software assets .
Profitability discipline evident: adjusted EBITDA margin expanded to 16% in Q2; continued progress should hinge on recurring growth and services partner ecosystem effectiveness .
Balance sheet optionality: ~$83.9M cash/investments, continued dividends and executed buybacks provide support for shareholder returns and strategic investment capacity .
Watch execution on AI offerings (DemandAI+, InventoryAI+): customer adoption and upsell into generative AI-enhanced planning could be medium-term catalysts for ARR and margins .
Near-term trading: absent consensus context, narrative likely pivots on transformation progress and recurring momentum offsetting services declines; any future guidance updates will be key triggers .
Medium-term thesis: if AI-native capabilities drive improved forecast accuracy and inventory optimization for customers (as cited), AMSWA’s position as a focused supply chain SaaS vendor could strengthen, with mix-driven margin expansion and stabilized top line as services troughs normalize .

AMERICAN SOFTWARE INC (AMSWA)·Q2 2024 Earnings Summary