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Crabtree Commentary
American Software (AMSWA): Solid Beat and No Offical Guidance
After the market close on Thursday, December 1, AMSWA reported their fiscal second quarter (ending October 31). The company reported non-GAAP earnings per share of $0.12, solidly ahead of the $0.08 single analyst (Sidoti) estimate. Revenues of $25.6 million (up 22% year-over-year) were also ahead of the $23.2m estimate.
AMSWA's quarterly performance was driven by 65% growth in software license fees, a significant acceleration. While this is impressive, even AMSWA management cautioned that, while driven by a new product cycle, the long-term growth outlook remains largely the same. The company is getting very solid traction with the multi-echelon inventory optimization suite, with 3 sales during the quarter, one to a customer new to AMSWA and two to existing customers. As has been the case recently, AMSWA's Logility subsidiary is providing most of AMSWA's revenue and profitability.
DSOs of 77 days were up vs. the year-earlier quarter, but down sequentially from July. Although volatile, the figure seems within the normal variability of the company. It's also understandable given a rush of business toward the end of the October quarter. Also factoring in were larger ASP for the optimization products. Something worth monitoring, though.
Total cash flow during the quarter was $1.5m. Like other Crabtree holdings, including MAXIMUS, Comtel and Harris, American Software pays a regular dividend, and their most recent authorization maintains a payout rate equivalent to a 4% yield.
Although management didn't offer specific guidance, both the CFO and COO indicated on the earnings conference call that the sales pipeline is materially stronger now than it was six months ago. Our estimate is that annual revenue growth going forward will re-stabilize in the 10-15% range.
Bottom line: AMSWA is proving its worth as a Crabtree holding: lots of cash flow, execution, and holding its own, market share-wise. Success speaks for itself. |
