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AMSWA Nasdaq· American Software Inc.
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AMSWA Nasdaq· American Software Inc.
Earnings report Q4 2023

AMSWA's Revenue Declines in Latest Quarter

Segments of revenue

In the latest quarter, AMSWA reported a decrease in revenue across its segments. The SCM segment, which accounted for approximately 100% of total license fee revenue, experienced a decline of 27% compared to the same period in the prior year. This decrease was primarily attributed to lower bookings and project work, as well as the timing of implementation projects. The Other segment also saw a decline in revenue, with a decrease of 13% compared to the prior year, mainly due to the timing of project work with existing clients.

Strengths

Despite the decline in revenue, AMSWA's direct sales channel remained strong, providing 100% of license fee revenues for both the three and six months ended October 31, 2023 and 2022. Additionally, the company's margins after commissions on direct sales improved, reaching approximately 93% for the three months ended October 31, 2023, compared to 91% in the same period last year.

Challenges

AMSWA faced challenges in its SCM segment, with lower bookings and project work impacting revenue. The decline in the Other segment's revenue was also a challenge, primarily due to the timing of project work with existing clients. The company noted that services and other revenue tend to lag changes in license and subscription revenue by one to three quarters, as new licenses and subscriptions often involve subsequent implementation and consulting services.

Noteworthy

It is worth mentioning that AMSWA observed a trend of its services and other revenue lagging behind changes in license and subscription revenue. This indicates that the revenue recognition for implementation and consulting services is delayed until those services are performed. Additionally, the company highlighted the impact of the timing of project work on its revenue, particularly in the Other segment.

Summary

AMSWA's latest quarter performance showed a decline in revenue across its segments. The SCM segment experienced a significant decrease due to lower bookings and project work, while the Other segment saw a decline in revenue primarily due to timing issues with project work. Despite these challenges, AMSWA's direct sales channel remained strong, providing all license fee revenues, and the company's margins improved. However, the lag in services and other revenue compared to license and subscription revenue highlights the delayed recognition of revenue for implementation and consulting services.

Source documents

Form 10-Q  filed on Dec 11, 2023
129 pages scanned

Reference data

Company financials Q4 revenue 25.5M
Analyst estimates Q4 EPS beat by 119.22%
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