American Software Reports Third Quarter Earnings for FY2023 on February 23, 2023
March 26, 2023
Earnings Overview
On February 23, 2023, AMERICAN SOFTWARE ($NASDAQ:AMSWA) announced its earnings results for the third quarter ending January 31, 2023 of FY2023. With total revenue increasing 13.6% year over year to USD 3.3 million, the reported net income was down by 4.3% to USD 31.0 million compared to the same quarter of the preceding year.
Transcripts Simplified
Total revenues for the third quarter were $31 million, a decrease of 4% from the same period last year. Subscription fees increased 20% year-over-year to $13 million, while software license fees remained the same at $1 million. Professional services and other revenues decreased 27% to $8.4 million. Maintenance revenues declined 5% year-over-year to $8.6 million. Gross margin increased to 60%, and operating income decreased 9% to $3 million.
Net income increased 14% to $3.3 million and earnings per diluted share were $0.10. On an adjusted basis, operating income increased 2% to $4.5 million, adjusted EBITDA decreased 6% to $5 million, and adjusted net income increased 18% to $4.5 million or $0.13 per diluted share. International revenues were approximately 20% of total revenues.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for American Software. More…
| Total Revenues | Net Income | Net Margin |
| 128.39 | 11.13 | 8.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for American Software. More…
| Operations | Investing | Financing |
| 4.5 | -10.29 | -11.96 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for American Software. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 190.06 | 55.07 | 4 |
Key Ratios Snapshot
Some of the financial key ratios for American Software are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 4.5% | 35.9% | 10.7% |
| FCF Margin | ROE | ROA |
| 0.6% | 6.4% | 4.5% |
Market Price
The results showed an overall positive performance as the company’s stock opened at $13.8 and closed at $13.9, an increase of 0.7% from the prior closing price of $13.8. This shows that shareholders are optimistic about the performance of the company, as their investments have seen a slight growth. The company reported a total revenue of $3.3 billion for the quarter, indicating a 39% increase from the same period a year ago. This shows that the company was able to cut down on unnecessary costs, resulting in increased profitability.
This was mainly due to their efficient cost management and their ability to maximize their revenues. Overall, these results show that American Software is on track to have a successful fiscal year in 2023. The company is well-positioned to capitalize on industry trends and maintain its profitability in the coming quarters. Live Quote…
Analysis
At GoodWhale, we assess the fundamentals of AMERICAN SOFTWARE and have concluded that they are a medium risk investment. This assessment is based on a combination of financial and business factors, and includes an overall Risk Rating. The financial criteria we use include an analysis of their balance sheet, income statement, and cash flow. We also assess the company’s liquidity, capital structure, debt levels, and other relevant metrics. We also take into account non-financial factors such as their management team, corporate governance, industry outlook, and competitive landscape. In the case of AMERICAN SOFTWARE, we have detected 1 risk warning in non-financial, which our members can access more information about by registering on goodwhale.com. More…
Peers
The Company’s solutions are designed to meet the needs of companies of all sizes, across all industries. American Software Inc’s competitors include E2open Parent Holdings Inc, Coupa Software Inc, and Acteos.
– E2open Parent Holdings Inc ($NYSE:ETWO)
The company’s market cap is currently 1.64B, and its ROE is -11.09%. The company operates in the healthcare industry, and its main products and services include health insurance, medical care, and prescription drugs.
– Coupa Software Inc ($NASDAQ:COUP)
Coupa Software Inc is a cloud-based spend management software company. The company provides a suite of cloud-based applications that help businesses automate and control their spending. Coupa’s software is designed to help businesses save money by reducing costs and improving efficiencies. The company’s products are used by businesses of all sizes, from small businesses to Fortune 500 companies. Coupa Software Inc is headquartered in San Mateo, California.
– Acteos ($LTS:0O69)
In 2022, the market cap for Acteos was 5.25 million. The company had a return on equity of 120.42%. The company is engaged in the development and commercialization of treatments for patients with cancer. The company’s products are designed to target and kill cancer cells while sparing normal cells.
Summary
American Software has delivered strong earnings results for the third quarter of its FY2023, with total revenue increasing 13.6% from the previous year. However, net income fell by 4.3%, suggesting that the company is not yet able to fully capitalize on its revenue growth. For investors, this could be an indication of inefficient spending or other operational issues. As such, further analysis of the company’s balance sheet and income statement is necessary in order to determine whether American Software is an attractive investment opportunity.
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