American Software Stock Intrinsic Value – AMERICAN SOFTWARE Reports Third Quarter Earnings Results for 2023 Fiscal Year
March 30, 2023
Earnings Overview
On February 23 2023, AMERICAN SOFTWARE ($NASDAQ:AMSWA) released its earnings results for the third quarter of the 2023 fiscal year (ending January 31 2023). Total revenue for the quarter increased by 13.6% to USD 3.3 million as compared to the same period in the previous year, but net income decreased by 4.3% to USD 31.0 million.
Transcripts Simplified
Total revenues for the third quarter were $31 million, a decrease of 4% compared to $32.4 million in the same period last year. Subscription fees increased 20% to $13 million, while software license fees were $1 million for both the current and prior year period. Professional services and other revenues decreased 27% to $8.4 million compared to the prior year period. Maintenance revenues declined 5% year-over-year to $8.6 million. Gross margin increased to 60% for the current period compared to 58% in the same period last year. Subscription fee margin was 69%, and license fee margin was 65%.
Services margin decreased to 24%, and maintenance margin was 81%. Gross R& D expenses were 14% of total revenues for the current and prior year period, sales and marketing expenses were 17%, and G& A expenses were 19%. On a GAAP basis, operating income decreased 9% to $3 million this quarter compared to the same period last year, while net income increased 14% to $3.3 million or earnings per diluted share of $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 adjusted earnings per diluted share of $0.13. International revenues were approximately 20% of total revenues this quarter.
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% |
Share Price
This marks the company’s continued growth in stock price despite the current economic climate. The increase was attributed to higher sales in its core markets of software and IT services. This was mainly due to increased efficiency in the company’s operations and cost-saving measures implemented over the past year.
The company’s management team highlighted the company’s expansive customer base and successful partnerships with third-party vendors as key contributors to its strong earnings results. They acknowledged that the competitive landscape had become increasingly challenging in recent years, but stated that the company was well-positioned to take advantage of new opportunities and continue its growth trajectory in the coming quarters. Live Quote…
Analysis – American Software Stock Intrinsic Value
GoodWhale has conducted an analysis of AMERICAN SOFTWARE‘s wellbeing and our findings show that the intrinsic value of AMERICAN SOFTWARE share is estimated to be around $19.6. This number was calculated using our proprietary Valuation Line, which takes into account a variety of factors such as financials, cash flows and market fluctuations. At the time of writing, AMERICAN SOFTWARE shares are trading at $13.9, which is a significant discount of 29.2%. This provides a great opportunity for any investors looking to gain exposure to the company at a discounted rate. More…
Peers
The Company’s solutions are designed to meet the needs of companies of all sizes, across all industries. American Software Inc’s competitors include E2open Parent Holdings Inc, Coupa Software Inc, and Acteos.
– E2open Parent Holdings Inc ($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
An analysis of AMERICAN SOFTWARE‘s financial performance for the third quarter of 2023 (ending January 31, 2023) shows that the company’s total revenue increased 13.6% year-over-year, while net income decreased 4.3%. This suggests that the company is generating more revenue but experiencing lower profits. Investors should carefully examine the company’s cost structure and pricing strategies to understand why profits are decreasing. Additionally, investor should monitor how successfully the company is able to monetize its increasing revenue through further cost cutting initiatives and product innovation.
