American Software, Inc. recorded a 188% increase in net earnings in its second quarter, despite a 6% year-over-year dip in total revenue.
The business software company, which purchased supply chain software provider Logility during the first quarter, earned $1.4 million on revenue of $18.7 million in the period, ended Oct. 31, 2009. A year ago, the company recorded earnings of $470,000 on revenue of $19.8 million. Last year’s net income total was lowered significantly by interest and other expenses.
On a sequential basis, American Software continued to show improvement. The company posted total revenue of $17.8 million and net earnings of $1.2 million in its first fiscal 2010 quarter.
On a conference call with analysts Thursday, Michael Edenfield, executive vice president of American Software and CEO of Logility, termed it a “good quarter” for American Software, pointing to 16 new customers and signed contracts in nine countries in the quarter. The company reported that this was its 35th consecutive quarter of profitability.
Nevertheless, the tough economy remained a factor in the company’s performance. Software license fees dipped 6% from year-earlier levels, to $3.6 million, in the quarter. Services revenue fell furthest, down 9% to $8.2 million. Maintenance revenue fared best, with only a 2% decline, to $6.9 million. Edenfield said Logility’s license fees were down 14% in the quarter, though up 20% year to date.
Overall, international revenue represented 12% of the company’s sales, up from 9% a year ago. However, much of the international business is through resellers, Edenfield acknowledged, contributing lower sales totals to the top line.
While saying the pipeline of orders has been about the same for several quarters, Edenfield and CFO Vince Klinges told analysts the challenge in this economy is closing deals. “We’re selected on a number of deals, a couple of them are of decent size. We need to get the projects approved,” Edenfield said. “This is not the best economy to get projects approved, but we’re hoping to get them through.” He added that the second half of the year is typically stronger than the first for the company.
Asked where the business environment is showing signs of strength, Edenfield pointed to private label manufacturers and said, “Larger companies, in general, are more willing to invest if they have capital budgets. The smaller companies are not doing as well because of a lack of credit and capital budgets.”
American Software reported that it is carrying no debt and has cash and investments of roughly $56.4 million. The company used $12.8 million to purchase the outstanding shares of Logility and for other expenses during the first quarter. Otherwise, executives said, they are keeping expenses “stable.”
Company executives provided no guidance on third-quarter performance.