American Software, Inc.

Good day, everyone, and welcome to today's second quarter FY23 Preliminary Financial Results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your touchtone phone. You may withdraw yourself from the queue by pressing star 2. Please note this call may be recorded. I'll be standing by should you need any assistance. It is now my pleasure to turn the conference over to Vincent Klingas, CFO, American Software. Please go ahead.

Good afternoon, everyone, and welcome to American Software's second quarter fiscal 2023 results. On the call with me is Alan Dow, President and CEO of American Software. Alan will provide some opening remarks, and then I'll review the numbers. But first, our safe harbor statement. This conference call may contain forward-looking statements. including statements regarding among other things our business strategy and growth strategy. Any such forward-looking statements speak only as of this date. These forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There are a number of factors that could cause actual results that differ materially from those anticipated by statements made on this call. Such factors include, but are not limited to, changes in uncertainty in general economic conditions, the growth rate of the market for our products and services, the timely availability and market acceptance of these products and services, the effect of competitive products and pricing and other competitive pressures, and the irregular and unpredictable predictable pattern of revenues. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. So at this time, I'd like to turn the call over to Alan for our opening remarks.

Thank you, Vince. I'm pleased to report that we delivered strong adjusted EBITDA in our second quarter results on revenue that was mostly in line with expectations, with the exception of our professional services revenue, which I'll cover in more detail later in the discussion. We achieved a 19% year-over-year revenue growth in our subscription revenue and have maintained a very solid maintenance retention rate, thus delivering recurring revenue that represents 67% of our total revenue. Total revenue in our supply chain management segment was up 5% year-over-year. Our solid top line performance was accompanied by continued expansion in our adjusted EBITDA margin, both sequentially and year-over-year. In regard to the decline in professional services, we principally saw the pullback in our IT consulting business, which is more sensitive to macroeconomic conditions and started the decline coming into the fall. In addition, we've experienced some delays and slowdown of projects in the supply chain segment, which we anticipate will continue into the new calendar year. Once our clients return from the holiday period, we expect to have a number of deferred projects starting up. Furthermore, we are fortunate that we've been delivering more projects through our partners, which in turn gives us the flexibility to shift resources with market demands more easily. During the first quarter, we announced our most recent acquisition. The team that came over from Starbird has been fantastic to work with. The client community has embraced our strategy, and we're seeing a growing pipeline for network design optimization both as standalone opportunities as well as a strategic part of the integrated planning suite. We see this acquisition to be everything we expected, if not more, in regard to a productive expansion of our footprint. The rapid success on this one clearly leaves us with the capacity to pursue other acquisitions with an objective to find at least one more with a strategic fit for our portfolio before the end of our fiscal year. As you're all aware, the continuation of major geopolitical events, inflationary pressures, and the signs of a recession continue to stir some business uncertainty in our consumer goods and retail markets. We've started to see some moderation in the pipeline expansion and are seeing delayed start dates on a number of projects. These delays have not only slowed services revenue, but also slow the capture of subscription revenue in the current fiscal year. Given the current market conditions, we believe it's prudent to adjust our guidance for fiscal 23. Due primarily to a reduction in our expectations for professional services, we're resetting our fiscal year revenue guidance to fall between $125.5 and $127.5 million. Given the delayed start of projects in our backlog, which impacts the timing of when we recognize subscription revenues We expect to see recurring revenue approach the low end of our original guidance and land between 85.5 and 87.5 million dollars. Finally, reflecting a more measured pace of investment as we await more clarity in the recessionary pressure on our clients, we are increasing our adjusted EBITDA expectations to a range of 18 million to 20 million. Overall, we remain confident in the need for new supply chain solutions in our target markets, and we're competing effectively. So we expect our growth to re-accelerate in the new year. In summary, we're pleased with the second half quarter results in the supply chain segment and expect to extend the performance improvements of our financial model during the remainder of this fiscal year. Our pipeline is steady. Our competitive position is strong. and we see long-term need for transformative supply chain solutions. We remain as bullish as ever in our market opportunity. At this time, I'll turn the call over to Vince, who will provide the details on our financial results. Thanks, Alan.