American Software, Inc. reported its financial results for the three months ended July 31, 2024, showing a modest increase in total revenue to $26.2 million, up 1% from $25.9 million in the same period of 2023. Subscription fees, a significant revenue driver, rose 7% to $14.8 million, reflecting a growing demand for the company's Software-as-a-Service (SaaS) solutions. However, the company experienced declines in license and maintenance revenues, which fell by 17% and 11%, respectively, primarily due to client attrition and transitions to cloud-based services.

The gross margin improved to 67%, compared to 65% in the prior year, driven by higher subscription revenues. Operating income increased by 33% to $1.8 million, up from $1.4 million in the previous year, with the Supply Chain Management (SCM) segment contributing significantly to this growth, reporting an operating income of $6.6 million, a 7% increase from the prior year.

Despite these positive trends, net earnings from continuing operations decreased to $2.1 million, down from $2.6 million in the same period last year. This decline was attributed to increased operating expenses and a higher income tax expense. The company reported a net cash used in operating activities of $1.8 million, a stark contrast to the $7.2 million provided in the same period of 2023.

On the balance sheet, total assets decreased to $188.9 million from $192.4 million as of April 30, 2024. Total current assets also fell, while investments rose significantly to $38.0 million, up from $24.3 million. Total liabilities decreased to $58.5 million, down from $62.0 million, contributing to a slight decline in total shareholders’ equity to $130.5 million.

Strategically, American Software made notable moves, including the acquisition of Garvis AI Limited for approximately $25 million, aimed at enhancing its AI-driven supply chain management capabilities. Additionally, the company disposed of its equity interest in The Proven Method for $2.1 million, allowing it to focus on its core SCM business.

The company continues to navigate a challenging macroeconomic environment, with global growth projected at 3.2% for 2024. Management anticipates that the demand for technology upgrades will persist, despite longer evaluation periods for software purchases. The company remains debt-free and maintains a strong liquidity position, with $92 million in cash and investments as of July 31, 2024.