US SOFTWARE: Administration Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (Type 10-Q)

FORWARD-LOOKING STATEMENTS
This quarterly report on Type 10-Q (this "Quarterly Report") incorporates
forward-looking statements referring to our future monetary efficiency,
enterprise technique, financing plans and different future occasions that contain
uncertainties and dangers. You possibly can establish these statements by forward-looking
phrases comparable to "anticipate," "intend," "plan," "proceed," "might," "develop,"
"might," "potential," "predict," "try" "will," "search," "estimate," "imagine,"
"anticipate," and related expressions that convey uncertainty of future occasions or
outcomes. Any forward-looking statements we make herein are pursuant to the protected
harbor provision of the Non-public Securities Litigation Reform Act of 1995.
Ahead-looking statements embody statements regarding future:
•outcomes of operations;
•liquidity, money movement and capital expenditures;
•demand for and pricing of our services and products;
•cloud providers annual contract worth ("ACV");
•viability and effectiveness of strategic alliances;
•business circumstances and market circumstances;
•acquisition actions and the impact of accomplished acquisitions; and
•common financial circumstances.
Though we imagine that the targets, plans, expectations, and prospects that our
forward-looking statements replicate are cheap in view of the data
at present out there to us, these statements are usually not ensures of efficiency.
There are various elements that might trigger our precise outcomes to vary materially
from these anticipated by forward-looking statements made herein. These elements
embody, however are usually not restricted to, persevering with U.S. and world financial
uncertainty, the timing and diploma of enterprise restoration, unpredictability and
the irregular sample of future income, dependence on explicit market
segments or clients, aggressive pressures, delays, product legal responsibility and
guarantee claims and different dangers related to new product improvement,
undetected software program errors, market acceptance of our merchandise, technological
complexity, the challenges and dangers related to integration of acquired
product traces, firms and providers, in addition to a variety of different threat elements
that might have an effect on our future efficiency. All forward-looking statements
included on this Quarterly Report are primarily based upon data out there to us as
of the submitting date of this Quarterly Report. We undertake no obligation to
replace any of those forward-looking statements for any motive. These
forward-looking statements contain recognized and unknown dangers, uncertainties and
different elements which will trigger our precise outcomes, ranges of exercise,
efficiency, or achievements to vary materially from these expressed or
implied by these statements. We focus on sure elements in higher element in
"Enterprise Overview" beneath.
ECONOMIC OVERVIEW
For fiscal 2022, we anticipate the worldwide economic system to enhance modestly compared
to current durations. We imagine improved financial circumstances and more and more
complicated provide chain challenges could also be driving some companies to concentrate on
reaching extra course of and effectivity enhancements of their operations and to
spend money on options that enhance working margins, slightly than make massive
infrastructure-type expertise purchases. If this development continues, we imagine it
might are likely to favor options comparable to our provide chain options, that are
designed to supply a extra fast return on funding and are focused at some
of the most important revenue drivers in a buyer's enterprise. Whereas we don't anticipate
that the COVID-19 pandemic will trigger any materials antagonistic adjustments on our
enterprise or monetary outcomes for fiscal 2022, we're unable to precisely
predict the impression that the coronavirus may have as a consequence of varied uncertainties,
together with the last word geographic unfold of the virus, the severity of the
illness, the length of the outbreak, and actions that could be taken by
governmental authorities.
Company capital spending tendencies and commitments are the first determinants
of the dimensions of the marketplace for enterprise software program. Company capital spending is,
in flip, a operate of common financial circumstances within the U.S. and overseas and in
explicit could also be affected by circumstances in U.S. and world credit score markets. In
current years, the weak spot within the total world economic system and the U.S. economic system
has resulted in decreased expenditures within the enterprise software program market.
In July 2021, the Worldwide Financial Fund ("IMF") supplied an replace to the
World Financial Outlook for 2021. The replace famous that, "The worldwide economic system is
projected to develop 6.0 % in 2021 and 4.9 % in 2022.The 2021 world
forecast is unchanged from the April 2021 WEO, however with offsetting revisions.
Prospects for rising market and creating economies have been marked down for
2021, particularly for Rising Asia. Against this, the forecast for superior
economies is revised up. These revisions replicate pandemic developments and
adjustments in coverage assist. The 0.5 percentage-point improve
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for 2022 derives largely from the forecast improve for superior economies,
notably the USA, reflecting the anticipated laws of
extra fiscal assist within the second half of 2021 and improved well being metrics
extra broadly throughout the group."
BUSINESS OVERVIEW
American Software program was integrated as a Georgia company in 1970. We develop,
market and assist a portfolio of software program and providers that ship enterprise
administration and collaborative provide chain options to the worldwide market.
We have now designed our software program and providers to convey enterprise worth to
enterprises by supporting their operations over intranets, extranets,
consumer/servers or the Web. References to "the Firm," "our merchandise,"
"our software program," "our providers" and related references embody the suitable
enterprise section really offering the services or products.
The Firm allows enterprises to speed up their operations from product
idea to buyer availability. Our manufacturers - Logility and Demand Options -
present a single platform spanning eight provide chain course of areas, together with
demand optimization, stock optimization, provide optimization, retail
optimization, high quality and compliance, product lifecycle administration, sourcing
administration and built-in enterprise planning. Our platform contains superior
analytics and is fueled by provide chain grasp information, permitting for the automation
of essential enterprise processes by way of the appliance of synthetic
intelligence and machine studying algorithms to quite a lot of inside and
exterior information streams.

Our main working items below our SCM section embody Logility, Inc. and
Demand Administration, Inc. ("DMI"). Logility is a wholly-owned subsidiary of the
Firm, and DMI is a wholly-owned subsidiary of Logility. Along with our
core SCM software program enterprise, we additionally provide expertise staffing and consulting
providers by way of our wholly-owned subsidiary, The Confirmed Technique, Inc., within the IT
Consulting section. The Different section consists of software program and providers supplied
to our legacy enterprise useful resource planning ("ERP") clients, in addition to
company overhead and different frequent bills.
We derive income primarily from 4 sources: software program licenses, subscriptions,
skilled providers and different, and upkeep. We typically decide
software program license and SaaS charges primarily based on the depth of performance, contractual
time period, variety of manufacturing deployments, customers and/or websites licensed and/or
subscribed. Skilled providers and different income consist primarily of charges
from software program implementation, coaching, and consulting providers. We invoice
primarily below time and supplies preparations and acknowledge income as we
carry out providers. SaaS and upkeep agreements usually are for a one- to
three-year time period, commencing on the time of the preliminary contract. We typically
invoice these charges, month-to-month, quarterly and yearly prematurely below agreements
with phrases of 1 to 3 years, after which acknowledge the ensuing income
ratably over the time period of the settlement. Deferred income represents funds or
billings for subscriptions and providers and upkeep prematurely of the time
we acknowledge the associated income.
Our value of income for licenses and subscriptions contains amortization of
capitalized pc software program improvement prices, amortization of acquired
developed expertise, royalties paid to third-party software program distributors, and agent
fee bills associated to income generated by the oblique channel,
primarily from DMI. Prices for upkeep and providers embody the price of
personnel to conduct implementations and buyer assist, consulting, different
personnel-related bills, and agent fee bills associated to upkeep
income generated by the oblique channel, primarily from DMI. We account for
the event prices of software program meant on the market in accordance with the
Software program subject of the FASB ASC. We monitor the web realizable worth of our
capitalized software program on a quarterly foundation primarily based on an estimate of future product
income. We at present anticipate to completely get better the worth of the capitalized
software program asset recorded on our Condensed Consolidated Stability Sheets; nevertheless,
if future product income are lower than administration's present expectations, we
might incur a write-down of capitalized software program prices.
Our gross sales and advertising and marketing bills primarily embody the wage and commissions paid
to our gross sales professionals, together with advertising and marketing, promotional, journey and
related prices. Our common and administrative bills primarily embody the
wage and advantages paid to govt, company and assist personnel, as effectively
as facilities-related prices, utilities, communications bills, and varied
skilled charges.
We at present view the next elements as the first alternatives and dangers
related to our enterprise:
•Acquisition Alternatives. There are alternatives for selective acquisitions
or investments to broaden our gross sales distribution channels and/or broaden our
product providing by offering extra options for our goal markets.
•Dependence on Capital Spending Patterns. There may be threat related to our
dependence on the capital spending patterns of U.S. and worldwide
companies, which in flip are features of financial tendencies and circumstances over
which we've no management.
•Acquisition Dangers. There are dangers related to acquisitions of
complementary firms, merchandise and applied sciences, together with the dangers that we
is not going to obtain the monetary and strategic targets that we ponder at
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the time of the transaction. Extra particularly, in any acquisition we are going to face
dangers and challenges related to the unsure worth of the acquired
enterprise or belongings, the problem of assimilating operations and personnel,
integrating acquired applied sciences and merchandise and sustaining the loyalty of
the purchasers of the acquired enterprise.
•Aggressive Applied sciences. There's a threat that our rivals might develop
applied sciences which are considerably equal or superior to our expertise.
•Competitors in Common. There are dangers inherent available in the market for enterprise
software software program and associated providers, which has been and continues to be
intensely aggressive; for instance, a few of our rivals might turn into extra
aggressive with their costs and/or cost phrases, which can adversely have an effect on
our revenue margins.
A dialogue of a variety of extra threat elements related to our enterprise
is included in our Annual Report for fiscal 2021. Further data and
different elements that might have an effect on future monetary outcomes could also be included, from
time to time, in our filings with the Securities and Alternate Fee
("SEC").
Current Accounting Pronouncements
For data with respect to current accounting pronouncements, if any, and
the impression of those pronouncements on our condensed consolidated monetary
statements, if any, see Observe A within the Notes to Condensed Consolidated Monetary
Statements included elsewhere on this Quarterly Report.
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COMPARISON OF RESULTS OF OPERATIONS
Three-Month Comparisons. The next desk units forth sure income and
expense gadgets as a share of whole income and the share adjustments in
these gadgets for the three months ended July 31, 2021 and 2020:
                                                                                           Three Months Ended July 31,
                                                                               Proportion of Complete                             Pct. Change in
                                                                                     Income                                       {Dollars}
                                                                           2021                          2020                   2021 vs. 2020
Income:
Subscription charges                                                                      33  %                  23  %                           54  %
License                                                                                 2  %                   3  %                          (37) %
Skilled providers and different                                                        33  %                  36  %                           (3) %
Upkeep                                                                            32  %                  38  %                           (8) %
Complete income                                                                         100  %                 100  %                            7  %
Value of income:
Subscription charges                                                                      11  %                  10  %                           17  %
License                                                                                 1  %                   2  %                          (76) %
Skilled providers and different                                                        24  %                  29  %                          (10) %
Upkeep                                                                             7  %                   6  %                           11  %
Complete value of income                                                                  43  %                  47  %                           (5) %
Gross margin                                                                           57  %                  53  %                           19  %
Analysis and improvement                                                               15  %                  15  %                            8  %
Gross sales and advertising and marketing                                                                    21  %                  17  %                           29  %
Common and administrative                                                             15  %                  16  %                            2  %
Amortization of acquisition-related intangibles                                         -  %                   -  %                            -  %
Complete working bills                                                               51  %                  48  %                           13  %
Working earnings                                                                        6  %                   5  %                          100  %
Different earnings:
Curiosity earnings                                                                         -  %                   -  %                          (26) %
Different, web                                                                              1  %                   4  %                          (71)
Earnings earlier than earnings taxes                                                            7  %                   9  %                            -  %
Earnings tax (advantages)expense                                                          (3) %                   1  %                              nm
Web earnings                                                                           10  %                   8  %                           45  %


nm - not significant
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COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2021 AND
2020
REVENUE
                                                                                   Three Months Ended July 31,
                                                                                                                       % of Complete Income
                                              2021                2020               % Change                       2021                       2020
                                                  (in hundreds)
Subscription charges                        $      9,788$  6,363                      54  %                            33  %                23  %
License                                  $        492               787                     (37) %                             2  %                 3  %
Skilled providers and different                 9,529             9,814                      (3) %                            33  %                36  %
Upkeep                                     9,462            10,314                      (8) %                            32  %                38  %
Complete income                            $     29,271$ 27,278                       7  %                           100  %               100  %


For the three months ended July 31, 2021 in comparison with July 31, 2020 income
elevated by 7% attributable primarily to a 54% enhance in subscription charges,
that have been partially offset by a 37% lower in license income, a 8% lower
in upkeep income and a 3% lower skilled providers and different income
in when in comparison with the identical interval final yr.
As a result of intense competitors in our business, we generally low cost license charges
from our printed record worth. Quite a few elements contribute to the quantity of the
low cost supplied, comparable to earlier buyer purchases, the variety of buyer
websites using the software program, the variety of modules bought and the variety of
customers, in addition to the general dimension of the contract. Whereas all these elements might
have an effect on the low cost quantity of a specific contract, the general share
low cost has not materially modified within the current reported fiscal durations.
The change in our income from interval to interval is primarily as a result of quantity
of merchandise and associated providers bought in any interval and the variety of merchandise
or modules bought with every sale.
Worldwide income represented roughly 17% of whole income within the
three months ended July 31, 2021 in comparison with 21% for a similar interval within the
prior yr. Our income, notably our worldwide income, might fluctuate
considerably from interval to interval, primarily as a result of we derive most of our
license and subscription payment income from a comparatively small variety of clients
in a given interval.
Subscription Charges
                                               Three Months Ended July 31,
                                             2021                  2020        % Change
                                               (in hundreds)
Provide Chain Administration           $       9,788$ 6,363           54  %
Complete subscription charges income   $       9,788$ 6,363

54%


For the three months ended July 31, 2021, subscription charges income elevated by
54% primarily as a consequence of a rise within the variety of contracts, contracts with a
greater cloud providers ACV, in addition to a rise in multi-year contracts. This
is proof of our profitable transition to the cloud subscription mannequin.
License Income
                                               Three Months Ended July 31,
                                              2021                   2020       % Change
                                               (in hundreds)
       Provide Chain Administration   $         476                      $ 787          (40) %
       Different                                16                          -          100  %
       Complete license income     $         492                      $ 787          (37) %

For the three months ended July 31, 2021, license payment revenues decreased by 37% in comparison with the identical interval final yr. Through the three months ended
July 31, 2021, our SCM section license payment revenues decreased by 40% in comparison with the identical interval final yr. The vast majority of our present license payment income is generated by

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extra customers and expanded scope from our present clients. For the three
months ended July 31, 2021 and 2020, our SCM section constituted roughly
97% and 100% of whole license payment income, respectively. Our Different section
license payment income elevated by 100% for the three months ended July 31, 2021
when in comparison with the identical interval within the prior yr primarily as a consequence of timing of
gross sales to our present ERP clients.

  The direct gross sales channel supplied roughly 92% of license payment income for
the three months ended July 31, 2021, in comparison with roughly 84% within the
comparable interval final yr. For the three months ended July 31, 2021, our
margins after commissions on direct gross sales have been roughly 88%, in comparison with
85% within the comparable interval final yr. The rise in margins is as a result of
mixture of gross sales fee charges primarily based on every particular person salesperson's quotas and
associated achievement. For the three months ended July 31, 2021 and 2020, our
margins after commissions on oblique gross sales have been roughly 64% and 53%,
respectively. The oblique channel margins for the fiscal yr elevated
in comparison with the identical durations within the prior yr as a result of mixture of value-added
reseller ("VAR") fee charges. These margin calculations embody solely
fee expense for comparative functions and don't embody different prices of
license charges comparable to amortization of capitalized software program.

Skilled providers and different earnings

                                                                            Three Months Ended July 31,
                                                                   2021                2020               % Change
                                                                       (in hundreds)
Provide Chain Administration                                      $       4,836$  4,575                       6  %
IT Consulting                                                        4,476             5,026                     (11) %
Different                                                                  217               213                       2  %
Complete skilled providers and different income                $       9,529$  9,814                      (3) %



  For the three months ended July 31, 2021, skilled providers and different
income decreased by 3%, as a result of decreased skilled providers and different
income from our IT Consulting section. For the three months ended July 31,
2021, our IT Consulting section's income decreased 11% when in comparison with the
similar interval within the prior yr as a consequence of a lower in venture work from present
clients. This lower was partially offset by a rise in skilled
providers and different income from our SCM and Different segments. For the three months
ended July 31, 2021, our SCM section's income elevated 6%, primarily as a consequence of a
greater ramp up of implementation venture work as a consequence of a rise in subscription
charges income in current durations. For the three months ended July 31, 2021, our
Different section's income elevated 2% as a consequence of a rise in license payment gross sales
when in comparison with the identical interval final yr. We have now noticed that there's a
tendency for providers and different income, apart from from IT Consulting, to lag
adjustments in license and subscription income by one to 3 quarters, as new
licenses and subscriptions in a single quarter typically contain implementation and
consulting providers in subsequent quarters, for which we acknowledge income solely
as we carry out these providers.

Upkeep Income
                                         Three Months Ended July 31,
                                       2021                  2020        % Change
                                         (in hundreds)
Provide Chain Administration     $       9,151$ 10,011           (9) %
Different                                 311                      303            3  %
Complete upkeep income   $       9,462$ 10,314           (8) %



For the three months ended July 31, 2021, upkeep income decreased 8% when
in comparison with the identical interval within the prior yr. Our SCM upkeep income
decreased 9% for the three months ended July 31, 2021, when in comparison with the identical
interval final yr as a consequence of a standard buyer attrition charge of roughly 9%.
The SCM section accounted for 97% of whole upkeep income for the three
months ended July 31, 2021 and for a similar durations within the prior yr.
Sometimes, our upkeep income have had a direct relationship to present and
historic license payment income, since licenses are the supply of upkeep
clients.
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GROSS MARGIN
The next desk offers each greenback quantities (in hundreds) and share
measures of gross margin:
                                                                            

Three months ended July 31,

                                                                    2021                %              2020              %
Gross margin on subscription charges                             $       6,564             67  %       $  3,604             57  %
Gross margin on license charges                                            333             68  %            112             14  %
Gross margin on skilled providers and different                       2,519             26  %          1,984             20  %
Gross margin on upkeep                                           7,488             79  %          8,541             83  %
Complete gross margin                                            $      16,904             57  %       $ 14,241             53  %


For the three months ended July 31, 2021, our whole gross margin share
elevated by 4% when in comparison with the identical interval within the prior yr primarily due
to greater margins on subscription charges income, license payment {and professional}
providers and different income, partially offset by a lower in upkeep
income.
Gross Margin on Subscription Charges
  For the three months ended July 31, 2021, our gross margin share on
subscription charges income elevated from 57% to 67% when in comparison with the identical
interval within the prior yr, primarily as a result of portfolio shift from license payment
to subscription income.
Gross Margin on License Charges
  License payment gross margin share for the three months ended July 31, 2021
elevated by 54%, when in comparison with the identical interval within the prior yr. License
payment gross margin share tends to be straight associated to the extent of license
payment income as a result of comparatively fastened value of pc software program amortization
expense, amortization of acquired software program and the gross sales combine between our direct
and oblique channels.
Gross Margin on Skilled Companies and Different
Our gross margin share on skilled providers and different income elevated
to 26% for the three months ended July 31, 2021 from 20% for the three months
ended July 31, 2020. This enhance was primarily as a consequence of greater gross margins in
our SCM section providers of 32% and 23% for the three months ended July 31, 2021
and 2020, respectively. That is primarily the results of a rise in
skilled providers and different income, which is being pushed by a rise in
billing utilization charges. Our Different section skilled providers gross margin
decreased barely to 42% from 43% for the three months ended July 31, 2021 and
2020, respectively, as a consequence of decrease margin initiatives yr to this point. Our IT Consulting
section skilled providers gross margin elevated to 21% of income when
in comparison with 17% the identical interval final yr as a consequence of greater margin venture work.
Skilled providers and different gross margin is straight associated to the extent of
providers and different income. The first part of value of providers and different
income is providers staffing, which is comparatively inelastic within the quick time period.
Gross Margin on Upkeep
  Upkeep gross margin share decreased from 83% to 79% for the three
months ended July 31, 2021 and July 31, 2020, as a consequence of decrease upkeep income
and enhance in personnel prices. The first value part is upkeep
staffing, which is comparatively inelastic within the quick time period.








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EXPENSES
                                                                                         Three Months Ended July 31,
                                                                                                                     % of Income
                                                                         2021                2020                2021               2020
                                                                            (in hundreds)
Analysis and improvement                                           $       4,424$ 4,095                     15  %           15  %
Gross sales and advertising and marketing                                                $       6,120$ 4,744                     21  %           17  %
Common and administrative                                         $       4,534$ 4,464                     15  %           16  %
Amortization of acquisition-related intangible belongings              $          53          $    53                      -  %            -  %
Different earnings, web                                                  $         437          $ 1,332                      1  %            4  %
Earnings tax (profit)expense                                       $        (737)$   183                     (3) %            1  %


Analysis and Improvement
Gross product analysis and improvement prices embody all non-capitalized and
capitalized software program improvement prices. A breakdown of the analysis and
improvement prices is as follows:
                                                                             Three Months Ended July 31,
                                                                   2021                 2020               % Change
                                                              (in hundreds)
Complete capitalized pc software program improvement prices        $           -           $    245                    (100) %
Proportion of gross product analysis and improvement prices               -   %              6  %
Complete analysis and improvement expense                       $       4,424$  4,095                       8  %
Proportion of whole income                                             15   %             15  %

Complete gross product analysis and improvement bills and capitalized pc software program improvement prices

              $       4,424$  4,340                       2  %
Proportion of whole income                                             15   %             16  %

Complete amortization of capitalized IT software program improvement prices *

                                          $         903           $  1,218                     (26) %


* Included in license and subscription charges.

  For the three months ended July 31, 2021, gross product analysis and
improvement prices elevated 2% when in comparison with the identical interval within the earlier
yr, primarily as a consequence of a rise in using third-party contractors and
personnel prices. Capitalized software program improvement prices decreased in July 31,
2021 in comparison with the identical interval within the prior yr, as a result of timing of venture
work and a rise in agile software program programming that accelerates the software program
releases from months to weeks. We anticipate capitalized software program to be immaterial
in fiscal 2022. Amortization of capitalized software program improvement decreased 26%
in fiscal 2022 when in comparison with fiscal 2021 as some initiatives have been totally
amortized. Prices included in gross product improvement are salaries of product
improvement personnel, {hardware} lease expense, pc software program expense,
phone expense and hire.
Gross sales and Advertising and marketing

For the three months ended July 31, 2021, gross sales and advertising and marketing bills elevated to 21% of income in comparison with 17% in the identical interval final yr as a consequence of elevated advertising and marketing and personnel bills. Common and administrative

  For the three months ended July 31, 2021, common and administrative bills
elevated by 2%, when in comparison with the identical interval a yr in the past, primarily as a consequence of
a rise in personnel prices and insurance coverage.
At July 31, 2021, the whole variety of workers was 416 in comparison with 437 at
July 31, 2020.


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Working Earnings/(Loss)
                                       Three Months Ended July 31,
                                     2021                  2020        % Change
                                       (in hundreds)
Provide Chain Administration   $       5,356$ 4,105           30  %
IT Consulting                       163                      106           54  %
Different*                           (3,746)                  (3,326)          13  %
Complete Working Earnings    $       1,773$   885          100  %

* Contains all company overhead and different frequent bills.

  Our SCM section working earnings elevated by 30% within the three months ended
July 31, 2021, in comparison with the identical interval within the prior yr primarily as a consequence of
improved gross margins.

Our IT consultancy section working earnings elevated by 54% for the three months ended July 31, 2021, in comparison with the identical interval final yr, primarily as a consequence of a lower in gross sales and subcontractor bills.

  Our Different section working loss elevated by 13% for the three months ended
July 31, 2021, when in comparison with the identical interval within the prior yr as a consequence of an
enhance in company bills.
Different Earnings
  Different earnings is comprised of web curiosity and dividend earnings, rental earnings,
alternate charge good points and losses, and realized and unrealized good points and losses
from investments. For the three months ended July 31, 2021, the lower in
different earnings is principally as a consequence of decrease unrealized good points on investments when
in comparison with the identical interval final yr. We recorded unrealized good points of
roughly $0.4 million and realized losses of roughly $0 for the three
months ended July 31, 2021 from our buying and selling securities portfolio. We recorded
unrealized good points of roughly $0.9 million and realized losses of
roughly $0 for the three months ended July 31, 2020 from our buying and selling
securities portfolio.

  For the three months ended July 31, 2021, our investments generated an
annualized yield of roughly 1.65%, in comparison with roughly 2.03% for the
three months ended July 31, 2020.
Earnings Taxes
We acknowledge deferred tax belongings and liabilities primarily based on the long run tax
penalties attributable to variations between the monetary assertion
carrying quantities of present belongings and liabilities and their tax bases. We
measure deferred tax belongings and liabilities utilizing statutory tax charges in impact
within the yr through which we anticipate the variations to reverse. We set up a
deferred tax asset for the anticipated future advantage of web working losses,
credit score carry-forwards and nonqualified inventory choices. Beneath the Earnings Tax Subject
of the FASB ASC, we can't acknowledge a deferred tax asset for the long run profit
of our web working losses, tax credit and momentary variations until we are able to
set up that it's "extra seemingly than not" that the deferred tax asset could be
realized.

Through the three months ended July 31, 2021, we recorded an earnings tax profit
of $737,000, primarily as a consequence of discrete inventory compensation advantages of $1.2
million, web of regular earnings tax expense from operations. Through the three
months ended July 31, 2020, we recorded an earnings tax expense of $183,000,
primarily as a consequence of discrete inventory compensation advantages of $234,000, web of regular
earnings tax expense from operations. Earlier than adjusting for these discrete tax
advantages, our efficient tax charge would have been 19.9% within the three months ended
July 31, 2021 in comparison with our efficient tax charge of 18.7% within the three months
ended July 31, 2020. As well as, analysis and improvement and international tax
credit decreased our efficient tax charge by 5.7% within the three months ended
July 31, 2021, in comparison with reductions of 6.0% within the three months ended July 31,
2020.
Working Sample
We expertise an irregular sample of quarterly working outcomes, brought about
primarily by fluctuations in each the quantity and dimension of software program license and
subscription contracts acquired and delivered from quarter to quarter and our
capacity to acknowledge income in that quarter in accordance with our income
recognition insurance policies. We anticipate this sample to proceed.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION Sources and makes use of of money

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Traditionally we've funded, and we proceed to fund, our operations and capital
expenditures primarily with money generated from working actions. The
adjustments in web money that our working actions present typically replicate the
adjustments in web earnings and non-cash working gadgets plus the impact of adjustments
in working belongings and liabilities, comparable to funding buying and selling securities,
commerce accounts receivable, commerce accounts payable, accrued bills and deferred
income. We have now no debt obligations or off-balance sheet financing
preparations, and due to this fact, we used no money for debt service functions.
The next desk exhibits details about our money flows and liquidity
positions throughout the three months ended July 31, 2021 and 2020. It is best to learn
this desk and the dialogue that follows at the side of our Condensed
Consolidated Statements of Money Flows contained in Merchandise 1 in Half I of this
Quarterly Report and in our Annual Report for fiscal 2021.
                                                           Three Months Ended
                                                                July 31,
                                                             (in hundreds)
                                                            2021            2020
Web money supplied by working actions             $    3,034          $ 

1,479

Web money utilized in investing actions                       (302)           

(363)

Web money supplied by (utilized in) financing actions 464 (1,164) Web change in money and money equivalents

               $    3,196          $ 

(48)


For the three months ended July 31, 2021, the web enhance in money supplied by
working actions when in comparison with the identical interval final yr was due
primarily to the next: (1) a relative lower in buyer accounts
receivables attributable to the timing of closing buyer gross sales and associated
collections, (2) a relative smaller lower in deferred income as a consequence of timing
of income recognition, (3) a rise in web earnings, (4) decrease good points on
investments than in prior yr, (5) a relative smaller lower in accounts
payable and different accruals in comparison with the identical interval final yr as a consequence of timing
of funds, (6) a rise in stock-based compensation expense and (7) a
lower in purchases of buying and selling securities.
This enhance in money supplied by working actions was partially offset by:
(1) a relative enhance in pay as you go bills when in comparison with a lower within the
similar interval final yr as a result of timing of purchases, (2) a lower within the
proceeds from the maturity and gross sales of buying and selling securities, (3) a lower in
depreciation and amortization and (4) a lower in deferred earnings taxes.
The lower in money utilized in investing actions when in comparison with the identical
interval within the prior yr was primarily as a consequence of a lower in capitalized pc
software program improvement prices, which was partially offset by a rise in
purchases of property and gear.
The rise in money supplied by financing actions in comparison with the prior yr
was due primarily to a rise in proceeds from train of inventory choices,
which was partially offset by a rise in dividends paid.
The next desk exhibits web adjustments in whole money, money equivalents, and
investments, which is one measure administration makes use of to grasp web whole money
generated by our actions:
                                                                                    As of July 31,
                                                                                    (in hundreds)
                                                                                2021               2020
Money and money equivalents                                                   $  91,854$  79,766
Quick and long-term investments                                                16,280             13,253
Complete money and quick and long-term investments                                108,134             93,019

Web enhance / lower in whole money and investments (three months ended
July 31)

$ 3,470$ (1657)


Our whole actions used much less money and investments throughout the months ended
July 31, 2021, when in comparison with the prior yr interval, in the midst of regular
enterprise operations.
Days Gross sales Excellent in accounts receivable have been 78 days as of July 31, 2021,
in comparison with 88 days as of July 31, 2020. This lower is primarily as a result of
timing of billings and money collections. Our present ratio was 2.8 to 1 on
July 31, 2021 and 2020.
Our enterprise in current durations has generated substantial constructive money movement from
operations, excluding purchases and proceeds of sale of buying and selling securities. For
this motive, and since we had $108.1 million in money and investments with no
debt
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as of July 31, 2021, we imagine that our sources of liquidity and capital
sources can be enough to fulfill our presently anticipated necessities
throughout not less than the following twelve months for working capital, capital expenditures
and different company wants. Nevertheless, at some future date we may have to hunt
extra sources of capital to satisfy our necessities. If such want arises, we
could also be required to boost extra funds by way of fairness or debt financing. We
don't at present have a financial institution line of credit score. We are able to present no assurance that
financial institution traces of credit score or different financing can be out there on phrases acceptable to
us. If out there, such financing might end in dilution to our shareholders or
greater curiosity expense.
On August 19, 2002, our Board of Administrators permitted a decision authorizing the
repurchase of as much as an extra 2.0 million shares of our Class A standard
inventory. We have now made and can make these repurchases by way of open market
purchases at prevailing market costs. The timing of any repurchase will rely
upon market circumstances, the market worth of our frequent inventory and administration's
evaluation of our liquidity and money movement wants. Beneath this repurchase plan,
by way of July 31, 2021, we've repurchased 1,053,679 shares of frequent inventory at a
value of roughly $6.2 million. As of July 31, 2021, below all repurchase
plans beforehand approved, together with this most up-to-date plan, we've
repurchased a complete of 4,588,632 shares of frequent inventory at a price of
roughly $25.6 million.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have now primarily based the next dialogue and evaluation of economic situation and
outcomes of operations on our condensed consolidated monetary statements, which
we've ready in accordance with U.S. GAAP. The preparation of those
condensed consolidated monetary statements requires administration to make
estimates and assumptions that have an effect on the reported quantities of belongings and
liabilities, disclosures of contingent belongings and liabilities on the date of the
condensed consolidated monetary statements and the reported quantities of income
and bills throughout the reporting interval. Observe 1 to the Condensed Consolidated
Monetary Statements for the fiscal yr resulted in our Annual Report for fiscal
2021, describes the numerous accounting insurance policies that we've utilized in
making ready our condensed consolidated monetary statements. On an ongoing foundation,
we consider our estimates, together with, however not restricted to, these associated to
income/collectability. We base our estimates on historic expertise and on
varied different assumptions that we imagine to be cheap below the
circumstances, the outcomes of which kind the idea for making judgments about
the carrying values of belongings and liabilities that aren't readily obvious from
different sources. Our precise outcomes might differ materially from these estimates
below totally different assumptions or circumstances.
We imagine the essential accounting insurance policies listed beneath have an effect on important
judgments and estimates used within the preparation of the monetary statements.
Income Recognition.
License. Our perpetual software program licenses present the client with a proper to
use the software program because it exists on the time of buy. We acknowledge income for
distinct software program licenses as soon as the license interval has begun and we've made
the software program out there to the client.

Our perpetual software program licenses are bought with upkeep below which we offer
clients with phone consulting, product updates on a when and if out there
foundation, and releases of recent variations of merchandise beforehand bought by the
buyer, in addition to error reporting and correction providers.
Subscription. Subscription charges embody Software program-as-a-Service ("SaaS") income
for the appropriate to make use of the software program for a restricted time period in an atmosphere
hosted by the Firm or by a 3rd celebration. The shopper accesses and makes use of the
software program on an as wanted foundation over the Web or by way of a devoted line;
nevertheless, the client has no proper to take supply of the software program. The
underlying preparations usually embody a single payment for the service that's
billed month-to-month, quarterly or yearly. The Firm's SaaS options symbolize a
collection of distinct providers which are considerably the identical and have the identical
sample of switch to the client. Income from a SaaS answer is usually
acknowledged ratably over the time period of the association.
Skilled Companies and Different. Our skilled providers income consists of
charges generated from consulting, implementation and coaching providers, together with
reimbursements of out-pocket bills in reference to our providers. These
providers are usually non-compulsory to our clients, and are distinct from our
software program. Charges for our skilled providers are individually priced and are
typically billed on an hourly foundation, and income is acknowledged over time because the
providers are carried out. We imagine the output technique of hours labored offers
one of the best depiction of the switch of our providers because the buyer is
receiving the profit from our providers because the work is carried out. Reimbursements
acquired from clients for out-of-pocket bills have been recorded in income and
totaled roughly $29,000 for the three months ended July 31, 2021, and
roughly $4,000 for the three months ended July 31, 2020.
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Upkeep and Assist. Income is derived from upkeep and assist
providers, below which we offer clients with phone consulting, product
updates on a when and if out there foundation, and releases of recent variations of
merchandise beforehand bought by the client, in addition to error reporting and
correction providers. Upkeep for perpetual licenses is renewable, typically
on an annual foundation, on the choice of the client. Upkeep phrases usually
vary from one to 3 years. Income associated to upkeep is usually paid
prematurely and acknowledged ratably over the time period of the settlement because the
Firm is standing prepared to supply a collection of upkeep providers which are
considerably the identical every interval over the time period; due to this fact, time is one of the best
measure of progress. Assist providers for subscriptions are included within the
subscription charges and are acknowledged as a part of such charges.
Oblique Channel Income. We document income from gross sales made by way of the oblique
gross sales channels on a gross foundation, as a result of we management the products or providers and
act because the principal within the transaction. In reaching this willpower, we
consider gross sales by way of our oblique channel on a case-by-case foundation and contemplate
a variety of elements together with indicators of management such because the celebration having the
main accountability to supply specified items or providers, and the celebration
having discretion in establishing costs.
Gross sales Taxes. We account for gross sales taxes collected from clients on a web foundation.

Vital Judgments. Lots of our contracts embody a number of efficiency
obligations. Our services and products typically don't require a big
quantity of integration or interdependency; due to this fact, our services and products
are typically not mixed. We allocate the transaction worth for every contract
to every efficiency obligation primarily based on the relative standalone promoting worth
(SSP) for every efficiency obligation inside every contract.

We use judgment in figuring out the SSP for services and products. For
considerably all efficiency obligations besides on-premise licenses, we're
capable of set up SSP primarily based on the observable costs of services or products
bought individually in comparable circumstances to related clients. We usually
set up an SSP vary for our services and products which is reassessed on a
periodic foundation or when info and circumstances change. Our on-premise licenses
haven't traditionally been bought on a standalone foundation, because the overwhelming majority of
all clients elect to buy on-premise license assist contracts on the time
of a on-premise license buy. Assist contracts are typically priced as a
share of the web charges paid by the client to entry the on-premise
license. We're unable to ascertain the SSP for our on-premise licenses primarily based on
observable costs given the identical merchandise are bought for a broad vary of quantities
(that's, the promoting worth is extremely variable) and a consultant SSP isn't
discernible from previous transactions or different observable proof. Consequently,
the SSP for a on-premise license included in a contract with a number of
efficiency obligations is set by making use of a residual strategy whereby
all different efficiency obligations inside a contract are first allotted a
portion of the transaction worth primarily based upon their respective SSPs, with any
residual quantity of transaction worth allotted to on-premise license income.


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