American Software, Inc. (NASDAQ:AMSWA) Q2 2023 Earnings Call Transcript

Allan Dow: New question. Will, thank you. Welcome to the call. Thank you so much for joining us. We still see some staffing challenges in there. I think we’re all in a — we’re all in the mode of where we anticipate coming into the new year that people are going to settle into their roles. A number of people walking out the door will probably diminish, a number of available resources on the market will probably become a little more plentiful. So we anticipate that our clients will be able to fill some of those positions, and they’re doing a good job. The reference to delays that we experienced now are more related to just timing of projects. Our clients — we focus on consumer goods. We focus on retail, direct-to-consumer business as well, through brand owners.

And this is the most important time of the year for them. You come into the holiday season, watch TV and you know what’s going on, everyone’s begging for the consumers to come out. So there — it’s an all hands-on-deck kind of view. Let’s focus on finishing the year strong, getting through the holiday season from our client perspective. And then we’ll pick back up in the new year. So that’s the kind of feedback we’re getting right now. So it’s probably more related to economics and their desire to do the best they can in this holiday season without any distractions on new projects, sort of thing. So does that help, Willow? Does that give some clarity in my comments?

Will Miller: Yes, that’s definitely helpful. And just one more question. So — and this is in response to the sequential increase to EBITDA margin expansion. So you mentioned moderating headcount. Was that intentional? Given the softer macro environment, are you looking to pull back on any expenses?

Allan Dow: Well, we’re — as you come to know us, you’ll get to know we’re conservative on all expenses. So we’ve been scrubbing the ranks across the board on anything we can look at to see where we are. We’ve successfully, like everyone, we’ve moved to a hybrid model, so we need less real estate. So we’ve been able to reduce some of our lease, our overhead costs in those kind of areas. But headcount is principal cost for us as a software organization. It’s, by far, the #1 cost. So we made a conscious decision to not accelerate as quickly as we had originally anticipated. And it’s just a cautionary move. At this point, we’ve still got a couple of dozen open roles that we’re trying to recruit for. You’ll see that happening. We’ll be announcing new folks joining us as we go forward into the new year.

So we haven’t shut it down, but we’re just being a little more conservative. If the recession hits and hits hard, we’d rather be in a conservative posture than be in a cutback mode. The folks that we’re bringing on to the team, we think, are very valuable and good contributors and will lend credibility to our organization. So we want to make sure we hang on to the folks we hire. So it’s just a conservative posture while we wait out the next couple of months and see what happens with the retail market.

Operator: And our next question comes from Zach Cummins.

Zach Cummins : Allan, can you just talk about more of the overall pipeline on the subscription side of the business? It sounds like maybe there’s been some moving parts going on there. Just curious, I know much of the guidance reduction for this year is related to your professional services, but can you give us any insight into kind of the deal cycles in the pipeline on the subscription side of the business?