Q4 2024 American Software Inc Earnings Call

Operator: Good day everyone, and welcome to today's fourth quarter and fiscal year 2024 earnings results call. 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 the star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star two. Please note this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Vince Klinges. Please go ahead, sir.

Good day, everyone and welcome to todays fourth quarter and fiscal year 2024 earnings results call.

Speaker Change: At this time all participants are in a listen only mode. Later, you'll have the opportunity to ask questions. During the question and answer session. You May Register ask me a question at any time I personally star and one on your telephone keypad you may withdraw yourself from the queue by pressing star. Two. Please note. This call is being recorded and I'll be standing by if you should need any assistance.

Vincent C. Klinges: It's now my pleasure to turn the conference over to Vince <unk>. Please go ahead Sir.

Vincent C. Klinges: Thank you, Travis. Good afternoon, everyone, and welcome to American Software's fourth quarter fiscal 2024 earnings call. On the call with me is Alan Dow, president and CEO of American Software. Alan will provide some opening remarks, and then I will review the numbers. But first, our safe harbor statement.

Vincent C. Klinges: Thank you Travis and good afternoon, everyone and welcome to American Software's fourth quarter fiscal 2024 earnings call.

Vincent C. Klinges: On the call with me is Allan Dow President and CEO of American software Alan will provide some opening remarks, and then I will review the numbers, but first our safe Harbor statement.

Vincent C. Klinges: This conference call may contain forward-looking statements, including statements regarding, among other things, our business strategy and growth strategy. However, 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 and contemplated by or underlying the forward-looking statement.

Vincent C. Klinges: 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.

Vincent C. Klinges: Some of which cannot be.

Vincent C. Klinges: Predicted or quantified and are beyond our control future developments and actual results could differ materially from those set forth in <unk>.

Vincent C. Klinges: Contemplated by or underlying the forward looking statements. There are a number of factors that could cause actual results to differ materially from those anticipated by statements made on this call. Such factors include but are not limited to changes and uncertainty in general economic conditions the growth rate of the market for our products and services timely.

Vincent C. Klinges: Availability and market acceptance of these products and services, the effective competitive products and pricing and other competitive pressures and the irregular and unpredictable pattern of revenues in light of these risks and uncertainties that can be no assurance that the forward looking information will prove to be accurate.

Vincent C. Klinges: There are a number of factors that could cause actual results to differ materially from those anticipated by statements made on this call. Such factors include, but are not limited to, changes and uncertainty in general economic conditions, the growth rate of the market for our products and services, 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 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. At this time, I'd like to turn the call over to Alan for opening remarks.

Speaker Change: At this time I'd like to turn the call over to Alan for opening remarks.

Thank you Vince good afternoon, everyone and thank you for joining us today.

Alan Dow: Thank you, Vince. Good afternoon, everyone, and thank you for joining us today.

Alan Dow: Although challenging from an economic standpoint, fiscal 2024 was a pivotal year for American Software. Strategically, we transformed our company through the divestiture of the proven method and transportation rating solutions, leaving us with a singular focus on our core supply chain software business moving forward. This transformation will become more evident later this year as we plan to rename the company Logility and trade under the ticker symbol LGTY. Most important is that our Logility brand is already known to our existing client community and prospects, and Logility was recognized by Gartner as a leader in the latest Magic Quadrant for Supply Chain Planning solutions.

Alan: Although challenging from an economic standpoint fiscal 2024 was a pivotal year for American software.

Alan: Strategically we transformed our company through the divestitures of the proven method and transportation ratings solutions, leaving us with a singular focus on our core supply chain software business moving forward.

Vince: This transformation will become more evident later this year as we plan to rename the company Logility and trade under the ticker symbol LG T y.

Speaker Change: Most important is that our logility brand is already known to our existing client community and prospects.

Speaker Change: Logility was recognized by Gartner as a leader in the latest magic quadrant for supply chain planning solutions. So this change will align the company with our brand.

Alan Dow: So this change will align the company with our brand. To further distance ourselves from the competition, we accelerated our AI roadmap significantly in fiscal 2024 with the acquisition of Garvis. As we shared last quarter, the Garvis products have been rebranded as Demand AI Plus, and early indications suggest that the new capabilities will benefit us on three fronts. The addition of new logos to our client community and the accelerated pace of existing client lift and shifts to the cloud and upgrades of existing cloud clients to this next generation of demand forecast. Given that Demand AI plus represents our next generation demand intelligence platform and is only available in the cloud, we recently informed our clients that this new innovation will no longer be available on premises.

Speaker Change: To further distance ourselves from the competition, we accelerated our AI roadmap significantly in fiscal 2024 with the acquisition of Gargis.

Speaker Change: As we shared last quarter, regardless products has been rebranded with.

Speaker Change: As demand AI, plus and early indications suggest that the new capabilities will benefit us on three fronts.

Speaker Change: The addition of new logos to our client community.

Speaker Change: And accelerated pace of existing client lift and shifts to the cloud.

Speaker Change: And upgrades of existing cloud clients to this next generation of demand forecasting.

Speaker Change: Given that demand a high.

Speaker Change: Plus represents our next generation demand intelligence platform and is only available in the cloud. We recently informed our clients that new innovation will no longer be available on premise.

Alan Dow: We believe this will further catalyze the conversion of our maintenance revenue to subscription fees over the next several years. Even as we bolstered our platform through M&A, we continued to return capital to our shareholders via our usual quarterly dividend, and for the first time in many years, we repurchased stock in the open market, fully utilizing the remaining amounts of our prior authorization. Finally, we reached a definitive agreement with our founder and Class B shareholder, Jim Edenfield, which, subject to shareholder approval, will eliminate our dual-class structure.

Speaker Change: We believe this will further catalyze the conversion of our maintenance revenue to subscription fees over the next several years.

Speaker Change: Even as we bolstered our platform through M&A, we continued to return capital to our shareholders via our usual quarterly dividend and for the first time in many years, we repurchased stock in the open market fully utilizing the remaining amounts of our prior authorization.

Speaker Change: Finally, we reached a definitive agreement with our founder and class B shareholder Jim Edenfield.

Jim Edenfield: Subject to shareholder approval, we will eliminate our dual class structure.

Alan Dow: In aggregate, we believe the actions we have taken over the past year will create significant shareholder value in the years to come. Turning to the fourth quarter, our results were largely as expected, and we were pleased to meet the revised guidance for the full year that we provided midway through fiscal 2024. Similar to our experience over the past year, our clients and prospects remain engaged on transformational supply chain initiatives but have delayed approvals or start dates and, in some cases, staged the commitments over multiple phases amid persistent macroeconomic headwinds.

Jim Edenfield: In aggregate, we believe the actions we have taken over the past year will create significant shareholder value in the years to come.

Speaker Change: Turning to the fourth quarter, our results were largely as expected and we were pleased to meet the revised guidance for the full year that we provided midway through fiscal 2024.

Speaker Change: Similar to our experience over the past year, our clients and prospects remain engaged on transformational supply chain initiatives, but have delayed approvals or start dates and in some cases stage the commitments over multiple phases amid persistent macroeconomic headwinds.

Alan Dow: Our pipeline again grew from the improved levels we saw in the third quarter, reflecting both strong interest in our new AI capabilities as well as an increase in late-stage deals that remain in the closed process. Although pipeline conversions remain below historic norms, we continue to see improvement relative to the start of the fiscal year, resulting in a sequential uptick in our backlog that was partially driven by contracts signed late in the fiscal quarter.

Speaker Change: Our pipeline again grew from the improved levels, we saw in the third quarter, reflecting both strong interest in our new AI capabilities as well as an increase in late stage deals that remain in the close process.

Although pipeline conversions remains below historic norms, we continued to see improvement relative to the start of the fiscal year, resulting in a sequential uptick in our backlog that was partially driven by contract signed late in the fiscal quarter.

Speaker Change: Contributing to the backlog growth in the fourth quarter was greater desire among our clients to move from on Prem to our enhanced capabilities in the cloud interest from our cloud clients and upgrading to the AI forecasting approach with dji plus.

Alan Dow: Contributing to the backlog growth in the fourth quarter was a greater desire among our clients to move from on-prem to our enhanced capabilities in the cloud, interest from our cloud clients in upgrading to the AI forecasting approach with DAI Plus, the acceleration of generative AI capabilities, a number of Garvis pilot clients expanding the footprint more broadly across their enterprise, and the traction with our continuous network optimization capabilities that provide insights into navigating around the bottlenecks in the We're also on the forefront of releasing new AI-based capabilities that expand value for our clients by enhancing their decision-making, such as Inventory AI+, which we announced in the spring, and most recently, the Decision Command Center.

Speaker Change: The acceleration of generative capabilities.

Speaker Change: A number of Garver's pilot clients, expanding the footprint more broadly across their enterprise.

Speaker Change: And the traction with our continuous network optimization capabilities that provide insights into navigating around the bottlenecks in supply chains.

Speaker Change: We're also on the forefront of releasing new AI based capabilities that expand value for our clients by enhancing their decision, making such as inventory AI, plus which we announced in the spring and most recently the decision Command Center.

Speaker Change: We have other groundbreaking solutions on the horizon for the year ahead.

Alan Dow: We have other groundbreaking solutions on the horizon for the year ahead. As we look forward to the current fiscal year, we're encouraged by the level of pipeline growth experienced throughout the latter half of fiscal 2024. We are poised to invest ahead of growth as soon as we see the economic pressures and uncertainties subside, and pipeline conversion starts to accelerate. At the same time, the timing of deal closures, particularly large transactions, remains difficult to predict and can meaningfully impact the revenue we recognize in any given period.

Speaker Change: As we look forward to the current fiscal year, we're encouraged by the level of pipeline growth experienced throughout the latter half of fiscal 2024.

Speaker Change: We are poised to invest ahead of the growth as soon as we see the economic pressures and uncertainties subside in pipeline conversion starts to accelerate.

Speaker Change: At the same time, the timing of deal closures, particularly large transactions remains difficult to predict and can meaningfully meaningfully impact the revenue we recognize in any given period.

Alan Dow: Thus, while we believe our cloud booking should grow at a higher rate and translate into accelerating subscription fee growth exiting the year, our initial outlook for fiscal 2025 reflects conservative assumptions around the timing of client spending decisions and the delayed revenue impact from late-year booking. Taking all this into consideration, our initial guidance for fiscal 2025 includes total revenue of $104 to $108 million, recurring revenue between $87 million and $89 million, and adjusted EBITDA of $15 to $16.4 million. At this time, I will turn the call over to Vince, who will provide the details of our financial results. Thanks, Alan.

Speaker Change: Thus, while we believe our cloud bookings should grow at a higher rate and translate into accelerating subscription fee growth exiting the year. Our initial outlook for fiscal 2025 reflects conservative assumptions around the timing of client spending decisions and the delayed revenue impact from late year bookings take.

Speaker Change: All of this into consideration our initial guidance for fiscal 2025 includes total revenue of 104 to 108 million recurring revenue between $87 million and $89 million and adjusted EBITDA of 15 to $16 4 million.

Speaker Change: At this time I will turn the call over to Vince who will provide the details of our financial results.

Vincent C. Klinges: Thanks, Alan. Before I discuss the results for the quarter, I'd like to remind everyone that due to the divestiture in the second quarter of our non-core IT staffing business unit, The Proven Method, our financial statements have been recast to show The Proven Method as a discontinued operation. Results from the Transportation Ratings Solutions business were not considered material enough to recast as discontinued operations and are still reflected in our prior year comparisons for continuing operations. Our discussion of the current and comparable periods will focus only on the continuing operations from this point forward.

Vince: Thanks Alan.

Vince: Before I discuss the results for the quarter I'd like to remind everyone that due to the divestiture in the second quarter of our noncore staffing staffing business unit. The proven method our financial statements have been recast to show the proven method as a discontinuing operation.

Vince: Results from the transportation ratings solutions were not considered material enough to recast as discontinued operations and are still reflected in our prior year comparisons for continuing operations.

Vince: Our discussion of the current and comparable periods, we will focus only on the continuing operations from this point on.

Vincent C. Klinges: So, for the fourth quarter, our total revenues were $25.4 million, which decreased 5% from $26.8 million in the same period last year, and that's primarily due to lower revenues from our license fees and professional services and maintenance. Our subscription fees, however, increased 8% year-over-year to $14.1 million compared to $13 million in the same period last year. Our software license revenues were $0.2 million, and that compares to $0.7 million the same period last year. Professional services and other revenues decreased 23% to $3.7 million from $4.8 million a year ago, and that's primarily due to lower bookings earlier in the year and also our efforts to direct more services to our SI partners.

Vince: So for the fourth quarter.

Total revenues were $25 $4 million decreased 5% from $26 8 million in the same period last year and Thats, primarily due to lower revenues from our license fees and professional services and maintenance or subscription fees.

Vince: Increased 8% year over year to $14 1 million compared to $13 million. The same period last year. Our software license revenues were <unk> 2 million and that compares to seven in the same period last year.

Vince: Services and other revenues decreased 23% to $3 7 million from $4 8 million a year ago period, and Thats, primarily due to lower bookings earlier in the year and also our efforts to direct more services to our Si partners.

Vincent C. Klinges: Our maintenance revenues declined 9% year-over-year to $7.4 million, reflecting a normal fall-off rate this quarter, as well as the divestiture of our transportation group, which reduced our maintenance revenues by approximately $250,000 for the quarter. So our total recurring revenues comprised of subscription and maintenance fees represented 85% of total revenue for the fourth quarter, and that's up from 79% in the same period last year. Our gross margin was 66% for the current period, up from 65% for the same period last year.

Vince: Our maintenance revenues declined 9% year over year to four point excuse me $7 4 million, reflecting a normal fall off rate this quarter as well as the divestiture of our transportation group, which reduced our maintenance revenues by approximately 250000.

Vince: For the quarter.

Vince: So our total recurring revenues comprised of subscription and maintenance fees represented 85% of the total revenue for the fourth quarter and that compares that's up from 79% in the same period last year.

Vince: Our gross margin was 66% for the current period up from 65 in the same period last year, our subscription fee margin was 68% for the current quarter and prior year period, excluding the noncash amortization of intangibles of 232000, our subscription gross margin was 70% in the current <unk>.

Vincent C. Klinges: Our subscription fee margin was 68% for the current quarter and prior year period, excluding the non-cash amortization of intangibles of $232,000. Our subscription gross margin was 70% in the current period, and that's compared to 71% in the same period last year. The amortization of intangible expense was $398,000 in the same period last year. The decline in non-cash amortization expense from the prior year period compared to the most recent period reflects a change in the Garvis acquisition technology amortization life from three to five years.

Vince: And thats compared to 71% in the same period last year, the amortization of intangible expense was 398000 in the same period last year.

Vince: The decline in noncash amortization expense from the prior year period.

Compared to the most recent period reflects a change in the Garbus acquisition technology amortization life from three to five years.

Vince: Our license fee margin was 68% compared to 77% in the same period last year, our gross margin for.

Vincent C. Klinges: Our license fee margin was 68% compared to 77% in the same period last year. Our gross margin for services decreased to 26% compared to 30% last year, and our maintenance margin was 81% for the current period, and that's up from 80% in the same period last year. Our gross R&D expenses were 18% of total revenues for the current period, and that compares to 17% in the prior year period, but we're virtually unchanged in absolute dollars.

Vince: Services.

Vince: Were decreased to 26.

Vince: Percent compare to 30%.

Vince: Last year.

Vince: Our maintenance margin was 81% for the current period and Thats up from 80% in the same period last year. Our gross R&D expenses were 18% of total revenues for the current period and that compares to 17% in the prior year period.

Vince: We were virtually unchanged in absolute dollars.

Vincent C. Klinges: Sales and marketing expenses were 21% of revenues for the current quarter, and that compares to 18% in the prior year period, primarily due to increased marketing activities and costs related to the Garbus acquisition. Our G&A expenses were 23% of total revenues for the current quarter, and that compares to 22% last year. The increase was due to the inclusion of approximately $550,000 of one-time expenses related to the planned elimination of our dual-class structure.

Vince: Sales and marketing expenses were 21% of revenues for the current quarter and that compares to 18% in the prior year period, primarily due to increased marketing activities and costs related to the <unk> acquisition. Our G&A expenses were 23% of total revenues for the current quarter and that compares to 22% last year the.

Vince: The increase was due to inclusion of approximately 550000 of onetime expenses related to the plan.

Speaker Change: Elimination of our dual class structure.

Speaker Change: So operating income was <unk> 7 million this quarter compared to $2 2 million in the same period last year.

Vincent C. Klinges: So operating income was $.7 million this quarter compared to $2.2 million in the same period last year, primarily due to lower revenues and also costs related to the Garvis acquisition and the non-recurring expenses related to our B-class structure. Net income was $2.2 million, or earnings per diluted share of $0.07, compared to net income of $2.9 million, or $0.09 per diluted share last year. On an adjusted basis, which excludes non-cash amortization of intangible expense related to acquisitions and stock-based compensation expense, our adjusted operating income was 2.7, and that compares to 3.7 in the same period last year.

Speaker Change: Primarily due to lower revenues and also costs related to <unk> acquisition, and the nonrecurring expenses related to our B class structure.

Speaker Change: Net income was $2 2 million or earnings per diluted share of <unk> <unk> compared to net income of $2 9 million or <unk> <unk> to <unk>.

Speaker Change: Per diluted share last year.

Speaker Change: On an adjusted basis, which excludes noncash amortization of intangible expense related to acquisitions and stock based compensation expense. Our adjusted operating income was $2 seven and that compares to $3 seven in the same period last year.

Vincent C. Klinges: Adjusted EBITDA was 3.1 million compared to 4.3 million in the fourth quarter of last year. And our adjusted net income was 4 million, or adjusted earnings per diluted share of about 12 cents for the fourth quarter, and that compares to adjusted net income of 4.2 million and adjusted earnings per diluted share of 12 cents for the same period last year. International revenues this quarter were approximately 20% of total revenues compared to 19% last year.

Speaker Change: Adjusted EBITDA was $3 1 million compared to $4 3 million the fourth quarter of last year and our adjusted net income was $4 million or adjusted earnings per diluted share of about 12% for the fourth quarter and that compares to adjusted net income of $4 2 million and adjusted earnings per diluted share of <unk> 12, the St.

Speaker Change: Period last year.

Speaker Change: International revenues this quarter were approximately 20% of total revenues.

Vincent C. Klinges: We exited the quarter with remaining performance obligations, or RPO, which we refer to as backlog, of 128 million, which is an 8% increase sequentially and a 3% year-over-year increase. Looking at our balance sheet, our financial position remains strong with cash investments of $83.8 million at the end of the quarter. And during the quarter, we paid $3.7 million in dividends. Our day sales outstanding as of January 31st, excuse me, April 30th of 24 was 101 days for the current period compared to 78 days for the same period last year. And that's due to the timing of increased billings at the end of the quarter, the majority of which were subsequently collected, and our current DSO is at the end of the quarter. May was 77 days.

Speaker Change: Compared to 19% last year are we exited the quarter with remaining performance obligations, our RPM, which we referred to as backlog of $128 million, which is an 8% increase sequentially and a 3% year over year increase.

Speaker Change: Looking at our balance sheet, our financial position remains strong with cash and investments of $83 8 million at the end of the quarter and during the quarter, we paid $3 7 million of dividends. Our days sales outstanding as of January 31, excuse me April 30th 24 was 101 days.

Speaker Change: For the current period compared to 78 days in the same period last year.

Speaker Change: And that's due to timing of increased billings at the end of the quarter, which are Mark which majority were subsequently.

Speaker Change: Collected in our current DSO at the end of.

Speaker Change: May.

Speaker Change: 77 days.

Vincent C. Klinges: As Alan mentioned, related to our guidance, consistent with our usual seasonality, our guidance for fiscal 25 assumes our bookings will be weighted more heavily toward the latter half of the year relative to the fiscal year of 24. We expect to see an increase in existing client conversions to the cloud, which combined with the sale of TRS will result in a greater decline in maintenance than we have seen in past years. As a reminder, we typically see an uplift of 2 to 3x revenue when our clients lift and shift to the cloud, so we anticipate our subscription fee growth will accelerate later this year.

Speaker Change: As Alan mentioned are related to our guidance.

Speaker Change: As with our usual seasonality our guidance for fiscal 'twenty five assumes our bookings will be weighted more heavily towards the latter half of the year relative to the fiscal year of 'twenty four we expect to see an increase in the existing client conversions to the cloud, which combined with the sale of Trs.

Speaker Change: Will result in greater decline in maintenance than we have seen in past years. As a reminder, we typically see an uplift of two to three X revenue when our clients lift and shift to the cloud. So we anticipate our subscription fee growth will accelerate exiting this year.

Vincent C. Klinges: So, the guidance we're providing for fiscal 25, we anticipate revenue in the range of $104 million to $108 million, including recurring revenue of $87 million to $89 million. And our adjusted EBITDA, we anticipate a range of $15 million to $16.4 million. At this time, I'd like to turn the call over to questions.

So the guidance, we're providing for fiscal 'twenty five we anticipate revenue in the range of $104 million to $108 million, including recurring revenue 87 two.

Speaker Change: $89 million.

Speaker Change: And our adjusted EBITDA, we anticipate a range of 15 million to $16 $4 million at this time I'd like to turn the call over to questions.

Speaker Change: Yeah.

Speaker Change: At this time, if you would like to ask a question. Please press the star and one on your telephone keypad, you may remove yourself from Q anytime, but pricing start to once again Thats star one to ask a question.

Operator: At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that's star 1 to ask a question. Our first question comes from Zach Cummins.

Speaker Change: Okay.

Speaker Change: Our first question comes from Zach Cummins.

Zachary Cummins: Yes, hi, good afternoon, Allan and Vince Thanks for taking my questions.

Zachary Cummins: Hi, good afternoon, Alan, Vince. Thanks for taking my questions. Allen, I just wanted to ask you about the current buying environment. It sounds like you're seeing some hesitation from some of your customers at this point, just trying to grapple with how they move forward with project start times. So just curious how those conversations have evolved versus maybe what you were seeing three or six months ago.

Zachary Cummins: Alan I just wanted to ask you around the current buying environment. It sounds like Youre seeing some hesitation from some of your customers at this point just trying to grapple how they move forward with projects start time. So just curious if how those conversations have evolved versus maybe what you were seeing three or six months ago.

Alan Dow: Well, first of all, Zach, good afternoon, and thanks for joining us. Great question.

Speaker Change: Well first of all.

Speaker Change: Good afternoon, and thanks for joining US great question, yes, the economic environment, although earlier in the year. When we last met got together, we were anticipating and interest rate job drop I think everyone was encouraged by.

Alan Dow: Yeah, the economic environment, although earlier in the year when we last met, got together, we were anticipating an interest rate drop. I think everyone was and encouraged by the long-term prospects of the economy improving. And since then, that really hasn't occurred, as we all know and see.

Speaker Change: The long term prospects of the economy, improving and since then that really hasn't occurred as we all know and see.

Alan Dow: That has translated into a continued stall in the marketplace relative to projects, although we were obviously able to break some projects loose. A few of the projects we signed actually have deferred start dates, so we're not doing any activity even though we were able to execute the contract. So that is a direct reflection of the increased RPO but an impact on the revenue that we were not able to capture in the fourth quarter, nor will we, in one case, even in the first quarter. And people are breaking up the projects.

Speaker Change: That has translated into continued stall in the marketplace relative to projects, we were obviously able to break some projects loose.

Speaker Change: A few of the projects, we signed actually have deferred start dates. So we're not doing any activity, even though we were able to execute the contract.

Speaker Change: So that is a direct reflection in it.

Speaker Change: The increased.

Speaker Change: Our PEO, but but an impact on the revenue that we were not able to capture in the fourth quarter.

Speaker Change: Nor will we in one case, even in this first quarter.

Speaker Change: And people are breaking up the projects theyre going for much smaller bites.

Alan Dow: They're going for much smaller bites, just trying to be conservative, get something done, keep some powder dry, so to speak. They want to proceed with phase two, but they want to make that decision as they see how things unwind here as the year continues. So a very conservative approach, probably less conservative than we were experiencing earlier on. What's very interesting, Zach, related to this conversation or the question you posed, is that the evaluation period itself is running at about the same pace that we'd seen historically, the amount of time and energy that's being invested.

Speaker Change: Just trying to be conservative get something done keep some powder dry gas so to speak to.

Zac: They want to proceed with phase two but they want to make that decision as they see how things unwind here as the year continues the calendar year continue so very conservative approach, probably less conservative than we were experiencing earlier on what's very interesting zac related to this conversation or question you posed is that the <unk>.

Zac: <unk> period itself is running about the same pace that we'd seen historically the amount of time and energy that has been invested which really much slower is the approval time period.

Alan Dow: What's really much slower is the approval time period. Once you get selected, you give evidence of selection, and you start working on contracts, and then getting through that approval cycle and going from budget to funding has really gotten much longer. So that's the part of the sales cycle that we see has gotten much more difficult. So, probably a longer answer than you were anticipating, Zach, but I think hopefully that'll provide a little clarity on what we're seeing in the marketplace right now.

Zac: Once you get selected you.

Zac: Give evidence of selection and you start working on contracts and then getting through that approval cycle than going from budget to funding is is really got it got much longer. So that's the that's the part of the sales cycle that we see gotten much more difficult so probably a longer answer than you were anticipating Zach, but I think hopefully that provides.

Zac: A little clarity on the on what we're seeing in the marketplace right now.

Zachary Cummins: Yes, absolutely I'll always appreciate the incremental color.

Alan Dow: Absolutely, I'll always appreciate the incremental color and... Alan, the follow-up question I had was around the conversion activity within your on-premise customer base. A little bit of a shift from what we've seen in the past, where it seems like you could have drawn a line in the sand, to use the phrase, to really accelerate some of that conversion activity moving forward. So, I was curious if you had any feedback from customers and kind of giving that notice and kind of what your expectations are in terms of really starting to move people over to the cloud side of the business.

Alan: Alan the follow up question I had was around the conversion activity within your on premise customer base.

Speaker Change: A little bit of a shift in what we've seen in the past where it seems like you've kind of drawn a line in the sand.

Speaker Change: Can you use the phrase.

Speaker Change: To really accelerate some of that conversion activity moving forward. So.

Speaker Change: Just curious if you had any feedback from customers.

Speaker Change: Giving that notice and kind of what's your expectation in terms of really starting to move people over to the cloud side of the business.

Alan Dow: Yeah, it's been mixed feedback. The rationale behind it was really multifold. First and foremost, it's just become far more difficult for us to deliver on prem, given that all of our development and the depth of development are really hinged around being in the cloud. So we decided that that didn't make sense.

Speaker Change: Yes, it's been it's been mixed feedback.

Speaker Change: The rationale behind it was really a multi fold first and foremost it's just become far more difficult for us to deliver an on prem.

Speaker Change: Given that all of our development and the depth of development is really hinged around being in the cloud. So we've decided that that didn't make sense. We've also seen as we've all experienced in the world today, the cyber risks have gotten.

Alan Dow: We've also seen, as we've all experienced in the world today, that cyber risks have gotten higher. So many of our clients have been very receptive to it. In some cases, they were pleased that we actually delivered the message because it gave them one more incentive behind the momentum to move to the cloud. They're anxious about being able to protect their data and their systems and make them available in their own environment.

Speaker Change: Higher so the <unk>.

Speaker Change: Many of our clients have been very receptive to it.

Speaker Change: Some cases, they were pleased that we actually delivered the message because it gave them one more incentive behind the momentum to move to the cloud.

Speaker Change: Were anxious about being able to protect their data and their systems and make them available on their own environment. They are much more comfortable that we and our partners are able to do that in a more effective way.

Alan Dow: They're much more comfortable that we and our partners are able to do that in a more effective way. So that's been encouraging. And then those who, on the other side of the spectrum, were frustrated by it, we've continued to dialogue with them and shared with them that we're not abandoning them. We're just not going to be able to deliver any new functionality.

Speaker Change: So thats been encouraging and then those who on the other side of the spectrum, we're frustrated by it.

Speaker Change: We've continued to dialogue with them and share with them that we're not we're not abandoning them. We're just not going to be able to deliver any new functionality and we're going to help them through that process. So after the initial shock and maybe a bit of a.

Alan Dow: And we're going to help them through that process. So after the initial shock and maybe a bit of an overreaction, the reality of having ample time to get them to the cloud in a comfortable way and facilitate getting budgets in place and adequate time to actually do the transformation project and move it over without putting risk on their supply chain, they've gotten more comfortable with the circumstances. So it takes a little more conversation with those who initially react negatively, but we haven't had anybody that ran away yelling and screaming. And I think that's probably also a strong reference to that being just the reality in the market today.

Speaker Change: Overreaction the.

Speaker Change: The reality of we have ample time to get them to the cloud in a comfortable way and facilitate getting budgets in place in <unk>.

Adequate time to actually do the transformation project and move it over without putting risk on their supply chain. They have gotten more comfortable with the with the <unk>.

Speaker Change: Circumstances, so that it takes a little more conversation with those who initially react negatively but.

Speaker Change: We haven't had anybody that ran away yelling and screaming and I think that's been probably also.

Speaker Change: <unk> referenced.

Speaker Change: The reality in the market today so.

Vincent C. Klinges: And my one final question, maybe geared towards Vince, but... Can you give us a sense of the baseline assumptions that you're making for your initial recurring revenue guidance for this year? I know it's maybe a little trickier from a revenue recognition standpoint, just given you're accelerating some of the conversions of on-prem customers, but any sort of incremental fee color around that would be greatly appreciated. Thanks.

Speaker Change: Understood and maybe one final question, maybe geared towards events, but.

Speaker Change: Can you give us a sense of the baseline.

Speaker Change: Assumptions that youre, making for your initial recurring revenue guidance for this year I know, it's maybe a little trickier from a revenue recognition standpoint, just given you're accelerating some of the conversions of on prem customers, but any sort of incremental fee.

Speaker Change: Color around that would be greatly appreciate it. Thanks.

Vincent C. Klinges: Yeah, Zach, you might be thinking that it's a little lower on the lower side. We were trying to be a little conservative because until we start seeing the close of the deals happening in the first half of the year, we wanted to take a cautious approach to adding incremental bookings to the SA. So that's why we kind of modeled it so that more of the bookings would be in the second half of the year related to the SAS area.

Speaker Change: Yes, yes, you might be thinking that it's a little lower on the lower side, we were trying to be a little conservative because.

Speaker Change: Until we start seeing the debt.

Speaker Change: At the close of the deal is happening.

Speaker Change: In the first half of the year, we want to be we wanted to take a cautious approach to adding incremental.

Speaker Change: Bookings to the SaaS.

Speaker Change: So that's why we've kind of modeled it so like more of the bookings would be in the second half of the year related to the SaaS area.

Speaker Change: Got it obviously, thanks for taking my yes, yes.

Zachary Cummins: Got it. Obviously. Well, thanks for taking my call. Yeah.

Vincent C. Klinges: Yeah, I was just going to say revenue is tied to the bookings and the contract start date. So as you move the bookings out to the back end of the year, we just have less time to capture the revenue and really have a reflection in the revenue number associated with the financial results.

Speaker Change: Yes, I was just going to say the revenue is tied to the bookings and the contract start date. So as you move the bookings out to the back end of the year. We just have less time to capture the revenue and really having a reflection in the revenue number associated with.

The financial results.

Speaker Change: Understood makes sense, we'll thanks for taking my questions and best of luck with what the rest of the quarter.

Zachary Cummins: Okay. Makes sense. Well, thanks for taking my questions and best of luck with the rest of the quarter. Thanks, Zach.

Operator: Thanks, Zach. Thanks, Zach. [inaudible]

Speaker Change: Thanks, Nick Thanks, Greg.

Matthew Evan Galinko: Our next question comes from Matthew Galinko.

Speaker Change: Our next question comes from Matthew <unk>.

Speaker Change: Hi, Thanks for taking my questions.

Matthew Evan Galinko: Hi, thanks for taking my questions. I was hoping maybe you could give us a little bit more color around the tone or what you see is the cause of the headwinds that, you know, that are kind of slowing the approval cycle. Is it the fact that, you know, customers were expecting interest rates to come down and didn't, but they'll sort of reset expectations and could kind of operate in a higher-rated environment and move forward? Or is it something where we need to expect rates to come down before, you know, Progress Happens?

Matthew: I was hoping maybe you could give us a little bit more color.

Matthew: Around.

Matthew: <unk>.

Speaker Change: Maybe the tone or when do you see as the cause of the.

Speaker Change: The headwinds.

Speaker Change: That are kind of prolonging the approval cycle is it.

Speaker Change: That.

The customers were expecting interest rates to come down in denim, but they'll sort of reset expectations and kind of.

Speaker Change: Operate in a higher rate environment and move forward or is it something where we need to expect rates to come down before.

Bill.

Speaker Change: Forward progress happens.

Alan Dow: Yeah. Matthew, first of all, Matthew, thank you for joining us and thanks for the question.

Speaker Change: Yes, Matt first of all Matthew Thank you for joining us and thanks for the question. It's a good one to explore a bit here.

Alan Dow: It's a good one to explore a bit here, because our client community is primarily in the consumer goods space. Much of that, many of those clients are in an environment where their products are not staple goods, so they're subjective. The consumer doesn't necessarily have to spend money on those things. We're seeing, although we also have a very good community of clients in the staple goods, and that's where we're seeing the energy that's going forward. Staple goods are still strong. We all still have to eat. We all still have to have some level of clothing.

Speaker Change: Our client community is primarily in the consumer goods space.

Speaker Change: Much of those.

Speaker Change: Many of those clients are in.

In an environment, where their products are not staple goods so subjective.

Speaker Change: <unk> doesn't necessarily have to spend money on those things.

Speaker Change: We are seeing.

Speaker Change: Though we also have.

Speaker Change: Very good community of clients in the staple goods and that's where we're seeing the energy thats going forward staple goods are still strong we all still have to eat.

We all still have to have some level of clothing.

Speaker Change: There is some of those things that are just strong in the marketplace and those are the clients that are investing disc.

Alan Dow: There are some things that are just strong in the marketplace, and those are the clients that are investing. However, discretionary spending is at will, obviously, and those are the clients that are really suffering the most. I don't anticipate, really, or we're not seeing that interest rates are a direct impact on our clients' business, but more a reflection of the impact on what's going on in their sales and the revenue impact that they're having.

Speaker Change: Discretionary spending has that will obviously and those are the clients that are really suffering the most.

Speaker Change: I don't I don't anticipate really are we're not seeing that the interest rates are a direct impact on the on our clients' business, but more a reflection of the impact on what's going on in their sales and their revenue impact that they're having there.

Alan Dow: They're seeing bloated inventories in the channel, so the flow of inventory has been kind of backlogged as they brought inventory back into the channel based on coming off the back end of the pandemic, and then all of a sudden, sales started to slow. So they're anxious. They're anxious about what interest rates will do to the consumer and what that will have an impact on consumer spending, and as you look under the covers at much of the economic news, we can actually see the same things that they're experiencing.

Speaker Change: They are seeing.

Speaker Change: Bloated inventories in the channel.

So the flow of inventories.

<unk> has been kind of backlog does.

Speaker Change: As they brought inventory in back into the channel based on coming off the back end of.

Speaker Change: The pandemic.

Speaker Change: And then all of a sudden sales started to slow so so they're anxious they're anxious about what the interest rates will do to the consumer and what that will have an impact on consumer spending and as you look under the covers that much of the economic news, we can actually see the same things that they are experiencing as a result of that there also.

Alan Dow: As a result of that, they're also cutting staff on their side. So while you're cutting staff, they're a little anxious about making investments and kicking off projects when there are limited staffing levels. They're kind of just staying in the course right now to see what happens. So that's really what we're hearing from them. However, they know that the pace of the market is outstripping their ability to operate a supply chain in the old traditional ways.

Speaker Change: Cutting staff on their side. So what are you cutting staff there they are a little anxious about making investments and gaining kicking off projects win.

Speaker Change: They're limited staffing levels Theyre kind of just staying the course right now to see what happens so that's really what we're hearing from them.

Speaker Change: However, they know that they need to invest they know that the piece of the market.

Speaker Change: Moving the their ability to operate our supply chain in the old traditional ways Theyre excited about the new capabilities that we can help them with it help them accelerate the.

Alan Dow: They're excited about the new capabilities that we can help them with, help them accelerate decision making, help them take down the barriers to making decisions more quickly and more effectively. But the CFO, who has a big desk and short arms, just won't reach out there and sign the capital expenditure document and release the funds to let them get going. So that's kind of what we're seeing in the marketplace.

Decision, making help them take down the barriers to making decisions more quickly and more effectively.

Speaker Change: But.

Speaker Change: The CFO has got a big desk in short arms, just won't reach out there and sign the capital expenditure document and released the funds to let them get going so.

Speaker Change: That's.

That's kind of what we're seeing in the marketplace. We are that's why we also think because they've done the evaluations. They readied the project they know what they need to do.

Speaker Change: We think if we can get a break in this macroeconomic conditions that we might see a rather rapid acceleration in projects.

Speaker Change: Thank you that's great color and I guess my follow up.

Matthew Evan Galinko: Thank you. That's great, Collar.

Matthew Evan Galinko: And I guess my follow-up. I guess it's relatively related, but as the... I think you outlined three pockets of demand, primarily cloud conversions and new logos. Within the cloud conversion group of potential deals, are those also under the same, you know, intense scrutiny as sort of new logos or new functionality, or are they, you know, a little bit more amenable to shifting if they're already, you know, under maintenance contracts? You know, help me understand a little bit if there are, you know, relative differences between those groups of prospective and existing customers. Yeah.

Speaker Change: Relatively related but.

Speaker Change: Hi.

Speaker Change: I think you outlined three pockets of.

Speaker Change: Demand.

Speaker Change: Yes, primarily the cloud conversions and new logos.

Speaker Change: Within the cloud conversion.

Speaker Change: Group of potential deals are those also under the same.

Speaker Change: Intense scrutiny and.

Speaker Change: And sort of new logos or new functionality or are they a little bit more amenable to shifting if they're already.

Speaker Change: Under maintenance contract.

Speaker Change: Let me understand a little bit of clarity.

Speaker Change: Relative differences between those groups of prospective and existing customers.

Speaker Change: Yes.

Speaker Change: Great Great perspective on that one the they are easier to get moving however, they as Vince pointed out.

Alan Dow: Great, great perspective on that one. They are easier to get moving, but, as Vince pointed out, there is an investment that needs to be made. There is typically an offset of investment, so what also makes it easier? But from our perspective, we see, as Vince said, somewhere between two to three and oftentimes an even greater uplift over the current spend they're making with us. When they can offset that spend internally, it becomes quite easy because now they get security and new functionality, and enhanced capabilities.

Speaker Change: There is an investment that needs to be made there is typically an offset of investment. So what also makes it easier but from our perspective, we see as Vince said somewhere between two to three and oftentimes even greater uplift over the current spend theyre, making with us.

Speaker Change: When they can offset that spend internally.

Speaker Change: It becomes quite easy because now they get security new functionality enhanced capabilities. They can stay current and make it a safer environment from a cyber risk standpoint.

Alan Dow: They can stay current, and they can get a safer environment from a cyber risk standpoint and have offsetting expenses. Now, with that said, they still have to get... it is still a project, it requires cash flow and that sort of thing, so there's some work to be done there. It's not easy, but it's a whole lot easier than saying, we're just going to scrap everything we do today and start over, because that's an easy one to balance out a bit and say, can't we just stay with what we have?

Speaker Change: And have offsetting as offsetting expenses now with that said they still have to get it is still a project that requires cash flow and that sort of thing. So there's some work to be done there. It's not it's not easy, but it's a whole lot easier than saying, we're just going to scrap everything we're doing today and start over because thats, an easy one to offset a bit and say can we just stay with what we got do we have to.

Alan Dow: You know, do we really have to spend the money today? Can we wait for a couple of months, when these lifts and shifts are a little easier to get through? Overall, expenditure is a little bit lower as well. I mean, they're not as big as a larger transformation project, and the larger the project, the more eyes and hands that get touched on it to get it approved, so we're counting on that continuing to accelerate for us in the new fiscal year, and we'll make up a pretty material portion of our anticipated bookkeeping.

Speaker Change: Really spend the money today can we wait for a couple of months.

Speaker Change: Whereas this lift and shifts are little easier to get through overall expenditures a little bit lower as well I mean, they are not as big as the larger transformation project and those large the larger the project the more eyes and enhance that get touched on it to get it approved so.

Speaker Change: We're counting on on that continuing to accelerate for us in the new fiscal year, and we will make up a pretty material portion of our anticipated bookings.

Speaker Change: Great. Thank you.

Speaker Change: Thank you Sir.

Operator: Our next question comes from Anja Soderstrom.

Speaker Change: Our next question comes from Anja Soderstrom.

Anja Marie Theresa Soderstrom: Thank you for taking my questions. Just a follow up on the bookings, you were expecting them to be back and loaded in the second half, so then that should be pretty impactful for fiscal 2026 then.

Anja Marie Theresa Soderstrom: And thank you for taking my questions.

Just a follow up.

Anja Marie Theresa Soderstrom: Jim.

Jim Edenfield: You were expecting bookings to be backend loaded in the second half.

Speaker Change: And that should be pretty impactful for fiscal 2026.

Speaker Change: Constant over time.

Alan Dow: Yeah, absolutely. Anja, again, thank you for joining us.

Speaker Change: Yes, absolutely.

Speaker Change: Again, thank you for joining US yes in fact that is exactly the point as.

Alan Dow: Yes, in fact, that is exactly the point. As we see, the end of the calendar year is typically good for us. That could stimulate a little bit of demand, but often even then, you know, someone that signs at the end of November or the beginning of December, usually the first thing they say is, and we'll get started after the holidays, so that usually causes a month or two delay. So, you know, even at that level, we get, we pick up maybe two, three months' worth of revenue on those bookings.

Speaker Change: As we see the end of the calendar year is typically good for us.

Speaker Change: That could stimulate a little bit of demand, but but often even then.

Speaker Change: Someone that signs at the beginning of the end of November or beginning of December usually the first thing. They say is and we will get started after the holidays. So that usually causes a month or two delay so even at that level, we get we pick up maybe two to three months worth of revenue on those on those bookings, but anything you saw in <unk>.

Alan Dow: But anything you sign in January, February, March, and April, April is basically you get nothing. It's all fiscal 26. March, you might get a month or so, so it's just the beginnings of it, but yes, it cascades immediately then into fiscal 26, so we're anticipating a bigger uplift in the back.

Speaker Change: Annually in February March and April April was basically you get nothing it's all this fiscal 'twenty six March you might get a month or so so it's.

Speaker Change: It's just the beginnings of it but yes. It Cascades immediately then into fiscal 'twenty, six or we're anticipating a bigger uplift into the backend.

Alan Dow: Okay, thank you, and then in terms of the pipeline, the conversion has been below historical levels, but it's been improving, and do you have any sort of numbers around to what magnitude it's been below historical levels and how it's been improving?

Speaker Change: Okay. Thank you and then in terms of the pipeline is today Congrats you have Danny.

Speaker Change: Historical levels, it's been improving.

Speaker Change: And do you have any sort of numbers around that magnitude, it's been below historical levels and has been improving.

Speaker Change: Yes.

Alan Dow: Yeah, we're seeing and continuing to see double-digit growth in our overall pipeline. The conversion rates are the trouble part of that, but it's pent-up demand, so again, if we can see a breakthrough in the economic conditions, we think that we're hoping to see our, you know, that we can burn through the growth in our pipeline and convert it to revenue and have to work really hard to continue to build our pipeline, which we do every day anyway. But yeah, the pipeline growth is really exciting. We need a breakthrough in conversions.

Speaker Change: We're seeing we're continuing to see double digit growth in our overall pipeline the conversion rates of the troubled part of that but.

Speaker Change: It is pent up demand. So again, if we can see a breakthrough in the economic conditions, we think that.

Speaker Change: We're hoping to see.

Speaker Change: That we can burn through the through the growth in our pipeline and converted to revenue and have to work really hard to continue to build pipeline, which we do every day anyway, but.

Speaker Change: Yes, the pipeline growth is really exciting.

Speaker Change: We need to we need a breakthrough in the conversions.

Okay. Thank you and then also curious about the rebranding what's been driving back in.

Anja Marie Theresa Soderstrom: Okay, thank you. I'm also curious about the rebranding, what's been driving that, and your thoughts around that.

Speaker Change: And your thoughts around that.

Alan Dow: Yeah, we've had that in mind for some time, and we're looking for the right trigger point. Earlier in the year, in fiscal 24, we made the commitment to divest the non-strategic assets, which carries with it a lot of work.

Speaker Change: Yes, we've had that in mind for some time and we're looking for the right trigger point.

Speaker Change: Early in the year earlier in the year in fiscal 'twenty four we made the commitment to divest non strategic assets. So.

Speaker Change: So it became.

Speaker Change: <unk>, which carries with it a lot of work and now with the.

Alan Dow: And now with the recapitalization under the share structure, it made sense, and it's going to be time. We've reserved the new ticker symbol. We've got the registration ready, and we're good to go. We're waiting for that final approval. We'll get some of this paperwork behind us.

Speaker Change: Recapitalization under the share structure.

Speaker Change: <unk>.

Speaker Change: It's going to be time, we've reserved the new ticker symbol, we've got the registration ready and we're good to go we are waiting for that final approval, we'll get a few of these this paperwork behind us, but primarily the motivation behind it is the fact that from.

Alan Dow: But primarily, the motivation behind it is the fact that from the investment community, we're known as American Software. From the business community, from the solutions we do, the brand we put out there, we're known as Logility. And the clients ask, you know, who's American Software?

Speaker Change: From an investment community, we're known as American software from a business community from the solutions. We do the brand we put out there were known as Logility.

Speaker Change: Clients ask who is American software and the investment community says what's logility. So we figured it's time to just dispense with that and be one and the most logical approach is to align the company with the brand as opposed to try to rebrand and aligned to our.

Alan Dow: And the investment community says, "What's Logility?" So we figured it was time to just dispense with that and be one. And the most logical approach is to align the company with the brand as opposed to trying to rebrand and align with the parent company, the registered company. So that's the motivation. You know, we're well-known in the industry, and the Logility brand is very well-known in the industry. So there's a whole lot less work if we follow the path we're on. And we're quite excited about that, just bringing that clarity to the table.

Speaker Change: The parent company that were registered company. So that's the motivation.

Speaker Change: We're well known in the industry.

Speaker Change: Logility brand is very well known in the industry. So there's a whole lot less work if we follow the path. We're on and we're quite excited about that just bringing that clarity to the table.

Speaker Change: Okay. Thank you and in terms of elimination of the dual class stock.

Anja Marie Theresa Soderstrom: Okay, thank you. And in terms of the elimination of dual class stock, how is that perceived by investors? Do you think that's going to be sort of a big hurdle for them currently? And are you going to see a lot more interest now?

Speaker Change: How is that perceived by the investors do you think thats going to be.

Speaker Change: Is that a big hurdle.

Speaker Change: With them currently and then you're going to see a lot more interest now.

Alan Dow: Yeah, well, a lot of them are with us on the call this afternoon, so we'll see what they have to say. But generally, we've been chatting about this for a while and when the right day would be.

Speaker Change: Yes.

Speaker Change: A lot of them are with us on the call. This afternoon. So we'll see what they have to say, but generally.

Speaker Change: We've been chatting about this for a while and when the day would be right.

Alan Dow: So the expectation is it is right, and it's the right thing to do. It gives equal representation across the entire investment community, which is always a positive thing. It also opens up the window.

Speaker Change: The expectation is it is it is right that it's the right thing to do it gives.

Speaker Change: Even even representation across the entire investment community, which is always a positive thing.

Speaker Change: It also opens up the window, maybe its well known maybe not completely well known there is a lot of investors who just their charter doesn't.

Alan Dow: Maybe it's well-known, maybe not completely well-known. There are a lot of investors who just, their charter doesn't, forbids them from making investments in growth companies that have a dual-class structure. So we think it'll open up the company to an even broader investment community, which is always good for the current investors as well. So we're quite excited about that transition. The work is all done. Now, we're really into it. We'll be making some filings in preparation for the shareholder meeting, which happens in August, and we'll be asking all the shareholders to either support us on that through their votes or express their desires otherwise. But we are firmly believing that it'll be a positive reception and that we'll wrap this up in the month of August.

Anja Marie Theresa Soderstrom: Okay, great. Thank you. That was all for me. Thank you.

Speaker Change: Bids them for making investments in growth companies that are have a dual class structure. So we think it will open up.

Speaker Change: The company to an even broader investment community, which is always good for the current investors as well. So we're quite excited about that transition.

Speaker Change: Work is all done.

Speaker Change: We're really into now we will be making some filings in preparation for the shareholder meeting which happens in August.

Speaker Change: And we will be asking for all the shareholders to either support us on now through their vote or or express their desires <unk>, but.

Speaker Change: We are firmly believing that.

Speaker Change: There'll be a positive reception in that we will wrap this up in the month of August.

Okay, great. Thank you I will start for me.

Alan Dow: Excellent. Thank you, Anja. Thank you for joining us.

Speaker Change: Excellent. Thank you on your thank you for joining us.

Speaker Change: We have no further questions at this time.

Operator: We have no further questions at this time.

Alan Dow: Well, Travis, thank you so much for helping us with the call today. Thank you all for participating once again. We certainly appreciate your attention and late in the day, and we'll look forward to speaking to all of you at the next quarter's end, if not sooner. Have a good afternoon.

Speaker Change: We will drive us. Thank you so much for helping us with the call today. Thank you all for participating once again, we certainly appreciate your attention and late in the day and we'll look forward to speak know all of you.

Speaker Change: The next quarter and if not sooner have a good afternoon.

Speaker Change: This does conclude today's program. Thank you for your participation you may disconnect at anytime.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change: [music].