Quick10K

American Software

Price	15.02		EPS	0
Shares	32		P/E	68
MCap	485		P/FCF	34
Net Debt	-63		EBIT	8
TEV	423		TEV/EBIT	54
TTM 2019-10-31, in MM, except price, ratios

10-Q	2020-07-31	Filed 2020-09-04 Print
10-K	2020-04-30	Filed 2020-07-10 Print
10-Q	2020-01-31	Filed 2020-03-06 Print
10-Q	2019-10-31	Filed 2019-12-06 Print
10-Q	2019-07-31	Filed 2019-09-06 Print
10-K	2019-04-30	Filed 2019-07-15 Print
10-Q	2019-01-31	Filed 2019-03-07 Print
10-Q	2018-10-31	Filed 2018-12-07 Print
10-Q	2018-07-31	Filed 2018-09-10 Print
10-K	2018-04-30	Filed 2018-07-13 Print
10-Q	2018-01-31	Filed 2018-03-09 Print
10-Q	2017-10-31	Filed 2017-12-08 Print
10-Q	2017-07-31	Filed 2017-09-08 Print
10-K	2017-04-30	Filed 2017-07-14 Print
10-Q	2017-01-31	Filed 2017-03-02 Print
10-Q	2016-10-31	Filed 2016-12-08 Print
10-Q	2016-07-31	Filed 2016-09-08 Print
10-K	2016-04-30	Filed 2016-07-14 Print
10-Q	2016-01-31	Filed 2016-03-04 Print
10-Q	2015-10-31	Filed 2015-12-07 Print
10-Q	2015-07-31	Filed 2015-09-04 Print
10-K	2015-04-30	Filed 2015-07-10 Print
10-Q	2015-01-31	Filed 2015-03-06 Print
10-Q	2014-10-31	Filed 2014-12-05 Print
10-Q	2014-07-31	Filed 2014-09-05 Print
10-K	2014-04-30	Filed 2014-07-14 Print
10-Q	2014-01-31	Filed 2014-03-12 Print
10-Q	2013-10-31	Filed 2013-12-06 Print
10-Q	2013-07-31	Filed 2013-09-09 Print
10-K	2013-04-30	Filed 2013-07-12 Print
10-Q	2013-01-31	Filed 2013-03-06 Print
10-Q	2012-10-31	Filed 2012-12-07 Print
10-Q	2012-07-31	Filed 2012-09-07 Print
10-K	2012-04-30	Filed 2012-07-12 Print
10-Q	2012-01-31	Filed 2012-03-08 Print
10-Q	2011-10-31	Filed 2011-12-09 Print
10-Q	2011-07-31	Filed 2011-09-08 Print
10-K	2011-04-30	Filed 2011-07-14 Print
10-Q	2011-01-31	Filed 2011-03-10 Print
10-Q	2010-10-31	Filed 2010-12-08 Print
10-Q	2010-07-31	Filed 2010-09-08 Print
10-K	2010-04-30	Filed 2010-07-14 Print
10-Q	2010-01-31	Filed 2010-03-10 Print

8-K	2020-08-26	Earnings, Exhibits
8-K	2020-08-20	Shareholder Vote
8-K	2020-06-18
8-K	2020-06-01
8-K	2020-05-26
8-K	2020-05-26
8-K	2020-02-20
8-K	2020-01-10
8-K	2019-11-21
8-K	2019-10-17
8-K	2019-08-28
8-K	2019-08-22
8-K	2019-06-19
8-K	2019-02-20
8-K	2019-01-01
8-K	2018-11-29
8-K	2018-09-04
8-K	2018-08-22
8-K	2018-06-21
8-K	2018-02-22

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Balance Sheet	Income Statement	Cash Flow
CopyHistoryView Assets, Equity	CopyHistoryView Rev, G Profit, Net Income	CopyHistoryView Ops, Inv, Fin

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PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

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Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete consolidated financial statements. In the opinion of our management, these Condensed Consolidated Financial Statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at July 31, 2020, results of operations for the three months ended July 31, 2020 and 2019, consolidated statements of shareholders’ equity for the three months ended July 31, 2020 and 2019 and cash flows for the three months ended July 31, 2020 and 2019. The Company’s results for the three months ended July 31, 2020 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended April 30, 2020. The terms “fiscal 2021” and “fiscal 2020” refer to our fiscal years ending April 30, 2021 and 2020, respectively.

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Note 1 in the Notes to the Consolidated Financial Statements for fiscal 2020 contained in the Annual Report describes the significant accounting policies that we have used in preparing our consolidated financial statements. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to revenue/reserves and allowances. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results could differ materially from these estimates under different assumptions or conditions.

Principles of Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of American Software, Inc. (“American Software”) and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017–04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill to eliminate Step 2 from the goodwill impairment test. In addition, it eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. ASU 2017–04 is effective for the Company’s fiscal year beginning May 1, 2020. The new guidance is required to be applied on a prospective basis. The adoption of ASU 2017–04 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (A Consensus of the FASB Emerging Issues Task Force). ASU 2018-15 provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract. The new guidance amends the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain implementation costs following the internal-use software capitalization criteria within Accounting Standards Codification ("ASC") Subtopic 350-40.

We adopted ASU 2018-15 on May 1, 2020, applying the guidance prospectively and the adoption of this standard did not have an impact on our consolidated financial statements. We have not historically capitalized implementation costs associated with cloud computing arrangements that are service contracts following the guidance in Subtopic 350-40, but we will do so pursuant to the clarifications provided in the new guidance on a go forward basis.

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In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU No. 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. This guidance is effective for annual reporting periods beginning after December 15, 2019, with early adoption permitted.

On May 1, 2020, we adopted ASU 2016-13 using the modified retrospective method applied for all financial assets measured at amortized cost. In estimating the allowance for credit losses, we considered the age of the accounts receivable, our historical write-offs, and the historical creditworthiness of the customer, among other factors. Should any of these factors change, the estimates made by us will also change accordingly, which could affect the level of our future allowances. We also analyzed future expected credit losses given ever present changes to future risks in projected economic conditions and future risks of customer collection. The net impact of the adoption of ASU 2016-13 was immaterial on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating taxes during the quarters and the recognition of deferred tax liabilities for outside basis differences. This guidance also simplifies aspects of the accounting for franchise taxes and changes in tax laws or rates, as well as clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for the Company beginning May 1, 2021 and would require us to recognize a cumulative effect adjustment to the opening balance of reinvested earnings, if applicable. We do not expect our adoption of this guidance to have a material impact on our consolidated financial statements.

        We recognize revenue when we transfer control of the promised goods or services to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We derive our revenue from software licenses; maintenance services; consulting, implementation and training services; and Software-as-a-Service (“SaaS”), which includes a subscription to our software as well as maintenance, hosting and managed services.

        The Company determines revenue recognition through the following steps:

Step 1 – Identification of the Contract with the Customer

Step 2 – Identification of Promised Goods and Services and Evaluation of Whether the Promised Goods and Services are Distinct Performance Obligations

Step 3 – Determination of the Transaction Price

Step 4 – Allocation of the Transaction Price to Distinct Performance Obligations

Step 5 – Attribution of Revenue for Each Distinct Performance Obligation

Nature of Products and Services.

        Subscription Fees. Subscription fees include SaaS revenues for the right to use the software for a limited period of time in an environment hosted by the Company or by a third party. The customer accesses and uses the software on an as-needed basis over the Internet or via a dedicated line; however, the customer has no right to take delivery of the software without incurring a significant penalty. The underlying arrangements typically include a single fee for the service that is billed monthly, quarterly or annually. The Company’s SaaS solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue from a SaaS solution is generally recognized ratably over the term of the arrangement.

        Licenses. Our perpetual software licenses provide the customer with a right to use the software as it exists at the time of purchase. We recognize revenue for distinct software licenses once the license period has begun and we have made the software available to the customer.

        Our perpetual software licenses are sold with maintenance under which we provide customers with telephone consulting, product updates on a when and if available basis, and releases of new versions of products previously purchased by the customer, as well as error reporting and correction services. 

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        Professional Services and Other. Our services revenue consists of fees generated from consulting, implementation and training services, including reimbursements of out-pocket expenses in connection with our services. Services are typically optional to our customers, and are distinct from our software. Fees for our services are separately priced and are generally billed on an hourly basis, and revenue is recognized over time as the services are performed. We believe the output method of hours worked provides the best depiction of the transfer of our services since the customer is receiving the benefit from our services as the work is performed. The total amount of expense reimbursement included in professional services and other revenue was approximately $0 for the three months ended July 31, 2020, respectively and approximately $0.4 million for the three months ended July 31, 2019, respectively.

        Maintenance. Revenue is derived from maintenance under which we provide customers with telephone consulting, product updates on a when and if available basis, and releases of new versions of products previously purchased by the customer, as well as error reporting and correction services. Maintenance for perpetual licenses is renewable, generally on an annual basis, at the option of the customer. Maintenance terms typically range from one to three years. Revenue related to maintenance is generally paid in advance and recognized ratably over the term of the agreement since the Company is standing ready to provide a series of maintenance services that are substantially the same each period over the term; therefore, time is the best measure of progress.

        Indirect Channel Revenue. We record revenues from sales made through the indirect sales channels on a gross basis, because we control the goods or services and act as the principal in the transaction. In reaching this determination, we evaluated sales through our indirect channel on a case-by-case basis and considered a number of factors including indicators of control such as the party having the primary responsibility to provide specified goods or services and the party having discretion in establishing prices.

        Sales Taxes. We account for sales taxes collected from customers on a net basis.

        Significant Judgments. Many of our contracts include multiple performance obligations. Our products and services generally do not require a significant amount of integration or interdependency; therefore, our products and services are generally not combined. We allocate the transaction price for each contract to each performance obligation based on the relative standalone selling price (SSP) for each performance obligation within each contract.

We use judgment in determining the SSP for products and services. For substantially all performance obligations except on-premise licenses, we are able to establish SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers. We typically establish an SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change. Our on-premise licenses have not historically been sold on a standalone basis, as the vast majority of all customers elect to purchase on-premise license maintenance and support contracts at the time of a on-premise license purchase. We are unable to establish the SSP for our on-premise licenses based on observable prices given the same products are sold for a broad range of amounts (that is, the selling price is highly variable) and a representative SSP is not discernible from past transactions or other observable evidence. As a result, the SSP for a on-premise license included in a contract with multiple performance obligations is determined by applying a residual approach whereby all other performance obligations within a contract are first allocated a portion of the transaction price based upon their respective SSPs, with any residual amount of transaction price allocated to on-premise license revenues. Maintenance and support contracts are generally priced as a percentage of the net fees paid by the customer to access the on-premise license.

        Contract Balances. Timing of invoicing to customers may differ from timing of revenue recognition and these timing differences result in unbilled accounts receivables or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. Fees for our software licenses are generally due within 30 days of contract execution. We have an established history of collecting under the terms of our software license contracts without providing refunds or concessions to our customers. SaaS solutions and maintenance are typically billed in advance on a monthly, quarterly, or annual basis. Services are typically billed as performed. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts generally do not include significant financing component. The primary purpose of our invoicing terms is to provide customers with predictable ways to purchase our software and services, not to provide or receive financing. Additionally, we are applying the practical expedient to exclude any financing component from consideration for any contracts with payment terms of one year or less since we rarely offer terms extending beyond one year. The consideration in our customer contracts is fixed.

We have an unconditional right to consideration for all goods and services transferred to our customers. That unconditional right to consideration is reflected in billed and unbilled accounts receivable in the accompanying consolidated balance sheets in accordance with ASC Topic 606.

Deferred revenue consists of amounts collected prior to having completed the performance of maintenance, SaaS, hosting, and managed services. We typically invoice customers for cloud subscription and support fees in advance on a monthly, quarterly or

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annual basis, with payment due at the start of the cloud subscription or support term. During the three months ended July 31, 2020, we recognized $14.7 million of revenue that was included in the deferred revenue balance as of April 30, 2020.  

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			July 31, 2020						April 30, 2020
						(in thousands)
Deferred revenue, current			32,488						34,227
Deferred revenue, long-term			—						—
Total deferred revenue			$	32,488					$	34,227

        Remaining Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Topic 606. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied by transferring the promised good or service to the customer. The Company identifies and tracks the performance obligations at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract. Remaining performance obligations represent the transaction price of orders for which products have not been delivered or services have not been performed. As of July 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $75.0 million. The Company expects to recognize revenue on approximately two-thirds of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter.

        Disaggregated Revenue. The Company disaggregates revenue from contracts with customers by geography, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s revenue by geography is as follows:

        

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			Three Months Ended July 31,
						2020						2019
						(in thousands)
Revenues:
Domestic			$	23,140					$	21,411
International			4,138						5,972
			$	27,278					$	27,383

        Contract Costs. The Company capitalizes the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, a sales commission). The Company capitalizes the costs incurred to fulfill a contract only if those costs meet all of the following criteria:

a. The costs relate directly to a contract or to an anticipated contract that the Company can specifically identify.

b. The costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.

c. The costs are expected to be recovered.

        Certain sales commissions incurred by the Company were determined to be incremental costs to obtain the related contracts, which are deferred and amortized ratably over the economic benefit period. These deferred commission costs are classified as current or non-current based on the timing of when the Company expects to recognize the expense. The current and non-current portions of deferred commissions are included in prepaid expenses and other current assets and deferred sales commissions—noncurrent, respectively, in the Company’s Condensed Consolidated Balance Sheets. Total deferred commissions at July 31, 2020 and April 30, 2020 were $3.2 million and $3.5 million, respectively. Amortization of sales

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The Company’s operating leases are primarily related to facility leases for administration and sales. The operating leases have terms ranging from three to five years. While each of the leases includes renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities. The Company does not have any finance leases.

Balance sheet information related to operating leases is as follows (in thousands):

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			July 31, 2020
Assets
Right of use assets			$	1,920
Liabilities
Current lease liabilities			782
Long-term lease liabilities			1,265
Total liabilities			$	2,047

Lease cost information related to operating leases is as follows (in thousands):

			Three Months Ended July 31, 2020
Lease cost
Operating lease cost			$	194
Short-term lease cost			158
Variable lease cost			69
Total lease cost			$	421

Lease costs are primarily included in "Sales and marketing" and "General and administrative" expenses in the Company’s Condensed Consolidated Statements of Operations.

The impact of the Company's leases on Condensed Consolidated Statement of Cash Flows is presented in the operating activities section, which mainly consisted of cash paid for operating lease liabilities of approximately $0.4 million during the three months ended July 31, 2020. On May 1, 2020, the Company extended the lease between John J. Flatley Company, and Logility, Inc., an additional two years for the office building located in New Hampshire ending on April 30, 2022.

Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:

			July 31, 2020
Weighted average remaining lease term			3.0 years
Weighted average discount rate			3.4		%

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The following table summarizes the maturity of the Company’s operating lease liabilities as of July 31, 2020 (in thousands):

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FY2021			$	596
FY2022			723
FY2023			463
FY2024			346
FY2025			20
Thereafter			—
Total operating lease payments			$	2,148
Less imputed interest			(101)
Total operating lease liabilities			$	2,047

The Company leases to other tenants a portion of its headquarters building that it owns in Atlanta, Georgia. The leases expire at various dates through October 2025. Lease income is included in "Other, net" in the Company’s Condensed Consolidated Statements of Operations and totaled approximately $0.1 million for the three months ended July 31, 2020. Lease payments to be received as of July 31, 2020 are as follows (in thousands):

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FY2021			$	123
FY2022			149
FY2023			96
FY2024			98
FY2025			100
Thereafter			50
Total			$	616

        The Company has two classes of common stock. Class B common shares are convertible into Class A common shares at any time, on a one-for-one basis. Under the Company’s Articles of Incorporation, if dividends are declared, holders of Class A common shares shall receive a $0.05 dividend per share prior to the Class B common shares receiving any dividend and holders of Class A common shares shall receive a dividend at least equal to Class B common shares dividends on a per share basis. As a result, the Company has computed the earnings per share in compliance with the Earnings Per Share Topic of the FASB ASC, which requires companies that have multiple classes of equity securities to use the “two-class” method in computing earnings per share.

        For the Company’s basic earnings per share calculation, the Company uses the “two-class” method. Basic earnings per share are calculated by dividing net earnings attributable to each class of common stock by the weighted average number of shares outstanding. All undistributed earnings are allocated evenly between Class A and B common shares in the earnings per share calculation to the extent that earnings equal or exceed $0.05 per share. This allocation is based on management’s judgment after considering the dividend rights of the two-classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares to Class A shares. If Class B shares convert to Class A shares during the period,

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the distributed net earnings for Class B shares is calculated using the weighted average common shares outstanding during the period.

        Diluted earnings per share is calculated similarly to basic earnings per share, except that the calculation includes the dilutive effect of the assumed exercise of options issuable under the Company’s stock incentive plans. For the Company’s diluted earnings per share calculation for Class A shares, the Company uses the “if-converted” method. This calculation assumes that all Class B common shares are converted into Class A common shares and, as a result, assumes there are no holders of Class B common shares to participate in undistributed earnings.

        For the Company’s diluted earnings per share calculation for Class B shares, the Company uses the “two-class” method. This calculation does not assume that all Class B common shares are converted into Class A common shares. In addition, this method assumes the dilutive effect of Class A stock options were converted to Class A shares and the undistributed earnings are allocated evenly to both Class A and B shares including Class A shares issued pursuant to those converted stock options. This allocation is based on management’s judgment after considering the dividend rights of the two-classes of common stock, the control of the Class B shareholders and the convertibility rights of the Class B shares into Class A shares.

The following tables set forth the computation of basic earnings per common share and diluted earnings per common share (in thousands except for per share amounts):

Basic earnings per common share:

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			Three Months Ended July 31, 2020																		Three Months Ended July 31, 2019
						Class A Common Shares						Class B Common Shares						Class A Common Shares						Class B Common Shares
Distributed earnings			$	0.11					$	0.11					$	0.11					$	0.11
Undistributed losses			(0.05)						(0.05)						(0.07)						(0.07)
Total			$	0.06					$	0.06					$	0.04					$	0.04
Distributed earnings			$	3,370					$	201					$	3,245					$	206
Undistributed losses			(1,450)						(87)						(2,163)						(136)
Total			$	1,920					$	114					$	1,082					$	70
Basic weighted average common shares outstanding			30,517						1,822						29,448						1,822

Diluted EPS for Class A Common Shares Using the If-Converted Method

Three Months Ended July 31, 2020

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			Undistributed & Distributed Earnings to Class A Common Shares						Class A Common Shares						EPS*
Per Basic			$	1,920					30,517						$	0.06
Common Stock Equivalents			—						593						—
			1,920						31,110						0.06
Class B Common Share Conversion			114						1,822						—
Diluted EPS for Class A Common Shares			$	2,034					32,932						$	0.06

Three Months Ended July 31, 2019

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			Undistributed & Distributed Earnings to Class A Common Shares						Class A Common Shares						EPS*
Per Basic			$	1,082					29,448						$	0.04
Common Stock Equivalents			—						681						—
			1,082						30,129						0.04
Class B Common Share Conversion			70						1,822						—
Diluted EPS for Class A Common Shares			$	1,152					31,951						$	0.04

Diluted EPS for Class B Common Shares Using the Two-Class Method

Three Months Ended July 31, 2020

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			Undistributed & Distributed Earnings to Class B Common Shares						Class B Common Shares						EPS*
Per Basic			$	114					1,822						$	0.06
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares			2						—						—
Diluted EPS for Class B Common Shares			$	116					1,822						$	0.06

Three Months Ended July 31, 2019

			Undistributed & Distributed Earnings to Class B Common Shares						Class B Common Shares						EPS*
Per Basic			$	70					1,822						$	0.04
Reallocation of undistributed earnings/losses from Class A Common Shares to Class B Common Shares			3						—						—
Diluted EPS for Class B Common Shares			$	73					1,822						$	0.04

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*Amounts adjusted for rounding

For the three months ended July 31, 2020, we excluded options to purchase 647,935 Class A Common Shares, respectively, and for the three months ended July 31, 2019, we excluded options to purchase 577,217 Class A Common Shares, respectively, from the computation of diluted earnings per Class A Common Shares. We excluded these option share amounts because the exercise prices of those options were greater than the average market price of the Class A Common Shares during the applicable period. As of July 31, 2020, we had a total of 3,959,903 options outstanding and as of July 31, 2019, we had a total of 3,873,560 options outstanding.

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We measure our investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. A number of factors affect market price observability, including the type of asset or liability and its characteristics. This hierarchy prioritizes the inputs into three broad levels as follows:

•Level 1—Quoted prices for identical instruments in active markets.

•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

•Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following is a general description of the valuation methodologies we use for financial assets and liabilities measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash Equivalents—Cash equivalents include investments in government obligation based money-market funds, other money market instruments and interest-bearing deposits with initial terms of three months or less. The fair value of cash equivalents approximates its carrying value due to the short-term nature of these instruments.

Marketable Securities—Marketable securities utilizing Level 1 inputs include active exchange-traded equity securities and equity index funds, and most U.S. government debt securities, as these securities all have quoted prices in active markets. Marketable securities utilizing Level 2 inputs include municipal bonds. We value these securities using market-corroborated pricing or other models that use observable inputs such as yield curves.

The following tables present our assets and liabilities that we measured at fair value on a recurring basis as of July 31, 2020 and April 30, 2020, and indicate the fair value hierarchy of the valuation techniques we used to determine such fair value (in thousands):

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			July 31, 2020
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Balance
Cash equivalents			$	73,532					$	—					$	—					$	73,532
Marketable securities			11,818						1,435						—						13,253
Total			$	85,350					$	1,435					$	—					$	86,785

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			April 30, 2020
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Balance
Cash equivalents			75,256						—						—						75,256
Marketable securities			11,758						3,104						—						14,862
Total			87,014						3,104						—						90,118

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FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of a public entity about which separate financial information is available that is evaluated regularly by the chief operating decision makers (“CODMs”), or decision making group, in deciding how to allocate resources and in assessing performance. Our CODMs are our Chief Executive Officer and President and our Chief Financial Officer. While our CODMs are apprised of a variety of financial metrics and information, we manage our business primarily on a segment basis, with the CODMs evaluating performance based upon segment operating profit or loss, with certain corporate and other common expenses included in the Other segment. Our CODMs review the operating results of our three segments, assess performance and allocate resources in a manner that is consistent with the changing market dynamics that we have experienced. As a result, in the third quarter of fiscal 2018, we updated our operating segments to reflect the fact that we provide our software solutions through three major operating segments, which are further broken down into a total of six major product and service groups. The three operating segments are (1) Supply Chain Management (“SCM”), (2) Information Technology (“IT”) Consulting and (3) Other.

Our primary operating units or brands under our SCM segment include Logility, Inc., New Generation Computing, Inc. ("NGC"), and Demand Management, Inc. ("DMI"). Logility and New Generation Computing are each a wholly-owned subsidiary of the Company, and Demand Management, Inc. is a wholly-owned subsidiary of Logility, Inc. Each operating unit focuses on a segment of the marketplace where their expertise lies.

All of our revenues are derived from external customers. We do not have any intersegment revenue. Our income taxes and dividends are paid at a consolidated level. Consequently, it is not practical to show these items by operating segment.

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In the following table, we have broken down the intersegment transactions applicable to the three months ended July 31, 2020 and 2019 (in thousands):

Copy History

			Three Months Ended July 31,
			2020						2019
Revenues:
Supply Chain Management			$	21,736					$	22,347
IT Consulting			5,026						4,378
Other			516						658
			$	27,278					$	27,383
Operating income (loss):
Supply Chain Management			$	4,105					$	3,851
IT Consulting			106						178
Other			(3,326)						(3,232)
			$