Including Subscription Revenue Growth of
29.1%
Raises Full Year Revenue Guidance Range To
$235M To $238M and Subscription Revenue Growth To 28%
Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of
hospitality software solutions that deliver High Return
Hospitality, today reported operating results for its fiscal 2024
second quarter ending September 30, 2023.
Summary of Fiscal 2024 Second Quarter Financial
Results
- Total net revenue increased 22.8% to a record $58.6 million,
compared to total net revenue of $47.7 million in the comparable
prior-year period.
- Recurring revenue (comprising subscription and maintenance
charges) was a record $34.2 million, or 58.4% of total net revenue
compared to $29.0 million, or 60.8% of total net revenue for the
same period in fiscal 2023. Subscription revenue increased 29.1%
year-over-year and was 53.6% of total recurring revenue compared to
48.9% of total recurring revenue in the second quarter of fiscal
2023.
- Gross margin was 59.9% compared to 61.5% in the comparable
prior-year period.
- Net income attributable to common shareholders was $4.1
million, or $0.16 per diluted share compared to $3.1 million, or
$0.12 per diluted share in the comparable prior-year period.
- Adjusted EBITDA (non-GAAP) was $8.1 million compared to $7.4
million in the comparable prior-year period (reconciliation
included in financial tables).
- Adjusted diluted EPS (non-GAAP) was $0.25 per share compared to
$0.24 per share in the comparable prior-year period (reconciliation
included in financial tables).
- Free cash flow (non-GAAP) in the fiscal 2024 second quarter was
$2.5 million compared to free cash flow of $2.3 million in the
fiscal 2023 second quarter (reconciliation included in financial
tables). Ending cash balance was $107.4 million, compared to ending
cash balance of $112.8 million as of fiscal 2023 year-end.
Ramesh Srinivasan, President and CEO of Agilysys, commented, “We
are pleased with the strong fiscal year 2024 second quarter
July-September results highlighted by year-over-year 22.8% quarter
revenue and 29.1% subscription revenue growth, driving both to
record high levels. Adjusted EBITDA was 13.7% of revenue, higher
than previous expectations going into the fiscal year. We are doing
well managing through the current phase of increased investment
requirements which are designed to drive significant further
revenue growth in the medium-term. We now expect adjusted EBITDA
for the full fiscal year to be 14% of revenue, higher than previous
guidance.
“Our implementation efficiency continues to improve as the
re-engineered core products and newly developed experience enhancer
add-on software modules are performing well in the field and
creating considerable value for customers. Excellent selling
success momentum highlighted by one of our best sales quarters and
the best ever first half of fiscal year April to September sales
measured in annual contract value terms drove aggregate recurring
revenue, product and services backlog to a near record level.
“Overall, we are well positioned to do better than guidance
levels provided at the beginning of the fiscal year. We now expect
fiscal year 2024 revenue to be between $235M and $238M inclusive of
28% subscription revenue growth. Given the successful investments
in product innovation during the past few years, we think our
ability to fulfill the growing hospitality industry need for
quantum technology improvements to improve operational
efficiencies, staff and guest experiences will help keep up and
build on our current business momentum. We remain bullish and
confident of our short, medium and long term prospects.”
Fiscal 2024 Outlook
We are raising full year fiscal 2024 revenue guidance to be $235
to $238 million, increasing subscription revenue growth guidance
for the full 2024 fiscal year to 28% year-over-year and increasing
Adjusted EBITDA expectations for fiscal 2024 to 14% of revenue.
Dave Wood, Chief Financial Officer, commented, “Successful
implementations of a couple of larger projects contributed to high
sequential subscription revenue growth this quarter. The first half
of the fiscal year has been stronger than expected on the back of
our sales investments and product innovation. We are pleased to be
in a position to raise our full year guidance of total revenue,
subscription revenue growth and Adjusted EBITDA levels. We continue
to be disciplined with our growth management efforts.”
2024 Second Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, October
23rd, 2023, at 4:30 p.m. ET. Both the call and the webcast are open
to the public. Interested parties can register for the call at
https://register.vevent.com/register/BIa33e374c65f34c2cae8fedf2198ff64b.
Registrants will receive an email confirmation with further access
details and a personalized PIN. Please register 15 minutes prior to
the call to receive registration confirmation and access details
before the call starts.
Interested parties can also access the conference call live on
the Investors Relations page of Agilysys.com under the Events and
Presentations heading. An archived version of the webcast will be
available for replay at the same location approximately two hours
after the call is concluded.
Forward-Looking Language
This press release contains “forward-looking statements” within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as: “anticipate,”
“intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,”
“expect,” “strategy,” “future,” “likely,” “may,” “should,” “will”
and similar references to future periods. Examples of
forward-looking statements include, among others, our revenue,
subscription revenue and Adjusted EBITDA guidance for 2024 fiscal
year.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding the
future of our business, future plans and strategies, projections,
anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the impact macroeconomic factors may have on
the overall business environment, our ability to achieve our fiscal
2024 guidance, future revenue growth, the company's ability to
convert the backlog into revenue, and the risks described in the
Company’s filings with the Securities and Exchange Commission,
including the Company’s reports on Form 10-K and Form 10-Q.
Additionally, references to "record" financial and business levels
in this document refer only to the time period after Agilysys made
the transformation to an entirely hospitality focused software
solutions company in FY2014.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. We undertake no obligation
to publicly update any forward-looking statement that may be made
from time to time, whether written or oral, whether as a result of
new information, future developments or otherwise.
Use of Non-GAAP Financial Information
To supplement the unaudited consolidated financial statements
presented in accordance with U.S. GAAP in this press release,
certain non-GAAP financial measures as defined by the SEC rules are
used. These non-GAAP financial measures include EBITDA, Adjusted
EBITDA, adjusted net income, adjusted basic earnings per share,
adjusted diluted earnings per share and free cash flow. Management
believes that such information can enhance investors’ understanding
of the Company’s ongoing operations.
The Company has included the following non-GAAP financial
measures in this press release: adjusted net income, adjusted basic
earnings per share and adjusted diluted earnings per share. The
Company believes these non-GAAP financial measures provide valuable
insight into the Company’s overall profitability from core
operations before certain non-cash and non-recurring charges. The
Company defines adjusted net income as net income before
amortization expense (including amortization of developed
technology), share-based compensation, convertible preferred stock
issuance costs, and one-time charges including severance and other
charges, impairments and legal settlements, less the related income
tax effect of these adjustments, as applicable, and defines
adjusted earnings per share as adjusted net income divided by basic
and diluted weighted average shares outstanding.
See the accompanying tables below for the definitions and
reconciliation of these non-GAAP measures to the most closely
related GAAP measures.
About Agilysys
Agilysys exclusively delivers state-of-the-art software
solutions and services that help organizations achieve High Return
Hospitality™ by maximizing Return on Experience (ROE) through
interactions that make ‘personal’ profitable. Customers around the
world use Agilysys Property Management Systems (PMS), Point-of-Sale
(POS) solutions and Inventory and Procurement (I&P) systems to
consistently delight guests, retain staff and grow margins.
Agilysys’ 100% hospitality customer base includes branded and
independent hotels; multi-amenity resorts; casinos; property, hotel
and resort management companies; cruise lines; corporate dining
providers; higher education campus dining providers; food service
management companies; hospitals; lifestyle communities; senior
living facilities; stadiums; and theme parks. Agilysys operates
across the Americas, Europe, the Middle East, Africa, Asia-Pacific,
and India with headquarters located in Alpharetta, GA. For more
information visit Agilysys.com.
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
Three months ended September
30,
Six months ended September
30,
(In thousands, except per share data)
2023
2022
2023
2022
Net revenue:
Products
$
12,640
$
10,548
$
25,422
$
21,594
Subscription and maintenance
34,248
29,036
66,373
56,763
Professional services
11,728
8,158
22,881
16,891
Total net revenue
58,616
47,742
114,676
95,248
Cost of goods sold:
Products
6,751
5,434
13,317
11,314
Subscription and maintenance
7,804
6,170
15,441
12,456
Professional services
8,965
6,773
17,764
13,618
Total cost of goods sold
23,520
18,377
46,522
37,388
Gross profit
35,096
29,365
68,154
57,860
Gross profit margin
59.9
%
61.5
%
59.4
%
60.7
%
Operating expenses:
Product development
14,583
12,577
27,904
24,134
Sales and marketing
6,400
5,320
13,701
10,733
General and administrative
8,785
7,570
18,150
14,922
Depreciation of fixed assets
1,209
461
2,133
934
Amortization of internal-use software and
intangibles
347
443
776
896
Other charges
210
67
969
281
Total operating expense
31,534
26,438
63,633
51,900
Operating income
3,562
2,927
4,521
5,960
Other income (expense):
Interest income
1,227
380
2,328
482
Interest expense
—
(1
)
—
(1
)
Other income (expense), net
51
112
(109
)
414
Income before taxes
4,840
3,418
6,740
6,855
Income tax provision (benefit)
295
(158
)
647
240
Net income
$
4,545
$
3,576
$
6,093
$
6,615
Series A convertible preferred stock
dividends
(459
)
(459
)
(918
)
(918
)
Net income attributable to common
shareholders
$
4,086
$
3,117
$
5,175
$
5,697
Weighted average shares outstanding -
basic
25,022
24,652
24,979
24,625
Net income per share - basic:
$
0.16
$
0.13
$
0.21
$
0.23
Weighted average shares outstanding -
diluted
26,117
25,783
26,148
25,591
Net income per share - diluted:
$
0.16
$
0.12
$
0.20
$
0.22
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share data)
September 30, 2023
(Unaudited)
March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
107,413
$
112,842
Accounts receivable, net of allowance for
expected credit losses of $723 and $610, respectively
27,762
22,378
Contract assets
3,278
2,242
Inventories
7,485
9,774
Prepaid expenses and other current
assets
7,473
7,422
Total current assets
153,411
154,658
Property and equipment, net
17,477
14,576
Operating lease right-of-use assets
23,097
12,708
Goodwill
32,755
32,638
Intangible assets, net
17,505
18,140
Deferred income taxes, non-current
3,153
2,790
Other non-current assets
7,816
7,526
Total assets
$
255,214
$
243,036
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
10,069
$
9,418
Contract liabilities
43,334
52,124
Accrued liabilities
13,764
13,708
Operating lease liabilities, current
5,540
3,263
Finance lease obligations, current
—
2
Total current liabilities
72,707
78,515
Deferred income taxes, non-current
2,278
2,257
Operating lease liabilities,
non-current
23,294
13,477
Other non-current liabilities
4,858
4,018
Commitments and contingencies
Series A convertible preferred stock, no
par value
35,459
35,459
Shareholders' equity:
Common shares, without par value, at $0.30
stated value; 80,000,000 shares authorized; 31,606,831 shares
issued; and 25,370,482 and 25,326,626 shares outstanding at
September 30, 2023 and March 31, 2023, respectively
9,482
9,482
Treasury shares, 6,236,349 and 6,280,205
at September 30, 2023 and March 31, 2023, respectively
(1,871
)
(1,884
)
Capital in excess of stated value
55,154
52,978
Retained earnings
57,939
52,764
Accumulated other comprehensive loss
(4,086
)
(4,030
)
Total shareholders' equity
116,618
109,310
Total liabilities and shareholders'
equity
$
255,214
$
243,036
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(UNAUDITED)
Six Months Ended
September 30,
(In thousands)
2023
2022
Operating activities
Net income
$
6,093
$
6,615
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of fixed assets
2,133
934
Amortization of internal-use software and
intangibles
776
896
Deferred income taxes
(389
)
(306
)
Share-based compensation
5,851
5,944
Changes in operating assets and
liabilities
(8,994
)
(10,966
)
Net cash provided by operating
activities
5,470
3,117
Investing activities
Capital expenditures
(6,002
)
(797
)
Additional investments in corporate-owned
life insurance policies
(2
)
(2
)
Net cash used in investing activities
(6,004
)
(799
)
Financing activities
Payment of preferred stock dividends
(918
)
(918
)
Repurchase of common shares to satisfy
employee tax withholding
(3,868
)
(1,455
)
Principal payments under long-term
obligations
(2
)
(2
)
Net cash used in financing activities
(4,788
)
(2,375
)
Effect of exchange rate changes on
cash
(107
)
(718
)
Net decrease in cash and cash
equivalents
(5,429
)
(775
)
Cash and cash equivalents at beginning of
period
112,842
96,971
Cash and cash equivalents at end of
period
$
107,413
$
96,196
AGILYSYS, INC.
RECONCILIATION OF NET INCOME TO
EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
Three months ended
Six months ended
(In thousands)
September 30,
September 30,
2023
2022
2023
2022
Net income
$
4,545
$
3,576
$
6,093
$
6,615
Income tax provision (benefit)
295
(158
)
647
240
Income before taxes
4,840
3,418
6,740
6,855
Depreciation of fixed assets
1,209
461
2,133
934
Amortization of internal-use software and
intangibles
347
443
776
896
Amortization of developed technology
acquired
41
40
81
81
Interest income, net
(1,227
)
(379
)
(2,328
)
(481
)
EBITDA (a)
5,210
3,983
7,402
8,285
Share-based compensation
2,684
3,456
5,851
5,944
Other charges
210
67
969
281
Other non-operating expense (income)
(51
)
(112
)
109
(414
)
Adjusted EBITDA (b)
$
8,053
$
7,394
$
14,331
$
14,096
(a) EBITDA, a non-GAAP financial measure,
is defined as net income before income taxes, interest income (net
of interest expense), depreciation and amortization (including
amortization of developed technology)
(b) Adjusted EBITDA, a non-GAAP financial
measure, is defined as net income before income taxes, interest
income (net of interest expense), depreciation and amortization
(including amortization of developed technology), and excluding
charges relating to i) legal settlements, ii) other charges, iii)
share-based compensation, and iv) other non-operating (income)
expense
AGILYSYS, INC.
RECONCILIATION OF NET INCOME TO
ADJUSTED NET INCOME FOR ADJUSTED EARNINGS PER SHARE
(UNAUDITED)
Three Months Ended
Six months ended
(In thousands, except per share data)
September 30,
September 30,
2023
2022
2023
2022
Net income attributable to common
shareholders
$
4,086
$
3,117
$
5,175
$
5,697
Amortization of developed technology
acquired
41
40
81
81
Amortization of internal-use software and
intangibles
347
443
776
896
Share-based compensation
2,684
3,456
5,851
5,944
Other charges
210
67
969
281
Income tax adjustments
(742
)
(841
)
(1,620
)
(1,367
)
Adjusted net income (a)
$
6,626
$
6,282
$
11,232
$
11,532
Basic weighted average shares
outstanding
25,022
24,652
24,979
24,625
Diluted weighted average shares
outstanding
26,117
25,783
26,148
25,591
Adjusted basic earnings per share
(b)
$
0.26
$
0.25
$
0.45
$
0.47
Adjusted diluted earnings per share
(b)
$
0.25
$
0.24
$
0.43
$
0.45
(a) Adjusted net income, a non-GAAP
financial measure, is defined as net income attributable to common
shareholders before amortization expense (including amortization of
developed technology), share-based compensation, and one-time
charges including other charges and legal settlements, less the
related income tax effect of these adjustments, as applicable, at
the Company’s current combined federal and state income statutory
tax rate. No income tax effect applies to one-time charges when a
valuation allowance offsets their related deferred tax assets
(b) Adjusted earnings per share, a
non-GAAP financial measure, is defined as adjusted net income
divided by basic and diluted weighted average shares
outstanding
AGILYSYS, INC.
RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)
Three months ended
Six months ended
(In thousands)
September 30,
September 30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
5,448
$
3,016
$
5,470
$
3,117
Capital expenditures
(2,937
)
(699
)
(6,002
)
(797
)
Free cash flow (a)
$
2,511
$
2,317
$
(532
)
$
2,320
(a) Free cash flow, a non-GAAP financial
measure, is defined as net cash provided by operating activities,
less capital expenditures
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023091370/en/
Investor Contact: Jessica Hennessy Senior Director
Corporate Strategy & Investor Relations Agilysys, Inc.
770-810-6116 or investorrelations@agilysys.com
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