Fifth Consecutive Quarter of Record Revenue
Includes Record Recurring Revenue of $20.1 Million,
Inclusive of 24% Growth in Subscription Revenue
Reports Record Adjusted EBITDA of $3.2
Million
Agilysys, Inc. (Nasdaq: AGYS), a global provider of
next-generation hospitality software solutions and services, today
reported operating results for its fiscal 2020 first quarter ended
June 30, 2019.
Summary of Fiscal 2020 First Quarter Financial
Results
- Total net revenue increased 12.9% to a record $38.4 million,
compared to total net revenue of $34.0 million in the comparable
prior-year period.
- Recurring revenues (which are comprised of support, maintenance
and subscription services) were a record $20.1 million, or 52.3% of
total net revenue, compared to $17.9 million, or 52.7% of total net
revenue, for the same period in fiscal 2019. Subscription revenues
increased 24% year over year and comprised 35% of total recurring
revenues, compared to 32% of total recurring revenues in the first
quarter of fiscal 2019.
- Gross margin was 52.1% in the fiscal 2020 first quarter,
compared to 52.6% in the comparable prior-year period.
- Net loss in the fiscal 2020 first quarter was $(1.6) million,
or $(0.07) per diluted share, compared to a net loss of $(1.7)
million, or $(0.08) per diluted share, in the comparable prior-year
period. The comparable prior-year period included a benefit of $2.1
million of software development costs capitalization that did not
occur in the fiscal 2020 first quarter.
- Adjusted EBITDA (non-GAAP) was a record $3.2 million, compared
to $3.1 million in the comparable prior-year period. As described
below, due to a change in software development and deployment
practices that went into effect in the fiscal 2019 second quarter,
the fiscal 2020 first quarter did not have the benefit of
capitalizing software development costs. Assuming no software
development costs were capitalized in the fiscal 2019 first
quarter, Adjusted EBITDA in the fiscal 2020 first quarter of $3.2
million would compare to $1.0 million in the fiscal 2019 first
quarter (see reconciliation below).
- Free cash flow (non-GAAP) in the fiscal 2020 first quarter was
($2.5) million, compared to free cash flow of $(4.2) million in the
fiscal 2019 first quarter (see reconciliation below).
As previously reported, in the fiscal 2019 second quarter the
Company adopted agile development and deployment practices across
all of its products, allowing for significantly reduced time
between the design of new products and their distribution in the
market. As a result, there were no product development costs
capitalized in the fiscal 2020 first quarter. The result of this
change increased the amount of product development costs included
in operating expenses. A reconciliation table in the back of this
release provides a comparison of the previously reported fiscal
2019 first quarter Adjusted EBITDA to a presentation that
incorporates all software development costs as if they were not
capitalized in both periods.
Ramesh Srinivasan, President and CEO of Agilysys, commented,
“The past three quarters have been among our best sales quarters
ever with our sales momentum driving strong revenue growth once
again. The fiscal 2020 first quarter was our fourth consecutive
quarter of double-digit revenue growth and fifth consecutive
quarter of record revenue. Recurring revenue grew 12% year over
year to a record $20.1 million, inclusive of a 24% increase in
subscription revenue. Backed by continuing growth in our product
development strength, relentless focus on product and technology
innovation and elevated focus on world class customer service, we
are achieving growing traction in our Hotels, Resorts and Cruise
(HRC) vertical and Food Service Management (FSM) vertical, as well
as in our international markets. Given our already strong market
presence in the gaming industry, growth in these other areas is
making our business momentum increasingly more broad-based.
“We continue to drive increased investments in R&D and in
Services and Support without sacrificing profitability growth.
Adjusted EBITDA for the fiscal 2020 first quarter was a record $3.2
million. This is notable given we generated the record Adjusted
EBITDA in the quarter despite not having the benefit of
capitalizing software development costs, which was the required
practice in periods prior to the fiscal 2019 second quarter.
“We remain confident that our improving talent levels, product
and technology capabilities and the increased confidence our
customers have in our ability to develop, implement and support
world class hospitality software solutions that help them improve
their guest experience and increase guest loyalty, will continue to
help drive our future top line and Adjusted EBITDA growth. We serve
an extraordinarily large market relative to our current size and
believe that we have established a strong foundation to continue
building shareholder value regardless of any possible changes in
broader macroeconomic conditions.”
Fiscal 2020 Outlook
Agilysys today reiterated its forecast for fiscal 2020 full year
revenue growth of approximately 11%, compared to fiscal 2019
revenue of approximately $141 million. In addition, the Company
expects to record an approximate 25% improvement in Adjusted EBITDA
(non-GAAP measure) in fiscal 2020, compared to fiscal 2019 Adjusted
EBITDA of approximately $10 million. Agilysys also expects fiscal
2020 free cash flow will be significantly more than the $1.7
million of free cash flow generated in fiscal 2019.
The Company defines free cash flow as net cash provided by
operating activities, less capital expenditures, less capitalized
software development costs. Management believes free cash flow is
another meaningful measure of the Company’s operating
performance.
Tony Pritchett, Chief Financial Officer, commented, “The fiscal
2020 first quarter operating results represent a strong start to
the year and reinforces the confidence we have in our ability to
achieve revenue and Adjusted EBITDA growth over the full year. Our
guidance for full year revenue growth of 11%, Adjusted EBITDA
growth of approximately 25%, as well as for a significant
improvement in free cash flow, reflects our focus on achieving
sustainable profitable revenue growth. The record levels of total
revenue, recurring revenue, professional services revenue and
Adjusted EBITDA reinforce our confidence in our future. With our
improving product portfolio, prudent investments in R&D,
improvement in our operating processes and a company-wide
commitment to excellence, we are well positioned to achieve
continued consistent growth in our financial results.”
2020 First Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, July
25, 2019, at 4:30 p.m. ET. Both the call and the webcast are open
to the public. The conference call number is 224-357-2393 (domestic
or international); and the conference ID number is 4999811. Please
call five minutes prior to the presentation to ensure that you are
connected.
Interested parties may also access the conference call live on
the Internet at Agilysys Events & Presentations. Approximately
two hours after the call has concluded, an archived version of the
webcast will be available for replay at the same location.
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 guidance
relating to revenue, Adjusted EBITDA and free cash flow, and
statements we make regarding continuing business momentum and
improvements in financial results and shareholder value.
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, our ability to achieve operational
efficiencies and meet customer demand for products and services 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.
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 condensed 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 EBITDA less capitalized software
development costs, Adjusted Earnings from Operations, product
development plus capitalized software development costs, and free
cash flow. Management believes that such information can enhance
investors’ understanding of the company’s ongoing operations. See
the accompanying table below for a definition and reconciliation of
these non-GAAP measures to the most closely related GAAP
measures.
About Agilysys
Agilysys has been a leader in hospitality software for more than
40 years, delivering innovative guest-centric technology solutions
for gaming, hotels, resorts and cruise, corporate foodservice
management, restaurants, universities, stadia and healthcare.
Agilysys offers the most comprehensive software solutions in the
industry, including point-of-sale (POS), property management (PMS),
inventory and procurement, payments, and related applications, to
manage the entire guest journey. Agilysys is known for its
leadership in hospitality, its broad product offerings and its
customer-centric service. Some of the largest hospitality companies
around the world use Agilysys solutions to help improve guest
loyalty, drive revenue growth and increase operational
efficiencies. Agilysys operates across North America, Europe,
Asia-Pacific, and India with headquarters located in Alpharetta,
GA. For more information visit Agilysys.com.
- Financial tables follow -
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
Three Months Ended
June 30,
2019
2018
Net revenue: Products
$
10,869
$
9,080
Support, maintenance and subscription services
20,082
17,929
Professional services
7,438
6,998
Total net revenue
38,389
34,007
Cost of goods sold: Products (inclusive of developed
technology amortization)
8,623
7,130
Support, maintenance and subscription services
4,181
4,074
Professional services
5,571
4,914
Total cost of goods sold
18,375
16,118
Gross profit
20,014
17,889
Gross profit margin
52.1
%
52.6
%
Operating expenses: Product development
10,064
7,089
Sales and marketing
4,498
4,754
General and administrative
5,874
6,005
Depreciation of fixed assets
213
606
Amortization of intangibles
678
543
Restructuring, severance and other charges
231
440
Legal settlements
-
91
Total operating expense
21,558
19,528
Operating loss
(1,544
)
(1,639
)
Other (income) expense: Interest (income)
(80
)
(55
)
Interest expense
1
3
Other expense, net
85
198
Loss before taxes
(1,550
)
(1,785
)
Income tax expense (benefit)
25
(49
)
Net loss
$
(1,575
)
$
(1,736
)
Weighted average shares outstanding
23,212
23,095
Loss per share - basic and diluted: Loss per share
$
(0.07
)
$
(0.08
)
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(In thousands, except share data)
June 30,
March 31,
2019
2019
ASSETS Current assets: Cash and cash equivalents
$
37,233
$
40,771
Accounts receivable, net of allowance for doubtful accounts of $760
and $788,respectively
25,690
27,000
Contract assets
3,888
2,921
Inventories
1,483
2,044
Prepaid expenses and other current assets
5,155
6,272
Total current assets
73,449
79,008
Property and equipment, net
15,067
15,838
Operating lease right-of-use assets
13,379
-
Goodwill
19,622
19,622
Intangible assets, net
8,427
8,438
Software development costs, net
31,392
34,567
Other non-current assets
6,112
6,118
Total assets
$
167,448
$
163,591
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable
$
4,469
$
4,718
Contract liabilities
35,589
38,669
Accrued liabilities
9,474
14,892
Operating lease liabilities, current
4,202
-
Finance lease obligations, current
22
22
Total current liabilities
53,756
58,301
Deferred income taxes, non-current
866
861
Finance lease obligations, non-current
33
35
Operating lease liabilities, non-current
11,539
-
Other non-current liabilities
1,331
3,772
Shareholders' equity: Common shares, without par value, at $0.30
stated value; 80,000,000 shares authorized;31,606,831 shares
issued; and 23,680,171 and 23,501,193 shares outstanding at June
30,2019 and March 31, 2019, respectively
9,482
9,482
Treasury shares, 7,926,660 and 8,105,638 at June 30, 2019 and March
31, 2019,respectively
(2,379
)
(2,433
)
Capital in excess of stated value
1,698
781
Retained earnings
91,476
93,051
Accumulated other comprehensive loss
(354
)
(259
)
Total shareholders' equity
99,923
100,622
Total liabilities and shareholders' equity
$
167,448
$
163,591
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(UNAUDITED)
Three Months Ended
(In thousands) June 30,
2019
2018
Operating activities Net loss
$
(1,575
)
$
(1,736
)
Adjustments to reconcile net loss to net cash used in operating
activities Net restructuring, severance and other charges
(11
)
15
Net legal settlements
-
91
Depreciation
213
606
Amortization
678
543
Amortization of developed technology
3,175
2,663
Deferred income taxes
5
28
Share-based compensation
482
409
Change in cash surrender value of company owned life insurance
policies
(4
)
(4
)
Changes in operating assets and liabilities
(4,876
)
(3,978
)
Net cash used in operating activities
(1,913
)
(1,363
)
Investing activities Capital expenditures
(571
)
(744
)
Capitalized software development costs
-
(2,132
)
Investments in corporate-owned life insurance policies
(2
)
(2
)
Net cash used in investing activities
(573
)
(2,878
)
Financing activities Repurchase of common shares to
satisfy employee tax withholding
(1,026
)
(495
)
Principal payments under long-term obligations
(2
)
(30
)
Net cash used in financing activities
(1,028
)
(525
)
Effect of exchange rate changes on cash
(24
)
(101
)
Net decrease in cash and cash equivalents
(3,538
)
(4,867
)
Cash and cash equivalents at beginning of period
40,771
39,943
Cash and cash equivalents at end of period
$
37,233
$
35,076
AGILYSYS, INC. RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
AND ADJUSTED EARNINGS FROM OPERATIONS (UNAUDITED) Three
Months Ended (In thousands) June 30,
2019
2018
Net loss
$
(1,575
)
$
(1,736
)
Income tax expense (benefit)
25
(49
)
Loss before taxes
(1,550
)
(1,785
)
Depreciation of fixed assets
213
606
Amortization of intangibles
678
543
Amortization of developed technology
3,175
2,663
Interest (income), net
(79
)
(52
)
EBITDA (a)
2,437
1,975
Share-based compensation
482
409
Restructuring, severance and other charges
231
440
Other non-operating expense
85
198
Legal settlements
-
91
Adjusted EBITDA (b)
3,235
3,113
Capitalized software development costs
-
(2,132
)
Adjusted EBITDA less capitalized software development costs
(c)
3,235
981
Capital expenditures
(571
)
(744
)
Adjusted Earnings from Operations (d)
$
2,664
$
237
Product development (operating expenses)
$
10,064
$
7,089
Capitalized software development costs
-
2,132
Product development plus capitalized software development costs
(e)
$
10,064
$
9,221
(a) EBITDA, a non-GAAP financial measure, is defined as net
income before income taxes, interest expense, depreciation and
amortization (b) Adjusted EBITDA, a non-GAAP financial measure, is
defined as income before income taxes, interest expense (net of
interest income), depreciation and amortization (including
amortization of developed technology), and excluding charges
relating to i) legal settlements, ii) restructuring, severance, and
other charges, iii) asset write-offs and other fair value
adjustments, iv) share-based compensation, and v) other
non-operating (income) expense (c) Adjusted EBITDA less capitalized
software development costs, a non-GAAP financial measure, is
defined as Adjusted EBITDA, less capitalized software development
costs (d) Adjusted Earnings from Operations, a non-GAAP financial
measure, is defined as Adjusted EBITDA less capitalized software
development costs, less capital expenditures (e) Product
development plus capitalized software development costs, a non-GAAP
financial measure, is defined as total product development costs
plus capitalized software development costs
AGILYSYS, INC.
RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)
Three Months Ended
(In thousands)
June 30,
2019
2018
Net cash used in operating activities
$
(1,913
)
$
(1,363
)
Capital expenditures
(571
)
(744
)
Capitalized software development costs
-
(2,132
)
Free cash flow (a)
$
(2,484
)
$
(4,239
)
(a) Free cash flow, a non-GAAP financial measure, is
defined as net cash provided by operating activities, less capital
expenditures, less capitalized software development costs
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005702/en/
Investors: Dave Wood VP, Corporate Strategy and Investor
Relations Agilysys, Inc. 770-810-7920 or
investorrelations@agilysys.com
Richard Land, Norberto Aja JCIR 212-835-8500 or
agys@jcir.com
Agilysys (NASDAQ:AGYS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Agilysys (NASDAQ:AGYS)
Historical Stock Chart
From Sep 2023 to Sep 2024