Sixth Consecutive Quarter of Record Revenue
Includes Record Recurring Revenue of $20.3 Million
Raises Fiscal 2020 Revenue Guidance to an
Expectation of Approximately 14% Year-Over-Year Growth
Agilysys, Inc. (Nasdaq: AGYS), a global provider of
next-generation hospitality software solutions and services, today
reported operating results for its fiscal 2020 second quarter ended
September 30, 2019.
Summary of Fiscal 2020 Second Quarter Financial
Results
• Total net revenue increased 19.1% to a record $40.7 million,
compared to total net revenue of $34.2 million in the comparable
prior-year period.
• Recurring revenues (which are comprised of support,
maintenance and subscription services) were a record $20.3 million,
or 49.9% of total net revenue, compared to $18.9 million, or 55.1%
of total net revenue, for the same period in fiscal 2019.
Subscription revenues increased 16% year over year and comprised
36.1% of total recurring revenues, compared to 33.6% of total
recurring revenues in the second quarter of fiscal 2019.
• Gross margin was 49.6% in the fiscal 2020 second quarter,
compared to 51.9% in the comparable prior-year period.
• Net loss in the fiscal 2020 second quarter was $(2.9) million,
or $(0.13) per diluted share, compared to a net loss of $(3.8)
million, or $(0.16) per diluted share, in the comparable prior-year
period.
• Adjusted EBITDA (non-GAAP) was $3.0 million, compared to $2.6
million in the comparable prior-year period.
• Free cash flow (non-GAAP) in the fiscal 2020 second quarter
was $1.8 million, compared to free cash flow of $(2.0) million in
the fiscal 2019 second quarter (see reconciliation below).
Ramesh Srinivasan, President and CEO of Agilysys, commented,
“Our visibility for consistent revenue growth continues to improve
as, excluding one outlying quarter in fiscal 2016, the fiscal 2020
second quarter was our strongest quarter of selling success and
deal closing since we transformed Agilysys to a pure-play
hospitality software solutions company in fiscal 2014. In fact, our
most recent four quarters represent four of our five best-ever
quarters for selling success. This momentum is also reflected in
our operating results as in the fiscal 2020 second quarter we
generated record quarterly revenue of $40.7 million, representing
our fifth consecutive quarter of double-digit year over year
quarterly revenue growth and the sixth consecutive quarter of
record revenue. Recurring revenue for the fiscal 2020 second
quarter was a record, as it increased approximately 8% year over
year, inclusive of a 16% increase in subscription revenue. In
addition, this was also our highest ever quarter for professional
services revenue, as we had our most productive quarter of global
implementations. Professional services revenue growth and
implementation levels are good indicators of our business momentum.
We expect the significant increase in the number of current and
upcoming software implementations to drive solid future recurring
revenue growth. Based on our current selling activity trends, with
the most recent five quarters all being record quarters for closed
sales deals involving software subscription services, we expect a
majority of such recurring revenue growth will be related to
subscription revenue.
“With our product development resources strength at a record
high, we continue to innovate in our existing and new product
portfolio at an increasing pace. Combining this product innovation
with our world class customer services and support is helping us
grow our market share across our product verticals and the markets
we serve. We remain committed to our goal of growing revenue in a
prudent and profitable manner and expect that this disciplined
approach will continue to generate growing shareholder value.”
Raises Fiscal 2020 Revenue Outlook
Agilysys today raised its forecast for fiscal 2020 full year
revenue growth as the Company now expects an approximate 14%
year-over-year increase compared to fiscal 2019 revenue of
approximately $141 million. The Company’s prior expectation was for
an approximate 11% year-over-year increase. The Company reiterated
its forecast for 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 continues to
expect 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 second quarter results again offer clear evidence of the
success our operating initiatives are generating for our business.
Our ability to drive product and services revenue growth even
faster than expected has established a stronger foundation for
consistent recurring revenue growth going forward. With each
quarter that we deliver profitable revenue growth, we have a higher
level of confidence in our outlook as reflected in the upward
revision to our forecast for full year revenue growth, which we now
expect will improve by 14%. We are hitting our stride as we
continue to position the Company for a prosperous future that
includes consistent growth across our financial results.”
2020 Second Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, October
24, 2019, at 4:30 p.m. ET. Both the call and the webcast are open
to the public. The conference call number is 334-323-0501 (domestic
or international); and the conference ID number is 2091971. 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 recurring revenue and subscription
revenue growth, 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
Six Months Ended
September 30,
September 30,
2019
2018
2019
2018
Net revenue:
Products
$
11,873
$
8,769
$
22,742
$
17,849
Support, maintenance and subscription
services
20,329
18,856
40,411
36,785
Professional services
8,520
6,578
15,958
13,576
Total net revenue
40,722
34,203
79,111
68,210
Cost of goods sold:
Products (inclusive of developed
technology amortization)
9,794
7,703
18,417
14,833
Support, maintenance and subscription
services
4,654
3,977
8,834
8,051
Professional services
6,057
4,774
11,628
9,688
Total cost of goods sold
20,505
16,454
38,879
32,572
Gross profit
20,217
17,749
40,232
35,638
Gross profit margin
49.6
%
51.9
%
50.9
%
52.2
%
Operating expenses:
Product development
10,778
10,151
20,842
17,240
Sales and marketing
4,890
4,393
9,389
9,146
General and administrative
6,038
5,176
11,911
11,181
Depreciation of fixed assets
707
676
920
1,282
Amortization of intangibles
614
674
1,292
1,217
Restructuring, severance and other
charges
190
448
421
889
Legal settlements
(119
)
35
(119
)
126
Total operating expense
23,098
21,553
44,656
41,081
Operating loss
(2,881
)
(3,804
)
(4,424
)
(5,443
)
Other (income) expense:
Interest (income)
(114
)
(97
)
(194
)
(152
)
Interest expense
2
3
3
5
Other expense, net
108
28
193
228
Loss before taxes
(2,877
)
(3,738
)
(4,426
)
(5,524
)
Income tax expense
41
53
67
4
Net loss
$
(2,918
)
$
(3,791
)
$
(4,493
)
$
(5,528
)
Weighted average shares
outstanding
23,238
23,131
23,225
23,113
Loss per share - basic and
diluted:
Loss per share
$
(0.13
)
$
(0.16
)
$
(0.19
)
$
(0.24
)
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(In thousands, except share data)
September 30,
March 31,
2019
2019
ASSETS
Current assets:
Cash and cash equivalents
$
38,915
$
40,771
Accounts receivable, net of allowance for
doubtful accounts of $632 and $788, respectively
23,117
27,000
Contract assets
3,906
2,921
Inventories
954
2,044
Prepaid expenses and other current
assets
5,501
6,272
Total current assets
72,393
79,008
Property and equipment, net
15,290
15,838
Operating lease right-of-use assets
12,717
—
Goodwill
19,622
19,622
Intangible assets, net
8,415
8,438
Software development costs, net
28,264
34,567
Deferred income taxes, non-current
678
443
Other non-current assets
6,416
5,675
Total assets
$
163,795
$
163,591
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
8,836
$
4,718
Contract liabilities
29,541
38,669
Accrued liabilities
9,984
14,892
Operating lease liabilities, current
4,201
—
Finance lease obligations, current
23
22
Total current liabilities
52,585
58,301
Deferred income taxes, non-current
870
861
Operating lease liabilities,
non-current
10,609
—
Finance lease obligations, non-current
28
35
Other non-current liabilities
1,338
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 23,658,529 and 23,501,193 shares outstanding at
September 30, 2019 and March 31, 2019, respectively
9,482
9,482
Treasury shares, 7,948,302 and 8,105,638
at September 30, 2019 and March 31, 2019, respectively
(2,386
)
(2,433
)
Capital in excess of stated value
2,909
781
Retained earnings
88,558
93,051
Accumulated other comprehensive loss
(198
)
(259
)
Total shareholders' equity
98,365
100,622
Total liabilities and shareholders'
equity
$
163,795
$
163,591
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(UNAUDITED)
Six Months Ended
(In thousands)
September 30,
2019
2018
Operating activities
Net loss
$
(4,493
)
$
(5,528
)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities
Net restructuring, severance and other
charges
85
(126
)
Net legal settlements
(15
)
126
Loss on disposal of property &
equipment
4
-
Depreciation
920
1,282
Amortization
1,292
1,217
Amortization of developed technology
6,303
6,010
Deferred income taxes
(239
)
54
Share-based compensation
1,827
1,674
Change in cash surrender value of company
owned life insurance policies
(7
)
(8
)
Changes in operating assets and
liabilities
(4,443
)
(7,449
)
Net cash provided by (used in) operating
activities
1,234
(2,748
)
Investing activities
Capital expenditures
(1,940
)
(1,333
)
Capitalized software development costs
—
(2,189
)
Investments in corporate-owned life
insurance policies
(2
)
(2
)
Net cash used in investing activities
(1,942
)
(3,524
)
Financing activities
Repurchase of common shares to satisfy
employee tax withholding
(1,053
)
(557
)
Principal payments under long-term
obligations
(12
)
(59
)
Net cash used in financing activities
(1,065
)
(616
)
Effect of exchange rate changes on
cash
(83
)
(151
)
Net decrease in cash and cash
equivalents
(1,856
)
(7,039
)
Cash and cash equivalents at beginning of
period
40,771
39,943
Cash and cash equivalents at end of
period
$
38,915
$
32,904
AGILYSYS, INC.
RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA AND ADJUSTED EARNINGS FROM OPERATIONS
(UNAUDITED)
Three Months Ended
Six Months Ended
(In thousands)
September 30,
September 30,
2019
2018
2019
2018
Net loss
$
(2,918
)
$
(3,791
)
$
(4,493
)
$
(5,528
)
Income tax expense
41
53
67
4
Loss before taxes
(2,877
)
(3,738
)
(4,426
)
(5,524
)
Depreciation of fixed assets
707
676
920
1,282
Amortization of intangibles
614
674
1,292
1,217
Amortization of developed technology
3,128
3,347
6,303
6,010
Interest (income), net
(112
)
(94
)
(191
)
(147
)
EBITDA (a)
1,460
865
3,898
2,838
Share-based compensation
1,345
1,265
1,827
1,674
Restructuring, severance and other
charges
190
448
421
889
Other non-operating expense
108
28
193
228
Legal settlements
(119
)
35
(119
)
126
Adjusted EBITDA (b)
2,984
2,641
6,220
5,755
Capitalized software development costs
—
(57
)
—
(2,189
)
Adjusted EBITDA less capitalized
software development costs (c)
2,984
2,584
6,220
3,566
Capital expenditures
(1,369
)
(589
)
(1,940
)
(1,333
)
Adjusted Earnings from Operations
(d)
$
1,615
$
1,995
$
4,280
$
2,233
Product development (operating
expenses)
$
10,778
$
10,151
$
20,842
$
17,240
Capitalized software development costs
—
57
—
2,189
Product development plus capitalized
software development costs (e)
$
10,778
$
10,208
$
20,842
$
19,429
(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 (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)
Three Months Ended
Six Months Ended
(In thousands)
September 30,
September 30,
2019
2018
2019
2018
Net cash provided by (used in)
operating activities
$
3,147
$
(1,385
)
$
1,234
$
(2,748
)
Capital expenditures
(1,369
)
(589
)
(1,940
)
(1,333
)
Capitalized software development costs
—
(57
)
—
(2,189
)
Free cash flow (a)
$
1,778
$
(2,031
)
$
(706
)
$
(6,270
)
(a) Free cash flow, a non-GAAP financial measure, is defined as
net cash provided by (used in) operating activities, less capital
expenditures, less capitalized software development costs
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191024005880/en/
Investor Contacts: 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
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