Including Subscription Revenue Growth of
27.4%
Quarter Adjusted EBITDA of $6.3M and GAAP
EPS of $0.04
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
first quarter ending June 30, 2023.
Summary of Fiscal 2024 First Quarter Financial
Results
- Total net revenue increased 18.0% to a record $56.1 million,
compared to total net revenue of $47.5 million in the comparable
prior-year period.
- Recurring revenue (comprised of subscription and maintenance
charges) was a record $32.1 million, or 57.3% of total net revenue
compared to $27.7 million, or 58.4% of total net revenue for the
same period in fiscal 2022. Subscription revenue increased 27.4%
year-over-year and was 52.2% of total recurring revenue compared to
47.4% of total recurring revenue in the first quarter of fiscal
2023.
- Gross margin was 59.0% compared to 60.0% in the comparable
prior-year period.
- Net income attributable to common shareholders was $1.1
million, or $0.04 per diluted share compared to $2.6 million, or
$0.10 per diluted share in the comparable prior-year period.
- Adjusted EBITDA (non-GAAP) was $6.3 million compared to $6.7
million in the comparable prior-year period (reconciliation
included in financial tables).
- Adjusted diluted EPS (non-GAAP) was $0.18 per share compared to
$0.21 per share in the comparable prior-year period (reconciliation
included in financial tables).
- Free cash flow (non-GAAP) in the fiscal 2024 first quarter was
$(3.0) million compared to free cash flow of $0.0 million in the
fiscal 2023 first quarter (reconciliation included in financial
tables). Ending cash balance was $107.1 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 to report our sixth consecutive record revenue quarter
at $56.1M, an 18% increase over the comparable prior year quarter.
April-June Q1 of fiscal 2024 was our highest ever quarter across
four major revenue categories - subscription revenue, overall
recurring revenue, product and services revenue. Subscription
revenue grew 27.4% year-over-year, while one-time revenue
consisting of product and services revenue was 21% higher. Adjusted
EBITDA was 11.2% of revenue, higher than our previous expectations
for the first fiscal quarter.
Our growing competitive strength across product, services and
support continues to drive good selling success. This was our best
ever Q1 April-June sales quarter, measured in annual contract value
terms. That selling success was matched well by improved services
implementation efficiency, leaving backlog levels across product,
recurring revenue and services at near record levels.
We remain confident of achieving the revenue, profitability and
subscription revenue growth guidance levels provided for fiscal
2024. With respect to profitability, we expect the second half of
the fiscal year to be significantly higher than the first couple of
quarters. We are pleased with the continuing positive business
momentum and have great reasons to be bullish about our short,
medium and long-term performance.”
Fiscal 2024 Outlook
We are reiterating full year fiscal 2024 guidance of revenue to
be $230 to $235 million, inclusive of 25% year-over-year
subscription revenue growth and Adjusted EBITDA of 13% of revenue
for the full fiscal year.
Dave Wood, Chief Financial Officer, commented, “We are happy
with our best ever start to a fiscal year across almost all aspects
of the business. Continuing sales expansion across both current and
new customers, total backlog remaining close to record levels,
increasing sales and marketing investments and improving product
strengths, have us well positioned to achieve our fiscal 2024
financial plan. We are working through a couple of quarters of
growth-related cost increase pressures and expect the second half
of the fiscal year to return to normal profitability levels. We
remain committed to executing well on disciplined growth
fundamentals.”
2024 First Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, July
24th, 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/BI80812c357ea24a6e8dec8ec2ab7e37b9.
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 and statements we make regarding profitability being
significantly higher in the second half of the 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 is well known for its long heritage of
hospitality-focused technology innovation. The Company delivers
modular and integrated software solutions and expertise to
businesses seeking to maximize Return on Experience (ROE) through
hospitality encounters that are both personal and profitable. Over
time, customers achieve High Return Hospitality by consistently
delighting guests, retaining staff and growing margins. Customers
around the world include: branded and independent hotels;
multi-amenity resort properties; 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. The Agilysys
Hospitality Cloud™ combines core operational systems for property
management (PMS), point-of-sale (POS) and Inventory and Procurement
(I&P) with Experience Enhancers™ that meaningfully improve
interactions for guests and for employees across dimensions such as
digital access, mobile convenience, self-service control, personal
choice, payment options, service coverage and real-time insights to
improve decisions. Core solutions and Experience Enhancers are
selectively combined in Hospitality Solution Studios™ tailored to
specific hospitality settings and business needs. 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.
- Financial tables follow -
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30,
(In thousands, except per share data)
2023
2022
Net revenue:
Products
$
12,781
$
11,046
Subscription and maintenance
32,125
27,727
Professional services
11,153
8,733
Total net revenue
56,059
47,506
Cost of goods sold:
Products
6,565
5,879
Subscription and maintenance
7,637
6,286
Professional services
8,800
6,846
Total cost of goods sold
23,002
19,011
Gross profit
33,057
28,495
Gross profit margin
59.0
%
60.0
%
Operating expenses:
Product development
13,321
11,556
Sales and marketing
7,301
5,413
General and administrative
9,365
7,353
Depreciation of fixed assets
923
473
Amortization of internal-use software and
intangibles
430
453
Other charges
759
214
Total operating expense
32,099
25,462
Operating income
958
3,033
Other income (expense):
Interest income
1,101
101
Interest expense
—
(1
)
Other (expense) income, net
(159
)
304
Income before taxes
1,900
3,437
Income tax expense
352
398
Net income
$
1,548
$
3,039
Series A convertible preferred stock
dividends
(459
)
(459
)
Net income attributable to common
shareholders
$
1,089
$
2,580
Weighted average shares outstanding -
basic
24,936
24,598
Net income per share - basic:
$
0.04
$
0.10
Weighted average shares outstanding -
diluted
26,177
25,370
Net income per share - diluted:
$
0.04
$
0.10
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(In thousands, except share data)
June 30, 2023 (Unaudited)
March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
107,093
$
112,842
Accounts receivable, net of allowance for
expected credit losses of $578 and $610, respectively
25,581
22,378
Contract assets
2,283
2,242
Inventories
8,452
9,774
Prepaid expenses and other current
assets
6,029
7,422
Total current assets
149,438
154,658
Property and equipment, net
15,987
14,576
Operating lease right-of-use assets
24,038
12,708
Goodwill
33,077
32,638
Intangible assets, net
17,888
18,140
Deferred income taxes, non-current
2,927
2,790
Other non-current assets
7,992
7,526
Total assets
$
251,347
$
243,036
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
10,544
$
9,418
Contract liabilities
47,291
52,124
Accrued liabilities
11,257
13,708
Operating lease liabilities, current
4,800
3,263
Finance lease obligations, current
1
2
Total current liabilities
73,893
78,515
Deferred income taxes, non-current
2,303
2,257
Operating lease liabilities,
non-current
24,139
13,477
Other non-current liabilities
4,326
4,018
Commitments and contingencies
Series A convertible preferred stock, no
par value
35,000
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 25,351,357 and 25,326,626 shares outstanding at June
30, 2023 and March 31, 2023, respectively
9,482
9,482
Treasury shares, 6,255,474 and 6,280,205
at June 30, 2023 and March 31, 2023, respectively
(1,877
)
(1,884
)
Capital in excess of stated value
53,735
52,978
Retained earnings
53,853
52,764
Accumulated other comprehensive loss
(3,507
)
(4,030
)
Total shareholders' equity
111,686
109,310
Total liabilities and shareholders'
equity
$
251,347
$
243,036
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(UNAUDITED)
Three Months Ended June 30,
(In thousands)
2023
2022
Operating activities
Net income
$
1,548
$
3,039
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of fixed assets
923
473
Amortization of internal-use software and
intangibles
430
453
Deferred income taxes
(129
)
(116
)
Share-based compensation
3,167
2,488
Changes in operating assets and
liabilities
(5,917
)
(6,236
)
Net cash provided by operating
activities
22
101
Investing activities
Capital expenditures
(3,065
)
(98
)
Additional investments in corporate-owned
life insurance policies
(2
)
(7
)
Net cash used in investing activities
(3,067
)
(105
)
Financing activities
Payment of preferred stock dividends
(918
)
(918
)
Repurchase of common shares to satisfy
employee tax withholding
(1,783
)
(820
)
Principal payments under long-term
obligations
(1
)
(1
)
Net cash used in financing activities
(2,702
)
(1,739
)
Effect of exchange rate changes on
cash
(2
)
(331
)
Net decrease in cash and cash
equivalents
(5,749
)
(2,074
)
Cash and cash equivalents at beginning of
period
112,842
96,971
Cash and cash equivalents at end of
period
$
107,093
$
94,897
AGILYSYS, INC.
RECONCILIATION OF NET INCOME TO
EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
Three Months Ended
(In thousands)
June 30,
2023
2022
Net income
$
1,548
$
3,039
Income tax expense
352
398
Income before taxes
1,900
3,437
Depreciation of fixed assets
923
473
Amortization of internal-use software and
intangibles
430
453
Amortization of developed technology
acquired
39
41
Interest income, net
(1,101
)
(100
)
EBITDA (a)
2,191
4,304
Share-based compensation
3,167
2,488
Other charges
759
214
Other non-operating expense (income)
159
(304
)
Adjusted EBITDA (b)
$
6,276
$
6,702
(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
(In thousands, except per share data)
June 30,
2023
2022
Net income attributable to common
shareholders
$
1,089
$
2,580
Amortization of developed technology
acquired
39
41
Amortization of internal-use software and
intangibles
430
453
Share-based compensation
3,167
2,488
Other charges
759
214
Income tax adjustments
(878
)
(527
)
Adjusted net income (a)
$
4,606
$
5,249
Basic weighted average shares
outstanding
24,936
24,598
Diluted weighted average shares
outstanding
26,177
25,370
Adjusted basic earnings per share
(b)
$
0.18
$
0.21
Adjusted diluted earnings per share
(b)
$
0.18
$
0.21
(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
(In thousands)
June 30,
2023
2022
Net cash provided by operating
activities
$
22
$
101
Capital expenditures
(3,065
)
(98
)
Free cash flow (a)
$
(3,043
)
$
3
(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/20230724077297/en/
Investor Contact: Jessica Hennessy Senior Director
Corporate Strategy & Investor Relations Agilysys, Inc.
770-810-6116 or investorrelations@agilysys.com
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