Recurring Revenues Increase 7% to $13.8 Million
Alpharetta, GA – November 5, 2014 – Agilysys, Inc. (Nasdaq: AGYS), a leading provider of innovative hospitality software solutions and services, today reported operating results for its fiscal 2015 second quarter ended September 30, 2014.
On March 31, 2014, the Company sold its United Kingdom business entity to U.K.-based Verteda Limited. All of the historical fiscal 2014 second quarter and six months financial results presented below give effect to the sale of the Company’s EMEA operations and adjustments as if they had occurred on April 1, 2013.
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Summary of Fiscal 2015 Second Quarter Financial Results
- Total net revenue increased $1.5 million, or 6%, to $26.3 million, compared to total net revenue of $24.8 million in the comparable prior-year period.
- Recurring revenues (which are comprised of support, maintenance and subscription services) were $13.8 million for the quarter, an increase of 7% over the same period in fiscal 2014.
- Gross margin was 63% in the fiscal 2015 second quarter, compared to 67% in the prior-year period.
- Adjusted operating income (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles and other one-time items) was $0.7 million, comparable to adjusted operating income from continuing operations in the year-ago period (see reconciliation below).
- Adjusted income (non-GAAP) from continuing operations was $0.7 million, or $0.03 per diluted share, comparable to adjusted income from continuing operations and per diluted share in the same period last year (see reconciliation below).
- Net loss in the period was $(1.1) million, or $(0.05) per diluted share, compared to net income of $20.5 million, or $0.92 per diluted share, in the prior-year period, which included net income from discontinued operations of $21.8 million, or $0.98 per diluted share.
James Dennedy, President and CEO of Agilysys, commented, “Our financial results year to date reflect our continued emphasis on increasing the contributions from subscription based revenue in our mix of business. This focus provides numerous benefits to our customers, including more flexible and scalable solutions with a lower overall technology footprint. We are helping customers increase the value of their touch-points with guests and drive improved financial performance. This benefits Agilysys in the near and long-term as we deepen relationships with our customers and increase the recurring revenue component of our financial results.
“We continue to invest substantially in our solution offerings. Our new solutions help our customers strengthen their relationships with patrons across the entire lifecycle of the guest experience including promotion, reservation, ordering, transactions and overall guest experience, as well as post-visit interaction and follow-on promotion. In addition to helping our customers grow their business through new solutions like rGuest Seat; innovations such as rGuest Pay enable our customers to more efficiently run their organization. Building on our product introductions during the first half of fiscal 2015, later this year we expect to generate initial revenues from our new rGuest Stay property management solution.”
Dennedy concluded, “With our emphasis on introducing new solutions for the hospitality industry that are aligned with our customers’ priorities, Agilysys is favorably positioned to continue to execute on our strategic goals of growing new logo business, expanding the number of end markets we serve, further leveraging existing customer relationships and consistently building recurring revenue.”
Summary of Fiscal 2015 Six Months Financial Results
- Total net revenue for the period increased $1.6 million, or 3%, to $50.1 million, compared with $48.5 million in the comparable prior-year period.
- Recurring revenues (which are comprised of support, maintenance and subscription services) were $27.6 million for the period, an increase of 7% over the first six months of fiscal 2014.
- Gross margin of 63% compares to gross margin of 66% in the prior-year period.
- Adjusted operating income (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles and other one-time items) for the first six months of fiscal 2015 was $0.3 million compared to adjusted operating income from continuing operations of $2.4 million in the comparable year-ago period (see reconciliation below).
- Adjusted income (non-GAAP) from continuing operations was $0.3 million, or $0.02 per diluted share, compared with adjusted income of $2.3 million, or $0.10 per diluted share, in the first six months of fiscal 2014 (see reconciliation below).
- Net loss in the first six months of fiscal 2015 was $(3.4) million, or $(0.15) per diluted share, compared with net income of $21.8 million, or $0.99 per diluted share, in the first six months of fiscal 2014, which included net income from discontinued operations of $22.3 million, or $1.01 per diluted share.
Janine Seebeck, Chief Financial Officer, added, “Through the first half of fiscal 2015 we have grown recurring revenues 7% inclusive of an 11% year-over-year increase in SaaS revenues. We expect to achieve additional success in the transition of our business to further grow this higher-margin component. In addition to this growing recurring revenue base, Agilysys is well positioned with strong gross margins and prudent fiscal discipline aimed at delivering longer-term operating efficiencies. Our strong balance sheet supports our goals for growth either through investments in new products or acquisitions that generate attractive returns.
“Reflecting the pace of progress we have made year to date in the transition in our sales team and go-to-market strategy, we expect that Agilysys will generate total annual revenue in line with the industry’s overall revenue growth in fiscal 2015. Importantly, we also remain on track to generate break-even to modestly positive adjusted operating income for the full year even as we support an accelerated investment cycle to develop new products for the rGuest platform.”
Agilysys is hosting a conference call and webcast today, November 5, 2014, beginning at 9:00 a.m. ET. Both the call and the webcast are open to the public. The conference call number is 224-357-2393 (domestic or international). 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 http://www.agilysys.com/company/investor-relations/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.
This press release and other publicly available documents, including the documents incorporated herein and therein by reference, contain, and our officers and representatives may from time to time make, "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, and include the statements under the heading “Summary of Fiscal 2015 Second Quarter Financial Results” above in the (i) last sentence of the second paragraph following the bullets and (ii) third paragraph following the bullets, and the statements under the heading “Summary of Fiscal 2015 Six Months Financial Results” above in the first and second paragraphs following the bullets. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in Item 1A of the company’s Annual Report for the fiscal year ended March 31, 2014. Copies are available from the SEC or the Agilysys website. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events 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 adjusted operating income (loss) from continuing operations, adjusted net income (loss), adjusted net income (loss) per share from continuing operations and adjusted cash flow from continuing operations. Management believes that such information can enhance investors' understanding of the company's ongoing operations. See the accompanying tables below for reconciliations of adjusted operating income (loss) from continuing operations and adjusted net income (loss) from continuing operations, and adjusted cash flow from continuing operations to the comparable GAAP measures.
Agilysys is a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality industry. The company specializes in market-leading point-of-sale, property management, inventory and procurement, workforce management, analytics, document management, and mobile and wireless solutions that are designed to streamline operations, improve efficiency and enhance the guest experience. Agilysys serves four major market sectors: Gaming, both corporate and tribal; Hotels, Resorts and Cruise; Foodservice Management; and Restaurants, Universities, Stadia and Healthcare. Agilysys operates extensively throughout North America, Europe and Asia, with corporate services located in Alpharetta, GA, and offices in Singapore, Hong Kong and Malaysia. For more information, visit www.agilysys.com.
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