Alpharetta, GA – August 3, 2016 – Agilysys, Inc. (Nasdaq: AGYS), a global provider of next-generation hospitality software solutions and services, today reported operating results for its fiscal 2017 first quarter ended June 30, 2016.
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Summary of Fiscal 2017 First Quarter Financial Results
Total net revenue was $31.0 million, compared to total net revenue of $27.5 million in the comparable prior-year period.
Recurring revenues (which are comprised of support, maintenance and subscription services) were $14.9 million, or 48% of total net revenue, compared to $14.9 million, or 54% of total net revenue, for the same period in fiscal 2016. SaaS revenues for the first quarter increased 31% year over year and comprised 20% of total recurring revenues, compared to 16% of total recurring revenues in the first quarter of fiscal 2016.
Gross margin was 52.3% in the fiscal 2017 first quarter, compared to 59.7% in the prior-year period. The fiscal 2017 first quarter gross margin reflects the previously disclosed impact of the amortization of software development costs as the Company’s rGuest® Stay property management solution achieved general availability.
Net loss in the fiscal 2017 first quarter was $(2.3) million, or $(0.10) per diluted share, compared to a net loss of $(0.2) million, or $(0.01) per diluted share, in the prior-year period.
Adjusted EBITDA (non-GAAP) was $0.4 million, compared to Adjusted EBITDA of $1.2 million in the same period last year (see reconciliation below).
Jim Dennedy, President and CEO of Agilysys, commented, “Our positive revenue growth continued in the fiscal 2017 first quarter. The first quarter results include 13% revenue growth and another quarter of more than 30% year-over-year growth in subscription-based revenue. In addition, the total contract value of bookings for subscription based business increased 250% year over year. The growth rate of our subscription business reflects a continued shift to a higher level of recurring revenue in our overall revenue mix, a more predictable revenue stream and a stronger connection to our customers.
“The 28% year-over-year increase in our installed point of sale end points and 4% rise in the number of rooms managed by our Lodging solutions provides strong evidence of our growth in market share. In addition, we have added more than 130 new customer wins over the last twelve months, including 37 new customer wins in the first quarter. Our product investments provide valuable innovation for the hospitality markets we serve and are driving our success in growing our business with current customers, attracting business with new customers, and expanding our total addressable markets. We expect these trends to continue which will benefit both our near and long term results.”
Fiscal 2017 Outlook
Agilysys today reiterated its forecast for several financial metrics for fiscal 2017, including revenue, gross margin and Adjusted EBITDA (non-GAAP) originally provided on June 9, 2016. The Company’s outlook for fiscal 2017 contemplates:
Full year revenue of approximately $132 - $136 million compared to fiscal 2016 revenue of $120 million.
Gross margin for fiscal 2017 is expected to be in the low-50% range, which reflects the impact of higher cost of goods sold related to the recent general availability of rGuest Stay for limited and select service hotels and chains and a continued mix shift in revenue towards more subscription based sales.
Adjusted EBITDA is expected to double in fiscal 2017, compared to fiscal 2016 Adjusted EBITDA of $4.3 million.
Janine Seebeck, Chief Financial Officer, commented, “Our fiscal 2017 first quarter results reflect the benefit from growth in our customer base and the expansion of relationships with existing customers, as well as from our entry into new hospitality markets. Product advancements for our Lodging and F&B solutions are catalyzing a high level of interest and enthusiasm from hospitality operators which is helping to open up opportunities in markets where we do not currently have significant market share. To meet this new demand, as previously discussed, we are leveraging our balance sheet on our return-focused product development investment plan in order to add features and functionality to our solutions that will continue to expand our addressable markets and further build value in our business. Given the timing of these investments and our support and maintenance calendar-year billing cycle, we expect our fiscal 2017 year-end cash balance will be higher than the fiscal 2017 first quarter ending level. Reflecting the expected initial benefit from these accelerated product introductions and our ongoing momentum, we continue to forecast low double digit revenue growth and Adjusted EBITDA to more than double in fiscal 2017.”
2017 First Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, August 3, 2016, 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); and the conference ID number is 49631673. 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.
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 (i) the statements in the last sentences of the first and second paragraphs after the bullets under the heading “Summary of Fiscal 2017 First Quarter Financial Results” and (ii) the statements under the heading “Fiscal 2017 Outlook.” 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, 2016. 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 cash flow from operations and adjusted EBITDA. Management believes that such information can enhance investors' understanding of the company's ongoing operations. See the accompanying tables below for reconciliations of adjusted cash flow from operations and adjusted EBITDA to the comparable GAAP measures.
Agilysys is a leading technology company that provides innovative point-of-sale, property management, inventory and procurement, workforce management, analytics, document management and mobile and wireless solutions and services to the hospitality industry. The company's solutions and services allow property managers to better connect, interact and transact with their customers by streamlining operations, improving efficiency, increasing guest recruitment and wallet share, and enhancing 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. A significant portion of the company's consolidated revenue is derived from contract support, maintenance and subscription services. Agilysys operates throughout North America, Europe and Asia, with corporate services located in Alpharetta, GA, and offices in Singapore, Hong Kong, Malaysia and the Philippines. For more information, visit www.agilysys.com.
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