An in-depth collection of product information and datasheets. Read about the latest in hospitality technology features designed to solve the challenges faced by hospitality professionals around the globe.
Includes Recurring Revenue of $29.0M and Subscription Revenue Growth of 28.6%
Quarter Positive Adjusted EBITDA of $7.4M and GAAP EPS of $0.12
Per Share Fiscal 2023 Annual Guidance Reiterated at $190M to $195M Revenue and Greater Than 15% Adjusted EBITDA
Alpharetta, GA – October 25, 2022 - Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of hospitality software solutions that deliver High Return Hospitality, today reported operating results for its fiscal 2023 second quarter and period ended September 30, 2022.
Summary of Fiscal 2023 Second Quarter Financial Results
Total net revenue increased 26.0% to a record $47.7 million, compared to total net revenue of $37.9 million in the comparable prior-year period.
Recurring revenue (which comprised of subscription and maintenance charges) were a record $29.0 million, or 60.8% of total net revenue compared to $24.0 million, or 63.4% of total net revenue for the same period in fiscal 2022. Subscription revenue increased 28.6% year over year and comprised 48.9% of total recurring revenues compared to 46.0% of total recurring revenues in the second quarter of fiscal 2022.
Gross margin was 61.5% in the fiscal 2023 second quarter compared to 64.0% in the comparable prior-year period.
Net income attributable to common shareholders in the fiscal 2023 second quarter was $3.1 million, or $0.12 per diluted share compared to $0.5 million, or $0.02 per diluted share in the comparable prior-year period.
Adjusted EBITDA (non-GAAP) was $7.4 million compared to $6.3 million in the comparable prior-year period (please see reconciliation below).
Adjusted diluted EPS (non-GAAP) was $0.24 per share in the fiscal 2023 second quarter compared to $0.18 per share in the comparable prior-year period (please see reconciliation below).
Free cash flow (non-GAAP) in the fiscal 2023 second quarter was $2.3 million compared to free cash flow of $3.2 million in the fiscal 2022 second quarter (please see reconciliation below). Ending cash balance was $96.2 million, compared to ending cash balance of $97.0 million as of fiscal 2022 year-end.
Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased to announce our third consecutive record revenue quarter, driven by subscription revenue growth of 28.6% year over year to now constitute nearly half of total recurring revenue. The growth in subscription revenue highlights the shifting demands and imperative technology needs in the hospitality marketplace, which are growing despite the various macroeconomic challenges. Hospitality customers need now, more than ever before, world class software solutions to make operational management easier for their teams and create memorable experiences for their guests even when they are short of staff. We are now well placed to fulfill those needs in this huge total addressable market and see a clear growth path ahead of us even if the economic headlines are not great.
One-time revenue, consisting of product and services revenue, were below the previous sequential quarter but were 35% higher than the same quarter last fiscal year. Adjusted EBITDA improved compared to the previous quarter to just over 15% of revenue.
Virtually all our recently developed state-of-the-art cloud-native technology based software solutions have now been implemented in at least a handful of customer sites. Customers are seeing high value in our end-to-end innovative product suite offering. A strong surge in selling success during the months of August and September drove the combined product, services and recurring revenue backlog back close to record levels. We expect our business results during the second half of fiscal 2023 to be better than the first and remain well on target to achieve the guidance expectations provided at the beginning of the year."
Fiscal 2023 Outlook
We are reiterating full year fiscal 2023 guidance of revenue to be $190 to $195 million, inclusive of approximately 30% subscription revenue growth year over year, and Adjusted EBITDA of greater than 15% of revenue.
Dave Wood, Chief Financial Officer, commented, “We continue to make good progress towards our FY23 full year expectations and are pleased to report another record revenue and substantial subscription revenue growth quarter. The hospitality industry is making investments in technology and we have positioned ourselves to be a leading choice among operators. Profitability and free cash flow remain a priority as we make strategic investments in sales and marketing with a focus on medium and long term revenue and subscription growth.”
2023 Second Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, October 25, 2022, at 4:30 p.m. ET. Both the call and the webcast are open to the public. Interested parties may register for the call at https://register.vevent.com/register/BIc5caabb8028c469696a4afbc87dc28da. After registration, an email confirmation with a personalized PIN will be provided with further access details. Please plan to register fifteen minutes prior to the presentation to ensure that you receive the confirmation and further instruction in a timely manner.
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 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 the 2023 fiscal year and statements we make regarding the hospitality industry's need for and investment in technology and our ability to continue profitable growth.
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 effect of the COVID-19 pandemic on our business and the success of any measures we have taken or may take in the future in response thereto; the impact other macroeconomic factors may have on the overall business environment 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.
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.
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Senior Director Corporate Strategy & Investor Relations