AGILYSYS FISCAL 2020 THIRD QUARTER REVENUE RISES 16.6% TO RECORD $42.0 MILLION
Seventh Consecutive Quarter of Record Revenue Includes Record Recurring Revenue of $21.0 Million, Inclusive of 28% Growth in Subscription Revenue
Raises Fiscal 2020 Revenue Guidance to an Expectation of Approximately 16% Year-Over-Year Growth
Alpharetta, GA – January 28, 2020 - Agilysys, Inc. (Nasdaq: AGYS), a global provider of next-generation hospitality software solutions and services, today reported operating results for its fiscal 2020 third quarter ended December 31, 2019.
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Summary of Fiscal 2020 Third Quarter Financial Results
• Total net revenue increased 16.6% to a record $42.0 million, compared to total net revenue of $36.0 million in the comparable prior-year period.
• Recurring revenues (which are comprised of support, maintenance and subscription services) were a record $21.0 million, or 49.9% of total net revenue, compared to $19.3 million, or 53.7% of total net revenue, for the same period in fiscal 2019. Subscription revenues increased 28% year-over-year and comprised 37.7% of total recurring revenues, compared to 32.0% of total recurring revenues in the third quarter of fiscal 2019.
• Gross margin was 50.2% in the fiscal 2020 third quarter, compared to 51.8% in the comparable prior-year period.
• Net loss in the fiscal 2020 third quarter was $(2.6) million, or $(0.11) per diluted share, compared to a net loss of $(4.0) million, or $(0.18) per diluted share, in the comparable prior-year period.
• Adjusted EBITDA (non-GAAP) was $3.2 million, compared to $2.1 million in the comparable prior-year period (see reconciliation below).
• Free cash flow (non-GAAP) in the fiscal 2020 third quarter was $3.0 million, compared to free cash flow of $4.2 million in the fiscal 2019 third quarter (see reconciliation below).
Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased to announce yet another solid revenue growth and profitability improvement quarter. Quarterly revenue of $42.0 million represents our sixth consecutive quarter of double-digit year-over- year quarterly revenue growth and the seventh consecutive record revenue quarter. Recurring revenue for the quarter reached a record $21.0 million, including a 28% year-over-year increase in subscription revenue.
“This was also one of our best quarters in terms of selling success. The last five quarters have been five of our six most successful selling quarters. The fact this was our best services revenue quarter is a good indication of how busy we were and continue to be with software implementations all over the world. Our continuing good selling momentum coupled with the shifting customer preference for subscription-based arrangements drove our significant year-over-year growth in subscription revenue.
“Our R&D resource strength continues to grow in a cost-effective manner. We continue to execute well and innovate at an increasing pace across all our product sets allowing us to stay ahead of ever-changing customer demands. Our customer centric work culture and passionate focus on the hospitality software solutions space continue to evolve well. All things considered, we like our current business momentum and strengthening competitive advantage. We are well poised to continue 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 16% year-over-year increase compared to fiscal 2019 revenue of approximately $141 million. The Company’s prior expectation was for an approximate 14% 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.
Tony Pritchett, Chief Financial Officer, commented, “We are pleased with our continued business momentum, including the strong financial results in the third fiscal quarter of 2020. Our customers continue to place a lot of trust in our ability to deliver reliable and innovative products as evidenced by another record revenue quarter. All three of our reported revenue categories were a record in the third quarter and on a year to date basis, demonstrating the consistency of our revenue growth. We remain committed to our customers and to delivering profitable revenue growth which continues to reflect in our results, including strong Adjusted EBITDA and free cash flows for the quarter and year to date periods. We provided for a slight upward revision to our forecast for full year revenue growth, which we now expect to further improve to 16%. We continue to push the Company forward and are confident about our future.”
2020 Third Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, January 28, 2020, at 4:30 p.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 9998734. 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 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, 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 also 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, restructuring, severance and other charges, legal settlements, net of the related income tax effect of these items, if applicable and defines adjusted earnings per share as adjusted net income divided by basic and diluted weighted average shares outstanding.
See the accompanying tables for the definitions and reconciliation of these non-GAAP measures to the most closely related GAAP measures.
Agilysys has been a leader in hospitality software for more than 40 years, delivering innovative guest-centric technology solutions for casinos, hotels, resorts, cruise ships, managed foodservice providers, stadiums and arenas. Agilysys offers the most comprehensive software solutions in the industry, including point-of-sale (POS), property management (PMS), inventory and procurement, payment solutions, and related hospitality 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, generate more revenue 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.
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