Includes Recurring Revenue of $30.2M and
Subscription Revenue Growth of 28.8%
Quarter Positive Adjusted EBITDA of $8.1M
and GAAP EPS of $0.13 Per Share
Raises Fiscal 2023 Annual Revenue Guidance
to $195M to $198M; Reiterates Greater Than 15% Adjusted
EBITDA
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
third quarter and period ended December 31, 2022.
Summary of Fiscal 2023 Third Quarter Financial
Results
- Total net revenue increased 26.5% to a record $49.9 million,
compared to total net revenue of $39.5 million in the comparable
prior-year period.
- Recurring revenue (comprised of subscription and maintenance
charges) was a record $30.2 million, or 60.4% of total net revenue
compared to $25.1 million, or 63.7% of total net revenue for the
same period in fiscal 2022. Subscription revenue increased 28.8%
year over year and was 49.8% of total recurring revenue compared to
46.4% of total recurring revenue in the third quarter of fiscal
2022.
- Gross margin was 61.7% in the fiscal 2023 third quarter
compared to 62.6% in the comparable prior-year period.
- Net income attributable to common shareholders in the fiscal
2023 third quarter was $3.4 million, or $0.13 per diluted share
compared to $1.1 million, or $0.04 per diluted share in the
comparable prior-year period.
- Adjusted EBITDA (non-GAAP) was $8.1 million compared to $6.6
million in the comparable prior-year period (reconciliation
included in financial tables).
- Adjusted diluted EPS (non-GAAP) was $0.26 per share in the
fiscal 2023 third quarter compared to $0.19 per share in the
comparable prior-year period (reconciliation included in financial
tables).
- Free cash flow (non-GAAP) in the fiscal 2023 third quarter was
$11.7 million compared to free cash flow of $9.9 million in the
fiscal 2022 third quarter (reconciliation included in financial
tables). Ending cash balance was $105.8 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 another record revenue quarter. The
positive momentum in our selling success, which started around
August of calendar year 2022, has continued at a healthy pace. Our
extraordinary investments in product innovation to create
state-of-the-art cloud-native hospitality industry focused
end-to-end software solutions over the past five plus years,
combined with the current increasing focus on sales and marketing,
continue to yield good results. In our opinion, this industry has
been underserved for decades with respect to software innovations
which are essential to better serve increasingly technology savvy
guests and internal staff. We expect the current escalating demand
for such solutions in the hospitality industry to overcome any
macro-economic challenges during the short and medium term.
Subscription revenue grew 28.8% while one-time revenue,
consisting of product and services revenue, was 38% higher than the
comparable quarter last fiscal year. Adjusted EBITDA improved to
16.1% of revenue.
Even excluding the recent Marriott PMS selection announcement
from both sales and backlog, this October to December Q3 fiscal
2023 was our best selling success quarter since the current
management team took charge about six years ago. The continued
selling success has driven the combined product, services and
recurring revenue backlog back to record levels. We are well
positioned to beat the full-year revenue guidance provided at the
start of our fiscal 2023 year. We now expect fiscal 2023 full-year
revenue to be in the range of $195 to $198 million and adjusted
EBITDA levels to be slightly higher than 15% of revenue, in line
with prior guidance.”
Fiscal 2023 Outlook
The Company announced it is raising full-year fiscal 2023
revenue guidance to be $195 to $198 million, inclusive of close to
30% subscription revenue growth year over year and is reiterating
its Adjusted EBITDA guidance of greater than 15% of revenue.
Dave Wood, Chief Financial Officer, commented, “We are making
excellent progress across all aspects of our business. Our recent
investments in sales and marketing along with the value
propositions of our cloud native solutions are putting us in a
strong position to win a good portion of sales opportunities. We
continue to grow subscription revenue at a consistent pace. Our
focus remains on managing a profitable business while executing
well on our strategies for organic, consistent revenue growth over
the medium and long term.”
2023 Third Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, January
24, 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/BI92e7fb3f342349caafb48725c1a83416.
After registration, an email confirmation with a personalized PIN
will be provided along with further access details. Please plan to
register fifteen minutes prior to the presentation to receive
confirmation and further instruction in a timely manner.
Interested parties can also access the conference call live on
the Events and Presentations page of Agilysys.com. Approximately
two hours after the call has concluded, an archived version of the
webcast will be available for replay at the same location.
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 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.
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.
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
Three months ended December
31,
Nine months ended December
31,
(In thousands, except per share data)
2022
2021
2022
2021
Net revenue:
Products
$
10,697
$
8,101
$
32,291
$
24,244
Subscription and maintenance
30,154
25,136
86,917
72,371
Professional services
9,069
6,223
25,960
19,463
Total net revenue
49,920
39,460
145,168
116,078
Cost of goods sold:
Products
5,368
4,400
16,682
12,420
Subscription and maintenance
6,767
5,421
19,223
15,184
Professional services
7,009
4,923
20,627
14,634
Total cost of goods sold
19,144
14,744
56,532
42,238
Gross profit
30,776
24,716
88,636
73,840
Gross profit margin
61.7
%
62.6
%
61.1
%
63.6
%
Operating expenses:
Product development
12,416
11,210
36,550
34,074
Sales and marketing
5,886
3,943
16,619
10,418
General and administrative
7,928
6,804
22,850
20,330
Depreciation of fixed assets
437
495
1,371
1,609
Amortization of internal-use software and
intangibles
430
267
1,326
1,077
Other charges
93
381
374
1,187
Legal settlements
104
4
104
371
Total operating expense
27,294
23,104
79,194
69,066
Operating income
3,482
1,612
9,442
4,774
Other (income) expense:
Interest income
(704
)
(10
)
(1,186
)
(45
)
Interest expense
—
4
—
5
Other (income) expense, net
(384
)
52
(799
)
53
Income before taxes
4,570
1,566
11,427
4,761
Income tax expense
678
24
920
265
Net income
$
3,892
$
1,542
$
10,507
$
4,496
Series A convertible preferred stock
dividends
(459
)
(459
)
(1,377
)
(1,377
)
Net income attributable to common
shareholders
$
3,433
$
1,083
$
9,130
$
3,119
Weighted average shares outstanding -
basic
24,703
24,477
24,651
24,315
Net income per share - basic:
$
0.14
$
0.04
$
0.37
$
0.13
Weighted average shares outstanding -
diluted
26,070
25,392
25,780
25,327
Net income per share - diluted:
$
0.13
$
0.04
$
0.35
$
0.12
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(In thousands, except share data)
December 31, 2022 (Unaudited)
March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
105,818
$
96,971
Accounts receivable, net of allowance for
expected credit losses of $655 and $318, respectively
31,953
25,175
Contract assets
2,531
1,669
Inventories
10,349
6,940
Prepaid expenses and other current
assets
8,432
5,418
Total current assets
159,083
136,173
Property and equipment, net
9,696
6,345
Operating lease right-of-use assets
14,823
9,889
Goodwill
33,569
32,759
Intangible assets, net
19,165
20,178
Deferred income taxes, non-current
2,380
2,664
Other non-current assets
7,445
6,154
Total assets
$
246,161
$
214,162
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
9,752
$
9,766
Contract liabilities
55,915
46,095
Accrued liabilities
11,728
10,552
Operating lease liabilities, current
3,734
5,049
Finance lease obligations, current
3
4
Total current liabilities
81,132
71,466
Deferred income taxes, non-current
1,679
938
Operating lease liabilities,
non-current
12,509
5,649
Finance lease obligations, non-current
—
2
Other non-current liabilities
3,929
3,304
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 25,184,727 and 24,728,532 shares outstanding at
December 31, 2022 and March 31, 2022, respectively
9,482
9,482
Treasury shares, 6,422,104 and 6,878,299
at December 31, 2022 and March 31, 2022, respectively
(1,926
)
(2,063
)
Capital in excess of stated value
56,166
49,963
Retained earnings
49,148
40,018
Accumulated other comprehensive loss
(958
)
(56
)
Total shareholders' equity
111,912
97,344
Total liabilities and shareholders'
equity
$
246,161
$
214,162
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
December 31,
(In thousands)
2022
2021
Operating activities
Net income
$
10,507
$
4,496
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss on disposal of property &
equipment
—
123
Depreciation of fixed assets
1,371
1,609
Amortization of internal-use software and
intangibles
1,326
1,077
Deferred income taxes
(378
)
(491
)
Share-based compensation
9,410
10,802
Changes in operating assets and
liabilities
(4,556
)
4,199
Net cash provided by operating
activities
17,680
21,815
Investing activities
Capital expenditures
(3,616
)
(1,078
)
Additional investments in corporate-owned
life insurance policies
(27
)
(3
)
Net cash used in investing activities
(3,643
)
(1,081
)
Financing activities
Payment of preferred stock dividends
(1,836
)
(1,836
)
Repurchase of common shares to satisfy
employee tax withholding
(2,924
)
(2,902
)
Principal payments under long-term
obligations
(3
)
(16
)
Net cash used in financing activities
(4,763
)
(4,754
)
Effect of exchange rate changes on
cash
(427
)
(38
)
Net increase in cash and cash
equivalents
8,847
15,942
Cash and cash equivalents at beginning of
period
96,971
99,180
Cash and cash equivalents at end of
period
$
105,818
$
115,122
AGILYSYS, INC.
RECONCILIATION OF NET INCOME TO
EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
Three months ended
Nine months ended
(In thousands)
December 31,
December 31,
2022
2021
2022
2021
Net income
$
3,892
$
1,542
$
10,507
$
4,496
Income tax expense
678
24
920
265
Income before taxes
4,570
1,566
11,427
4,761
Depreciation of fixed assets
437
495
1,371
1,609
Amortization of internal-use software and
intangibles
430
267
1,326
1,077
Amortization of developed technology
acquired
39
—
120
—
Interest income, net
(704
)
(6
)
(1,186
)
(40
)
EBITDA (a)
4,772
2,322
13,058
7,407
Share-based compensation
3,466
3,839
9,410
10,802
Other charges
93
381
374
1,187
Other non-operating (income) expense
(384
)
52
(799
)
53
Legal settlements
104
4
104
371
Adjusted EBITDA (b)
$
8,051
$
6,598
$
22,147
$
19,820
(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
Nine months ended
(In thousands, except per share data)
December 31,
December 31,
2022
2021
2022
2021
Net income attributable to common
shareholders
$
3,433
$
1,083
$
9,130
$
3,119
Amortization of developed technology
acquired
39
—
120
—
Amortization of internal-use software and
intangibles
430
267
1,326
1,077
Share-based compensation
3,466
3,839
9,410
10,802
Other charges
93
381
374
1,187
Legal settlements
104
4
104
371
Income tax adjustments
(913
)
(657
)
(2,280
)
(1,868
)
Adjusted net income (a)
$
6,652
$
4,917
$
18,184
$
14,688
Basic weighted average shares
outstanding
24,703
24,477
24,651
24,315
Diluted weighted average shares
outstanding
26,070
25,409
25,780
25,296
Adjusted basic earnings per share
(b)
$
0.27
$
0.20
$
0.74
$
0.60
Adjusted diluted earnings per share
(b)
$
0.26
$
0.19
$
0.71
$
0.58
(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
Nine months ended
(In thousands)
December 31,
December 31,
2022
2021
2022
2021
Net cash provided by operating
activities
$
14,563
$
10,142
$
17,680
$
21,815
Capital expenditures
(2,819
)
(292
)
(3,616
)
(1,078
)
Free cash flow (a)
$
11,744
$
9,850
$
14,064
$
20,737
(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/20230124006011/en/
Investor Contact: Jessica Hennessy Senior Director
Corporate Strategy & Investor Relations Agilysys, Inc.
770-810-6116 or investorrelations@agilysys.com
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