Includes Subscription Revenue Growth of
29.9%
Quarter Adjusted EBITDA of $11.8M and
Adjusted EPS of $0.35
Increases Full Fiscal Year Adjusted EBITDA
Guidance to 15% of Revenue
Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of
hospitality software solutions that deliver High Return
Hospitality, today reported operating results for its fiscal 2024
third quarter ending December 31, 2023.
Summary of Fiscal 2024 Third Quarter Financial
Results
- Total net revenue increased 21.3% to a record $60.6 million,
compared to total net revenue of $49.9 million in the comparable
prior-year period.
- Recurring revenue (comprising subscription and maintenance
charges) was a record $35.1 million, or 58.0% of total net revenue,
compared to $30.2 million, or 60.4% of total net revenue, for the
same period in fiscal 2023. Subscription revenue increased 29.9%
year-over-year and was 55.6% of total recurring revenue compared to
49.8% of total recurring revenue in the third quarter of fiscal
2023.
- Gross margin was 62.5% compared to 61.7% in the comparable
prior-year period.
- Net income attributable to common shareholders was $76.9
million, or $2.85 per diluted share, compared to $3.4 million, or
$0.13 per diluted share, in the comparable prior-year period. Net
income for the quarter included discrete tax events including a
$65.1 million release of valuation allowances against certain
deferred tax assets.
- Adjusted EBITDA (non-GAAP) was $11.8 million compared to $8.1
million in the comparable prior-year period (reconciliation
included in financial tables).
- Adjusted diluted EPS (non-GAAP) was $0.35 per share compared to
$0.26 per share in the comparable prior-year period (reconciliation
included in financial tables).
- Free cash flow (non-GAAP) in the fiscal 2024 third quarter was
$11.3 million compared to free cash flow of $11.7 million in the
fiscal 2023 third quarter (reconciliation included in financial
tables). Ending cash balance was $116.2 million, compared to ending
cash balance of $112.8 million as of fiscal 2023 year-end.
Ramesh Srinivasan, President and CEO of Agilysys, commented, “We
are pleased with our continuing good business momentum, highlighted
by the eighth consecutive record revenue quarter, 21.3%
year-over-year revenue growth that includes subscription revenue
growth of 29.9% and Adjusted EBITDA of 19.4%.”
Mr. Srinivasan continued, “Improving implementation services
efficiency, as our recently re-engineered and newly created
state-of-the-art technology-based software solutions continue to
establish themselves well across many hospitality corporations and
their properties, was the other salient highlight of the quarter.
Record high services revenue and significantly improved services
margins helped drive increases in gross margin and net income
profitability levels.
“We remain confident with the increased full fiscal year revenue
guidance range of $235M to $238M and subscription revenue growth of
28% year-over-year provided at the end of the last quarter. We
expect fiscal 2024 Adjusted EBITDA to be 15% of revenue, higher
than the previous guidance. Several major customers across various
geographies continue to implement recently modernized versions of
our cloud-native solutions at their properties and are increasingly
relying on us to enable new efficiencies for staff and better
experiences for guests. Our competitive positioning across all
product categories continues to strengthen, giving us the
capability to generate significant shareholder value during the
short, medium and long term,” he concluded.
Fiscal 2024 Outlook
Agilysys raised Adjusted EBITDA expectations for fiscal 2024 to
15% of revenue and reiterated full-year revenue guidance of $235 to
$238 million and subscription revenue growth of 28%
year-over-year.
Dave Wood, Chief Financial Officer, commented, “Product
implementations continue to show improved efficiencies driving
consistent recurring revenue growth. Our backlog remains strong and
we remain confident about continued good business growth. Increased
profitability this quarter is another testament to our relentless
and unwavering focus on disciplined growth across all areas of our
business.”
2024 Third Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, January
22nd, 2024, 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/BI613f55fedd064a359f57d5a7b2de762a.
Registrants will receive an email confirmation with further access
details and a personalized PIN. Please register 15 minutes prior to
the call to receive registration confirmation and access details
before the call starts.
Interested parties also can access the conference call live on
the Investors Relations page of Agilysys.com under the Events and
Presentations heading. An archived version of the webcast will be
available for replay at the same location approximately two hours
after the call is concluded.
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 2024
fiscal year.
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 impact macroeconomic factors may have on
the overall business environment, our ability to achieve our fiscal
2024 guidance, future revenue growth, the company's ability to
convert the backlog into revenue, 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 attributable to
common shareholders before amortization expense (including
amortization of developed technology), share-based compensation,
other (gains) and charges, net, 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, and tax events which are defined as excess tax benefits
or expense related to share-based compensation, release of
valuation allowances against deferred income taxes, and changes in
uncertain tax positions. The Company 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 exclusively delivers state-of-the-art software
solutions and services that help organizations achieve High Return
Hospitality™ by maximizing Return on Experience (ROE) through
interactions that make ‘personal’ profitable. Customers around the
world use Agilysys Property Management Systems (PMS), Point-of-Sale
(POS) and F&B Inventory and Procurement (I&P) solutions to
consistently delight guests, retain staff and grow margins.
Agilysys’ 100% hospitality customer base includes branded and
independent hotels; multi-amenity resorts; 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. 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.
- Financial tables follow -
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
Three months ended December
31,
Nine months ended December
31,
(In thousands, except per share data)
2023
2022
2023
2022
Net revenue:
Products
$
12,678
$
10,697
$
38,100
$
32,291
Subscription and maintenance
35,107
30,154
101,481
86,917
Professional services
12,781
9,069
35,662
25,960
Total net revenue
60,566
49,920
175,243
145,168
Cost of goods sold:
Products
6,707
5,368
20,023
16,682
Subscription and maintenance
7,371
6,767
22,812
19,223
Professional services
8,664
7,009
26,428
20,627
Total cost of goods sold
22,742
19,144
69,263
56,532
Gross profit
37,824
30,776
105,980
88,636
Gross profit margin
62.5
%
61.7
%
60.5
%
61.1
%
Operating expenses:
Product development
14,551
12,416
42,455
36,550
Sales and marketing
6,137
5,886
19,838
16,619
General and administrative
9,057
7,928
27,207
22,850
Depreciation of fixed assets
909
437
3,042
1,371
Amortization of internal-use software and
intangibles
343
430
1,120
1,326
Other (gains) and charges, net
(924
)
93
45
374
Legal settlements
—
104
—
104
Total operating expense
30,073
27,294
93,707
79,194
Operating income
7,751
3,482
12,273
9,442
Other income (expense):
Interest income
1,252
704
3,580
1,186
Other income (expense), net
95
384
(15
)
799
Income before taxes
9,098
4,570
15,838
11,427
Income tax (benefit) provision
(68,043
)
678
(67,396
)
920
Net income
$
77,141
$
3,892
$
83,234
$
10,507
Series A convertible preferred stock
dividends
(286
)
(459
)
(1,204
)
(1,377
)
Net income attributable to common
shareholders
$
76,855
$
3,433
$
82,030
$
9,130
Weighted average shares outstanding -
basic
25,808
24,703
25,256
24,651
Net income per share - basic:
$
2.98
$
0.14
$
3.25
$
0.37
Weighted average shares outstanding -
diluted
26,979
26,070
26,463
25,780
Net income per share - diluted:
$
2.85
$
0.13
$
3.10
$
0.35
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share data)
December 31,
2023
(Unaudited)
March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
116,200
$
112,842
Accounts receivable, net of allowance for
expected credit losses of $763 and $610, respectively
49,366
22,378
Contract assets
1,971
2,242
Inventories
6,772
9,774
Prepaid expenses and other current
assets
9,385
7,422
Total current assets
183,694
154,658
Property and equipment, net
18,074
14,576
Operating lease right-of-use assets
18,734
12,708
Goodwill
33,082
32,638
Intangible assets, net
17,223
18,140
Deferred income taxes, non-current
67,999
2,790
Other non-current assets
7,852
7,526
Total assets
$
346,658
$
243,036
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
9,012
$
9,418
Contract liabilities
62,938
52,124
Accrued liabilities
15,310
13,708
Operating lease liabilities, current
3,947
3,263
Finance lease obligations, current
—
2
Total current liabilities
91,207
78,515
Deferred income taxes, non-current
1,035
2,257
Operating lease liabilities,
non-current
20,200
13,477
Other non-current liabilities
3,943
4,018
Commitments and contingencies
Series A convertible preferred stock, no
par value
—
35,459
Shareholders' equity:
Common shares, without par value, at $0.30
stated value; 80,000,000 shares authorized; 33,342,288 shares
issued; and 27,349,322 and 25,326,626 shares outstanding at
December 31, 2023 and March 31, 2023, respectively
10,003
9,482
Treasury shares, 5,992,966 and 6,280,205
at December 31, 2023 and March 31, 2023, respectively
(1,798
)
(1,884
)
Capital in excess of stated value
91,173
52,978
Retained earnings
134,794
52,764
Accumulated other comprehensive loss
(3,899
)
(4,030
)
Total shareholders' equity
230,273
109,310
Total liabilities and shareholders'
equity
$
346,658
$
243,036
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
December 31,
(In thousands)
2023
2022
Operating activities
Net income
$
83,234
$
10,507
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on asset disposals
(1,145
)
—
Depreciation of fixed assets
3,042
1,371
Amortization of internal-use software and
intangibles
1,120
1,326
Deferred income taxes
(66,506
)
(378
)
Share-based compensation
9,489
9,410
Changes in operating assets and
liabilities
(10,855
)
(4,556
)
Net cash provided by operating
activities
18,379
17,680
Investing activities
Capital expenditures
(7,658
)
(3,616
)
Additional investments in corporate-owned
life insurance policies
(2
)
(27
)
Net cash used in investing activities
(7,660
)
(3,643
)
Financing activities
Payment of preferred stock dividends
(1,663
)
(1,836
)
Repurchase of common shares to satisfy
employee tax withholding
(5,734
)
(2,924
)
Principal payments under long-term
obligations
(2
)
(3
)
Net cash used in financing activities
(7,399
)
(4,763
)
Effect of exchange rate changes on
cash
38
(427
)
Net increase in cash and cash
equivalents
3,358
8,847
Cash and cash equivalents at beginning of
period
112,842
96,971
Cash and cash equivalents at end of
period
$
116,200
$
105,818
AGILYSYS, INC.
RECONCILIATION OF NET INCOME TO
EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
Three months ended
Nine months ended
(In thousands)
December 31,
December 31,
2023
2022
2023
2022
Net income
$
77,141
$
3,892
$
83,234
$
10,507
Income tax (benefit) provision
(68,043
)
678
(67,396
)
920
Income before taxes
9,098
4,570
15,838
11,427
Depreciation of fixed assets
909
437
3,042
1,371
Amortization of internal-use software and
intangibles
343
430
1,120
1,326
Amortization of developed technology
acquired
39
39
119
120
Interest income, net
(1,252
)
(704
)
(3,580
)
(1,186
)
EBITDA (a)
9,137
4,772
16,539
13,058
Share-based compensation
3,638
3,466
9,489
9,410
Other (gains) and charges, net
(924
)
93
45
374
Other non-operating expense (income)
(95
)
(384
)
15
(799
)
Legal settlements
—
104
—
104
Adjusted EBITDA (b)
$
11,756
$
8,051
$
26,088
$
22,147
(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 (gains) and
charges, net, 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,
2023
2022
2023
2022
Net income attributable to common
shareholders
$
76,855
$
3,433
$
82,030
$
9,130
Amortization of developed technology
acquired
39
39
119
120
Amortization of internal-use software and
intangibles
343
430
1,120
1,326
Share-based compensation
3,638
3,466
9,489
9,410
Other (gains) and charges, net
(924
)
93
45
374
Legal settlements
—
104
—
104
Tax events (a)
(69,644
)
—
(69,644
)
—
Income tax adjustments
(978
)
(913
)
(2,610
)
(2,280
)
Adjusted net income (b)
$
9,329
$
6,652
$
20,549
$
18,184
Basic weighted average shares
outstanding
25,808
24,703
25,256
24,651
Diluted weighted average shares
outstanding
26,979
26,070
26,463
25,780
Adjusted basic earnings per share
(c)
$
0.36
$
0.27
$
0.81
$
0.74
Adjusted diluted earnings per share
(c)
$
0.35
$
0.26
$
0.78
$
0.71
(a) Tax events include excess tax
benefits or expense related to share-based compensation, release of
valuation allowances against deferred income taxes, and changes in
uncertain tax positions
(b) 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,
other (gains) and charges, net, 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 and, as defined under (a) above, tax events
(c) 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,
2023
2022
2023
2022
Net cash provided by operating
activities
$
12,909
$
14,563
$
18,379
$
17,680
Capital expenditures
(1,656
)
(2,819
)
(7,658
)
(3,616
)
Free cash flow (a)
$
11,253
$
11,744
$
10,721
$
14,064
(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/20240122132179/en/
Investor Contact: Jessica Hennessy Senior Director
Corporate Strategy & Investor Relations Agilysys, Inc.
770-810-6116 or investorrelations@agilysys.com
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