AGYS Agilysys Inc

Includes Subscription Revenue Growth of 32.0%

Quarter Adjusted EBITDA of $12.1M and Adjusted EPS of $0.30

Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of hospitality software solutions that deliver High Return Hospitality, today reported results for its fiscal 2025 first quarter ending June 30, 2024.

Summary of Fiscal 2025 First Quarter Financial Results

• Total net revenue increased 13.3% to a record $63.5 million compared to total net revenue of $56.1 million in the comparable prior-year period.
• Recurring revenue (comprised of subscription and maintenance charges) was a record $38.0 million, or 59.9% of total net revenue, compared to $32.1 million, or 57.3% of total net revenue for the same period in fiscal 2024. Subscription revenue increased 32.0% year over year and was 58.1% of total recurring revenue compared to 52.2% of total recurring revenue in the first quarter of fiscal 2024.
• Gross margin was 62.8% in the fiscal 2025 first quarter compared to 59.0% in the comparable prior-year period.
• Net income attributable to common shareholders in the fiscal 2025 first quarter was $14.1 million, or $0.50 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 $12.1 million compared to $6.3 million in the comparable prior-year period (reconciliation included in financial tables).
• Adjusted diluted EPS (non-GAAP) was $0.30 per share in the fiscal 2025 first quarter compared to $0.18 per share in the comparable prior-year period (reconciliation included in financial tables).
• Free cash flow (non-GAAP) in the fiscal 2025 first quarter was $0.2 million compared to free cash flow of $(3.0) million in the fiscal 2024 first quarter (reconciliation included in financial tables). Ending cash balance was $144.1 million compared to ending cash balance of $144.9 million as of fiscal 2024 year-end.

Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased to report our tenth consecutive record revenue quarter at $63.5 million, a 13.3% increase over the comparable prior year quarter, which included strong year-over-year growth of 32.0% for subscription revenue and 39.8% for services revenue. Adjusted EBITDA at $12.1 million, 19% of revenue, was slightly above our original expectations for the current quarter.

“The year-over-year overall revenue increase achieved was despite challenges with product revenue which was negatively impacted more than our expectations going into the fiscal year due to customers increasingly preferring subscription licenses over one-time perpetual licenses and lesser hardware revenue."

Srinivasan continued, “We are encouraged by our continuing good progress with subscription and services revenue. Project execution and deployments continue to operate at a high velocity and at excellent efficiency levels, even as the complexity of implementations involving multiple software solutions of our hospitality ecosystem is increasing. The hospitality industry continues to embrace the distinct advantages our integrated modular solution sets provide to improve ease of use and guest experience while also creating greater revenue upsell and expansion opportunities. Q1 fiscal year 2025 represented the best sales start we have had for any fiscal year thus far, remaining consistent with the high sales levels we have seen in recent quarters. During the rest of the fiscal year, we expect to maintain and improve on the good business momentum we are seeing now," he concluded.

Fiscal 2025 Outlook The Company expects full year fiscal 2025 revenue to be $275 million to $280 million, including higher than 27% year-over-year subscription revenue growth. Adjusted EBITDA is expected to be 16% of revenue for the full fiscal year.

Dave Wood, Chief Financial Officer, commented, “We are pleased with the strong start to the fiscal year while we evolve through product revenue challenges. Subscription and services revenue growth are ahead of our fiscal year 2025 plan and continue to drive the business toward our fiscal 2025 expectations. Our profitability levels and continued operating leverage expansion allow us the flexibility and confidence to continue to invest in future revenue growth and revenue expansion initiatives.”

2025 First Quarter Conference Call and Webcast Agilysys is hosting a conference call and webcast today, July 22, 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/BI8b51ba0e5997483c858018eb0ddf0650. After registration, an email confirmation with a personalized PIN will be provided along with further access details. Please plan to register 15 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 2025 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 2025 guidance, future revenue growth, the company's ability maintain sales levels, the Company's ability to increase implementation efficiencies, 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, other charges, and legal settlements, less the related income tax effect of these adjustments, as applicable, and tax events 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 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) solutions and Food & Beverage Inventory and Procurement (I&P) systems 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

June 30,

 

 

 

 

(In thousands, except per share data)

 

2024

 

2023

Net revenue:

 

 

 

 

 

 

Products

 

$

9,874

 

 

$

12,781

 

Subscription and maintenance

 

 

38,043

 

 

 

32,125

 

Professional services

 

 

15,595

 

 

 

11,153

 

Total net revenue

 

 

63,512

 

 

 

56,059

 

Cost of goods sold:

 

 

 

 

 

 

Products

 

 

5,226

 

 

 

6,565

 

Subscription and maintenance

 

 

8,108

 

 

 

7,637

 

Professional services

 

 

10,310

 

 

 

8,800

 

Total cost of goods sold

 

 

23,644

 

 

 

23,002

 

Gross profit

 

 

39,868

 

 

 

33,057

 

Gross profit margin

 

 

62.8

%

 

 

59.0

%

Operating expenses:

 

 

 

 

 

 

Product development

 

 

14,720

 

 

 

13,321

 

Sales and marketing

 

 

7,014

 

 

 

7,301

 

General and administrative

 

 

10,483

 

 

 

9,365

 

Depreciation of fixed assets

 

 

838

 

 

 

923

 

Amortization of internal-use software and intangibles

 

 

251

 

 

 

430

 

Other charges, net

 

 

550

 

 

 

759

 

Legal settlements

 

 

265

 

 

 

-

 

Total operating expense

 

 

34,121

 

 

 

32,099

 

Operating income

 

 

5,747

 

 

 

958

 

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

1,782

 

 

 

1,101

 

Other (expense), net

 

 

(157

)

 

 

(159

)

Income before taxes

 

 

7,372

 

 

 

1,900

 

Income tax (benefit) provision

 

 

(6,734

)

 

 

352

 

Net income

 

$

14,106

 

 

$

1,548

 

Series A convertible preferred stock dividends

 

 

—

 

 

 

(459

)

Net income attributable to common shareholders

 

$

14,106

 

 

$

1,089

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

27,134

 

 

 

24,936

 

 

 

 

 

 

 

 

Net income per share - basic:

 

$

0.52

 

 

$

0.04

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

 

28,127

 

 

 

26,177

 

 

 

 

 

 

 

 

Net income per share - diluted:

 

$

0.50

 

 

$

0.04

 

       

AGILYSYS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS 

 

(In thousands, except share data)

 

June 30, 2024

(Unaudited)

 

March 31,

2024

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

144,111

 

 

$

144,891

 

Accounts receivable, net of allowance for expected credit losses of $944 and $974, respectively

 

 

27,308

 

 

 

29,441

 

Contract assets

 

 

3,523

 

 

 

2,287

 

Inventories

 

 

5,300

 

 

 

4,587

 

Prepaid expenses and other current assets

 

 

6,523

 

 

 

7,731

 

Total current assets

 

 

186,765

 

 

 

188,937

 

Property and equipment, net

 

 

17,663

 

 

 

17,930

 

Operating lease right-of-use assets

 

 

17,843

 

 

 

18,384

 

Goodwill

 

 

32,659

 

 

 

32,791

 

Intangible assets, net

 

 

16,706

 

 

 

16,952

 

Deferred income taxes, non-current

 

 

76,237

 

 

 

67,373

 

Other non-current assets

 

 

7,825

 

 

 

8,063

 

Total assets

 

$

355,698

 

 

$

350,430

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

10,085

 

 

$

9,422

 

Contract liabilities

 

 

49,200

 

 

 

56,148

 

Accrued liabilities

 

 

13,127

 

 

 

19,522

 

Operating lease liabilities, current

 

 

4,992

 

 

 

4,279

 

Total current liabilities

 

 

77,404

 

 

 

89,371

 

Deferred income taxes, non-current

 

 

549

 

 

 

554

 

Operating lease liabilities, non-current

 

 

18,903

 

 

 

19,613

 

Other non-current liabilities

 

 

4,671

 

 

 

4,415

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Common shares, without par value, at $0.30 stated value; 80,000,000 shares authorized; 33,342,288 shares issued; and 27,872,345 and 27,376,862 shares outstanding at June 30, 2024 and March 31, 2024, respectively

 

 

10,003

 

 

 

10,003

 

Treasury shares, 5,469,903 and 5,965,426 at June 30, 2024 and March 31, 2024, respectively

 

 

(1,642

)

 

 

(1,791

)

Capital in excess of stated value

 

 

98,277

 

 

 

94,680

 

Retained earnings

 

 

151,861

 

 

 

137,755

 

Accumulated other comprehensive loss

 

 

(4,328

)

 

 

(4,170

)

Total shareholders' equity

 

 

254,171

 

 

 

236,477

 

Total liabilities and shareholders' equity

 

$

355,698

 

 

$

350,430

 

       

AGILYSYS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

 

 

 

Three Months Ended

 

 

June 30,

(In thousands)

 

2024

 

2023

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

Net income

 

$

14,106

 

 

$

1,548

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation of fixed assets

 

 

838

 

 

 

923

 

Amortization of internal-use software and intangibles

 

 

251

 

 

 

430

 

Deferred income taxes

 

 

(8,861

)

 

 

(129

)

Share-based compensation

 

 

4,429

 

 

 

3,167

 

Changes in operating assets and liabilities

 

 

(9,665

)

 

 

(5,917

)

Net cash provided by operating activities

 

 

1,098

 

 

 

22

 

Investing activities

 

 

 

 

 

 

Capital expenditures

 

 

(869

)

 

 

(3,065

)

Additional investments in corporate-owned life insurance policies

 

 

—

 

 

 

(2

)

Net cash used in investing activities

 

 

(869

)

 

 

(3,067

)

Financing activities

 

 

 

 

 

 

Payment of preferred stock dividends

 

 

—

 

 

 

(918

)

Repurchase of common shares to satisfy employee tax withholding

 

 

(925

)

 

 

(1,783

)

Principal payments under long-term obligations

 

 

—

 

 

 

(1

)

Net cash used in financing activities

 

 

(925

)

 

 

(2,702

)

Effect of exchange rate changes on cash

 

 

(84

)

 

 

(2

)

Net decrease in cash and cash equivalents

 

 

(780

)

 

 

(5,749

)

Cash and cash equivalents at beginning of period

 

 

144,891

 

 

 

112,842

 

Cash and cash equivalents at end of period

 

$

144,111

 

 

$

107,093

 

       

AGILYSYS, INC. RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (UNAUDITED) 

 

 

 

Three months ended

 

 

June 30,

(In thousands)

 

2024

 

2023

Net income

 

$

14,106

 

 

$

1,548

 

Income tax (benefit) provision

 

 

(6,734

)

 

 

352

 

Income before taxes

 

 

7,372

 

 

 

1,900

 

Depreciation of fixed assets

 

 

838

 

 

 

923

 

Amortization of internal-use software and intangibles

 

 

251

 

 

 

430

 

Amortization of developed technology acquired

 

 

38

 

 

 

39

 

Interest income, net

 

 

(1,782

)

 

 

(1,101

)

EBITDA (a)

 

 

6,717

 

 

 

2,191

 

Share-based compensation

 

 

4,429

 

 

 

3,167

 

Other charges, net

 

 

550

 

 

 

759

 

Other non-operating expense

 

 

157

 

 

 

159

 

Legal settlements

 

 

265

 

 

 

—

 

Adjusted EBITDA (b)

 

$

12,118

 

 

$

6,276

 

(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) share-based compensation, ii) other (gains) and charges, net, iii) other non-operating expense (income), and iv) legal settlements 

       

AGILYSYS, INC. RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME FOR ADJUSTED EARNINGS PER SHARE (UNAUDITED) 

 

 

 

Three Months Ended

 

 

June 30,

(In thousands, except per share data)

 

2024

 

2023

Net income attributable to common shareholders

 

$

14,106

 

 

$

1,089

 

Amortization of developed technology acquired

 

 

38

 

 

 

39

 

Amortization of internal-use software and intangibles

 

 

251

 

 

 

430

 

Share-based compensation

 

 

4,429

 

 

 

3,167

 

Other charges, net

 

 

550

 

 

 

759

 

Legal settlements

 

 

265

 

 

 

—

 

Tax events (a)

 

 

(10,180

)

 

 

—

 

Income tax adjustments

 

 

(1,148

)

 

 

(878

)

Adjusted net income (b)

 

$

8,311

 

 

$

4,606

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

27,134

 

 

 

24,936

 

Diluted weighted average shares outstanding

 

 

28,127

 

 

 

26,177

 

 

 

 

 

 

 

 

Adjusted basic earnings per share (c)

 

$

0.31

 

 

$

0.18

 

Adjusted diluted earnings per share (c)

 

$

0.30

 

 

$

0.18

 

(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

 

 

June 30,

(In thousands)

 

2024

 

2023

Net cash provided by operating activities

 

$

1,098

 

 

$

22

 

Capital expenditures

 

 

(869

)

 

 

(3,065

)

Free cash flow (a)

 

$

229

 

 

$

(3,043

)

(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/20240722181218/en/

Investor Contact: Jessica Hennessy Senior Director Corporate Strategy & Investor Relations Agilysys, Inc. 770-810-6116 or investorrelations@agilysys.com