Agilysys Fiscal 2022 Fourth Quarter Revenue Rises 28.1% to Record $46.6M

·16 min read

Quarter Recurring Revenue of $26.6M Inclusive of Subscription Revenue Growth of 32.8%

Quarter Positive Adjusted EBITDA of $7.5M, Free Cash Flow of $6.5M & Fiscal 2022 Full Year GAAP Net Income of $4.6M

Expects Fiscal 2022 Record Revenue of $162.6M to Grow to $190M to $195M in Fiscal 2023

ALPHARETTA, Ga., May 17, 2022--(BUSINESS WIRE)--Agilysys, Inc. (NASDAQ: AGYS), a global provider of next-generation hospitality software solutions and services, today reported operating results for its fiscal 2022 fourth quarter and period ended March 31, 2022.

Summary of Fiscal 2022 Fourth Quarter Financial Results

  • Total net revenue was $46.6 million, compared to total net revenue of $36.3 million and $39.7 million in the fourth quarters of fiscal 2021 and 2020, respectively.

  • Recurring revenue (which is comprised of support, maintenance and subscription services) was $26.6 million, or 57.1% of total net revenue compared to $22.9 million, or 63.1% of total net revenue and $22.3 million or 56.2% of total net revenue for the fourth quarters of fiscal 2021 and 2020, respectively. Subscription revenues increased 32.8% over fiscal 2021 fourth quarter compared to an increase of 11.6% fiscal 2021 over fiscal 2020 fourth quarter. Subscription revenue comprised 48.1% of total recurring revenues compared to 42.0% and 38.7% for the fourth quarters of fiscal 2021 and 2020, respectively.

  • Gross margin was 59.5% compared to 64.6% and 49.6% in the fourth quarters of fiscal 2021 and 2020, respectively.

  • Net income attributable to common shareholders in the fiscal 2022 fourth quarter was $1.5 million, or $0.06 per diluted share compared to a net loss of $(24.7) million, or $(1.05) per diluted share and net loss of $(27.0) million or $(1.16) per diluted share for the fourth quarters of fiscal 2021 and 2020, respectively.

  • Adjusted EBITDA (non-GAAP) was $7.5 million, compared to $7.1 million and $3.6 million in the fourth quarters of fiscal 2021 and 2020 respectively (please see reconciliation below).

  • Adjusted diluted EPS (non-GAAP) was $0.24 per share compared to $0.21 and $0.05 per share in the fourth quarters of fiscal 2021 and 2020 respectively (please see reconciliation below).

  • Free cash flow (non-GAAP) in the fiscal 2022 fourth quarter was $6.5 million compared to $13.0 million and $4.9 million in the fiscal fourth quarters of 2021 and 2020 respectively (please see reconciliation below). Ending cash balance was $97.0 million, compared to ending cash balance of $99.2 million as of fiscal 2021 year-end. (Please note the ResortSuite acquisition closed during Q4 fiscal 2022 for approximately $25 million in an all cash transaction).

Ramesh Srinivasan, President and CEO of Agilysys, commented, "Despite lingering pandemic related and other business environment challenges in the hospitality industry across Asia, Europe, and managed food services, we are pleased to report our best ever revenue quarter, beating the previous best mark by 11%. Our increasing competitive advantage driven by broad-based effective product innovation over the past few years and strong business health of the gaming casino and multi-amenity resort market verticals are contributing to improving financial performance. The increased availability and market acceptance of our end-to-end cloud native software solutions also helped drive a 33% year over year increase in subscription revenue.

One-time product and services revenue improved during Q4. We believe the supply chain management efforts we have put in place and improved implementations will continue to support these revenue levels moving forward. The combined product, recurring revenue and services backlog levels remain close to record levels - at about 98% of where we ended the previous quarter. We operate in an immensely big total addressable market relative to our current size and we have done the hard successful work during the past years of making our products cloud native and world class giving us the fuel to increase our market share across all market verticals. Our high level of caring customer service continues to be a differentiator in the market place, we remain one of the few technology vendors who can provide end-to-end integrated solutions to empower hospitality teams to deliver exceptional guest experiences and we are making good progress with increasing our sales and marketing strengths.

We expect fiscal 2023 annual revenue to be in the range of $190 to $195 million, driven among other factors by year over year subscription revenue growth of around 30% and Adjusted EBITDA to remain greater than 15% of revenue. We are pleased with our Q4 fiscal 2022 results across the board. This is only the beginning."

Fiscal 2023 Outlook

We are expecting full year fiscal 2023 revenue to be $190 to $195 million, a 17-20% growth over fiscal 2022 results and include approximately 30% subscription revenue growth year over year. Adjusted EBITDA is expected to remain greater than 15% of revenue.

Dave Wood, Chief Financial Officer, commented, "We are pleased to be back at quarter and annual record revenue levels. Our world class SaaS solutions continued to drive subscription revenue forward at an increased pace. An overwhelming majority of new customers and properties are choosing cloud implementations. We are maintaining high levels of operational discipline to support profitable revenue growth and are well positioned to execute successfully on our long term strategic plan as the hospitality recovery phase continues to unfold."

2022 Fourth Quarter Conference Call and Webcast

Agilysys is hosting a conference call and webcast today, May 17, 2022, 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 9326259. 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.

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 ability of our supply chain management efforts and improved implementations to support increasing revenue levels moving forward and our ability to increase market share across all market verticals.

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 has been driving hospitality software innovations for more than 40 years, delivering cloud-native SaaS and on-prem ready guest-centric technology solutions for gaming, hotels, resorts and cruise lines, corporate foodservice management, restaurants, universities, stadiums and healthcare. Agilysys offers the most comprehensive software solutions in the hospitality industry, including point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications, to manage the entire guest journey. Agilysys is also known for its world class customer-centric service and recent investments in research and development, having modernized virtually all its longstanding trusted software solutions. Some of the largest hospitality companies around the world use Agilysys solutions to help improve guest loyalty, drive revenue growth and increase operational efficiencies. Agilysys operates across North America, Europe, the Middle East, Asia-Pacific and India with headquarters located in Alpharetta, GA. 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
March 31,

Year Ended
March 31,

(In thousands, except per share data)

2022

2021

2022

2021

Net revenue:

Products

$

11,712

$

7,318

$

35,956

$

26,714

Support, maintenance and subscription services

26,588

22,918

98,958

88,565

Professional services

8,259

6,100

27,722

21,897

Total net revenue

46,559

36,336

162,636

137,176

Cost of goods sold:

Products

6,830

3,881

19,251

13,506

Support, maintenance and subscription services

5,957

4,470

21,141

17,985

Professional services

6,078

4,505

20,712

16,309

Total cost of goods sold

18,865

12,856

61,104

47,800

Gross profit

27,694

23,480

101,532

89,376

Gross profit margin

59.5

%

64.6

%

62.4

%

65.2

%

Operating expenses:

Product development

12,258

26,445

46,332

55,345

Sales and marketing

4,312

5,918

14,730

14,196

General and administrative

7,404

14,831

27,734

33,273

Depreciation of fixed assets

602

672

2,210

2,832

Amortization of internal-use software

577

470

1,654

1,959

Severance and other charges

398

(233

)

1,584

2,529

Legal settlements

598

150

969

200

Total operating expense

26,149

48,253

95,213

110,334

Operating income (loss)

1,545

(24,773

)

6,319

(20,958

)

Other (income) expense:

Interest income

(14

)

(31

)

(59

)

(107

)

Interest expense

6

7

12

20

Other expense, net

(197

)

50

(145

)

338

Income (loss) before taxes

1,750

(24,799

)

6,511

(21,209

)

Income tax expense (benefit)

(232

)

(518

)

33

(208

)

Net income (loss)

$

1,982

$

(24,281

)

$

6,478

$

(21,001

)

Series A convertible preferred stock issuance costs

(1,031

)

Series A convertible preferred stock dividends

(459

)

(459

)

(1,836

)

(1,576

)

Net income (loss) attributable to common shareholders

$

1,523

$

(24,740

)

$

4,642

$

(23,608

)

Weighted average shares outstanding - basic

24,484

23,574

24,357

23,458

Net income (loss) per share - basic:

$

0.06

$

(1.05

)

$

0.19

$

(1.01

)

Weighted average shares outstanding - diluted

25,317

23,574

25,483

23,458

Net income (loss) per share - diluted:

$

0.06

$

(1.05

)

$

0.18

$

(1.01

)

AGILYSYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

As of March 31,

(In thousands, except share data)

2022

2021

ASSETS

Current assets:

Cash and cash equivalents

$

96,971

$

99,180

Accounts receivable, net of allowance for expected credit losses of $318 and $1,220, respectively

25,175

25,732

Contract assets

1,669

2,364

Inventories

6,940

1,177

Prepaid expenses and other current assets

5,418

4,797

Total current assets

136,173

133,250

Property and equipment, net

6,345

8,789

Operating lease right-of-use assets

9,889

12,210

Goodwill

32,759

19,622

Intangible assets, net

20,178

8,400

Deferred income taxes, non-current

2,664

1,802

Other non-current assets

6,154

5,800

Total assets

$

214,162

$

189,873

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

9,766

$

6,346

Contract liabilities

46,095

38,394

Accrued liabilities

10,552

11,387

Operating lease liabilities, current

5,049

5,009

Finance lease obligations, current

4

19

Total current liabilities

71,466

61,155

Deferred income taxes, non-current

938

923

Operating lease liabilities, non-current

5,649

8,597

Finance lease obligations, non-current

2

6

Other non-current liabilities

3,304

3,857

Commitments and contingencies (see Note 11)

Series A convertible preferred stock, no par value

35,459

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 24,728,532 and 24,010,727 shares outstanding at March 31, 2022 and March 31, 2021, respectively

9,482

9,482

Treasury shares, 6,878,299 and 7,596,104 at March 31, 2022 and March 31, 2021, respectively

(2,063

)

(2,278

)

Capital in excess of stated value

49,963

37,257

Retained earnings

40,018

35,376

Accumulated other comprehensive (loss) income

(56

)

39

Total shareholders' equity

97,344

79,876

Total liabilities and shareholders' equity

$

214,162

$

189,873

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Year Ended

March 31,

(In thousands)

2022

2021

Operating activities

Net income (loss)

$

6,478

$

(21,001

)

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

Loss on disposal of property & equipment

195

44

Depreciation

2,210

2,832

Amortization of intangibles

1,654

1,959

Deferred income taxes

(925

)

(959

)

Share-based compensation

14,549

40,093

Changes in operating assets and liabilities:

Accounts receivable

2,551

10,363

Contract assets

684

(228

)

Inventories

(5,764

)

2,746

Prepaid expense and other current assets

(484

)

(201

)

Accounts payable

3,417

(7,016

)

Contract liabilities

4,902

(3,971

)

Accrued liabilities

146

1,187

Income taxes payable

50

340

Other changes, net

(1,188

)

2,219

Net cash provided by operating activities

28,475

28,407

Investing activities

Capital expenditures

(1,197

)

(1,389

)

Cash paid for business combinations, net of cash acquired

(24,455

)

Additional investments in corporate-owned life insurance policies

(27

)

(2

)

Net cash used in investing activities

(25,679

)

(1,391

)

Financing activities

Preferred stock issuance proceeds, net of issuance costs

33,969

Payment of preferred stock dividends

(1,836

)

(1,117

)

Repurchase of common shares to satisfy employee tax withholding

(3,046

)

(7,512

)

Principal payments under long-term obligations

(19

)

(24

)

Net cash (used in) provided by financing activities

(4,901

)

25,316

Effect of exchange rate changes on cash

(104

)

195

Net (decrease) increase in cash and cash equivalents

(2,209

)

52,527

Cash and cash equivalents at beginning of period

99,180

46,653

Cash and cash equivalents at end of period

$

96,971

$

99,180

AGILYSYS, INC.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(UNAUDITED)

Three months ended

Twelve months ended

(In thousands)

March 31,

March 31,

2022

2021

2022

2021

Net income (loss)

$

1,982

$

(24,281

)

$

6,478

$

(21,001

)

Income tax expense (benefit)

(232

)

(518

)

33

(208

)

Income before taxes

1,750

(24,799

)

6,511

(21,209

)

Depreciation of fixed assets

602

672

2,210

2,832

Amortization of internal-use software

577

470

1,654

1,959

Amortization of developed technology acquired

42

42

Interest income, net

(8

)

(24

)

(47

)

(87

)

EBITDA (a)

2,963

(23,681

)

10,370

(16,505

)

Share-based compensation

3,747

30,781

14,549

40,093

Severance and other charges

398

(233

)

1,584

2,529

Other non-operating expense (income)

(197

)

50

(145

)

338

Legal settlements

598

150

969

200

Adjusted EBITDA (b)

$

7,509

$

7,067

$

27,327

$

26,655

(a) EBITDA, a non-GAAP financial measure, is defined as net income (loss) before income taxes, interest expense (net of interest income), depreciation and amortization

(b) Adjusted EBITDA, a non-GAAP financial measure, is defined as net income (loss) before income taxes, interest expense (net of interest income), depreciation and amortization (including amortization of developed technology), and excluding charges relating to i) legal settlements, ii) severance and other charges, iii) impairments, iv) share-based compensation, and v) other non-operating (income) expense

AGILYSYS, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME FOR ADJUSTED EARNINGS PER SHARE

(UNAUDITED)

Three months ended

Twelve months ended

(In thousands, except per share data)

March 31,

March 31,

2022

2021

2022

2021

Net income (loss) attributable to common shareholders

$

1,523

$

(24,740

)

$

4,642

$

(23,608

)

Amortization of internal-use software

577

470

1,654

1,959

Share-based compensation

3,747

30,781

14,549

40,093

Series A convertible preferred stock issuance costs

1,031

Severance and other charges

398

(233

)

1,584

2,529

Legal settlements

598

150

969

200

Income tax adjustments

(717

)

(1,190

)

(2,584

)

(2,710

)

Adjusted net income (a)

$

6,126

$

5,238

$

20,814

$

19,494

Basic weighted average shares outstanding

24,484

23,574

24,357

23,458

Diluted weighted average shares outstanding

25,317

24,806

25,483

24,016

Adjusted basic earnings per share (b)

$

0.25

$

0.22

$

0.85

$

0.83

Adjusted diluted earnings per share (b)

$

0.24

$

0.21

$

0.82

$

0.81

(a) Adjusted net income, a non-GAAP financial measure, is defined as net income (loss) attributable to common shareholders before amortization expense (including amortization of developed technology), share-based compensation, and one-time charges including severance and other charges, impairments 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 (loss) 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

Twelve months ended

(In thousands)

March 31,

March 31,

2022

2021

2022

2021

Net cash provided by operating activities

$

6,660

$

13,323

$

28,475

$

28,407

Capital expenditures

(119

)

(313

)

(1,197

)

(1,389

)

Free cash flow (a)

$

6,541

$

13,010

$

27,278

$

27,018

(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/20220517006169/en/

Contacts

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

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