Agilysys Inc.
10/28/2024 | Press release | Distributed by Public on 10/28/2024 14:05
AGILYSYS ANNOUNCES RECORD REVENUE OF $68.3M IN SECOND QUARTER FISCAL 2025 Form 8 K
AGILYSYS ANNOUNCES RECORD REVENUE OF $68.3M IN SECOND QUARTER FISCAL 2025
36.6% Subscription Revenue Growth Inclusive of Book4Time
Increases Full Year Fiscal 2025 Revenue Guidance to $280M to $285M With at Least 38% Subscription Revenue Growth and Adjusted EBITDA of 18%
ALPHARETTA, GA - October 28, 2024 - Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of hospitality software solutions that deliver High Return Hospitality, today reported results for its fiscal 2025 second quarter ending September 30, 2024.
Summary of Fiscal 2025 Second Quarter Financial Results
•
Total net revenue increased 16.5% to a record $68.3 million compared to total net revenue of $58.6 million in the comparable prior-year period.
•
Recurring revenue (comprised of subscription and maintenance charges) was a record $41.4 million, or 60.7% of total net revenue, compared to $34.2 million, or 58.4% of total net revenue for the same period in fiscal 2024. Subscription revenue increased 36.6% year over year and was 60.5% of total recurring revenue compared to 53.6% of total recurring revenue in the second quarter of fiscal 2024.
•
Gross margin was 63.3% in the fiscal 2025 second quarter compared to 59.9% in the comparable prior-year period.
•
Net income attributable to common shareholders in the fiscal 2025 second quarter was $1.4 million, or $0.05 per diluted share, compared to $4.1 million, or $0.16 per diluted share, in the comparable prior-year period.
•
Adjusted EBITDA (non-GAAP) was $12.2 million compared to $8.1 million in the comparable prior-year period (reconciliation included in financial tables).
•
Adjusted diluted EPS (non-GAAP) was $0.34 per share in the fiscal 2025 second quarter compared to $0.25 per share in the comparable prior-year period (reconciliation included in financial tables).
•
Free cash flow (non-GAAP) in the fiscal 2025 second quarter was $5.9 million compared to free cash flow of $2.5 million in the fiscal 2024 second quarter (reconciliation included in financial tables). Ending cash balance was $54.9 million compared to ending cash balance of $144.9 million as of fiscal 2024 year-end. During the fiscal 2025 second quarter, cash paid for the acquisition of Book4Time, net of cash acquired, was $144.9 million while cash received from debt proceeds, net of issuance costs, was $49.7 million.
Ramesh Srinivasan, President and CEO of Agilysys, commented, "We are pleased to report another set of excellent results with record revenue for the 11th consecutive quarter at $68.3 million and 16.5% higher than the comparable prior year quarter, 36.6% total subscription revenue growth and Adjusted EBITDA of 17.9% of revenue. Fiscal 2025 second quarter July to September sales, measured in annual contract value terms, were the second highest in the company's history. We have also made good progress with integrating Book4Time into the business and with the strides made towards realizing anticipated synergies and added value.
"Our growing competitive strengths based on a solid foundation of cloud-native state-of-the-art technology and a broad ecosystem of hospitality-focused software products and modules continue to yield good current results and create extensive potential for increasing shareholder value. A strong selling success quarter which drove cumulative recurring revenue, services and product backlog close to peak levels, along with additional subscription revenue from Book4Time increased our expectations for the second half of fiscal 2025. As a result, we are raising full fiscal year 2025 revenue guidance to $280 million to $285 million including at least 38% year-over-year subscription revenue growth. In addition, we expect full year fiscal 2025 Adjusted EBITDA to be 18% of revenue, higher than our previous guidance of 16%," he concluded.
Fiscal 2025 Outlook
The Company raises full year fiscal 2025 revenue guidance to $280 million to $285 million, including at least 38% year-over-year subscription revenue growth. Adjusted EBITDA is expected to be 18% of revenue for the full fiscal year.
Dave Wood, Chief Financial Officer, commented, "We are pleased with the business momentum through the first half of the fiscal year and increased expectations for the second half. The Book4Time acquisition expands our reach within hospitality and provides us an expanded customer base to sell the Agilysys ecosystem of products into. Our current and improving profitability levels and expanding operating leverage creates flexibility for our business and gives us confidence to continue to invest in future revenue growth initiatives."
2025 Second Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, October 28, 2024, at 4:30 p.m. ET. Both the call and the webcast are open to the public. Please register at https://register.vevent.com/register/BIfb8adfed26314ff8abe76f95460e6fde 15 minutes prior to the call to receive confirmation and further instruction in a timely manner. After registration, an email confirmation with a personalized PIN will be provided along with further access details.
Interested parties also can access the conference call live on the Investor Relations page of Agilysys.com under the Events and Presentations headline. 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 integrate Book4Time and realize future synergies, 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.
# # #
Investor Contact:
Jessica Hennessy
Senior Director Corporate Strategy & Investor Relations
Agilysys, Inc.
770-810-6116 or [email protected]
- Financial tables follow -
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
Three Months Ended |
Six Months Ended |
|||||||
|
(In thousands, except per share data) |
2024 |
2023 |
2024 |
2023 |
||||
|
Net revenue: |
||||||||
|
Products |
$ |
10,525 |
$ |
12,640 |
$ |
20,400 |
$ |
25,422 |
|
Subscription and maintenance |
41,432 |
34,248 |
$ |
79,474 |
$ |
66,373 |
||
|
Professional services |
16,322 |
11,728 |
$ |
31,917 |
$ |
22,881 |
||
|
Total net revenue |
68,279 |
58,616 |
131,791 |
114,676 |
||||
|
Cost of goods sold: |
||||||||
|
Products |
5,206 |
6,751 |
10,432 |
13,317 |
||||
|
Subscription and maintenance |
8,827 |
7,804 |
16,935 |
15,441 |
||||
|
Professional services |
11,032 |
8,965 |
21,342 |
17,764 |
||||
|
Total cost of goods sold |
25,065 |
23,520 |
48,709 |
46,522 |
||||
|
Gross profit |
43,214 |
35,096 |
83,082 |
68,154 |
||||
|
Gross profit margin |
63.3 |
% |
59.9 |
% |
63.0 |
% |
59.4 |
% |
|
Operating expenses: |
||||||||
|
Product development |
16,172 |
14,583 |
30,892 |
27,904 |
||||
|
Sales and marketing |
8,794 |
6,400 |
15,808 |
13,701 |
||||
|
General and administrative |
10,162 |
8,785 |
20,645 |
18,150 |
||||
|
Depreciation of fixed assets |
915 |
1,209 |
1,752 |
2,133 |
||||
|
Amortization of internal-use software and intangibles |
904 |
347 |
1,155 |
776 |
||||
|
Other charges, net |
2,037 |
210 |
2,587 |
969 |
||||
|
Legal settlements |
104 |
- |
369 |
- |
||||
|
Total operating expense |
39,088 |
31,534 |
73,208 |
63,633 |
||||
|
Operating income |
4,126 |
3,562 |
9,874 |
4,521 |
||||
|
Other income (expense): |
||||||||
|
Interest income |
1,095 |
1,227 |
2,877 |
2,328 |
||||
|
Interest expense |
(458 |
) |
- |
(458 |
) |
- |
||
|
Other income (expense), net |
383 |
51 |
226 |
(109 |
) |
|||
|
Income before taxes |
5,146 |
4,840 |
12,519 |
6,740 |
||||
|
Income tax (benefit) provision |
3,782 |
295 |
(2,951 |
) |
647 |
|||
|
Net income |
$ |
1,364 |
$ |
4,545 |
$ |
15,470 |
$ |
6,093 |
|
Series A convertible preferred stock dividends |
- |
(459 |
) |
- |
(918 |
) |
||
|
Net income attributable to common shareholders |
$ |
1,364 |
$ |
4,086 |
$ |
15,470 |
$ |
5,175 |
|
Weighted average shares outstanding - basic |
27,533 |
25,022 |
27,335 |
24,979 |
||||
|
Net income per share - basic: |
$ |
0.05 |
$ |
0.16 |
$ |
0.57 |
$ |
0.21 |
|
Weighted average shares outstanding - diluted |
28,257 |
26,117 |
28,202 |
26,148 |
||||
|
Net income per share - diluted: |
$ |
0.05 |
$ |
0.16 |
$ |
0.55 |
$ |
0.20 |
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands, except share data) |
September 30, 2024 (Unaudited) |
March 31, |
||
|
ASSETS |
||||
|
Current assets: |
||||
|
Cash and cash equivalents |
$ |
54,888 |
$ |
144,891 |
|
Accounts receivable, net of allowance for expected credit losses |
31,614 |
29,441 |
||
|
Contract assets |
4,537 |
2,287 |
||
|
Inventories |
6,446 |
4,587 |
||
|
Prepaid expenses and other current assets |
11,216 |
7,731 |
||
|
Total current assets |
108,701 |
188,937 |
||
|
Property and equipment, net |
17,538 |
17,930 |
||
|
Operating lease right-of-use assets |
18,120 |
18,384 |
||
|
Goodwill |
135,426 |
32,791 |
||
|
Intangible assets, net |
79,018 |
16,952 |
||
|
Deferred income taxes, non-current |
74,898 |
67,373 |
||
|
Other non-current assets |
8,309 |
8,063 |
||
|
Total assets |
$ |
442,010 |
$ |
350,430 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
|
Current liabilities: |
||||
|
Accounts payable |
$ |
12,746 |
$ |
9,422 |
|
Contract liabilities |
55,355 |
56,148 |
||
|
Accrued liabilities |
22,315 |
19,522 |
||
|
Operating lease liabilities, current |
5,473 |
4,279 |
||
|
Total current liabilities |
95,889 |
89,371 |
||
|
Deferred income taxes, non-current |
12,269 |
554 |
||
|
Operating lease liabilities, non-current |
18,662 |
19,613 |
||
|
Debt, non-current |
50,000 |
- |
||
|
Other non-current liabilities |
4,928 |
4,415 |
||
|
Commitments and contingencies |
||||
|
Shareholders' equity: |
||||
|
Common shares, without par value, at $0.30 stated value; 80,000,000 |
10,003 |
10,003 |
||
|
Treasury shares, 5,402,284 and 5,965,426 at September 30, 2024 |
(1,622 |
) |
(1,791 |
) |
|
Capital in excess of stated value |
102,275 |
94,680 |
||
|
Retained earnings |
153,225 |
137,755 |
||
|
Accumulated other comprehensive loss |
(3,619 |
) |
(4,170 |
) |
|
Total shareholders' equity |
260,262 |
236,477 |
||
|
Total liabilities and shareholders' equity |
$ |
442,010 |
$ |
350,430 |
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
Six Months Ended |
||||
|
September 30, |
||||
|
(In thousands) |
2024 |
2023 |
||
|
Operating activities |
||||
|
Net income |
$ |
15,470 |
$ |
6,093 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||
|
Loss on asset disposals |
21 |
- |
||
|
Depreciation of fixed assets |
1,752 |
2,133 |
||
|
Amortization of internal-use software and intangibles |
1,155 |
776 |
||
|
Deferred income taxes |
(7,634 |
) |
(389 |
) |
|
Share-based compensation |
8,438 |
5,851 |
||
|
Changes in operating assets and liabilities |
(11,514 |
) |
(8,994 |
) |
|
Net cash provided by operating activities |
7,688 |
5,470 |
||
|
Investing activities |
||||
|
Cash paid for business combination, net of cash acquired |
(144,945 |
) |
- |
|
|
Capital expenditures |
(1,520 |
) |
(6,002 |
) |
|
Additional investments in corporate-owned life insurance policies |
- |
(2 |
) |
|
|
Net cash used in investing activities |
(146,465 |
) |
(6,004 |
) |
|
Financing activities |
||||
|
Payment of preferred stock dividends |
- |
(918 |
) |
|
|
Debt proceeds, net of issuance costs |
49,655 |
- |
||
|
Proceeds from Employee Stock Purchase Plan purchases |
453 |
- |
||
|
Repurchase of common shares to satisfy employee tax withholding |
(1,428 |
) |
(3,868 |
) |
|
Principal payments under long-term obligations |
- |
(2 |
) |
|
|
Net cash provided by (used in) financing activities |
48,680 |
(4,788 |
) |
|
|
Effect of exchange rate changes on cash |
94 |
(107 |
) |
|
|
Net decrease in cash and cash equivalents |
(90,003 |
) |
(5,429 |
) |
|
Cash and cash equivalents at beginning of period |
144,891 |
112,842 |
||
|
Cash and cash equivalents at end of period |
$ |
54,888 |
$ |
107,413 |
AGILYSYS, INC.
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
|
Three Months Ended |
Six Months Ended |
|||||||
|
September 30, |
September 30, |
|||||||
|
(In thousands) |
2024 |
2023 |
2024 |
2023 |
||||
|
Net income |
$ |
1,364 |
$ |
4,545 |
$ |
15,470 |
$ |
6,093 |
|
Income tax (benefit) provision |
3,782 |
295 |
(2,951 |
) |
647 |
|||
|
Income before taxes |
5,146 |
4,840 |
12,519 |
6,740 |
||||
|
Depreciation of fixed assets |
915 |
1,209 |
1,752 |
2,133 |
||||
|
Amortization of internal-use software and intangibles |
904 |
347 |
1,155 |
776 |
||||
|
Amortization of developed technology acquired |
99 |
41 |
138 |
81 |
||||
|
Interest (income), net |
(637 |
) |
(1,227 |
) |
(2,419 |
) |
(2,328 |
) |
|
EBITDA (a) |
6,427 |
5,210 |
13,145 |
7,402 |
||||
|
Share-based compensation |
4,009 |
2,684 |
8,438 |
5,851 |
||||
|
Other charges, net |
2,037 |
210 |
2,587 |
969 |
||||
|
Other non-operating (income) expense |
(383 |
) |
(51 |
) |
(226 |
) |
109 |
|
|
Legal settlements |
104 |
- |
369 |
- |
||||
|
Adjusted EBITDA (b) |
$ |
12,194 |
$ |
8,053 |
$ |
24,313 |
$ |
14,331 |
(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 |
Six Months Ended |
|||||||
|
September 30, |
September 30, |
|||||||
|
(In thousands, except per share data) |
2024 |
2023 |
2024 |
2023 |
||||
|
Net income attributable to common shareholders |
$ |
1,364 |
$ |
4,086 |
$ |
15,470 |
$ |
5,175 |
|
Amortization of developed technology acquired |
99 |
41 |
138 |
81 |
||||
|
Amortization of internal-use software and intangibles |
904 |
347 |
1,155 |
776 |
||||
|
Share-based compensation |
4,009 |
2,684 |
8,438 |
5,851 |
||||
|
Other charges, net |
2,037 |
210 |
2,587 |
969 |
||||
|
Legal settlements |
104 |
- |
369 |
- |
||||
|
Tax events (a) |
2,251 |
- |
(7,929 |
) |
- |
|||
|
Income tax adjustments |
(1,220 |
) |
(742 |
) |
(2,368 |
) |
(1,620 |
) |
|
Adjusted net income (b) |
$ |
9,548 |
$ |
6,626 |
$ |
17,860 |
$ |
11,232 |
|
Basic weighted average shares outstanding |
27,533 |
25,022 |
27,335 |
24,979 |
||||
|
Diluted weighted average shares outstanding |
28,257 |
26,117 |
28,202 |
26,148 |
||||
|
Adjusted basic earnings per share (c) |
$ |
0.35 |
$ |
0.26 |
$ |
0.65 |
$ |
0.45 |
|
Adjusted diluted earnings per share (c) |
$ |
0.34 |
$ |
0.25 |
$ |
0.63 |
$ |
0.43 |
(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 |
Six Months Ended |
||||||||
|
September 30, |
September 30, |
||||||||
|
(In thousands) |
2024 |
2023 |
2024 |
2023 |
|||||
|
Net cash provided by operating activities |
$ |
6,590 |
$ |
5,448 |
$ |
7,688 |
$ |
5,470 |
|
|
Capital expenditures |
(651 |
) |
(2,937 |
) |
(1,520 |
) |
(6,002 |
) |
|
|
Free cash flow (a) |
$ |
5,939 |
$ |
2,511 |
$ |
6,168 |
$ |
(532 |
) |
(a) Free cash flow, a non-GAAP financial measure, is defined as net cash provided by operating activities, less capital expenditures