Financial News

Agilysys Reports Fiscal 2022 First Quarter Revenue of $38.7M

Reports Record Recurring Revenue of $23.2M Inclusive of Subscription Record Revenue of $10.2M

Reports Adjusted EBITDA of $6.9M and Positive GAAP EPS of $0.06 With

Quarterly Free Cash Flow of $7.7M and Cash Balance Increase of $4.7M to $103.9M

Agilysys, Inc. (Nasdaq: AGYS), a leading global provider of next-generation cloud-native SaaS and on-premise hospitality software solutions and services, today reported operating results for its fiscal 2022 first quarter ended June 30, 2021.

Summary of Fiscal 2022 First Quarter Financial Results

  • Total net revenue was $38.7 million, compared to net revenue of $29.8 million and $38.4 million in the first quarters of fiscal 2021 and 2020, respectively.
  • Recurring revenues (which are comprised of support, maintenance and subscription services) for the fiscal first quarter were $23.2 million or 59.9% of total net revenue compared to $20.5 million or 68.8% of total net revenue and $20.1 million or 52.3% of total net revenue for the first quarters of fiscal 2021 and 2020, respectively. Subscription revenues increased 33.2% over fiscal 2021 first quarter compared to an increase of 8.6% fiscal 2021 over fiscal 2020 first quarter. Subscription revenues comprised 43.7% of total recurring revenues compared to 37.2% and 34.9% for the first quarters of fiscal 2021 and 2020, respectively.
  • Gross margin was 64.2% compared to 62.2% and 52.1% in the first quarters of fiscal 2021 and 2020, respectively.
  • Net income attributable to common shareholders in the fiscal 2022 first quarter was $1.5 million, or $0.06 per diluted share compared to a net loss of $(1.7) million or $(0.07) per diluted share and a net loss of $(1.6) million or $(0.07) per diluted share for the first quarters of fiscal 2021 and 2020, respectively.
  • Adjusted diluted EPS (non-GAAP) was $0.21 compared to $0.08 and $0.08 per share in the first quarters of fiscal 2021 and 2020 respectively (see reconciliation below).
  • Adjusted EBITDA (non-GAAP) improved to $6.9 million, compared to $3.4 million and $3.2 million in the first quarters of fiscal 2021 and 2020 respectively (see reconciliation below).
  • Free cash flow (non-GAAP) in the fiscal 2022 first quarter was $7.7 million compared to $(5.2) million and $(2.5) million in the fiscal first quarters of 2021 and 2020 respectively (see reconciliation below). Ending cash balance was $103.9 million, compared to ending cash balance of $99.2 million as of fiscal 2021 year-end.

Ramesh Srinivasan, President and CEO of Agilysys, commented, “While certain sectors within the domestic hospitality industry have seen good recovery since around March of this year, several other market segments, especially in international regions, remain challenged by the pandemic.”

“Despite the lack of recovery in multiple vertical and geographic market areas, this was our best Q1 April – June quarter with respect to sales success and revenue level, slightly higher than Q1 two years ago. We have seen a good pick up in hospitality customers finalizing technology decisions in a couple of domestic market segments. However, continuing implementation delays negatively affected revenue for the quarter, while driving the combined product, services and recurring revenue backlog to record levels.”

“We continue to make good progress with getting our recently modernized software products implemented at various customer properties. Our transformation from being known as a solid, trusted hospitality software solutions enterprise software company to one which is also driven by modern technology-based cloud applications is now underway in full flow, positioning us well for a promising future. Our upcoming increases in sales, marketing, services and support investments will further speed up that transformation process.”

Fiscal 2022 Outlook

Agilysys continues to monitor the impact of COVID-19 on the hospitality industry with our primary focus being the safety of our employees and customers as we manage through these unprecedented times. We are re-iterating our previously released guidance of full year fiscal 2022 revenue of $160 to $170 million and Adjusted EBITDA of slightly better than 15% of revenue.

Dave Wood, Chief Financial Officer, commented, “We continue to be excited with the solid foundation we have built for long term sustainable growth and profitability. We have positioned the company to be a dependable growing partner for customers and a provider of mission critical, modern technology solutions to the hospitality industry. Now that the industry is starting to see recovery in certain markets, we are beginning to see the sound business fundamentals come through in our financial results. We are executing on our strategic plan and remaining committed to the profitability and success of the company while serving the needs of customers and supporting the recovery of the hospitality industry.”

2022 First Quarter Conference Call and Webcast

Agilysys is hosting a conference call and webcast today, July 27, 2021, 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 3984906. 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 and adjusted EBITDA guidance for the 2022 fiscal year, and statements we make regarding recovery from and impacts of the COVID-19 pandemic, our technical transformation, and future growth and profitability.

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; 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.

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, adjusted diluted earnings per share, and free cash flow. 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. Free cash flow is defined as net cash provided by (used in) operating activities, less capital expenditures.

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 a leader in hospitality software for more than 40 years, delivering innovative cloud-native SaaS and on-premise guest-centric technology solutions for gaming, hotels, resorts and cruise, corporate foodservice management, restaurants, universities, stadia 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. During recent years, Agilysys has made major investments in R&D and has successfully 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. For more information visit Agilysys.com.

 

 

AGILYSYS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

(In thousands, except per share data)

 

Three Months Ended

 

 

June 30,

 

 

2021

 

2020

Net revenue:

 

 

 

 

 

 

 

 

Products

 

$

8,844

 

 

$

5,239

 

Support, maintenance and subscription services

 

 

23,207

 

 

 

20,497

 

Professional services

 

 

6,674

 

 

 

4,071

 

Total net revenue

 

 

38,725

 

 

 

29,807

 

Cost of goods sold:

 

 

 

 

 

 

 

 

Products

 

 

4,360

 

 

 

3,015

 

Support, maintenance and subscription services

 

 

4,744

 

 

 

4,306

 

Professional services

 

 

4,754

 

 

 

3,936

 

Total cost of goods sold

 

 

13,858

 

 

 

11,257

 

Gross profit

 

 

24,867

 

 

 

18,550

 

Gross profit margin

 

 

64.2

%

 

 

62.2

%

Operating expenses:

 

 

 

 

 

 

 

 

Product development

 

 

11,485

 

 

 

8,266

 

Sales and marketing

 

 

3,052

 

 

 

2,601

 

General and administrative

 

 

7,003

 

 

 

5,719

 

Depreciation of fixed assets

 

 

566

 

 

 

723

 

Amortization of intangibles

 

 

465

 

 

 

461

 

Severance and other charges

 

 

225

 

 

 

1,203

 

Legal settlements, net

 

 

30

 

 

 

-

 

Total operating expense

 

 

22,826

 

 

 

18,973

 

Operating income (loss)

 

 

2,041

 

 

 

(423

)

Other (income) expense:

 

 

 

 

 

 

 

 

Interest income

 

 

(22

)

 

 

(21

)

Interest expense

 

 

1

 

 

 

1

 

Other (income) expense, net

 

 

(103

)

 

 

106

 

Income (loss) before taxes

 

 

2,165

 

 

 

(509

)

Income tax expense

 

 

193

 

 

 

8

 

Net income (loss)

 

$

1,972

 

 

$

(517

)

Series A convertible preferred stock issuance costs

 

 

-

 

 

 

(937

)

Series A convertible preferred stock dividends

 

 

(459

)

 

 

(199

)

Net income (loss) attributable to common shareholders

 

$

1,513

 

 

$

(1,653

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

24,014

 

 

 

23,405

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic:

 

$

0.06

 

 

$

(0.07

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

 

25,178

 

 

 

23,405

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - diluted:

 

$

0.06

 

 

$

(0.07

)

 

 

AGILYSYS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

(In thousands, except share data)

 

June 30,

 

March 31,

 

 

2021

 

2021

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

103,911

 

 

$

99,180

 

Accounts receivable, net of allowance for expected credit losses

of $1,002 and $1,220, respectively

 

 

22,812

 

 

 

25,732

 

Contract assets

 

 

2,081

 

 

 

2,364

 

Inventories

 

 

1,186

 

 

 

1,177

 

Prepaid expenses and other current assets

 

 

4,837

 

 

 

4,797

 

Total current assets

 

 

134,827

 

 

 

133,250

 

Property and equipment, net

 

 

7,746

 

 

 

8,789

 

Operating lease right-of-use assets

 

 

11,367

 

 

 

12,210

 

Goodwill

 

 

19,622

 

 

 

19,622

 

Intangible assets, net

 

 

8,400

 

 

 

8,400

 

Deferred income taxes, non-current

 

 

1,885

 

 

 

1,802

 

Other non-current assets

 

 

5,638

 

 

 

5,800

 

Total assets

 

$

189,485

 

 

$

189,873

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,388

 

 

$

6,346

 

Contract liabilities

 

 

34,763

 

 

 

38,394

 

Accrued liabilities

 

 

10,148

 

 

 

11,233

 

Operating lease liabilities, current

 

 

4,705

 

 

 

5,009

 

Finance lease obligations, current

 

 

15

 

 

 

19

 

Total current liabilities

 

 

57,019

 

 

 

61,001

 

Deferred income taxes, non-current

 

 

928

 

 

 

923

 

Operating lease liabilities, non-current

 

 

7,868

 

 

 

8,597

 

Finance lease obligations, non-current

 

 

5

 

 

 

6

 

Other non-current liabilities

 

 

4,178

 

 

 

4,011

 

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 24,568,661

and 24,010,727 shares outstanding at June 30, 2021

and March 31, 2021, respectively

 

 

9,482

 

 

 

9,482

 

Treasury shares, 7,038,170 and 7,596,104 at June 30, 2021

and March 31, 2021, respectively

 

 

(2,111

)

 

 

(2,278

)

Capital in excess of stated value

 

 

40,190

 

 

 

37,257

 

Retained earnings

 

 

36,889

 

 

 

35,376

 

Accumulated other comprehensive income

 

 

37

 

 

 

39

 

Total shareholders' equity

 

 

84,487

 

 

 

79,876

 

Total liabilities and shareholders' equity

 

$

189,485

 

 

$

189,873

 

 

 

AGILYSYS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Three Months Ended

(In thousands)

 

June 30,

 

 

2021

 

2020

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,972

 

 

$

(517

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities

 

 

 

 

 

 

 

 

Loss on disposal of property & equipment

 

 

123

 

 

 

 

Depreciation

 

 

566

 

 

 

723

 

Amortization of intangibles

 

 

465

 

 

 

461

 

Deferred income taxes

 

 

(108

)

 

 

(84

)

Share-based compensation

 

 

3,621

 

 

 

1,426

 

Changes in operating assets and liabilities

 

 

1,356

 

 

 

(6,938

)

Net cash provided by (used in) operating activities

 

 

7,995

 

 

 

(4,929

)

Investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(274

)

 

 

(243

)

Additional investments in corporate-owned life insurance policies

 

 

(2

)

 

 

(2

)

Net cash used in investing activities

 

 

(276

)

 

 

(245

)

Financing activities

 

 

 

 

 

 

 

 

Repurchase of common shares to satisfy employee tax withholding

 

 

(2,070

)

 

 

(934

)

Series A convertible preferred stock issuance proceeds, net of issuance costs

 

 

-

 

 

 

34,063

 

Payment of preferred stock dividends

 

 

(918

)

 

 

 

Principal payments under long-term obligations

 

 

(6

)

 

 

(6

)

Net cash (used in) provided by financing activities

 

 

(2,994

)

 

 

33,123

 

Effect of exchange rate changes on cash

 

 

6

 

 

 

2

 

Net increase in cash and cash equivalents

 

 

4,731

 

 

 

27,951

 

Cash and cash equivalents at beginning of period

 

 

99,180

 

 

 

46,653

 

Cash and cash equivalents at end of period

 

$

103,911

 

 

$

74,604

 

 

 

AGILYSYS, INC.

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

(UNAUDITED)

 

 

 

Three Months Ended

(In thousands)

 

June 30,

 

 

2021

 

2020

 

2019

Net income (loss)

 

$

1,972

 

 

$

(517

)

 

$

(1,575

)

Income tax expense

 

 

193

 

 

 

8

 

 

 

25

 

Income (loss) before taxes

 

 

2,165

 

 

 

(509

)

 

 

(1,550

)

Depreciation of fixed assets

 

 

566

 

 

 

723

 

 

 

213

 

Amortization of intangibles

 

 

465

 

 

 

461

 

 

 

678

 

Amortization of developed technology

 

 

 

 

 

 

 

 

3,175

 

Interest (income), net

 

 

(21

)

 

 

(20

)

 

 

(79

)

EBITDA (a)

 

 

3,175

 

 

 

655

 

 

 

2,437

 

Share-based compensation

 

 

3,621

 

 

 

1,426

 

 

 

482

 

Severance and other charges, net

 

 

225

 

 

 

1,203

 

 

 

231

 

Other non-operating (income) expense, net

 

 

(103

)

 

 

106

 

 

 

85

 

Legal settlements, net

 

 

30

 

 

 

 

 

 

 

Adjusted EBITDA (b)

 

$

6,948

 

 

$

3,390

 

 

$

3,235

 

(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

(In thousands, except per share data)

 

June 30,

 

 

2021

 

2020

 

2019

Net income (loss) attributable to common shareholders

 

$

1,513

 

 

$

(1,653

)

 

$

(1,575

)

Amortization of intangibles

 

 

465

 

 

 

461

 

 

 

678

 

Amortization of developed technology

 

 

 

 

 

 

 

 

3,175

 

Share-based compensation

 

 

3,621

 

 

 

1,426

 

 

 

482

 

Series A convertible preferred stock issuance costs

 

 

 

 

 

937

 

 

 

 

Severance and other charges, net

 

 

225

 

 

 

1,203

 

 

 

231

 

Legal settlements, net

 

 

30

 

 

 

 

 

 

 

Income tax adjustments

 

 

(655

)

 

 

(456

)

 

 

(1,047

)

Adjusted net income (a)

 

$

5,199

 

 

$

1,918

 

 

$

1,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

24,014

 

 

 

23,405

 

 

 

23,212

 

Diluted weighted average shares outstanding

 

 

25,178

 

 

 

23,820

 

 

 

23,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per share (b)

 

$

0.22

 

 

$

0.08

 

 

$

0.08

 

Adjusted diluted earnings per share (b)

 

$

0.21

 

 

$

0.08

 

 

$

0.08

 

(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 (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW

(UNAUDITED)

 

 

 

Three Months Ended

(In thousands)

 

June 30,

 

 

2021

 

2020

 

2019

Net cash provided by (used in) operating activities

 

$

7,995

 

 

$

(4,929

)

 

$

(1,913

)

Capital expenditures

 

 

(274

)

 

 

(243

)

 

 

(571

)

Free cash flow (a)

 

$

7,721

 

 

$

(5,172

)

 

$

(2,484

)

(a) Free cash flow, a non-GAAP financial measure, is defined as net cash provided by operating activities, less capital expenditures

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