Alpharetta, GA - Agilysys, Inc. (NASDAQ: AGYS), a global provider of next-generation hospitality software solutions and services, today reported operating results for its fiscal 2023 first quarter and period ended June 30, 2022.
Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased to report a second consecutive record revenue quarter, despite lingering pandemic-related industry challenges in international regions and managed food services. Overall revenue and subscription revenue grew by close to 23% and 30% respectively over the comparable prior year quarter. The sum of product and services revenue was about 28% higher year-over-year."
"As previously highlighted, our EBITDA level this quarter as a percentage of revenue, was slightly less than recent previous quarters due to expected increased spend in sales, marketing and professional services and certain additional costs which tend to happen during each fiscal Q1 April to June quarter. The decrease in free cash flow this quarter was primarily due to short-term working capital fluctuations including additional payments for previously reported increased inventory levels which were required to give us operating cushion against possible future supply chain challenges."
"We continue to see good momentum in the marketplace. Backed by a superior set of state-of-the-art cloud-native products and supporting software modules, an end-to-end array of software solutions and world class customer service, our sales win-loss ratios continue to remain at high levels. The hospitality industry is investing in technology to mitigate staffing shortages and other challenges and to enhance guest experience. Our R&D investments over the past years have placed us in a good position to take advantage of the advancing industry trends. Our combined product, recurring revenue and services backlog levels have decreased slightly, but continue to remain healthy, at about 85% of peak and about 10% above prior year Q1 levels. Continued sales progress, a healthy backlog and an industry hungry for improved technology options have positioned us well to achieve our 2023 targets and continue on a profitable growth path thereafter."
We are reiterating full year fiscal 2023 guidance of revenue to be $190 to $195 million, inclusive of approximately 30% subscription revenue growth year over year, and Adjusted EBITDA of greater than 15% of revenue.
Dave Wood, Chief Financial Officer, commented, “We remain disciplined and focused on profitable growth. We are growing sales, marketing and professional services investments incrementally to prepare the organization to take advantage of the significant growth opportunities in front of us. Another record revenue and substantial subscription revenue growth quarter are good indicators of our consistent progress in the right direction. As the hospitality industry continues to recover and get back to and grow beyond pre-COVID levels, we are well positioned to execute on our medium and long-term strategic plan.”
Agilysys hosted a conference call and webcast yesterday, July 26, 2022, at 4:30 p.m. (ET). Both the call and the webcast were open to the public. Interested parties may access the conference call at Agilysys Events & Presentations.
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 hospitality industry's investment in technology and our ability to continue profitable growth.
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.
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.
Agilysys is well known for its long heritage of hospitality-focused technology innovation. The Company delivers modular and integrated software solutions and expertise to businesses seeking to maximize Return on Experience (ROE) through hospitality encounters that are both personal and profitable. Over time, customers achieve High Return Hospitality by consistently delighting guests, retaining staff and growing margins. Customers around the world include: branded and independent hotels; multi-amenity resort properties; 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. The Agilysys Hospitality Cloud™ combines core operational systems for property management (PMS), point-of-sale (POS) and Inventory and Procurement (I&P) with Experience Enhancers™ that meaningfully improve interactions for guests and for employees across dimensions such as digital access, mobile convenience, self-service control, personal choice, payment options, service coverage and real-time insights to improve decisions. Core solutions and Experience Enhancers are selectively combined in Hospitality Solution Studios™ tailored to specific hospitality settings and business needs. www.Agilysys.com
For more information about Agilysys, visit www.agilysys.com