Agilysys Announces Fiscal 2025 First Quarter Record Revenue of $63.5M

Rhea-AI Summary

Agilysys (NASDAQ: AGYS) reported record revenue of $63.5 million for Q1 fiscal 2025, a 13.3% increase year-over-year. Highlights include:

- Subscription revenue growth of 32.0%
- Recurring revenue at 59.9% of total net revenue
- Net income of $14.1 million, or $0.50 per diluted share
- Adjusted EBITDA of $12.1 million, 19% of revenue
- Adjusted EPS of $0.30

The company expects full-year fiscal 2025 revenue between $275-$280 million, with over 27% subscription revenue growth. Adjusted EBITDA is projected at 16% of revenue for the full fiscal year.

Positive

• Record revenue of $63.5 million, up 13.3% year-over-year
• Subscription revenue growth of 32.0%
• Net income increased to $14.1 million from $1.1 million in the prior year
• Adjusted EBITDA grew to $12.1 million from $6.3 million year-over-year
• Positive free cash flow of $0.2 million compared to -$3.0 million in the prior year
• Strong sales start for fiscal year 2025

Negative

• Product revenue negatively impacted by customers preferring subscription licenses over perpetual licenses
• Lower hardware revenue than expected

Insights

Financial Analyst

Agilysys's Q1 fiscal 2025 results showcase strong financial performance. The company's total net revenue increased by 13.3% to a record $63.5 million compared to the previous year's quarter, highlighting solid growth. The subscription revenue growth of 32% is particularly noteworthy. This indicates a strong shift towards a recurring revenue model, which tends to be more predictable and stable. Additionally, the adjusted EBITDA nearly doubled from $6.3 million to $12.1 million, showcasing improved operational efficiency. Given these positive indicators, I would expect investor confidence to rise, potentially leading to a positive impact on the stock price in the short term. However, the slight challenge mentioned regarding product revenue should be monitored as it can affect long-term growth if not addressed.

Market Research Analyst

From a market trends perspective, Agilysys's continued shift towards subscription-based services aligns well with broader industry trends. The hospitality sector increasingly values integrated modular solutions that enhance guest experiences and operational efficiency. Agilysys is capitalizing on this trend, as reflected in their record subscription and services revenue. The company’s ability to execute complex implementations efficiently is a competitive advantage. The projected full-year revenue of $275 million to $280 million and expected subscription revenue growth of over 27% are strong forward-looking indicators. This positions Agilysys favorably against competitors and highlights its potential for sustainable growth.

Tech Expert

Agilysys's performance underscores the growing importance of technology in the hospitality industry. Their suite of software solutions that enhance operational efficiency and guest experience is driving their revenue growth. The shift from perpetual licenses to subscription models aligns with industry trends towards SaaS (Software as a Service) platforms, which offer flexibility and scalability. The ability to deliver complex, integrated solutions efficiently is a testament to their technological prowess. The CEO’s comments on the increasing complexity of implementations yet maintaining high efficiency levels underscore their robust technical capabilities. Investors should watch for further innovation and potential new product launches that could drive future growth.

Includes Subscription Revenue Growth of 32.0%

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

ALPHARETTA, Ga.--(BUSINESS WIRE)-- 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

Source: Agilysys, Inc.

FAQ

What was Agilysys (AGYS) revenue for Q1 fiscal 2025?

Agilysys reported record revenue of $63.5 million for Q1 fiscal 2025, representing a 13.3% increase year-over-year.

How much did Agilysys (AGYS) subscription revenue grow in Q1 fiscal 2025?

Agilysys' subscription revenue grew by 32.0% year-over-year in Q1 fiscal 2025.

What is Agilysys (AGYS) revenue guidance for fiscal 2025?

Agilysys expects full-year fiscal 2025 revenue to be between $275 million and $280 million, including over 27% year-over-year subscription revenue growth.

What was Agilysys (AGYS) net income for Q1 fiscal 2025?

Agilysys reported a net income of $14.1 million, or $0.50 per diluted share, for Q1 fiscal 2025.

What challenges did Agilysys (AGYS) face in Q1 fiscal 2025?

Agilysys faced challenges with product revenue due to customers increasingly preferring subscription licenses over one-time perpetual licenses and lower hardware revenue than expected.