Agilysys fiscal 2022 fourth quarter revenue rises 28.1% to record $46.6m
Alpharetta, ga.--(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
