Agilysys reports fiscal 2022 third quarter revenue of $39.5m
Alpharetta, ga.--(business wire)--agilysys, inc. (nasdaq: agys), a leading global provider of next-generation saas and on-premise hospitality software solutions and services, today reported operating results for its fiscal 2022 third quarter ended december 31, 2021. summary of fiscal 2022 third quarter financial results total net revenue was $39.5 million, compared to net revenue of $36.7 million and $42.0 million in the third quarters of fiscal 2021 and 2020, respectively. recurring revenues (which are comprised of support, maintenance and subscription services) for the fiscal third quarter were $25.1 million or 63.7% of total net revenue compared to $22.8 million or 62.3% of total net revenue and $21.0 million or 49.9% of total net revenue for the third quarters of fiscal 2021 and 2020, respectively. subscription revenues increased 24.9% over fiscal 2021 third quarter compared to an increase of 18.1% fiscal 2021 over fiscal 2020 third quarter. subscription revenues comprised 46.4% of total recurring revenues compared to 40.9% and 37.7% for the third quarters of fiscal 2021 and 2020, respectively. gross margin was 62.6% compared to 66.0% and 50.2% in the third quarters of fiscal 2021 and 2020, respectively. net income attributable to common shareholders in the fiscal 2022 third quarter was $1.1 million, or $0.04 per diluted share compared to a net loss of $(2.5) million or $(0.11) per diluted share and $(2.6) million or $(0.11) per diluted share for the third quarters of fiscal 2021 and 2020, respectively. adjusted diluted eps (non-gaap) was $0.19 compared to $0.23 and $0.05 per share in the third quarters of fiscal 2021 and 2020 respectively (see reconciliation below). adjusted ebitda (non-gaap) was $6.6 million, compared to $7.6 million and $3.2 million in the third quarters of fiscal 2021 and 2020 respectively (see reconciliation below). free cash flow (non-gaap) in the fiscal 2022 third quarter was $9.9 million compared to $7.8 million and $3.0 million in the fiscal third quarters of 2021 and 2020 respectively (see reconciliation below). ending cash balance was $115.1 million, compared to ending cash balance of $99.2 million as of fiscal 2021 year-end. ramesh srinivasan, president and ceo of agilysys, commented, “we are pleased with our continued consistent growth in subscription revenue despite partial to high business environment challenges across asia, europe, managed food services, cruise ships and hotel chains. we are happy to have crossed the $100m total annual recurring revenue exit run-rate milestone. with only three quarters completed, this fiscal year is already a record year with respect to sales bookings pertaining to subscription fees measured in annual contract value (acv) terms. among other things, that has a lot to do with increasing momentum with property management system (pms) products and related software modules. the hardware revenue related supply chain situation improved this quarter and should make more progress during q4. services revenue continues to be challenged by delayed projects which have further increased services and subscription revenue backlog. the previously announced acquisition of resortsuite closed early january as expected. only a handful of technology providers currently have the experience and expertise to offer robust, comprehensive and end-to-end integrated property management solutions and the merger of two of them – agilysys and resortsuite – is progressing well on all fronts, among internal teams, customers and the overall hospitality industry community. q3 fiscal 2022 was a record quarter with respect to both subscription and overall recurring revenue. we expect the current business environment pressures on one-time hardware product and services revenue to get better soon. we expect q4 fiscal 2022 to be a record high for overall total revenue getting us to the low end of fiscal 2022 annual guidance with profitability remaining at adjusted ebitda being slightly above 15% of revenue.” 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 expect overall revenue during q4 to be at record levels and total fiscal 2022 annual revenue to be at the low end of the guidance provided with adjusted ebitda being slightly better than 15% of revenue as stated before. dave wood, chief financial officer, commented, “we remain encouraged with the results of fiscal year 2022 with profitability and recurring revenue growth continuing as significant strengths. q3 fiscal 2022 was our highest top line revenue quarter since the pandemic started close to two years ago. supply chain and labor shortages continue to be a challenge to top line revenue. in addition, a recent accelerating shift from on premise to saas based solutions, a welcome trend for our long-term business health, has created a drag on top line revenue sooner than we anticipated. our investment in building world class saas products through the downturn in the markets we serve is driving the record backlog levels we have seen during the last few quarters. as the industry continues to recover and the residual challenges are addressed, we expect our increasing investments in sales and marketing to result in sustained revenue growth and profitability levels.” 2022 third quarter conference call and webcast agilysys is hosting a conference call and webcast today, january 25, 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 1964765. 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 fourth quarter and fiscal year, statements we make regarding the integration of the resortsuite acquisition, the timing of improvements to the current business environment pressures on one-time hardware product and services revenue, and expectations of future revenue growth and profitability resulting from increased investments in sales and marketing. 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. 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 ebitda, 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 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. - financial tables follow - agilysys, inc. consolidated statements of operations (unaudited) three months ended december 31, nine months ended december 31, (in thousands, except share data) 2021 2020 2021 2020 net revenue: products $ 8,101 $ 7,599 $ 24,244 $ 19,396 support, maintenance and subscription services 25,136 22,846 72,371 65,647 professional services 6,223 6,230 19,463 15,797 total net revenue 39,460 36,675 116,078 100,840 cost of goods sold: products 4,400 3,660 12,420 9,625 support, maintenance and subscription services 5,421 4,655 15,184 13,515 professional services 4,923 4,164 14,634 11,802 total cost of goods sold 14,744 12,479 42,238 34,942 gross profit 24,716 24,196 73,840 65,898 gross profit margin 62.6 % 66.0 % 63.6 % 65.3 % operating expenses: product development 11,210 12,376 34,074 28,900 sales and marketing 3,943 3,327 10,418 8,278 general and administrative 6,804 7,509 20,330 18,446 depreciation of fixed assets 495 722 1,609 2,160 amortization of internal-use software 267 521 1,077 1,490 severance and other charges 381 1,552 1,187 2,762 legal settlements, net 4 - 371 50 total operating expense 23,104 26,007 69,066 62,086 operating income (loss) 1,612 (1,811 ) 4,774 3,812 other (income) expense: interest income (10 ) (27 ) (45 ) (76 ) interest expense 4 9 5 13 other expense, net 52 95 53 284 income (loss) before taxes 1,566 (1,888 ) 4,761 3,591 income tax expense 24 182 265 311 net income (loss) $ 1,542 $ (2,070 ) $ 4,496 $ 3,280 series a convertible preferred stock issuance costs - - - (1,031 ) series a convertible preferred stock dividends (459 ) (459 ) (1,377 ) (1,117 ) net income (loss) attributable to common shareholders $ 1,083 $ (2,529 ) $ 3,119 $ 1,132 weighted average shares outstanding - basic 24,477 23,429 24,315 23,419 net income (loss) per share - basic: $ 0.04 $ (0.11 ) $ 0.13 $ 0.05 weighted average shares outstanding - diluted 25,392 23,429 25,327 23,903 net income (loss) per share - diluted: $ 0.04 $ (0.11 ) $ 0.12 $ 0.05 agilysys, inc. consolidated balance sheets (unaudited) (in thousands, except share data) december 31, 2021 (unaudited) march 31, 2021 assets current assets: cash and cash equivalents $ 115,122 $ 99,180 accounts receivable, net of allowance for expected credit losses of $717 and $1,220, respectively 24,957 25,732 contract assets 1,628 2,364 inventories 3,256 1,177 prepaid expenses and other current assets 4,651 4,797 total current assets 149,614 133,250 property and equipment, net 6,788 8,789 operating lease right-of-use assets 9,681 12,210 goodwill 19,622 19,622 intangible assets, net 8,400 8,400 deferred income taxes, non-current 2,281 1,802 other non-current assets 5,952 5,800 total assets $ 202,338 $ 189,873 liabilities and shareholders' equity current liabilities: accounts payable $ 8,035 $ 6,346 contract liabilities 43,193 38,394 accrued liabilities 8,385 11,233 operating lease liabilities, current 4,531 5,009 finance lease obligations, current 7 19 total current liabilities 64,151 61,001 deferred income taxes, non-current 937 923 operating lease liabilities, non-current 6,187 8,597 finance lease obligations, non-current 3 6 other non-current liabilities 3,647 4,011 commitments and contingencies 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 24,712,343 and 24,010,727 shares outstanding at december 31, 2021 and march 31, 2021, respectively 9,482 9,482 treasury shares, 6,894,488 and 7,596,104 at december 31, 2021 and march 31, 2021, respectively (2,068 ) (2,278 ) capital in excess of stated value 46,436 37,257 retained earnings 38,495 35,376 accumulated other comprehensive income 68 39 total shareholders' equity 92,413 79,876 total liabilities and shareholders' equity $ 202,338 $ 189,873 agilysys, inc. consolidated statements of cash flows (unaudited) nine months ended december 31, (in thousands) 2021 2020 operating activities net income $ 4,496 $ 3,280 adjustments to reconcile net income to net cash provided by operating activities loss on disposal of property & equipment 123 — depreciation 1,609 2,160 amortization of internal-use software 1,077 1,490 deferred income taxes (491 ) (499 ) share-based compensation 10,802 9,312 changes in operating assets and liabilities 4,199 (659 ) net cash provided by operating activities 21,815 15,084 investing activities capital expenditures (1,078 ) (1,076 ) additional investments in corporate-owned life insurance policies (3 ) (2 ) net cash used in investing activities (1,081 ) (1,078 ) financing activities repurchase of common shares to satisfy employee tax withholding (2,902 ) (1,069 ) series a convertible preferred stock issuance proceeds, net of issuance costs — 33,969 payment of preferred stock dividends (1,836 ) (1,117 ) principal payments under long-term obligations (16 ) (18 ) net cash (used in) provided by financing activities (4,754 ) 31,765 effect of exchange rate changes on cash (38 ) 184 net increase in cash and cash equivalents 15,942 45,955 cash and cash equivalents at beginning of period 99,180 46,653 cash and cash equivalents at end of period $ 115,122 $ 92,608 agilysys, inc. reconciliation of net income (loss) to ebitda and adjusted ebitda (unaudited) three months ended nine months ended (in thousands) december 31, december 31, 2021 2020 2021 2020 net income (loss) $ 1,542 $ (2,070 ) $ 4,496 $ 3,280 income tax expense 24 182 265 311 income before taxes 1,566 (1,888 ) 4,761 3,591 depreciation of fixed assets 495 722 1,609 2,160 amortization of internal-use software 267 521 1,077 1,490 interest (income), net (6 ) (18 ) (40 ) (63 ) ebitda (a) 2,322 (663 ) 7,407 7,178 share-based compensation 3,839 6,630 10,802 9,312 severance and other charges 381 1,552 1,187 2,762 other non-operating expense 52 95 53 284 legal settlements, net 4 — 371 50 adjusted ebitda (b) $ 6,598 $ 7,614 $ 19,820 $ 19,586 (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, and excluding charges relating to i) legal settlements, ii) severance and other charges, iii) share-based compensation, and iv) 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 nine months ended (in thousands, except per share data) december 31, december 31, 2021 2020 2021 2020 net income (loss) attributable to common shareholders $ 1,083 $ (2,529 ) $ 3,119 $ 1,132 amortization of internal-use software 267 521 1,077 1,490 share-based compensation 3,839 6,630 10,802 9,312 series a convertible preferred stock issuance costs — — — 1,031 severance and other charges, net 381 1,552 1,187 2,762 legal settlements, net 4 — 371 50 income tax adjustments (657 ) (640 ) (1,868 ) (1,522 ) adjusted net income (a) $ 4,917 $ 5,534 $ 14,688 $ 14,255 basic weighted average shares outstanding 24,477 23,429 24,315 23,419 diluted weighted average shares outstanding 25,392 23,966 25,327 23,903 adjusted basic earnings per share (b) $ 0.20 $ 0.24 $ 0.60 $ 0.61 adjusted diluted earnings per share (b) $ 0.19 $ 0.23 $ 0.58 $ 0.60 (a) adjusted net income, a non-gaap financial measure, is defined as net income (loss) attributable to common shareholders before amortization expense, share-based compensation, and one-time charges including severance and other charges 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 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 nine months ended (in thousands) december 31, december 31, 2021 2020 2021 2020 net cash provided by operating activities $ 10,142 $ 8,442 $ 21,815 $ 15,084 capital expenditures (292 ) (605 ) (1,078 ) (1,076 ) free cash flow (a) $ 9,850 $ 7,837 $ 20,737 $ 14,008 (a) free cash flow, a non-gaap financial measure, is defined as net cash provided by operating activities, less capital expenditures
