Annual Revenue Includes Recurring Revenue of $118.3M and Subscription Revenue Growth of 27.5%
Annual Record Adjusted EBITDA of $30.3M, Free Cash Flow of $27.2M and GAAP EPS of $0.49
Fiscal 2024 Annual Revenue Expected To Grow To $230M to $235M With Full Year Adjusted EBITDA of 13%
ALPHARETTA, GA – May 17, 2023 – Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of hospitality software solutions that deliver High Return Hospitality, today reported operating results for its fiscal 2023 fourth quarter and full year ending March 31, 2023.
Summary of Fiscal 2023 Fourth Quarter Financial Results
• Total net revenue increased 13.6% to a record $52.9 million, compared to total net revenue of $46.6 million in the comparable prior-year period.
• Recurring revenue (comprised of subscription and maintenance charges) was a record $31.4 million, or 59.3% of total net revenue compared to $26.6 million, or 57.1% of total net revenue for the same period in fiscal 2022. Subscription revenue increased 23.9% year over year and was 50.6% of total recurring revenue compared to 48.1% of total recurring revenue in the fourth quarter of fiscal 2022.
• Gross margin was 60.8% in the fiscal 2023 fourth quarter compared to 59.5% in the comparable prior-year period.
• Net income attributable to common shareholders in the fiscal 2023 fourth quarter was $3.6 million, or $0.14 per diluted share compared to $1.5 million, or $0.06 per diluted share in the comparable prior-year period.
• Adjusted EBITDA (non-GAAP) was $8.1 million compared to $7.5 million in the comparable prior-year period (reconciliation included in financial tables).
• Adjusted diluted EPS (non-GAAP) was $0.26 per share in the fiscal 2023 fourth quarter compared to $0.24 per share in the comparable prior-year period (reconciliation included in financial tables).
• Free cash flow (non-GAAP) in the fiscal 2023 fourth quarter was $13.2 million compared to free cash flow of $6.5 million in the fiscal 2022 fourth quarter (reconciliation included in financial tables). Ending cash balance was $112.8 million, compared to ending cash balance of $97.0 million as of fiscal 2022 year-end.
Summary of Full Fiscal Year 2023 Financial Results
• Total net revenue increased 21.8% to a record $198.1 million, compared to total net revenue of $162.6 million in the comparable prior-year period.
• Recurring revenue (comprised of subscription and maintenance charges) was a record $118.3 million, or 59.7% of total net revenue compared to $99.0 million, or 60.8% of total net revenue for fiscal year 2022. Subscription revenue increased 27.5% year over year and was 49.2% of total recurring revenue compared to 46.1% of total recurring revenue in fiscal year 2022.
• Gross margin was 61.0% in fiscal year 2023 compared to 62.4% in the comparable prior-year period.
• Net income attributable to common shareholders in fiscal year 2023 was $12.7 million, or $0.49 per diluted share compared to $4.6 million, or $0.18 per diluted share in the comparable prior-year period.
• Adjusted EBITDA (non-GAAP) was a record $30.3 million compared to $27.3 million in the comparable prior-year period (reconciliation included in financial tables).
• Adjusted diluted EPS (non-GAAP) was $0.97 per share in fiscal year 2023 compared to $0.82 per share in the comparable prior-year period (reconciliation included in financial tables).
• Free cash flow (non-GAAP) in fiscal year 2023 was $27.2 million compared to free cash flow of $27.3 million in fiscal year 2022 (reconciliation included in financial tables).
Ramesh Srinivasan, President and CEO of Agilysys, commented, “Despite macroeconomic volatility, we are pleased to have exceeded $50M in revenue during a quarter for the first time in our history thanks to the growing strength and competitive advantages of our products and services.
Subscription revenue grew 23.9% year over year during the fourth quarter, while one-time revenue, consisting of product and services revenue, was 7.8% higher. Adjusted EBITDA was 15.3% of revenue for the full fiscal year.
Demand for our state-of-the-art cloud-native products has remained strong during each of the past three quarters. Full-year fiscal 2023 was our best sales year and the January through March fourth quarter was our best sales quarter, both by a fair distance, measured in annual contract value terms. This selling success has driven backlog across all three revenue lines – recurring revenue, product and services – to record levels. We are well positioned to achieve a revenue level of $230 to $235 million during fiscal year 2024. Increased investments across multiple business areas to drive future revenue growth beyond fiscal 2024 are resulting in reduced profitability expectations for this year with Adjusted EBITDA expected to be 13% of revenue for the full fiscal year, with profitability levels increasing throughout.”
Fiscal 2024 Outlook
We are expecting full year fiscal 2024 revenue to be $230 to $235 million, inclusive of 25% year-over-year subscription revenue growth. Adjusted EBITDA is expected to be 13% of revenue for the full fiscal year.
Dave Wood, Chief Financial Officer, commented, “We continue to show strong results across all aspects of our business. The record sales and revenue quarter and full fiscal year are further validation of the investments made during the past few years in our new cloud-native solutions and the success of recent, increased investments in sales and marketing. Subscription revenue continues to grow faster than total revenue and now makes up more than 50% of total recurring revenue. Record backlog levels have us well positioned to achieve our fiscal 2024 plan. We will remain dedicated to executing on disciplined profitable growth while increasing investments in various areas to drive the next growth phase of our business.”
2023 Fourth Quarter Conference Call and Webcast
Agilysys hosted a conference call and webcast May 16, 2023, at 4:30 p.m. ET. Both the call and the webcast were open to the public. Interested parties can access an archived version of the webcast on the Events and Presentations page of Agilysys.com.
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 2024 fiscal year and statements we make regarding future revenue growth and profitability levels increasing throughout the 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 2024 guidance, future revenue growth, the company’s ability to convert the backlog into revenue, 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.