Alpharetta, GA – July 27, 2022 – 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.
Summary of Fiscal 2023 First Quarter Financial Results
- Total net revenue increased 22.7% to a record $47.5 million, compared to total net revenue of $38.7 million in the comparable prior-year period.
- Recurring revenue (which comprised of subscription and maintenance charges) were a record $27.7 million, or 58.4% of total net revenue compared to $23.2 million, or 59.9% of total net revenue for the same period in fiscal 2022. Subscription revenue increased 29.5% year over year and comprised 47.4% of total recurring revenues compared to 43.7% of total recurring revenues in the first quarter of fiscal 2022.
- Gross margin was 60.0% in the fiscal 2023 first quarter compared to 64.2% in the comparable prior-year period.
- Net income attributable to common shareholders in the fiscal 2023 first quarter was $2.6 million, or $0.10 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 $6.7 million compared to $6.9 million in the comparable prior-year period (please see reconciliation below).
- Adjusted diluted EPS (non-GAAP) was $0.21 per share in the fiscal 2023 first quarter compared to $0.21 per share in the comparable prior-year period (please see reconciliation below.)
- Free cash flow (non-GAAP) in the fiscal 2023 first quarter was $0.0 million compared to free cash flow of $7.7 million in the fiscal 2022 first quarter (please see reconciliation below). Ending cash balance was $94.9 million, compared to ending cash balance of $97.0 million as of fiscal 2022 year-end.
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.”
Fiscal 2023 Outlook
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.”
2023 First Quarter Conference Call and Webcast
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.