Agilysys, Inc., a global provider of next-generation hospitality software solutions and services, 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

Agilysys is expecting full year fiscal 2023 revenue to be $190 to $195 million, a 17-20% growth over fiscal 2022 results and including 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 hosted a conference call and webcast yesterday, May 17, 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.  

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, Agilysys revenue, subscription revenue and adjusted EBITDA guidance for the 2023 fiscal year, and statements made regarding the ability of our supply chain management efforts and improved implementations to support increasing revenue levels moving forward, as well as 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; and 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.