Includes Recurring Revenue of $30.2M and Subscription Revenue Growth of 28.8%
Quarter Positive Adjusted EBITDA of $8.1M and GAAP EPS of $0.13 Per Share
Raises Fiscal 2023 Annual Revenue Guidance to $195M to $198M; Reiterates Greater Than 15% Adjusted EBITDA
ALPHARETTA, GA – January 25, 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 third quarter and period ended December 31, 2022.
Summary of Fiscal 2023 Third Quarter Financial Results
• Total net revenue increased 26.5% to a record $49.9 million, compared to total net revenue of $39.5 million in the comparable prior-year period.
• Recurring revenue (comprised of subscription and maintenance charges) was a record $30.2 million, or 60.4% of total net revenue compared to $25.1 million, or 63.7% of total net revenue for the same period in fiscal 2022. Subscription revenue increased 28.8% year over year and was 49.8% of total recurring revenue compared to 46.4% of total recurring revenue in the third quarter of fiscal 2022.
• Gross margin was 61.7% in the fiscal 2023 third quarter compared to 62.6% in the comparable prior-year period.
• Net income attributable to common shareholders in the fiscal 2023 third quarter was $3.4 million, or $0.13 per diluted share compared to $1.1 million, or $0.04 per diluted share in the comparable prior-year period.
• Adjusted EBITDA (non-GAAP) was $8.1 million compared to $6.6 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 third quarter compared to $0.19 per share in the comparable prior-year period (reconciliation included in financial tables).
• Free cash flow (non-GAAP) in the fiscal 2023 third quarter was $11.7 million compared to free cash flow of $9.9 million in the fiscal 2022 third quarter (reconciliation included in financial tables). Ending cash balance was $105.8 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 announce another record revenue quarter. The positive momentum in our selling success, which started around August of calendar year 2022, has continued at a healthy pace. Our extraordinary investments in product innovation to create state-of-the-art cloud-native hospitality industry focused end-to-end software solutions over the past five plus years, combined with the current increasing focus on sales and marketing, continue to yield good results. In our opinion, this industry has been underserved for decades with respect to software innovations which are essential to better serve increasingly technology savvy guests and internal staff. We expect the current escalating demand for such solutions in the hospitality industry to overcome any macro-economic challenges during the short and medium term.
Subscription revenue grew 28.8% while one-time revenue, consisting of product and services revenue, was 38% higher than the comparable quarter last fiscal year. Adjusted EBITDA improved to 16.1% of revenue.
Even excluding the recent Marriott PMS selection announcement from both sales and backlog, this October to December Q3 fiscal 2023 was our best selling success quarter since the current management team took charge about six years ago. The continued selling success has driven the combined product, services and recurring revenue backlog back to record levels. We are well positioned to beat the full-year revenue guidance provided at the start of our fiscal 2023 year. We now expect fiscal 2023 full-year revenue to be in the range of $195 to $198 million and adjusted EBITDA levels to be slightly higher than 15% of revenue, in line with prior guidance.”
Fiscal 2023 Outlook
The Company announced it is raising full-year fiscal 2023 revenue guidance to be $195 to $198 million, inclusive of close to 30% subscription revenue growth year over year and is reiterating its Adjusted EBITDA guidance of greater than 15% of revenue.
Dave Wood, Chief Financial Officer, commented, “We are making excellent progress across all aspects of our business. Our recent investments in sales and marketing along with the value propositions of our cloud-native solutions are putting us in a strong position to win a good portion of sales opportunities. We continue to grow subscription revenue at a consistent pace. Our focus remains on managing a profitable business while executing well on our strategies for organic, consistent revenue growth over the medium and long term.”
2023 Third Quarter Conference Call and Webcast
Agilysys hosted a conference call and webcast on January 24, 2023, at 4:30 p.m. ET. Both the call and the webcast were open to the public. An archived version of the webcast is available at: https://register.vevent.com/register/BI92e7fb3f342349caafb48725c1a83416.
