ALPHARETTA, GA–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 second quarter ended September 30, 2021.
Summary of Fiscal 2022 Second Quarter Financial Results
- Total net revenue was $37.9 million, compared to net revenue of $34.4 million and $40.7 million in the second quarters of fiscal 2021 and 2020, respectively.
- Recurring revenues (which are comprised of support, maintenance and subscription services) for the fiscal second quarter were $24.0 million or 63.4% of total net revenue compared to $22.3 million or 64.9% of total net revenue and $20.3 million or 49.9% of total net revenue for the second quarters of fiscal 2021 and 2020, respectively. Subscription revenues increased 21.7% over fiscal 2021 second quarter compared to an increase of 23.9% fiscal 2021 over fiscal 2020 second quarter. Subscription revenues comprised 46.0% of total recurring revenues compared to 40.7% and 36.1% for the second quarters of fiscal 2021 and 2020, respectively.
- Gross margin was 64.0% compared to 4% and 49.6% in the second quarters of fiscal 2021 and 2020, respectively.
- Net income attributable to common shareholders in the fiscal 2022 second quarter was $0.5 million, or $02 per diluted share compared to $5.3 million or $0.22 per diluted share and a net loss of $(2.9) million or $(0.13) per diluted share for the second quarters of fiscal 2021 and 2020, respectively.
- Adjusted diluted EPS (non-GAAP) was $0.18 compared to $0.29 and $0.04 per share in the second quarters of fiscal 2021 and 2020 respectively (see reconciliation below).
- Adjusted EBITDA (non-GAAP) was $6.3 million, compared to $6 million and $3.0 million in the second quarters of fiscal 2021 and 2020 respectively (see reconciliation below).
- Free cash flow (non-GAAP) in the fiscal 2022 second quarter was $3.2 million compared to $11.3 million and $1.8 million in the fiscal second quarters of 2021 and 2020 respectively (see reconciliation below). Ending cash balance was $106.4 million, compared to ending cash balance of $99.2 million as of fiscal 2021 year-end.
Ramesh Srinivasan, President and CEO of Agilysys, commented, “The second quarter of fiscal 2022 (July to September) was our best sales quarter measured in Annual Contract Value (ACV) since the pandemic started. Subscription sales have increased significantly over three consecutive quarters. With modern technology cloud-native subscription-license-based software applications, which can also be implemented on-premise based on customer preference, now available for virtually every need across the hospitality software solutions spectrum, Q2 fiscal 2022 was our highest ever subscription sales quarter and our highest new customer win sales quarter in five years. Our total backlog across product, services and recurring revenue remains at record levels.”
“One-time revenue during Q2 of fiscal 2022 was at the low end of the guidance range. Some of the sales verticals including managed food services and international regions remain challenged by lingering effects of the pandemic. In addition, POS terminals and payment device deliveries were affected by global supply chain challenges causing delays in hardware and associated software product revenue. We continue to work closely with hardware partners to achieve appropriate inventory levels as quickly as possible. Services revenue levels continue to be challenged by project delays. Amidst all this, recurring revenue continues to move forward at record levels, with quarterly subscription revenue surpassing $11.0M for the first time in our history. Progress with our products, especially with respect to the entirely software-based PMS solutions, continues to remain on target. Our transition to being a fully modern technology cloud-native software applications provider is, for all practical purposes, now complete.”
“While the current short-term challenges to one-time revenue are yet to be fully resolved, we remain bullish about our medium and long-term prospects due to the breadth of cloud native applications we now have available, our continued momentum in the marketplace, current record backlog levels and our expectation that the remaining pandemic challenged portions of the hospitality industry will turn the corner soon. We remain cautiously optimistic and are maintaining the range of fiscal 2022 revenue and profitability guidance levels provided earlier, but the speed at which we overcome the aforementioned short-term one-time revenue challenges will determine where we come out therein.”
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 are re-iterating our previously released guidance of full year fiscal 2022 revenue of $160 to $170 million and Adjusted EBITDA of slightly better than 15% of revenue.
Dave Wood, Chief Financial Officer, commented, “The recovery in our markets continued through the fiscal second quarter translating into record subscription sales for the second consecutive quarter. We are also pleased to see ARR sales of PMS solutions contributing with an increase of 115% compared to pre-pandemic levels in Q2 fiscal 2020 two years ago. With the addition of new add-on software modules and the strengthening of our existing solutions, we remain confident in our ability for long term sustained growth. We believe our profitability and business fundamentals have us well positioned for continuing to manage through the current environment and short-term challenges around the supply chain and labor shortages at customer sites.”