BusinessWire

Agilysys Reports Fiscal 2021 First Quarter Revenue Of $29.8m

Reports Positive Adjusted EBITDA of $3.4M

Expects Sequential Revenue and Adjusted EBITDA Increase of 15% and 25% Respectively in Q2 Compared to Q1 Fiscal 2021

Cash Balance Remains Strong at $74.6 Million as of June 30, 2020

ALPHARETTA, Ga.--(BUSINESS WIRE)--Agilysys, Inc. (Nasdaq: AGYS), a global provider of next-generation hospitality software solutions and services, today reported operating results for its fiscal 2021 first quarter and period ended June 30, 2020.

Summary of Fiscal 2021 First Quarter Financial Results

  • Total net revenue was $29.8 million, compared to total net revenue of $38.4 million in the comparable prior-year period for a 22.4% decrease in revenue.
  • Recurring revenues (which are comprised of support, maintenance and subscription services) were $20.5 million, or 68.8% of total net revenue, compared to $20.1 million, or 52.3% of total net revenue, for the same period in fiscal 2020. Subscription revenues increased 8.6% year over year and comprised 37.2% of total recurring revenues, compared to 34.9% of total recurring revenues in the first quarter of fiscal 2020.
  • Gross margin was 62.2% in the fiscal 2021 first quarter, compared to 52.1% in the comparable prior-year period.
  • Net loss available to common shareholders in the fiscal 2021 first quarter was $(1.7) million, or $(0.07) per diluted share compared to a net loss of $(1.6) million, or $(0.07) per diluted share, in the comparable prior-year period.
  • Adjusted EBITDA (non-GAAP) was $3.4 million, compared to $3.2 million in the comparable prior-year period (see reconciliation below).
  • Adjusted diluted EPS (non-GAAP) was $0.08 per share compared to $0.08 per share in the comparable prior-year period.
  • Free cash flow (non-GAAP) in the fiscal 2021 first quarter was $(5.2) million, compared to free cash flow of $(2.5) million in the fiscal 2020 first quarter (see reconciliation below). Ending cash balance was $74.6 million, compared to ending cash balance of $37.2 million in the comparable prior-year period.

Ramesh Srinivasan, President and CEO of Agilysys, commented, “This was likely the toughest quarter ever for the hospitality industry and our business. Given the extremely difficult circumstances, we are pleased with our top and bottom-line results. What is notable about the EBITDA level achieved is that we did not in any way compromise the pace of product innovation and customer service levels during the quarter. Our current velocity of product improvements and innovation is the best it has ever been and has helped create expanded market opportunities. Apart from the tough business conditions affecting all our revenue areas, recurring revenue was additionally affected by one-time COVID-19 related financial relief provided to customers to help them during this time of need. We expect this one-time COVID-19 relief to also affect future quarters of this fiscal year, albeit to a lesser extent. Services revenue this quarter was additionally affected by sales incentives given to customers to enable adoption of an innovative new online ordering F&B software application, which was successful in driving multifold increased use, thereby helping future SaaS fees growth potential.”

“We continue to be intensely focused on securing the safety and health of our employees, customers, and the communities we serve in. We are deeply grateful for all the sacrifices our team-members worldwide have made to secure the financial health of the company during the current crisis period.”

“As we work our way through the current business environment, significant marketplace uncertainties remain. This fiscal year will be a tale of four quarters for us. We will therefore continue to provide guidance one quarter at a time for the remainder of this fiscal year and switch to our normal annual guidance cadence starting the next fiscal year FY2022. After hitting a bottom in April, the extent of global sales deals won in value terms has improved month over month during each of the next three months. Our cash balance has improved further since June 30th. We remain cautiously optimistic about our near-term future and bullish about our long-term growth and profitability improvement prospects. We have good reasons to believe our competitive advantage and overall business health will be better on the other side of this crisis than it was before.”

Fiscal 2021 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. Given the continued impact of COVID-19, we are still not releasing full fiscal year 2021 guidance at this time. We are expecting Q2 fiscal 2021 revenue to increase 15% over Q1 fiscal 2021 results with a corresponding 25% Adjusted EBITDA increase for the same period.

Dave Wood, Chief Financial Officer, commented, “I am very pleased with the work our teams have done during the quarter to manage through the COVID-19 pandemic while the hospitality industry was significantly impacted. During the first quarter we realized better than expected top-line results, along with healthy profitability levels. We remain more confident than ever in our long term financial strength and ability to execute on our plan to become a growing, profitable, product lead organization delivering mission critical solutions to customers and to do whatever it takes to support their ever changing business needs. The strength of our cash balance, along with our ability to deliver cost effective product innovation should allow us to pick back up with the business momentum we were achieving prior to the pandemic.”

2021 First Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, July 28, 2020, at 4:30 p.m. ET. Both the call and the webcast are open to the public. The conference call number is 574-990-1036 (domestic or international); and the conference ID number is 8999561. Please call five minutes prior to the presentation to ensure that you are connected.

Interested parties may also access the conference call live on the Internet at Agilysys Events & Presentations. Approximately two hours after the call has concluded, an archived version of the webcast will be available for replay at the same location.

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, our revenue and Adjusted EBITDA guidance for the second quarter, statements we make regarding our ability to improve our competitive positioning and improvement of our business momentum and business health over time once the industry begins to recover.

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 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.

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.

About Agilysys
Agilysys has been a leader in hospitality software for more than 40 years, delivering innovative guest-centric technology solutions for casinos, hotels, resorts, cruise ships, managed foodservice providers, sports and entertainment, and healthcare. Agilysys offers the most comprehensive software solutions in the industry, including point-of-sale (POS), property management (PMS), inventory and procurement, payment solutions, and related hospitality applications, to manage the entire guest journey. Agilysys is known for its leadership in hospitality, its broad product offerings and its customer-centric service. Some of the largest hospitality companies around the world use Agilysys solutions to help improve guest loyalty, drive revenue growth, increase operational efficiencies and support social distancing. Agilysys operates across North America, Europe, the Middle East, Africa, Asia-Pacific, and India with headquarters located in Alpharetta, GA. For more information visit Agilysys.com.




- Financial tables follow -

 
 
 
 

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

 

(In thousands, except per share data)

 

Three Months Ended

 

 

June 30,

 

 

2020

 

2019

Net revenue:

 

 

 

 

 

 

 

 

Products

 

$

5,239

 

 

$

10,869

 

Support, maintenance and subscription services

 

 

20,497

 

 

 

20,082

 

Professional services

 

 

4,071

 

 

 

7,438

 

Total net revenue

 

 

29,807

 

 

 

38,389

 

Cost of goods sold:

 

 

 

 

 

 

 

 

Products (inclusive of developed technology amortization)

 

 

3,015

 

 

 

8,623

 

Support, maintenance and subscription services

 

 

4,306

 

 

 

4,181

 

Professional services

 

 

3,936

 

 

 

5,571

 

Total cost of goods sold

 

 

11,257

 

 

 

18,375

 

Gross profit

 

 

18,550

 

 

 

20,014

 

Gross profit margin

 

 

62.2

%

 

 

52.1

%

Operating expenses:

 

 

 

 

 

 

 

 

Product development

 

 

8,266

 

 

 

10,064

 

Sales and marketing

 

 

2,601

 

 

 

4,498

 

General and administrative

 

 

5,719

 

 

 

5,874

 

Depreciation of fixed assets

 

 

723

 

 

 

213

 

Amortization of intangibles

 

 

461

 

 

 

678

 

Severance and other charges

 

 

1,203

 

 

 

231

 

Total operating expense

 

 

18,973

 

 

 

21,558

 

Operating loss

 

 

(423

)

 

 

(1,544

)

Other (income) expense:

 

 

 

 

 

 

 

 

Interest income

 

 

(21

)

 

 

(80

)

Interest expense

 

 

1

 

 

 

1

 

Other expense, net

 

 

106

 

 

 

85

 

Loss before taxes

 

 

(509

)

 

 

(1,550

)

Income tax expense

 

 

8

 

 

 

25

 

Net loss

 

$

(517

)

 

$

(1,575

)

Series A convertible preferred stock issuance costs

 

 

(937

)

 

 

-

 

Series A convertible preferred stock dividends

 

 

(199

)

 

 

-

 

Net loss available to common shareholders

 

$

(1,653

)

 

$

(1,575

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic and diluted

 

 

23,405

 

 

 

23,212

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted:

 

$

(0.07

)

 

$

(0.07

)

 
 
 
 
 

AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

 

(In thousands, except share data)

 

June 30,

 

March 31,

 

 

2020 Unaudited

 

 

2020

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

74,604

 

 

$

46,653

 

Accounts receivable, net of allowance for expected credit losses of $1,458 and for doubtful accounts of $1,634, respectively

 

 

30,494

 

 

 

35,869

 

Contract assets

 

 

2,677

 

 

 

2,125

 

Inventories

 

 

2,760

 

 

 

3,887

 

Prepaid expenses and other current assets

 

 

6,407

 

 

 

4,874

 

Total current assets

 

 

116,942

 

 

 

93,408

 

Property and equipment, net

 

 

11,113

 

 

 

12,230

 

Operating lease right-of-use assets

 

 

13,050

 

 

 

13,829

 

Goodwill

 

 

19,622

 

 

 

19,622

 

Intangible assets, net

 

 

8,400

 

 

 

8,400

 

Deferred income taxes, non-current

 

 

852

 

 

 

764

 

Other non-current assets

 

 

6,124

 

 

 

6,309

 

Total assets

 

$

176,103

 

 

$

154,562

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,439

 

 

$

13,403

 

Contract liabilities

 

 

38,149

 

 

 

42,244

 

Accrued liabilities

 

 

8,801

 

 

 

9,033

 

Operating lease liabilities, current

 

 

4,641

 

 

 

4,719

 

Finance lease obligations, current

 

 

24

 

 

 

24

 

Total current liabilities

 

 

56,054

 

 

 

69,423

 

Deferred income taxes, non-current

 

 

884

 

 

 

880

 

Operating lease liabilities, non-current

 

 

9,810

 

 

 

10,617

 

Finance lease obligations, non-current

 

 

20

 

 

 

25

 

Other non-current liabilities

 

 

2,786

 

 

 

1,860

 

Series A convertible preferred stock, no par value

 

 

35,199

 

 

 

-

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Common shares, without par value, at $0.30 stated value; 80,000,000 shares authorized; 31,606,831 shares issued; and 23,612,924 and 23,609,398 shares outstanding at June 30, 2020 and March 31, 2020, respectively

 

 

9,482

 

 

 

9,482

 

Treasury shares, 7,993,907 and 7,997,433 at June 30, 2020 and March 31, 2020, respectively

 

 

(2,399

)

 

 

(2,401

)

Capital in excess of stated value

 

 

6,760

 

 

 

5,491

 

Retained earnings

 

 

57,331

 

 

 

58,984

 

Accumulated other comprehensive income

 

 

176

 

 

 

201

 

Total shareholders' equity

 

 

71,350

 

 

 

71,757

 

Total liabilities and shareholders' equity

 

$

176,103

 

 

$

154,562

 

 
 
 
 
 

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 

 

 

Three Months Ended

(In thousands)

 

June 30,

 

 

2020

 

2019

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(517

)

 

$

(1,575

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Depreciation

 

 

723

 

 

 

213

 

Amortization of intangibles

 

 

461

 

 

 

678

 

Amortization of developed technology

 

 

 

 

 

3,175

 

Deferred income taxes

 

 

(84

)

 

 

5

 

Share-based compensation

 

 

1,426

 

 

 

482

 

Changes in operating assets and liabilities:

 

 

(6,938

)

 

 

(4,891

)

Net cash used in operating activities

 

 

(4,929

)

 

 

(1,913

)

Investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(243

)

 

 

(571

)

Additional investments in corporate-owned life insurance policies

 

 

(2

)

 

 

(2

)

Net cash used in investing activities

 

 

(245

)

 

 

(573

)

Financing activities

 

 

 

 

 

 

 

 

Repurchase of common shares to satisfy employee tax withholding

 

 

(934

)

 

 

(1,026

)

Series A convertible preferred stock issuance proceeds, net of issuance costs

 

 

34,063

 

 

 

 

Principal payments under long-term obligations

 

 

(6

)

 

 

(2

)

Net cash provided by (used in) financing activities

 

 

33,123

 

 

 

(1,028

)

Effect of exchange rate changes on cash

 

 

2

 

 

 

(24

)

Net increase (decrease) in cash and cash equivalents

 

 

27,951

 

 

 

(3,538

)

Cash and cash equivalents at beginning of period

 

 

46,653

 

 

 

40,771

 

Cash and cash equivalents at end of period

 

$

74,604

 

 

$

37,233

 

 
 
 
 
 

AGILYSYS, INC.
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)

 

 

 

Three Months Ended

(In thousands)

 

June 30,

 

 

2020

 

2019

Net loss

 

$

(517

)

 

$

(1,575

)

Income tax expense

 

 

8

 

 

 

25

 

Loss before taxes

 

 

(509

)

 

 

(1,550

)

Depreciation of fixed assets

 

 

723

 

 

 

213

 

Amortization of intangibles

 

 

461

 

 

 

678

 

Amortization of developed technology

 

 

-

 

 

 

3,175

 

Interest (income), net

 

 

(20

)

 

 

(79

)

EBITDA (a)

 

 

655

 

 

 

2,437

 

Share-based compensation

 

 

1,426

 

 

 

482

 

Severance and other charges

 

 

1,203

 

 

 

231

 

Other non-operating expense

 

 

106

 

 

 

85

 

Adjusted EBITDA (b)

 

$

3,390

 

 

$

3,235

 

 

(a) EBITDA, a non-GAAP financial measure, is defined as net income (loss) before income taxes, interest expense (net of interest income), depreciation and amortization

(b) Adjusted EBITDA, a non-GAAP financial measure, is defined as net income (loss) before income taxes, interest expense (net of interest income), depreciation and amortization (including amortization of developed technology), and excluding charges relating to i) legal settlements, ii) severance and other charges, iii) impairments, iv) share-based compensation, and v) other non-operating (income) expense

 
 
 
 
 

AGILYSYS, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED NET INCOME FOR ADJUSTED EARNINGS PER SHARE
(UNAUDITED)

 

 

 

Three Months Ended

(In thousands, except per share data)

 

June 30,

 

 

2020

 

2019

Net loss available to common shareholders

 

$

(1,653

)

 

$

(1,575

)

Amortization of intangibles

 

 

461

 

 

 

678

 

Amortization of developed technology

 

 

-

 

 

 

3,175

 

Share-based compensation

 

 

1,426

 

 

 

482

 

Series A convertible preferred stock issuance costs

 

 

937

 

 

 

-

 

Severance and other charges

 

 

1,203

 

 

 

231

 

Income tax adjustments

 

 

(456

)

 

 

(1,047

)

Adjusted net income (a)

 

$

1,918

 

 

$

1,944

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

23,405

 

 

 

23,212

 

Diluted weighted average shares outstanding

 

 

23,820

 

 

 

23,681

 

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per share (b)

 

$

0.08

 

 

$

0.08

 

Adjusted diluted earnings per share (b)

 

$

0.08

 

 

$

0.08

 

 

(a) Adjusted net income, a non-GAAP financial measure, is defined as net income (loss) attributable to common shareholders before amortization expense (including amortization of developed technology), share-based compensation, and one-time charges including severance and other charges, impairments and legal settlements, less the related income tax effect of these adjustments, as applicable, at a 24% tax rate, the Company’s current combined federal and state income statutory tax rate. No income tax effect applies to one-time charges when a valuation allowance offsets their related deferred tax assets

(b) Adjusted earnings per share, a non-GAAP financial measure, is defined as adjusted net income (loss) divided by basic and diluted weighted average shares outstanding

 
 
 
 
 

AGILYSYS, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)

 

 

 

Three Months Ended

(In thousands)

 

June 30,

 

 

2020

 

2019

Net cash used in operating activities

 

$

(4,929

)

 

$

(1,913

)

Capital expenditures

 

 

(243

)

 

 

(571

)

Free cash flow (a)

 

$

(5,172

)

 

$

(2,484

)

(a) Free cash flow, a non-GAAP financial measure, is defined as net cash provided by (used in) operating activities, less capital expenditures


Contacts

Investor Contact:
Jessica Hennessy
Senior Manager Corporate Strategy and Investor Relations
Agilysys, Inc.
770-810-6116 or investorrelations@agilysys.com