Agilysys, Inc. (AGYS) Tops Q4 EPS by 7c, Miss on Revenues

Agilysys, Inc. (NASDAQ: AGYS) reported Q4 EPS of ($0.01), $0.07 better than the analyst estimate of ($0.08). Revenue for the quarter came in at $32.1 million versus the consensus estimate of $32.58 million.

Summary of Fiscal 2018 Fourth Quarter Financial Results

• Total net revenue was $32.1 million, compared to total net revenue of $30.6 million in the comparable prior-year period.
• Recurring revenues (which are comprised of support, maintenance and subscription services) were $18.1 million, or 56% of total net revenue, compared to $16.2 million, or 53% of total net revenue, for the same period in fiscal 2017. SaaS revenues increased 32% year over year and comprised 30% of total recurring revenues, compared to 25% of total recurring revenues in the fourth quarter of fiscal 2017.
• Gross margin was 52.2% in the fiscal 2018 fourth quarter, compared to 50.6% in the prior-year period.
• Net loss in the fiscal 2018 fourth quarter was $(0.2) million, or $(0.01) per diluted share, compared to a net loss of $(5.3) million, or $(0.23) per diluted share, in the prior-year period.
• Adjusted EBITDA (non-GAAP) was $3.1 million, compared to an Adjusted EBITDA loss of $(0.2) million in the same period last year (see reconciliation below).
• Adjusted earnings from operations (non-GAAP) in the fiscal 2018 fourth quarter was $0.6 million, compared to Adjusted loss from operations in the fiscal 2017 fourth quarter of $(3.8) million (see reconciliation below).

Ramesh Srinivasan, President and CEO of Agilysys, commented, “We ended fiscal 2018 with growing momentum, particularly in sales, as fiscal 2018 fourth quarter revenue rose sequentially for the second consecutive quarter, driven by an 11% year-over-year increase in recurring revenue to a quarterly record $18.1 million, inclusive of a 32% increase in SaaS subscription revenue. For fiscal 2018, our recurring revenue grew by $5.8M, which is our largest single year increase since fiscal 2014, the year we transformed our business into a pure-play software provider to the hospitality industry. In addition, full year fiscal 2018 SaaS subscription revenue grew by 35%. While overall fiscal 2018 revenue level was flat compared to fiscal 2017, we achieved a much better revenue mix and higher margins, with higher SaaS and other recurring revenue contributions offsetting the decline in hardware revenue. Currently our recurring revenue is approximately 56% of overall revenue and our predictable services revenue is another 19% of overall revenue. As such, our revenuebase continues to be increasingly more predictable. Importantly, without the impact of reselling low margin servers and associated maintenance which is now mostly out of our revenue, our revenue mix is now significantly more favorable for achieving profitable growth moving forward.

“We are pleased that we achieved positive adjusted earnings from operations (AOE) in the fiscal 2018 fourth quarter, our first such quarter since we transformed the Company in fiscal 2014. The $4.3 million year-over-year quarterly improvement in AOE, as well as the 48% full fiscal year improvement, clearly demonstrates that the various strategic initiatives we have been working on are positioning Agilysys for sustainable and consistent medium and long-term growth and profitability.

“Throughout fiscal 2018 we made consistent progress on several key priorities, including significantly improving full year adjusted earnings from operations even with flat revenue levels, more than doubling our R&D resources to enable far greater innovation and product development velocity, and establishing an accomplished cohesive management team passionately focused on executing our growth plans. During the past few months, we have implemented a more disciplined and process-oriented sales structure reinforced with a significantly higher level of accountability across all departments. We are currently in the process of enhancing our marketing efforts including brand awareness programs along with a new analytical approach that we expect will lead to increased effectiveness and drive stronger demand generation. We are also making good strides with respect to transforming our Company’s culture as we continue to make progress with establishing Agilysys as an obsessively customer focused organization that is engineering and innovation driven, dedicated to supporting all our products across all the markets we serve with world class zeal, excellence in quality standards, commitment and relentless focus.

“We expect we will build on our current momentum and have a successful fiscal 2019 reflecting growth during the year driven by multiple opportunities including additional gains from certain large strategic accounts and a growing SaaS subscription and annual maintenance recurring revenue base. We are entering fiscal 2019 with sales momentum that has increased over the last several months and expect to generate full year revenue growth of approximately 10%. In addition, we expect our improving operational efficiency will help us achieve a full year adjusted earnings from operations improvement of approximately $4 million to $6 million, compared to fiscal 2018. Overall, we are pleased with our current position in the marketplace and believe we are well poised to be a sought out employer of world-class talent, a responsive fast-moving and reliable partner for our customers and vendors, and a growing profitable hospitality software solutions business unit that unlocks considerable value for our shareholders.”

For earnings history and earnings-related data on Agilysys, Inc. (AGYS) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• Blackhawk Network (HAWK) Reports Q2 Loss of $0.07; Offers Guidance
• Agilysys Inc (AGYS) PT Raised to $135 at Needham