Agilysys, Inc. (AGYS) Tops Q3 EPS by 12c, Revenues Beat; Raises FY20 Revenue Growth Outlook

Agilysys, Inc. (NASDAQ: AGYS) reported Q3 EPS of $0.05, $0.12 better than the analyst estimate of ($0.07). Revenue for the quarter came in at $42 million versus the consensus estimate of $40.61 million.

Summary of Fiscal 2020 Third Quarter Financial Results

• Total net revenue increased 16.6% to a record $42.0 million, compared to total net revenue of $36.0 million in the comparable prior-year period.
• Recurring revenues (which are comprised of support, maintenance and subscription services) were a record $21.0 million, or 49.9% of total net revenue, compared to $19.3 million, or 53.7% of total net revenue, for the same period in fiscal 2019. Subscription revenues increased 28% year-over-year and comprised 37.7% of total recurring revenues, compared to 32.0% of total recurring revenues in the third quarter of fiscal 2019.
• Gross margin was 50.2% in the fiscal 2020 third quarter, compared to 51.8% in the comparable prior-year period.
• Net loss in the fiscal 2020 third quarter was $(2.6) million, or $(0.11) per diluted share, compared to a net loss of $(4.0) million, or $(0.18) per diluted share, in the comparable prior-year period.
• Adjusted EBITDA (non-GAAP) was $3.2 million, compared to $2.1 million in the comparable prior-year period (see reconciliation below).
• Free cash flow (non-GAAP) in the fiscal 2020 third quarter was $3.0 million, compared to free cash flow of $4.2 million in the fiscal 2019 third quarter (see reconciliation below).

Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased to announce yet another solid revenue growth and profitability improvement quarter. Quarterly revenue of $42.0 million represents our sixth consecutive quarter of double-digit year-over- year quarterly revenue growth and the seventh consecutive record revenue quarter. Recurring revenue for the quarter reached a record $21.0 million, including a 28% year-over-year increase in subscription revenue.

“This was also one of our best quarters in terms of selling success. The last five quarters have been five of our six most successful selling quarters. The fact this was our best services revenue quarter is a good indication of how busy we were and continue to be with software implementations all over the world. Our continuing good selling momentum coupled with the shifting customer preference for subscription-based arrangements drove our significant year-over-year growth in subscription revenue.

“Our R&D resource strength continues to grow in a cost-effective manner. We continue to execute well and innovate at an increasing pace across all our product sets allowing us to stay ahead of ever-changing customer demands. Our customer centric work culture and passionate focus on the hospitality software solutions space continue to evolve well. All things considered, we like our current business momentum and strengthening competitive advantage. We are well poised to continue growing shareholder value.”

Raises Fiscal 2020 Revenue Outlook

Agilysys today raised its forecast for fiscal 2020 full year revenue growth as the Company now expects an approximate 16% year-over-year increase compared to fiscal 2019 revenue of approximately $141 million. The Company’s prior expectation was for an approximate 14% year-over-year increase. The Company reiterated its forecast for an approximate 25% improvement in Adjusted EBITDA (non-GAAP measure) in fiscal 2020, compared to fiscal 2019 Adjusted EBITDA of approximately $10 million. Agilysys also continues to expect fiscal 2020 free cash flow will be significantly more than the $1.7 million of free cash flow generated in fiscal 2019.

Tony Pritchett, Chief Financial Officer, commented, “We are pleased with our continued business momentum, including the strong financial results in the third fiscal quarter of 2020. Our customers continue to place a lot of trust in our ability to deliver reliable and innovative products as evidenced by another record revenue quarter. All three of our reported revenue categories were a record in the third quarter and on a year to date basis, demonstrating the consistency of our revenue growth. We remain committed to our customers and to delivering profitable revenue growth which continues to reflect in our results, including strong Adjusted EBITDA and free cash flows for the quarter and year to date periods. We provided for a slight upward revision to our forecast for full year revenue growth, which we now expect to further improve to 16%. We continue to push the Company forward and are confident about our future.”

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

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