Agilysys Reports Fiscal 2017 Third Quarter Revenue of $33.4 Million

  • Agilysys
  • 02.10.17
Agilysys, Inc., a global provider of next-generation hospitality software solutions and services, reported operating results for its fiscal 2017 third quarter ended December 31, 2016.

• Total net revenue was $33.4 million, compared to total net revenue of $31.3 million in the comparable prior-year period.
• Recurring revenues (which are comprised of support, maintenance and subscription services) were a quarterly record $16.2 million, or 49 percent of total net revenue, compared to $14.9 million, or 48 percent of total net revenue, for the same period in fiscal 2016. SaaS revenues increased 48 percent year over year and comprised 24 percent of total recurring revenues, compared to 18 percent of total recurring revenues in the third quarter of fiscal 2016.
 
• Gross margin was 48.6 percent in the fiscal 2017 third quarter, compared to 52.7 percent in the prior-year period. Fiscal 2017 third quarter gross margin primarily reflects the previously disclosed impact of the amortization of software development costs for first generation versions of the Company’s rGuest® solutions, which achieved general availability in the first half of fiscal 2017.

• Net loss in the fiscal 2017 third quarter was $(1.7) million, or $(0.08) per diluted share, compared to a net loss of $(1.7) million, or $(0.07) per diluted share, in the prior-year period.

• Adjusted EBITDA (non-GAAP) was $3.0 million, compared to Adjusted EBITDA of $0.6 million in the same period last year (see reconciliation below).

Ramesh Srinivasan, President and CEO of Agilysys, commented, “Our fiscal 2017 third quarter results demonstrate progress in multiple areas of the business. Compared to the same period last year, our installed point of sale end points increased 15 percent and the number of rooms managed by our lodging solutions rose 6 percent. Our subscription based SaaS revenue improved 48 percent compared to the third quarter of last year. Our total contract value for subscription based SaaS licenses sold nearly doubled during the first nine months of fiscal 2017 compared to the same period last year. Our recurring revenue, of which SaaS revenue is a growing component, is a source of considerable strength for us in terms of increasing future earnings predictability.
 
“Agilysys already possesses many competitive advantages. We offer best-in-market technology solutions that can help take the hospitality industry to the next level in terms of guest attraction, service and retention. Our recent, well-attended Inspire Customer and Partner User Conference served as further confirmation of our commanding position in the marketplace. We expect to achieve significant improvements over the near and long term in our product innovation and delivery velocity, customer service capabilities, cost effectiveness, execution efficiencies and overall cost per unit of meaningful output. Given our significant past investments and competitive strengths already inherent in the Company, we expect to start demonstrating a steady decrease in our overall expenses as a percentage of revenue going forward. I am happy to have this opportunity to lead Agilysys during this exciting period of disciplined revenue growth and operating performance improvement.”

Summary of Fiscal 2017 Nine Months Financial Results
• Total net revenue was $97.1 million, compared to total net revenue of $88.4 million in the comparable prior-year period.
• Recurring revenues (which are comprised of support, maintenance and subscription services) were $47.1 million, or 49 percent of total net revenue, compared to $44.5 million, or 50 percent of total net revenue, in the first nine months of fiscal 2016. SaaS revenues increased 42 percent year over year and comprised 23 percent of total recurring revenues, compared to 17 percent of total recurring revenues in the first nine months of fiscal 2016.

• Gross margin was 49.8 percent in the first nine months of fiscal 2017, compared to 57.1 percent in the comparable year-ago period. The Company’s gross margin for the first nine months of fiscal 2017 primarily reflects the previously disclosed impact of the amortization of software development costs for first generation versions of the Company’s rGuest® solutions which achieved general availability in the first half of fiscal 2017.

• Net loss in the first nine months of fiscal 2017 was $(6.4) million, or $(0.28) per diluted share, compared to a net loss of $(2.2) million, or $(0.10) per diluted share, in the first nine months of fiscal 2016.

• Adjusted EBITDA (non-GAAP) was $4.7 million, compared to Adjusted EBITDA of $3.3 million in the same period last year (see reconciliation below).
 
Updated Fiscal 2017 Outlook

Agilysys revised its full year guidance as it now expects fiscal 2017 revenue will be in a range of $128 million - $131 million, modestly below the previously anticipated range of $132 - $136 million. The decline in the Company’s revenue outlook is attributable to a reduction in realized and anticipated up front product sales in the last half of the year. In addition, the Company now expects gross margin for fiscal 2017 will be slightly below 50 percent, reflecting the lower full-year revenue outlook, the impact of higher cost of goods sold related to the recent general availability of first generation versions of rGuest products, and a continued shift in revenue towards more subscription-based sales.
 
Tony Pritchett, Interim Chief Financial Officer, commented, “Our financial position and balance sheet remain strong and the underlying positive trends of the business including revenue growth opportunities remain encouraging. While we are revising revenue guidance for the year, primarily due to lower product sales, we are encouraged by the continued growth in recurring revenue, including subscription based SaaS revenue. With a new CEO bringing in fresh perspectives on our business including opportunities for growth and improvement, we are already in the process of implementing better execution strategies that will accelerate product development and other deliverables. We strongly believe that our overall spend rate as a percentage of revenue is now at its peak and our initiatives currently underway will lead to a reduction in the near term. We expect these actions will help significantly improve near and long term results.”



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