Agilysys Announces Record Revenue of $69.6M in Third Quarter Fiscal 2025

45.1% Subscription Revenue Growth Including Book4Time

Quarter Adjusted EBITDA of $14.7M and Adjusted EPS of $0.38

Revises Full Fiscal Year Total Revenue Guidance To $273M, While Reiterating Previous Subscription Growth Guidance

Agilysys, Inc. (NASDAQ:AGYS), a leading global provider of hospitality software solutions that deliver High Return Hospitality, today reported results for its fiscal 2025 third quarter ending December 31, 2024.

Summary of Fiscal 2025 Third Quarter Financial Results

• Total net revenue increased 14.9% to a record $69.6 million compared to total net revenue of $60.6 million in the comparable prior-year period.
• Recurring revenue (comprised of subscription and maintenance charges) was a record $44.4 million, or 63.8% of total net revenue, compared to $35.1 million, or 58.0% of total net revenue, for the same period in fiscal 2024. Subscription revenue increased 45.1% year-over-year and was 63.8% of total recurring revenue compared to 55.6% of total recurring revenue in the third quarter of fiscal 2024.
• Gross margin was 63.0% in the fiscal 2025 third quarter compared to 62.5% in the comparable prior-year period.
• Net income attributable to common shareholders in the fiscal 2025 third quarter was $3.8 million, or $0.14 per diluted share, compared to $76.9 million, or $2.85 per diluted share, in the comparable prior-year period. Net income during prior-year fiscal 2024 third quarter included discrete tax events such as a release of valuation allowances against certain deferred tax assets.
• Adjusted EBITDA (non-GAAP) was $14.7 million compared to $11.8 million in the comparable prior-year period (reconciliation included in financial tables).
• Adjusted diluted EPS (non-GAAP) was $0.38 per share in the fiscal 2025 third quarter compared to $0.35 per share in the comparable prior-year period (reconciliation included in financial tables).
• Free cash flow (non-GAAP) in the fiscal 2025 third quarter was $19.7 million compared to free cash flow of $11.3 million in the fiscal 2024 third quarter (reconciliation included in financial tables). Ending cash balance was $60.8 million compared to ending cash balance of $144.9 million as of fiscal 2024 year-end.

Ramesh Srinivasan, President and CEO of Agilysys, commented, "Subscription revenue continues to grow at a healthy pace and we are pleased with the integration progress of the Book4Time acquisition. However, revenue levels, especially one-time product revenue, continue to be impacted by recent sales challenges with point-of-sale products, mainly in the managed food services vertical, caused by our final modernization transition phase.

While we expect fiscal 2025 to end up as a good year for subscription revenue growth of at least 38%, product revenue including hardware revenue, will remain challenged. Professional services revenue has returned to more realistic levels as we have completed most of the development phase of a large project. We are therefore revising fiscal 2025 annual total revenue guidance to $273 million.

"We are confident the overall structural strengths of the business, increasing competitive advantages and growing product innovation capabilities will continue to fuel strong growth, which will accelerate as we move past these short-term transition challenges," he concluded.

Fiscal 2025 Outlook

The Company revises full year fiscal 2025 total revenue guidance to approximately $273 million while maintaining at least 38% year-over-year subscription revenue growth. Adjusted EBITDA is expected to be 18% of revenue for the full fiscal year.

Dave Wood, Chief Financial Officer, commented, "We are pleased to report strong subscription revenue growth results for the quarter. One time revenue remains challenged as we see continued impacts from our slow point-of-sales bookings during the first half of the year and wind down the heavy lift of significant development efforts related to large projects. While we are disappointed with the short-term headwinds leading to the reduction in our annual total revenue guidance, we remain confident in the strength of our product ecosystem and future revenue growth opportunities."

2025 Third Quarter Conference Call and Webcast

Agilysys is hosting a conference call and webcast today, January 21, 2025, at 4:30 p.m. ET. Both the call and the webcast are open to the public. Please register at https://register.vevent.com/register/BId9a48404836f4457a5b8630114e30243 15 minutes prior to the call to receive confirmation and further instruction in a timely manner. After registration, an email confirmation with a personalized PIN will be provided along with further access details.

Interested parties also can access the conference call live on the Investor Relations page of Agilysys.com under the Events and Presentations headline. 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, subscription revenue and Adjusted EBITDA guidance for the 2025 fiscal year and statements made about future revenue growth.

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 impact macroeconomic factors may have on the overall business environment, our ability to achieve our fiscal 2025 guidance, future revenue growth, the company's ability maintain sales levels, the Company's ability to integrate Book4Time and realize future synergies, 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. Additionally, references to "record" financial and business levels in this document refer only to the time period after Agilysys made the transformation to an entirely hospitality focused software solutions company in FY2014.

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, other charges, and legal settlements, less the related income tax effect of these adjustments, as applicable, and tax events 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 exclusively delivers state-of-the-art software solutions and services that help organizations achieve High Return Hospitality™ by maximizing Return on Experience (ROE) through interactions that make ‘personal' profitable. Customers around the world use Agilysys Property Management Systems (PMS), Point-of-Sale (POS) solutions and Food & Beverage Inventory and Procurement (I&P) systems to consistently delight guests, retain staff and grow margins. Agilysys' 100% hospitality customer base includes branded and independent hotels; multi-amenity resorts; casinos; property, hotel and resort management companies; cruise lines; corporate dining providers; higher education campus dining providers; food service management companies; hospitals; lifestyle communities; senior living facilities; stadiums; and theme parks. Agilysys operates across the Americas, Europe, the Middle East, Africa, Asia-Pacific, and India with headquarters located in Alpharetta, GA. For more information visit Agilysys.com.

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

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

(a) Tax events include excess tax benefits or expense related to share-based compensation, release of valuation allowances against deferred income taxes, and changes in uncertain tax positions

(b) Adjusted net income, a non-GAAP financial measure, is defined as net income attributable to common shareholders before amortization expense (including amortization of developed technology), share-based compensation, other (gains) charges, net, and legal settlements, less the related income tax effect of these adjustments, as applicable, at the Company's current combined federal and state income statutory tax rate and, as defined under (a) above, tax events

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

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

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Investor Contact:

Jessica Hennessy

Senior Director Corporate Strategy & Investor Relations

Agilysys, Inc.

770-810-6116 or [email protected]