Market Performance - There is a significant divergence in performance between large-cap stocks and small-to-mid cap stocks, with large-cap stocks, particularly the S&P 500, showing strong gains of nearly 7% year-to-date, while the Russell 2000, which tracks small and mid-cap stocks, is trading flat [1] - The Nasdaq has risen 4% year-to-date, indicating that U.S. equities performance is increasingly tied to larger, well-known companies [1] Company Analysis: IonQ (IONQ) - IonQ is a quantum computing firm that has seen its shares plummet 28% since the start of 2024, primarily due to higher interest rates and uncertain macroeconomic conditions affecting investor interest in loss-making start-ups [2][3] - The company's innovations, such as the ion-trapping technique and the Forte quantum computer, are promising, but current use cases for quantum computing remain limited, necessitating further equity capital injections [2] Company Analysis: Agilysys (AGYS) - Agilysys is an enterprise software company providing cloud-based POS and property management systems for the hospitality industry, maintaining solid double-digit revenue growth in 2022 and 2023 [4][5] - Despite its profitability on a GAAP basis, Agilysys has a stretched trading multiple valuation, currently trading at 69.2x forward earnings, which could lead to significant downward pressure in a market downturn [5] Company Analysis: National Vision (EYE) - National Vision operates a chain of optical retail stores and reported a 6% revenue growth for 2023, but also a significant net loss of $66 million, contrasting with a net income of $42 million in 2022 [6] - The company's ability to perform well in 2024 is questionable if it continues to incur losses, with shares falling over 16% year-to-date [6]

Core Insights - Agilysys, Inc. has successfully implemented a range of hospitality solutions on a unified cloud-based platform at Mohegan INSPIRE Entertainment Resort, enhancing operational efficiency and guest experiences [1][2][3] Company Overview - Agilysys is a leading global provider of hospitality software solutions, focusing on maximizing Return on Experience (ROE) for its clients [5] - The company offers a comprehensive suite of solutions including Property Management Systems (PMS), Point-of-Sale (POS) systems, and Food & Beverage Inventory and Procurement systems [5] Implementation Details - The Agilysys PMS and POS solutions began supporting hotel and food & beverage operations in December 2023, with expansion to gaming and non-gaming patrons coinciding with the casino opening on February 3 [2][3] - Additional solutions for booking, dining reservations, service management, mobile food & beverage ordering, and document imaging are now live, with mobile check-in/check-out and loyalty management solutions to be deployed soon [3] Project Significance - The implementation at Mohegan INSPIRE marks a significant milestone for Agilysys in the Asia-Pacific region, showcasing the company's capability to deliver integrated hospitality technology on a large scale [3] - The resort features a diverse range of facilities including a five-star hotel, a 15,000-seat arena, a water park, MICE facilities, and a casino, all designed to create memorable experiences for guests [4] Future Outlook - Agilysys aims to continue supporting Mohegan INSPIRE as it enhances hospitality experiences for guests from around the world [3]

Industry Overview - The Zacks Computer – Integrated Systems industry is facing persistent supply-chain bottlenecks and a challenging macroeconomic landscape characterized by rising inflation, leading to high levels of backlog and concerns about industry prospects [1][4] - Companies are increasing investments in data modernization, analytics, cyber defense, remote work, automation, and supply-chain modernization, which are accelerating growth in digital transformation services [2] Industry Trends - There is a rising demand for integrated solutions across enterprises, driven by investments in IoT, big data, AI, and blockchain technologies, as well as opportunities presented by remote work trends [3] - The adoption of multi-cloud models is expanding the scope for industry participants, with cloud and virtual technologies expected to favor the industry [4] - Supply-chain constraints and delays in customer acceptance are leading to consistent backlog levels, particularly in Compute and Storage segments [4][5] Market Performance - The Zacks Computer – Integrated Systems industry has underperformed the broader Computer and Technology sector but has outperformed the S&P 500 over the past year, returning 46.2% compared to the S&P 500's 33% [8] - The industry is currently trading at a trailing 12-month Price-to-Sales (P/S) ratio of 2.05X, below the S&P 500's 3.97X and the sector's 5.26X [9] Company Highlights - **International Business Machines (IBM)**: Experiencing solid net sales growth in the software segment, driven by hybrid cloud adoption and demand trends across various sectors. IBM is acquiring Software AG's integration platform businesses for €2.13 billion, expected to enhance its data integration capabilities [10][11][12] - **Hewlett Packard Enterprise (HPE)**: Benefiting from strong execution in clearing backlogs and increased customer acceptance. HPE is focusing on higher-margin offerings and has plans to acquire Juniper Networks to enhance its competitive stance [14][15] - **Agilysys**: Seeing steady demand for cloud-native products and services, with record high services revenues contributing to improved profitability levels [16][17]

Core Viewpoint - Agilysys, Inc. has announced a secondary offering of 867,729 shares of its common stock, resulting in gross proceeds of $72.7 million to the selling stockholders, with the offering expected to close on February 20, 2024 [1]. Group 1: Offering Details - The offering is underwritten by BTIG, LLC, and shares will be sold at market prices prevailing at the time of sale [2]. - The offering is made under an effective shelf registration statement filed with the SEC on September 15, 2023 [2]. Group 2: Company Overview - Agilysys is a global provider of hospitality software solutions aimed at maximizing Return on Experience (ROE) for its customers [4]. - The company's customer base includes various sectors such as hotels, resorts, casinos, and food service management, operating across multiple regions including the Americas, Europe, and Asia-Pacific [4].

Revenue Growth - Total net revenue increased by $10.6 million, or 21.3%, during Q3 FY2024 compared to Q3 FY2023, reaching $60.6 million[86] - Products revenue rose by $2.0 million, or 18.5%, driven by higher sales to new and existing customers[88] - Subscription and maintenance revenue grew by $5.0 million, or 16.4%, with subscription-based service revenue increasing by 29.9%[88] - Professional services revenue surged by $3.7 million, or 40.9%, due to increased sales and service activity[88] - For the first nine months of fiscal 2024, total net revenue increased by $30.1 million, or 20.7%, compared to the same period in fiscal 2023, reaching $175.2 million[102] - Product revenue rose by $5.8 million, or 18.0%, driven by higher sales to new and existing customers[102] - Subscription and maintenance revenue increased by $14.6 million, or 16.8%, with subscription-based service revenue growing by 28.9%[102] - Professional services revenue surged by $9.7 million, or 37.4%, due to increased sales and service activity[102] Profitability - Gross profit increased by $7.0 million, or 22.9%, with gross profit margin rising from 61.7% to 62.5%[89] - Operating income for Q3 FY2024 was $7.8 million, a 122.6% increase from $3.5 million in Q3 FY2023[86] - Gross profit increased by $17.3 million, or 19.6%, while gross profit margin decreased from 61.1% to 60.5%[105] - Operating income for the first nine months of fiscal 2024 was $12.3 million, representing a 30.0% increase from the prior year[102] Operating Expenses - Operating expenses, excluding other gains and charges, rose by $3.9 million, or 14.4%, compared to the same period last year[90] - Operating expenses rose by $14.9 million, or 19.0%, with product development expenses increasing by $5.9 million, or 16.2%[106] Cash Flow and Financial Position - Cash flow from operating activities was $18.4 million, attributed to cash-based earnings of $29.2 million[122] - As of December 31, 2023, the company had cash and cash equivalents of $116.2 million, with 94% located in the United States[121] Tax Benefits - The company recognized a discrete tax benefit of $68.0 million, primarily due to the release of a $65.1 million valuation allowance against deferred tax assets[99] - The effective tax rate for Q3 FY2024 was not meaningful due to the significant tax benefit recognized[98] - The company recognized a discrete tax benefit of approximately $65.1 million related to the release of valuation allowances against deferred tax assets[115] Accounting and Market Risk - No material changes in significant accounting policies since March 31, 2023[127] - No material changes in market risk exposures since March 31, 2023[129]

Financial Data and Key Metrics Changes - Fiscal 2024 Q3 revenue reached a record $60.6 million, representing a 21.3% increase from $49.9 million in the prior year [19][25] - Product revenue was $12.7 million, up 18.5% year-over-year, while services revenue was a record $12.8 million, increasing by 41% [19][20] - Subscription revenue grew 29.9% year-over-year to a record $19.5 million, constituting 55.6% of total recurring revenue compared to 49.8% in Q3 of the previous fiscal year [20][28] Business Line Data and Key Metrics Changes - Sales in the Asia Pacific region and U.S. hotels, resorts, and cruise ship verticals showed significant year-over-year improvements [7][8] - The average deal size for new customers increased by approximately 30% compared to the previous fiscal year [11] - The company added 18 new customers in Q3, with 90% of new properties being subscription-based [10][12] Market Data and Key Metrics Changes - Fiscal 2024 Q3 was the best quarter for revenue from international regions, indicating encouraging progress with potential for future growth [22] - The company reported a strong backlog, with total backlog increasing by 6% over the prior year, despite a decrease in product backlog [26] Company Strategy and Development Direction - The company is transitioning from a product re-engineering phase to focusing on customer acquisition and enhancing competitive advantages [35][36] - Investments have been made in product development to ensure competitiveness in international markets, with a focus on creating successful implementations and reference customers [45][46] - The company aims to leverage its low market share in the property management system (PMS) space for future growth opportunities [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full fiscal year 2024 revenue guidance of $235 million to $238 million, with solid subscription revenue growth expected [23][33] - The company anticipates continued improvement in profitability, with adjusted EBITDA expected to be 15% of revenue for the full fiscal year [24][33] - Management highlighted the importance of establishing credibility and generating customer success stories to drive future growth [36][66] Other Important Information - The release of a tax-related valuation allowance of $65 million allowed the company to recognize existing U.S. federal net operating losses as deferred tax assets [31] - The company reported a free cash flow gain of $11.3 million for the quarter, slightly down from $11.7 million in the prior year [33] Q&A Session Summary Question: Outlook for Q4 and margin guidance - Management expects a sequential increase in revenue for Q4, despite a slight pullback in product revenue due to operational costs returning to normal levels [40][42] Question: Investments for international success - The company has focused on product improvements and is now investing in services and marketing to create successful implementations and reference customers in international markets [45][46] Question: PMS pipeline and credibility from the Marriott deal - The Marriott deal has enhanced the company's credibility in the PMS space, contributing to increased interest and momentum in sales [50][52] Question: Free cash flow expectations - Free cash flow is expected to remain consistent, with no changes to expectations despite some timing headwinds [72][74]

Core Insights - Agilysys reported revenue of $60.57 million for the quarter ended December 2023, reflecting a year-over-year increase of 21.3% [1] - The company's EPS was $0.35, up from $0.26 in the same quarter last year, indicating strong earnings growth [1] - Revenue exceeded the Zacks Consensus Estimate of $60.03 million by 0.90%, while EPS surpassed the consensus estimate of $0.23 by 52.17% [1] Revenue Breakdown - Net revenue from Products was $12.68 million, exceeding the average estimate of $12.51 million, with a year-over-year increase of 18.5% [2] - Subscription and maintenance revenue was reported at $35.11 million, slightly below the average estimate of $35.68 million, but still showing a 16.4% year-over-year growth [2] - Professional services revenue reached $12.78 million, surpassing the estimated $11.84 million, marking a significant year-over-year increase of 40.9% [2] Stock Performance - Over the past month, Agilysys shares have returned -2.8%, contrasting with the Zacks S&P 500 composite's increase of 1.6% [2] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [2]

分组1 - Agilysys reported quarterly earnings of $0.35 per share, exceeding the Zacks Consensus Estimate of $0.23 per share, and up from $0.26 per share a year ago, representing an earnings surprise of 52.17% [1] - The company achieved revenues of $60.57 million for the quarter ended December 2023, surpassing the Zacks Consensus Estimate by 0.90%, and an increase from $49.92 million year-over-year [1] - Agilysys has consistently surpassed consensus EPS and revenue estimates over the last four quarters [1] 分组2 - The stock has underperformed the market with a loss of about 2.3% since the beginning of the year, compared to the S&P 500's gain of 1.5% [2] - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $62.45 million, and for the current fiscal year, it is $0.88 on revenues of $237.12 million [4] - The Computer - Integrated Systems industry, to which Agilysys belongs, is currently ranked in the top 45% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [4]

Core Viewpoint - Agilysys, Inc. reported strong financial results for the third quarter of fiscal 2024, achieving record revenues and significant growth in subscription revenue, driven by improved service efficiency and technology solutions [2][3][4]. Financial Performance - Total net revenue increased by 21.3% to a record $60.6 million, compared to $49.9 million in the same period last year [2]. - Recurring revenue reached a record $35.1 million, accounting for 58.0% of total net revenue, compared to 60.4% in the prior year [2]. - Subscription revenue grew by 29.9% year-over-year, representing 55.6% of total recurring revenue [2]. - Gross margin improved to 62.5%, up from 61.7% in the prior-year period [2]. - Net income attributable to common shareholders was $76.9 million, or $2.85 per diluted share, compared to $3.4 million, or $0.13 per diluted share, in the same period last year [2]. - Adjusted EBITDA was $11.8 million, compared to $8.1 million in the prior-year period [2]. - Free cash flow for the quarter was $11.3 million, slightly down from $11.7 million in the same quarter last year [2]. Business Outlook - The company raised its full fiscal year revenue guidance to a range of $235 million to $238 million, with subscription revenue growth expected at 28% year-over-year [4][5]. - Adjusted EBITDA expectations for fiscal 2024 were increased to 15% of revenue, higher than previous guidance [5]. - The company noted strong implementation of its cloud-native solutions across various geographies, enhancing operational efficiencies for clients [4][5]. Management Commentary - The President and CEO highlighted the eighth consecutive record revenue quarter and emphasized the importance of improved implementation services and technology solutions in driving business momentum [3]. - The CFO expressed confidence in continued business growth, supported by a strong backlog and consistent recurring revenue growth [5].

Core Insights - Agilysys, Inc. is providing on-site premier support for the InfoGenesis point-of-sale (POS) system at Melbourne & Olympic Parks for the 2024 Australian Open, expecting over 900,000 attendees [1] - The venue will utilize hundreds of InfoGenesis POS terminals to enhance service efficiency, focusing on mobile concession ordering and contactless payments [2] - Agilysys emphasizes its commitment to service by providing direct system support during high-demand events, ensuring optimal performance and customer insights [3] Company Overview - Agilysys specializes in hospitality software solutions, aiming to maximize Return on Experience (ROE) for its clients [4] - The company's customer base includes a wide range of sectors such as hotels, casinos, cruise lines, and stadiums, highlighting its extensive reach in the hospitality industry [4]