Revenue Growth - Total net revenue increased by $10.5 million, or 26.5%, during the third quarter of fiscal 2023 compared to the same period in fiscal 2022[81] - Total net revenue increased by $29.1 million, or 25.1%, during the first nine months of fiscal 2023 compared to the same period in fiscal 2022[95] - Products revenue rose by $2.6 million, or 32.0%, driven by higher sales to new and existing customers[81] - Products revenue increased by $8.0 million, or 33.2%, driven by higher sales and deliveries to new and existing customers[95] - Subscription and maintenance revenue grew by $5.0 million, or 20.0%, with subscription-based service revenue increasing by 28.8%[81] - Subscription and maintenance revenue rose by $14.5 million, or 20.1%, with subscription-based service revenue growing by 28.9%[95] - Professional services revenue increased by $2.8 million, or 45.7%, due to higher sales and service activity[81] Profitability - Gross profit increased by $6.1 million, or 24.5%, while gross profit margin decreased from 62.6% to 61.7%[83] - Gross profit increased by $14.8 million, or 20.0%, while gross profit margin decreased from 63.6% to 61.1%[97] - Operating income rose to $3.5 million, representing an increase of 116.0% compared to the previous year[81] - Operating income increased by $4.7 million, or 97.8%, reaching $9.4 million, with an operating income percentage of 6.5%[95] Expenses - Operating expenses, excluding other charges and legal settlements, increased by $4.4 million, or 19.3%[84] - Operating expenses, excluding other charges and legal settlements, rose by $11.2 million, or 16.6%[98] - Sales and marketing expenses surged by $1.9 million, or 49.3%, due to increased marketing activities and key hires[85] Cash Flow and Financial Position - Cash flow provided by operating activities was $17.7 million, attributed to cash-based earnings of $22.3 million[110] - As of December 31, 2022, cash and cash equivalents totaled $105.8 million, with 92% located in the United States[109] - Interest income increased significantly to $(1.2 million) from $(45,000), reflecting changes in cash equivalents[102] Taxation - The effective tax rate for the three months ended December 31, 2022, was 14.8%, compared to 1.5% in the previous year[91] - The effective tax rate for the nine months ended December 31, 2022, was 8.1%, up from 5.6% in the prior year[105] Strategic Initiatives - The company plans to invest a portion of its cash on hand to enhance existing software products and develop new ones[76] Market Risk - There have been no material changes in market risk exposures since March 31, 2022[116]

Financial Data and Key Metrics Changes - Fiscal 2023 Q3 revenue reached a record $49.9 million, a 26.5% increase from $39.5 million in the prior year quarter and a sequential increase of 4.6% from Q2 [22][26] - Recurring revenue grew to $30.2 million, driven by a 28.8% year-over-year increase in subscription revenue, which constituted 17% of total subscription revenue this quarter compared to 11% in the previous year [23][28] - Adjusted EBITDA for Q3 was $8.1 million, representing 16.1% of revenue, in line with the fiscal year plan [31] Business Line Data and Key Metrics Changes - Product revenue increased by 32% and professional services revenue rose by 45.7% compared to the prior year quarter [26] - The company added 18 new customers in Q3, with 16 being fully subscription-based, and the average deal size was more than 50% higher than the previous quarter [12][14] - Services revenue crossed the $9 million mark for the first time, indicating strong sales momentum [22][27] Market Data and Key Metrics Changes - Sales in the gaming casinos, resorts, and EMEA verticals are operating at exceptionally high levels, while APAC and managed food services sales are still below pre-pandemic levels [8][9] - The company reported a significant increase in prospective customer meetings and product demo requests in Asia, although actual sales results have not yet materialized due to delayed decision-making [9][10] Company Strategy and Development Direction - The company is focused on expanding its presence in the property management system (PMS) space, with expectations to triple the number of rooms connected to its PMS products over the next three years [20][52] - The recent selection by Marriott as a PMS provider is seen as a transformational win, enhancing the company's credibility and opening up significant subscription revenue growth opportunities [19][36] - The company is investing in R&D and infrastructure to support its growth as a cloud-based SaaS provider, which may lead to short-term margin compression [21][56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, citing a large total addressable market and the hospitality industry's long-standing need for integrated technology solutions [33][34] - The company believes that pent-up demand in the hospitality sector is driven by the need for modern technology rather than just recovery from pandemic-related travel restrictions [48] - Management anticipates that the infrastructure investments will prepare the company for significant growth in subscription revenue, despite potential short-term margin impacts [41][56] Other Important Information - The company expects full fiscal year 2023 revenue to be between $195 million and $198 million, exceeding initial guidance [22][32] - The gross profit margin decreased slightly to 61.7% due to a shift in revenue mix as product and professional services revenue increased [29] Q&A Session Summary Question: Clarification on the Marriott deal and potential margin headwinds - Management outlined three phases of work related to the Marriott deal, with the first two phases expected to be profitable, while the third phase may incur margin compression due to infrastructure investments [40][41] Question: Visibility on the number of rooms and future opportunities - Management emphasized the focus on delivering the selected PMS for Marriott and acknowledged the potential for future opportunities as other large operators consider RFPs [45][52] Question: Impact of business travel recovery on momentum - Management indicated that pent-up demand is driven by the need for integrated technology solutions rather than solely by travel recovery [46][48] Question: OpEx spend and capacity for increased demand - Management stated that while sales and marketing expenses will remain stable as a percentage of revenue, they are monitoring capacity levels to ensure they can meet demand [61][65] Question: Inclusion of add-on modules in the Marriott contract - Management clarified that the current RFP was specifically for PMS, and there is no information on the inclusion of add-on modules at this time [66][68]

Financial Performance - Total net revenue for the three months ended September 30, 2022, was $47,742,000, representing a 26% increase from $37,892,000 in the same period of 2021[9] - Subscription and maintenance revenue increased to $29,036,000 for the three months ended September 30, 2022, up from $24,027,000, marking a 21% growth[9] - Gross profit margin for the three months ended September 30, 2022, was 61.5%, slightly down from 64.0% in the same period of 2021[9] - Operating income for the three months ended September 30, 2022, was $2,927,000, compared to $1,120,000 in the same period of 2021, reflecting a significant increase[9] - Net income attributable to common shareholders for the three months ended September 30, 2022, was $3,117,000, up from $523,000 in the same period of 2021, indicating a substantial growth[9] - Net income for the three months ended September 30, 2022, was $3,576,000, compared to $982,000 for the same period in 2021, representing a significant increase of 264%[12] - Total comprehensive income for the six months ended September 30, 2022, was $5,961,000, up from $2,972,000 in the prior year, reflecting an increase of 101%[12] - Operating income for the six months ended September 30, 2022, was $5,960,000, a significant increase from $3,162,000 for the same period in 2021[9] - Basic income per share increased to $0.13 for the three months ended September 30, 2022, compared to $0.02 for the same period in 2021, while diluted income per share rose to $0.12 from $0.02[56] Assets and Liabilities - Total assets as of September 30, 2022, were $220,766,000, an increase from $214,162,000 as of March 31, 2022[7] - Total current liabilities decreased to $62,054,000 as of September 30, 2022, from $71,466,000 as of March 31, 2022, showing improved financial health[7] - Cash and cash equivalents were $96,196,000 as of September 30, 2022, slightly down from $96,971,000 as of March 31, 2022[7] - The company recorded total accrued liabilities of $9.959 million as of September 30, 2022, down from $10.552 million as of March 31, 2022[46] - Cash payments for operating leases were $2.619 million for the six months ended September 30, 2022, compared to $2.308 million for the same period in 2021[48] Revenue Recognition - Revenue recognized at a point in time totaled $10.5 million and $21.6 million for the three months ended September 30, 2022 and 2021, respectively[39] - Revenue recognized over time totaled $37.2 million and $73.7 million for the three months ended September 30, 2022 and 2021, respectively[39] - Contract liabilities included revenue recognized from amounts at the beginning of the period of $13.9 million and $12.2 million for the three months ended September 30, 2022 and 2021, respectively[41] - Professional services revenue recognized over time totaled $37.2 million for Q3 2022, up from $30.6 million in Q3 2021, representing a 21.6% increase[39] - Revenue from product sales recognized at a point in time was $10.5 million for Q3 2022, compared to $7.3 million in Q3 2021, reflecting a 43.8% increase[39] Acquisition and Investments - The company acquired ResortSuite Inc. for a total net cash consideration of $24.5 million, enhancing its offerings in the complex multi-amenity and resort market[74] - The total purchase price for ResortSuite was $24.8 million, with identifiable intangible assets valued at $12.2 million and goodwill of $13.1 million[76][77] - Revenue attributable to ResortSuite for the three and six months ended September 30, 2022, was $1.3 million and $2.6 million, respectively[79] - The company recognized acquisition costs of $0.1 million related to the ResortSuite acquisition, primarily for professional fees[79] Share-Based Compensation - Share-based compensation for the six months ended September 30, 2022, was $5,944,000, compared to $6,963,000 in the same period of 2021[14] - The total share-based compensation expense for the six months ended September 30, 2022, was $5.9 million, a decrease from $7.0 million in the same period of 2021[62] - The company has a total of 1,946,565 stock-settled appreciation rights (SSARs) outstanding as of September 30, 2022, with an aggregate intrinsic value of $59.6 million[66] - As of September 30, 2022, total unrecognized share-based compensation expense related to unvested restricted shares was $11.2 million, expected to be recognized over a weighted-average vesting period of 2.4 years[68] Tax and Legal Matters - The effective tax rate for the three months ended September 30, 2022 was (4.6)% compared to 4.7% for the same period in 2021[49] - The company’s India subsidiary operates in a Special Economic Zone, benefiting from reduced income tax rates during its operational phases[49] - The company is involved in various legal actions and contingencies, but management believes that the ultimate resolution will not have a material adverse effect on its financial position[53] Market Presence and Strategy - The company has been a leader in hospitality software for over 40 years, providing innovative cloud-native SaaS solutions for various sectors including hotels and restaurants[21] - Agilysys operates across multiple regions including North America, Europe, and Asia-Pacific, enhancing guest experiences and operational efficiencies[21] - The company continues to focus on expanding its market presence and enhancing its software solutions to drive revenue growth[21] - The company plans to continue investing in product development and market expansion to drive future growth[9]

Financial Data and Key Metrics Changes - Fiscal 2023 Q2 revenue reached a record $47.7 million, a 26% increase from $37.9 million in the prior year [25][18] - Adjusted EBITDA for the quarter was $7.4 million, representing 15.5% of revenue, slightly improved from the previous quarter [23][30] - Free cash flow for the period was $2.3 million, down from $3.2 million in the prior year quarter [24][32] Business Line Data and Key Metrics Changes - Product revenue increased by 44.5% year-over-year, while professional services revenue rose by 24.3% [25] - Recurring revenue grew to $29 million, driven by a 29% year-over-year increase in subscription revenue [21] - Subscription revenue constituted 49% of total recurring revenue, with add-on software modules making up 16% of subscription revenue [28][21] Market Data and Key Metrics Changes - Sales in the gaming casinos and EMEA verticals set new quarterly sales records, while Asia sales remained slow but showed increased prospective customer meetings [6][7] - The company is expanding its presence in the Middle East, hiring a local sales leader in Dubai to tap into the growing hospitality market [9] Company Strategy and Development Direction - The company is focused on increasing sales and marketing investments, with a 55% year-over-year increase in sales and marketing expenses [9] - The launch of the Versa PMS platform is progressing well, with seven customer resorts already live [37][39] - The company aims to maintain and improve current sales momentum despite macroeconomic challenges [8][6] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about maintaining sales momentum, citing the hospitality industry's growing demand for technology solutions [8] - The company expects fiscal 2023 annual revenue to be in the range of $190 million to $195 million, driven by approximately 30% year-over-year subscription revenue growth [33] - Management acknowledged challenges in services revenue and margins but expects gradual improvement as the transition to a subscription model continues [19][20] Other Important Information - The company is undergoing a transformation from an older technology provider to a subscription-based model, which is challenging but necessary for long-term growth [19] - The number of properties using four or more software modules has more than doubled in the last 1.5 years, indicating strong customer engagement [15] Q&A Session Summary Question: Progress on the Versa PMS platform - Management confirmed that Versa is ahead of schedule, with seven customer resorts live and positive reception [37][39] Question: Performance of chain hotels post-pandemic - Management noted that while not back to pre-pandemic levels, chain hotel business has improved significantly [41] Question: Impact of new marketing team on visibility - Management reported that the new marketing team has made a significant positive impact, with increased sales and marketing expenses leading to better visibility [43][44] Question: Sales rep quotas and win rates - Management indicated that while exact numbers were not available, win rates remain strong, particularly at the demo stage [50] Question: Improvement in Asia sales - Management highlighted improvements in the Asia sales team and increased activity levels, with several promising opportunities emerging [53] Question: Service business performance - Management explained that delays in multi-product implementations contributed to lower-than-expected service revenue, but they expect improvements moving forward [58] Question: Guidance reiteration - Management reiterated that fiscal year guidance remains on track, with confidence in achieving set targets [60] Question: Sales productivity of new reps - Management stated that while new sales reps are contributing well, there is still room for improvement in closing rates as more reference customers are established [65]

Financial Performance - Total net revenue for the three months ended June 30, 2022, was $47,506,000, an increase of 22.7% compared to $38,725,000 for the same period in 2021[8] - Gross profit for the same period was $28,495,000, resulting in a gross profit margin of 60.0%, down from 64.2% in the prior year[8] - Net income for the three months ended June 30, 2022, was $3,039,000, compared to $1,972,000 for the same period in 2021, representing a 54% increase[11] - Operating income for the three months ended June 30, 2022, was $3,033,000, compared to $2,041,000 for the same period in 2021[8] - Total comprehensive income for the quarter was $2,641,000, compared to $1,970,000 in the prior year[11] - Basic income per share for the three months ended June 30, 2022, was $0.10, compared to $0.06 for the same period in 2021, marking a 66.7% increase[53] Cash and Assets - Cash and cash equivalents at the end of the period were $94,897,000, down from $96,971,000 at the beginning of the period[12] - Total current assets decreased to $132,140,000 as of June 30, 2022, from $136,173,000 as of March 31, 2022[7] - Total assets as of June 30, 2022, were $208,759,000, down from $214,162,000 at the end of the previous quarter[8] - The balance sheet as of June 30, 2022, showed total assets of $101.3 million, an increase from $84.5 million as of June 30, 2021[15] Liabilities and Equity - Total liabilities decreased to $107,483,000 as of June 30, 2022, from $116,818,000 as of March 31, 2022[7] - Total current liabilities decreased to $62,777,000 from $71,466,000, indicating improved liquidity[8] - The company’s total shareholders' equity increased to $101,276,000 as of June 30, 2022, compared to $97,344,000 as of March 31, 2022[7] - Total accrued liabilities decreased from $10.552 million as of March 31, 2022, to $7.870 million as of June 30, 2022, a reduction of approximately 25.5%[43] Revenue Streams - Subscription and maintenance revenue for the three months ended June 30, 2022, totaled $36.5 million, up from $29.9 million in the same period of 2021, indicating a growth of 22%[36] - Revenue recognized from contract liabilities was $20.9 million for the three months ended June 30, 2022, compared to $17.4 million for the same period in 2021, reflecting a 20.1% increase[38] - Revenue recognized at a point in time totaled $11.0 million for the three months ended June 30, 2022, compared to $8.8 million for the same period in 2021[36] - Revenue attributable to ResortSuite for the three months ended June 30, 2022, was $1.3 million[76] Operational Changes - The impact of COVID-19 has led to significant economic challenges, affecting customer operations and necessitating remote working arrangements[19] - The impact of COVID-19 has led to significant changes in operational strategies, including remote working arrangements and virtual events[19] Acquisitions - The acquisition of ResortSuite Inc. on January 5, 2022, involved a total purchase price of $24.8 million, with $22.6 million paid in cash at closing[70][71] - The acquisition resulted in the recognition of $13.1 million of goodwill, expected to be deductible for income tax purposes[74] - The company incurred acquisition costs of $0.1 million related to the acquisition of ResortSuite, primarily for professional fees[76] - The purchase price allocation for ResortSuite included identifiable intangible assets valued at $12.2 million[73] Shareholder Information - The company reported a total of 31,607 shares issued as of June 30, 2022[15] - The weighted average grant-date fair value of restricted shares outstanding at June 30, 2022, was $43.25[65] - The number of outstanding rights at June 30, 2022, was 2,039,408, with a weighted average exercise price of $24.51[63] - The Holders of the preferred stock are entitled to dividends at a rate of 5.25% per annum, payable semi-annually[69] Tax and Expenses - The effective tax rate for the three months ended June 30, 2022, was 11.6%, compared to 8.9% for the same period in 2021[47] - Total operating expenses for the quarter were $25,462,000, an increase from $22,826,000 in the same quarter of the previous year[8] - Share-based compensation expense totaled $2.5 million for the three months ended June 30, 2022, down from $3.6 million in the prior year, a decrease of approximately 31.2%[59] Future Commitments - The company has an additional operating lease of approximately $11.7 million set to commence in fiscal year 2023[51] - Cash payments for operating leases increased from $969,000 in 2021 to $1.468 million in 2022, reflecting a 51.5% increase[45]

Financial Data and Key Metrics Changes - Fiscal 2023 Q1 revenue reached a record $47.5 million, a 22.7% increase from $38.7 million in the prior year [23] - Recurring revenue grew to $27.7 million, with a nearly 30% year-over-year increase in subscription revenue [13][24] - Adjusted EBITDA for the quarter was $6.7 million, representing 14.1% of revenue, consistent with expectations [20][26] - GAAP net income was $3 million, or $0.10 per diluted share, marking the best quarter in a while [20] Business Line Data and Key Metrics Changes - Product revenue increased by 25%, while professional services revenue rose by 30.9% compared to the prior year [23] - Subscription revenue comprised approximately 47% of total recurring revenue, down from about 48% in the previous quarter [24] - Add-on software modules accounted for 15% of subscription revenue, up from 10% in the prior year [25] Market Data and Key Metrics Changes - Sales from the managed food services division, particularly in higher education and healthcare, showed significant recovery [6] - Business from Europe (EMEA) is stable but not growing as desired, while the hospitality industry in Asia continues to face challenges due to lockdowns [6] Company Strategy and Development Direction - The company is focused on increasing sales and marketing investments to drive growth and capitalize on sizable sales opportunities [7][29] - There is a commitment to product innovation and customer service to create a competitive advantage [15][30] - The company expects fiscal 2023 annual revenue to be in the range of $190 million to $195 million, driven by a 30% year-over-year subscription revenue growth [22] Management's Comments on Operating Environment and Future Outlook - Management noted that customers are confident and making long-term technology decisions despite economic concerns [33][34] - The company is experiencing delays in technology adoption as customers transition from old to new products, but overall progress is being made [41][42] - Management expressed optimism about future growth, citing strong customer retention rates and ongoing demand for technology solutions [15][29] Other Important Information - The company reported a gross margin of 60%, consistent with the previous quarter, and expects margins to remain in the high 50s to low 60s range [18] - Cash and marketable securities as of June 30, 2022, were $94.9 million, a decrease from $97 million on March 31, 2022, primarily due to timing of payments [26] Q&A Session Summary Question: Insights on customer sentiment regarding future projects - Management indicated that customers are confident and have good visibility on bookings, continuing to make significant technology investments [33][34] Question: Feedback on new cloud-based PMS products - Early feedback on the new PMS products has been positive, with installations settling well and contributing to sales momentum [36][37] Question: Pipeline and purchase decision delays - Management acknowledged delays in purchase decisions due to the transition from old to new products but noted that many customers are making the switch [41][42] Question: Customization requirements for new deals - There is no significant customization required; instead, different customer requirements are being integrated into the base product [45][46] Question: Customer retention and subscription growth breakdown - Management confirmed a strong customer retention rate of over 95% and noted that subscription growth is a combination of new and existing customers [48][51]

Revenue Performance - Total net revenue increased by $25.5 million, or 18.6%, in fiscal 2022 compared to fiscal 2021, reaching $162.6 million[143] - Products revenue rose by $9.2 million, or 34.6%, driven by higher sales as customers reopened their locations[147] - Support, maintenance, and subscription services revenue grew by $10.4 million, or 11.7%, with subscription-based revenue increasing by 28.0%[147] - Total net revenue decreased by $23.6 million, or 14.7%, in fiscal 2021 compared to fiscal 2020, with product revenue down by $17.5 million, or 39.6%[165] - Revenue from international operations accounted for 7% of total revenue in fiscal 2022, down from 8% in 2021 and 9% in 2020[203] Profitability - Operating income improved to $6.3 million in fiscal 2022 from a loss of $20.96 million in fiscal 2021, marking a significant turnaround[144] - Gross profit increased by $12.2 million, or 13.6%, but gross profit margin decreased from 65.2% to 62.4%[148] - Gross profit increased by $8.4 million, or 10.4%, in fiscal 2021, with gross profit margin rising from 50.4% to 65.2%[166] - Operating loss for fiscal 2021 was $20.96 million, improving by $13.1 million or 38.5% compared to fiscal 2020[162] Operating Expenses - Operating expenses decreased by $14.9 million, or 13.9%, as a percentage of total revenue fell by 21.5%[149] - Product development expenses decreased by $9.0 million, or 16.3%, due to a reduction in share-based compensation expenses[149] - Sales and marketing expenses increased by $0.5 million, or 3.8%, reflecting investments in sales teams and marketing activities[151] - General and administrative expenses decreased by $5.5 million, or 16.6%, primarily due to lower share-based compensation expenses[152] - Operating expenses, excluding legal settlements and impairments, increased by $16.8 million, or 18.5%, in fiscal 2021 compared to fiscal 2020[167] - Product development expenses rose by $13.9 million, or 33.5%, in fiscal 2021 due to expansion of R&D teams and share-based compensation charges[167] Legal and Tax Matters - Legal settlements increased by $0.8 million during fiscal 2022 compared to fiscal 2021, attributed to more settlements related to employment and business matters[153] - The effective tax rate for fiscal 2022 was 0.5%, down from 1.0% in the previous year[156] - The effective tax rate for fiscal 2021 was 1.0%, compared to (0.6)% in 2020, primarily due to adjustments to deferred tax assets[175] Cash Flow and Liquidity - For fiscal 2022, cash flows provided by operating activities were $28.5 million, primarily due to a net income of $6.5 million adjusted for $17.7 million in non-cash expenses[180] - As of March 31, 2022, the company had $97.0 million in cash on hand, with 93% of it located in the United States[179] - Cash flows used in investing activities for fiscal 2022 were $25.7 million, mainly due to $24.5 million for business combinations[182] - Cash flows used in financing activities for fiscal 2022 were $4.9 million, primarily for share repurchases of $3.0 million and $1.8 million in preferred stock dividends[184] - The company believes that cash flow from operating activities and access to capital markets will adequately meet its liquidity requirements[179] Federal Net Operating Loss Carryforwards - At March 31, 2022, the company had $196.3 million of federal net operating loss carryforwards expiring between fiscal years 2031 to 2038[160] - The company recorded $199.1 million of federal net operating loss carryforwards that expire between fiscal years 2031 to 2038, and $46.8 million that can be carried forward indefinitely[178] Other Financial Information - The company has not entered into any off-balance sheet arrangements that could affect its financial condition[187] - The cash surrender value of corporate-owned life insurance policies was recorded at $1.0 million as of the balance sheet date[186] - Total other expense, net, was $251,000 in fiscal 2021, compared to a loss of $195,000 in fiscal 2020, reflecting a change of $446,000[173] - Interest income decreased by $273,000, or 71.8%, in fiscal 2021 compared to fiscal 2020[173] - The company recorded no impairments in fiscal 2021, following $23.7 million in impairments in fiscal 2020[171]

Financial Data and Key Metrics Changes - Fiscal 2022 Q4 revenue reached a record $46.6 million, an 18% sequential increase and a 28% increase year-over-year [12][27] - Fiscal 2022 full year revenue was a record $162.6 million, slightly ahead of the annual revenue level achieved during fiscal 2020 [17] - Adjusted EBITDA for Q4 was $7.5 million, approximately 16.1% of revenue, and for the full year, it was $27.3 million [19][20] - Gross margin for Q4 was 59.5%, lower than the previous year due to increased product and services revenue [14][30] Business Line Data and Key Metrics Changes - Subscription revenue grew to 48% of total recurring revenue, the highest level thus far, with a 33% year-over-year increase [13][29] - Subscription software sales of PMS and related modules were 53% higher than the previous best year [11] - Product revenue increased by 60% in Q4 compared to the prior year, while professional services revenue was up 35.4% [27][30] Market Data and Key Metrics Changes - Sales in the APAC region decreased by 15% compared to last year and by about 50% compared to fiscal 2020 [9] - EMEA sales showed a 74% improvement over the prior year, slightly better than fiscal 2020 [9] - The gaming casinos and resort verticals, which represent about 70% of the business, continue to show exceptional strength [7] Company Strategy and Development Direction - The company is focused on transitioning to a cloud SaaS-based business model while maintaining strong product margins [15][16] - The acquisition of ResortSuite is expected to enhance product offerings and customer engagement [22][23] - The company aims to achieve annual revenue in the range of $190 million to $195 million for fiscal 2023, driven by subscription revenue growth of around 30% [25][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery in the hospitality industry, particularly in hotel chains and cruise ships [35] - The company is confident in achieving subscription revenue growth of 30% without needing dramatic increases in bookings [56][58] - Management highlighted the importance of modern technology and integrated solutions as competitive advantages [51] Other Important Information - The company ended fiscal 2022 with a cash balance of $97 million, slightly down from the previous year due to the ResortSuite acquisition [32] - Customer retention levels were reported to be excellent, marking the best year in many years [19] Q&A Session Summary Question: On the PMS side, are there more conversations and demand from hotel customers? - Management confirmed increased conversations and sizable sales opportunities in PMS across hotels, resorts, and gaming customers [40] Question: How is the recovery in Europe and Asia compared to the US market? - Management indicated that Europe is recovering faster than Asia, with significant opportunities emerging in both regions [44] Question: Were there any one-time impacts influencing the year-end results? - Management clarified that there were no one-time impacts; sales were steady throughout the fiscal year [47][48] Question: What is the competitive advantage in terms of product offerings? - Management emphasized the integration of modern technology and end-to-end solutions as key competitive advantages [51] Question: What type of bookings growth is needed to achieve the subscription growth guidance? - Management stated that no dramatic bookings growth is needed, as steady growth will suffice to meet the subscription revenue target [56][58]

Revenue Recognition - Revenue recognized at a point in time totaled $8.1 million and $24.2 million for the three and nine months ended December 31, 2021, compared to $7.6 million and $19.4 million for the same periods in 2020[42]. - Revenue recognized over time totaled $31.4 million and $91.8 million for the three and nine months ended December 31, 2021, compared to $29.1 million and $81.4 million for the same periods in 2020[42]. - Total net revenue for the three months ended December 31, 2021, was $39.46 million, an increase of 7.6% compared to $36.68 million for the same period in 2020[89]. - Total net revenue increased by $15.2 million, or 15.1%, during the first nine months of fiscal 2022 compared to the same period in fiscal 2021[106]. Income and Expenses - Net income for the three months ended December 31, 2021, was $1,542,000, compared to a net loss of $2,070,000 for the same period in 2020[61]. - For the nine months ended December 31, 2021, net income was $4,496,000, an increase from $3,280,000 in the prior year[61]. - Operating income for the three months ended December 31, 2021, was $1.61 million, a significant improvement from an operating loss of $1.81 million in the same period of 2020[89]. - Operating income for the first nine months of fiscal 2022 was $4.8 million, representing an operating income percentage of 4.1%[104]. - Total gross profit increased by $7.9 million, or 12.1%, for the first nine months of fiscal 2022, while gross profit margin decreased from 65.3% to 63.6%[108]. Tax and Legal Matters - The effective tax rate for the three months ended December 31, 2021, was 1.5%, compared to (9.6)% for the same period in 2020[54]. - The effective tax rate for the nine months ended December 31, 2021, was 5.6%, down from 8.7% in the same period of fiscal 2020[114]. - Legal settlements increased by $0.3 million in the first nine months of fiscal 2022 due to a lawsuit settlement involving a former employee[111]. Share-Based Compensation - Total share-based compensation expense for the three months ended December 31, 2021, was $3,839,000, down from $6,630,000 in the same period of 2020[66]. - As of December 31, 2021, total unrecognized share-based compensation expense related to non-vested service condition SSARs was $6.3 million, expected to be recognized over a weighted-average vesting period of 1.2 years[68]. - As of December 31, 2021, total unrecognized share-based compensation expense related to unvested restricted stock was $5.4 million, expected to be recognized over 2.3 years[71]. Operating Costs and Liabilities - Total accrued liabilities decreased from $11.233 million as of March 31, 2021, to $8.385 million as of December 31, 2021[49]. - The company recorded cash payments for operating leases of $3,676,000 for the nine months ended December 31, 2021, down from $4,039,000 in the same period of 2020[51]. - Operating expenses increased by $8.2 million, or 13.9%, in the first nine months of fiscal 2022 compared to the same period in fiscal 2021[109]. Revenue Streams - Products revenue increased by 6.6% to $8.10 million from $7.60 million year-over-year[89]. - Support, maintenance, and subscription services revenue rose by 10.0% to $25.14 million from $22.85 million year-over-year[89]. - Subscription revenue increased by $2.3 million, or 10.0%, during the third quarter of fiscal 2022, driven by sales of newer cloud-native add-on modules[102]. - Professional services revenue increased by $3.7 million, or 23.2%, as customers resumed service activity[106]. Investments and Acquisitions - The company completed the acquisition of ResortSuite Inc. for approximately $25 million, enhancing its offerings in the multi-amenity and resort market[75]. - The company expects to acquire ResortSuite for approximately $25 million, with $22.7 million already paid in January 2022[117]. - The company plans to invest a portion of its cash on hand to enhance existing software products and develop new ones, focusing on customer-first strategies and international expansion[84]. Cash Flow and Debt - Cash flow from operating activities was $21.8 million in the first nine months of fiscal 2022, up from $15.1 million in the same period of fiscal 2021[118]. - Total debt remained approximately $0.1 million as of December 31, 2021, primarily consisting of finance lease obligations[117].

Financial Data and Key Metrics Changes - Total revenue for Q3 fiscal 2022 was $39.5 million, a 7.6% increase from $36.7 million in the same period last year [28] - Recurring revenue increased by 10% year-over-year, reaching $25.1 million, which represented 63.7% of total net revenue [29] - Subscription revenue grew by 24.9% year-over-year to a record $11.7 million, comprising about 46% of total recurring revenue [29] Business Line Data and Key Metrics Changes - Sales in the gaming and destination resort markets, which constitute over 70% of overall sales, have seen record highs [7][10] - Managed food services sales were at only around 60% of pre-pandemic levels, while hotel chains and cruise ships showed partial recovery [10][12] - Total sales of property management systems (PMS) products surpassed pre-pandemic levels during the first three quarters of fiscal 2022 [15] Market Data and Key Metrics Changes - Sales levels in the APAC region were about 40% of pre-pandemic levels, while EMEA performed better, operating at pre-pandemic levels [12] - Overall global sales across all verticals during the first three quarters of fiscal 2022 were at more than 90% of the levels seen during pre-pandemic fiscal 2020 [12] Company Strategy and Development Direction - The company is focusing on cloud SaaS solutions, with over 90% of new customers preferring this model, leading to a reduction in perpetual license sales [8][14] - The acquisition of ResortSuite is expected to enhance the company's product offerings and create revenue synergies by upselling to ResortSuite's customer base [25][27] Management's Comments on Operating Environment and Future Outlook - Management described the current business environment as a "rollercoaster recovery," with expectations for Q4 to be the best revenue quarter yet [6][35] - The company anticipates continued sequential improvement in subscription recurring revenue and overall recurring revenue, with services revenue expected to improve [35] Other Important Information - Adjusted EBITDA for the quarter was $6.6 million, about 17% of revenue, and cash collections have increased significantly, marking the best nine-month cash collection period in history [24][34] - The company has increased its sales capacity by about 20% over the past year and plans to continue hiring in sales and marketing [68] Q&A Session Summary Question: Commentary on delayed project backlog and project initiation - Management noted positive signs in January with services staff booked for implementation projects, indicating a pickup in project activity [39][40] Question: Competitive positioning of PMS products - Management expressed confidence in the competitiveness of their PMS products, highlighting modernization efforts and integration capabilities [43][45] Question: Future business outlook and the "flywheel effect" - Management expects improvements in other business segments over the next two to three quarters as the market recovers, with a virtuous cycle of product installations and increased sales [49][51] Question: Revenue synergies from the ResortSuite acquisition - Management confirmed that the acquisition is primarily about revenue synergies, with significant opportunities to upsell Agilysys products to ResortSuite's customer base [57][64] Question: Sales capacity and performance metrics - Management indicated that sales capacity has increased significantly, with expectations for continued growth in sales per representative due to improved product offerings [71][72]