Revenue Recognition - Revenue recognized at a point in time totaled $7.3 million and $16.1 million for the first three months ended September 30, 2021 and 2020, respectively[42]. - Revenue recognized over time totaled $30.6 million and $60.5 million for the three months ended September 30, 2021 and 2020, respectively[42]. - Contract liabilities at the beginning of the period resulted in revenue recognized of $12.2 million for the three months ended September 30, 2021[44]. - Total net revenue increased by $3.5 million, or 10.3%, in Q2 FY2022 compared to Q2 FY2021, driven by higher sales as customers reopened their locations[91]. - Total net revenue increased by $12.5 million, or 19.4%, during the first half of fiscal 2022 compared to the first half of fiscal 2021[106]. Income and Expenses - For the three months ended September 30, 2021, net income attributable to common shareholders was $523,000, a decrease of 90.2% compared to $5,314,000 for the same period in 2020[62]. - The company recorded a net income of $2,954,000 for the six months ended September 30, 2021, compared to $5,350,000 for the same period in 2020, representing a decline of 44.4%[62]. - Operating income decreased by $2.5 million, or 43.8%, resulting in an operating income percentage of 4.1%[103]. - Total gross profit increased by $1.1 million, or 4.8%, but gross profit margin decreased from 67.4% to 64.0% due to changes in revenue composition[92]. - Total gross profit increased by $7.4 million, or 17.8%, while gross profit margin decreased from 65.0% to 64.1%[107]. - Operating expenses, excluding legal settlements and severance, rose by $5.2 million, or 30.3%, in Q2 FY2022 compared to Q2 FY2021[93]. - Operating expenses, excluding legal settlements and severance, rose by $10.0 million, or 28.6%, during the first half of fiscal 2022[108]. Share-Based Compensation - Total share-based compensation expense for the three months ended September 30, 2021, was $3,342,000, an increase of 166.5% from $1,256,000 in the same period of 2020[67]. - As of September 30, 2021, total unrecognized share-based compensation expense related to non-vested service condition SSARs was $8.9 million, expected to be recognized over a weighted-average vesting period of 1.5 years[69]. - Product development expenses increased by $3.1 million, or 37.8%, due to restored base pay and higher share-based compensation[93]. - Sales and marketing expenses increased by $1.1 million, or 45.7%, due to restored base pay, increased share-based compensation, and higher advertising costs[93]. Taxation - The effective tax rate for the three months ended September 30, 2021, was 4.7%, compared to 2.0% for the same period in 2020[53]. - For the six months ended September 30, 2021, the effective tax rate was 7.5%, significantly higher than 2.3% for the same period in 2020[113]. - The company maintains a valuation allowance offsetting substantially all of its deferred tax assets in the U.S. due to prior period losses[54]. Cash Flow and Liquidity - Cash flow from operating activities was $11.7 million for the first six months of fiscal 2022, an increase from $6.6 million in the same period of fiscal 2021[117]. - Cash and cash equivalents totaled $106.4 million as of September 30, 2021, with 96% located in the United States[115]. - The net increase in cash and cash equivalents was $7.2 million for the first six months of fiscal 2022, compared to $39.1 million in the same period of fiscal 2021[117]. - Cash flow used in investing activities was $(788,000) for the first six months of fiscal 2022, compared to $(473,000) in the same period of fiscal 2021[117]. - Cash flow used in financing activities was $(3.6 million) for the first six months of fiscal 2022, primarily due to share repurchases and preferred stock dividends[118]. Operating Leases and Obligations - Cash payments for operating leases were $2.3 million for the six months ended September 30, 2021, compared to $3.0 million in the same period of 2020[51]. - The company has additional operating leases of approximately $11.8 million that will commence between fiscal year 2022 and fiscal year 2023[58]. - There were no significant changes to contractual obligations as of September 30, 2021, compared to the previous annual report[119]. - The company has not entered into any off-balance sheet arrangements that could affect its financial condition[120]. Market Conditions and Risks - The ongoing impact of COVID-19 on the company's financial condition remains uncertain and may not be fully reflected for some time[26]. - There have been no material changes in market risk exposures since March 31, 2021[124].

Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2022 was $37.9 million, a 10.3% increase from $34.4 million in the comparable prior year period [19] - Recurring revenue increased by 7.7% year-over-year, representing 63.4% of total net revenue [20] - Adjusted EBITDA for the quarter was $6.3 million, down from $8.6 million in the prior year second quarter [23] Business Line Data and Key Metrics Changes - Subscription revenue reached a record $11.1 million, a 21.7% increase year-over-year [20] - Total ARR of Property Management Systems (PMS) sales increased 115% compared to fiscal 2020 [25] - Add-on software modules contributed 6% of total sales, a significant increase from less than 2 years ago [21] Market Data and Key Metrics Changes - The US gaming and resorts market showed excellent recovery, while managed food services and international regions remained significantly affected by the pandemic [6] - The hotel chain and cruise ship verticals experienced only partial recovery [6] - International regions, particularly Asia, faced challenges due to ongoing travel restrictions [44] Company Strategy and Development Direction - The company is focusing on increasing sales and marketing efforts, with plans to expand the sales force and hire a head of marketing [17] - The modernization of products, including the V1 PMS platform and InfoGenesis POS, aims to enhance competitive positioning [15] - The company is maintaining a revenue guidance range of $160 million to $170 million for fiscal 2022, expecting the second half to be significantly better than the first half [16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about medium and long-term prospects due to record backlog levels and improving market conditions [16] - The company is seeing improvements in supply chain issues, which are expected to enhance product delivery in the second half of the fiscal year [27] - Labor shortages at customer sites are impacting project implementations, but management anticipates these challenges will ease [36] Other Important Information - Cash and marketable securities improved by $2.5 million to $106.4 million, with cash collections remaining strong [24] - The company reported a net income of $0.5 million, a decrease from the prior quarter [23] Q&A Session Summary Question: What data points give confidence in a stronger fiscal second half? - Management noted record backlogs and improvements in supply chain issues as key indicators for confidence in the second half [27] Question: How is the competitive position after recent shows? - Management indicated an improved competitive position in the PMS area, with increased recognition and participation in deals [29] Question: Are hardware supply issues accelerating the adoption of off-the-shelf hardware? - Management clarified that while there are hardware delivery issues, the PMS and software solutions are not significantly affected [39] Question: What are the emerging strengths in sales verticals? - Management highlighted strong performance in gaming and resort sectors, while hotel chains and cruise ships are recovering more slowly [43] Question: How does the company defend its pricing in the market? - Management stated that they remain disciplined with pricing, supported by superior product features and technology [46] Question: What are the subscription sales levels compared to previous years? - Management indicated that subscription sales are substantially up compared to two years ago, driven by customer preference for cloud-native applications [50]

Agilysys, Inc. (NASDAQ:AGYS) Q1 2022 Earnings Conference Call July 27, 2021 4:30 PM ET Company Participants Jessica Hennessy – Director-Corporate Strategy and Investor Relations Ramesh Srinivasan – President and Chief Executive Officer Dave Wood – Chief Financial Officer Conference Call Participants Matt VanVliet – BTIG Nehal Chokshi – Northland Capital George Sutton – Craig-Hallum Allen Klee – Maxim Group Operator Good day, ladies and gentlemen, and welcome to the Agilysys Fiscal 2022 First Quarter Confere ...

Agilysys, Inc. (NASDAQ:AGYS) Q4 2021 Earnings Conference Call May 18, 2021 4:30 PM ET Company Participants Jessica Hennessy – Senior Manager-Corporate Strategy and Investor Relations Ramesh Srinivasan – President and Chief Executive Officer Dave Wood – Chief Financial Officer Conference Call Participants Allen Klee – Maxim Group Matt VanVliet – BTIG George Sutton – Craig-Hallum Nehal Chokshi – Northland Capital Operator Good day, ladies and gentlemen, and welcome to Agilysys Fiscal 2021 Fourth Quarter and Y ...

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201%20Financial%20Statements%20(Unaudited)) Unaudited Q2 and H1 FY2021 financials show increased cash, revenue decline due to COVID-19, and a shift to net income from improved margins [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance sheet as of September 30, 2020, reflects increased cash to **$85.7 million** due to preferred stock issuance, strengthening assets and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 (Unaudited) | Mar 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $85,706 | $46,653 | | Accounts receivable, net | $20,173 | $35,869 | | Total current assets | $115,544 | $93,408 | | Total assets | $173,714 | $154,562 | | **Liabilities & Equity** | | | | Total current liabilities | $45,777 | $69,423 | | Series A convertible preferred stock | $35,459 | $— | | Total shareholders' equity | $77,924 | $71,757 | | Total liabilities and shareholders' equity | $173,714 | $154,562 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 and H1 FY2021 operations show revenue decline but a shift to net income, driven by improved gross margin and reduced operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Six Months Ended Sep 30, 2020 | Six Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total net revenue | $34,360 | $40,722 | $64,166 | $79,111 | | Gross profit | $23,154 | $20,217 | $41,703 | $40,232 | | Gross profit margin | 67.4% | 49.6% | 65.0% | 50.9% | | Operating income (loss) | $6,050 | $(2,881) | $5,626 | $(4,424) | | Net income (loss) | $5,867 | $(2,918) | $5,350 | $(4,493) | | Net income (loss) per share - basic | $0.23 | $(0.13) | $0.16 | $(0.19) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow for H1 FY2021 shows **$6.6 million** from operations and **$32.8 million** from financing, increasing cash to **$85.7 million** Cash Flow Summary (in thousands) | Activity | Six Months Ended Sep 30, 2020 | Six Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,642 | $1,234 | | Net cash used in investing activities | $(473) | $(1,942) | | Net cash provided by (used in) financing activities | $32,799 | $(1,065) | | Net increase (decrease) in cash | $39,053 | $(1,856) | | Cash and cash equivalents at end of period | $85,706 | $38,915 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail operations in hospitality software, COVID-19 impact, revenue disaggregation, **$35 million** preferred stock issuance, and accounting policies - The company operates as a single reportable segment serving the global hospitality industry, offering solutions like POS, PMS, and inventory management[16](index=16&type=chunk)[17](index=17&type=chunk) - Revenue recognized from products (point in time) totaled **$6.6 million** for the three months and **$11.9 million** for the six months ended Sep 30, 2020, a decrease from the prior year[45](index=45&type=chunk) - Revenue from services (over time) was **$27.8 million** and **$52.4 million** for the same periods, respectively[45](index=45&type=chunk) - On May 22, 2020, the company sold **1,735,457 shares** of Series A Convertible Preferred Stock to MAK Capital for an aggregate price of **$35 million**[72](index=72&type=chunk) - The stock carries a **5.25% dividend** per annum[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses H1 FY2021 revenue decline due to COVID-19, improved profitability from cost reductions, and strengthened liquidity from a **$35 million** investment [Overview and Recent Developments](index=18&type=section&id=Overview%20and%20Recent%20Developments) COVID-19 impacted H1 FY2021 revenue, leading to cost-saving measures and a **$35 million** investment from MAK Capital boosting cash - First half fiscal 2021 revenue was negatively impacted by delays and reduced spending attributed to the COVID-19 pandemic, though recurring revenue renewal rates remained high[88](index=88&type=chunk) - The company implemented cost-saving measures including reduced discretionary costs, a hiring freeze, layoffs, furloughs, and salary decreases for executives and certain employees[89](index=89&type=chunk)[90](index=90&type=chunk) - In May 2020, the company sold **$35 million** of convertible preferred stock to MAK Capital One, LLC, increasing the cash balance by **$34 million** after costs[93](index=93&type=chunk) [Results of Operations - Q2 FY2021 vs Q2 FY2020](index=20&type=section&id=Results%20of%20Operations%20-%20Q2%20FY2021%20vs%20Q2%20FY2020) Q2 FY2021 saw a **15.6%** revenue decrease but a shift to **$6.1 million** operating income, driven by increased gross profit and **26.0%** lower operating expenses Q2 FY2021 vs Q2 FY2020 Performance (in thousands) | Metric | Q2 FY2021 (ended Sep 30, 2020) | Q2 FY2020 (ended Sep 30, 2019) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total net revenue | $34,360 | $40,722 | $(6,362) | (15.6)% | | Gross profit | $23,154 | $20,217 | $2,937 | 14.5% | | Operating income (loss) | $6,050 | $(2,881) | $8,931 | 310.0% | - Subscription-based service revenue grew **23.9%** in Q2 FY2021 compared to the prior-year quarter[100](index=100&type=chunk) - Operating expenses (excluding certain items) decreased by **$6.0 million** or **26.0%**, driven by reductions in product development (**-23.4%**), sales and marketing (**-51.9%**), and G&A (**-13.6%**)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [Results of Operations - First Half FY2021 vs First Half FY2020](index=23&type=section&id=Results%20of%20Operations%20-%20First%20Half%20FY2021%20vs%20First%20Half%20FY2020) H1 FY2021 saw an **18.9%** revenue decrease but a shift to **$5.6 million** operating income, driven by increased gross profit and **21.5%** lower operating expenses First Half FY2021 vs First Half FY2020 Performance (in thousands) | Metric | H1 FY2021 (ended Sep 30, 2020) | H1 FY2020 (ended Sep 30, 2019) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total net revenue | $64,166 | $79,111 | $(14,945) | (18.9)% | | Gross profit | $41,703 | $40,232 | $1,471 | 3.7% | | Operating income (loss) | $5,626 | $(4,424) | $10,050 | 227.2% | - The growth rate in support, maintenance, and subscription services was lower than in recent periods due to one-time COVID-19 related financial relief provided to certain customers[116](index=116&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is strong with **$85.7 million** cash, boosted by **$34.0 million** from MAK Capital investment, and **$6.6 million** cash flow from operations - Cash on hand was **$85.7 million** as of September 30, 2020[129](index=129&type=chunk) - The MAK Capital investment increased the cash balance by **$34.0 million** after closing costs[127](index=127&type=chunk) Six-Month Cash Flow Summary (in thousands) | Activity | Six Months Ended Sep 30, 2020 | Six Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Operating activities | $6,642 | $1,234 | | Investing activities | $(473) | $(1,942) | | Financing activities | $32,799 | $(1,065) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk exposures since March 31, 2020 - There have been no material changes in the company's market risk exposures since the fiscal year ended March 31, 2020[138](index=138&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting - Management concluded that as of the end of the period covered by the report, the company's disclosure controls and procedures were effective[139](index=139&type=chunk) - No changes occurred during the six months ended September 30, 2020, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[140](index=140&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=28&type=section&id=Item%201%20Legal%20Proceedings) The company reports no new or material legal proceedings for the period - The company reported no legal proceedings under this item[143](index=143&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A%20Risk%20Factors) No material changes to risk factors were reported, except for the ongoing unpredictable adverse effects of the COVID-19 pandemic - No material changes in risk factors are reported, except for the ongoing uncertainty related to the full impact of the COVID-19 pandemic[143](index=143&type=chunk)[144](index=144&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206%20Exhibits) This section lists exhibits filed with Form 10-Q, including certifications and Inline XBRL data files - Exhibits filed include certifications by the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act of 2002[147](index=147&type=chunk)[148](index=148&type=chunk)

Financial Data and Key Metrics Changes - Q2 fiscal year 2021 revenue was $34.4 million, representing a 15% sequential growth over Q1 and a 16% year-over-year decline compared to Q2 of the previous fiscal year [8][31] - Adjusted EBITDA for Q2 fiscal 2021 was $8.6 million, significantly higher than previous quarters, marking the first positive GAAP EPS and highest adjusted EPS since the company focused entirely on hospitality software solutions [22][35] - Total recurring revenue reached $22.3 million, a year-over-year increase of 10%, with subscription revenue growing by 24% [10][32] Business Line Data and Key Metrics Changes - Product revenue increased by 25% sequentially, while services revenue increased by 35% over Q1, although both remained down year-over-year by 45% and 35% respectively [8][31] - Sales measured by annual contract value increased by nearly 30% sequentially compared to Q1, but remained at about two-thirds of prior fiscal year Q2 levels [11][31] - Add-on software modules accounted for roughly 34% of sales deal value during Q2, up from 13% in the same period last year [33] Market Data and Key Metrics Changes - The hospitality industry remains challenged, but certain segments are showing signs of recovery, particularly regional resorts and casinos [51][52] - The company signed agreements adding 10 new customers and 55 new properties, indicating a stable customer base despite the pandemic [21] Company Strategy and Development Direction - The company is focused on transitioning to a cloud-native SaaS applications-led business model, with an emphasis on product innovation and customer service [14][24] - The pandemic has accelerated the adoption of mobile and contactless solutions in the hospitality industry, positioning the company to meet future demands [14][43] - The company anticipates potential acquisition opportunities as smaller competitors may struggle due to the pandemic [60][62] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of calendar 2021, expecting a culmination of positive factors including product modernization and a recovering hospitality industry [40][42] - The company expects a modest 5% sequential revenue increase in Q3 over Q2, with adjusted EBITDA projected to decrease to about $7 million due to the reversal of salary reductions [28][29] Other Important Information - Cash and marketable securities improved to $85.7 million as of September 30, 2020, compared to $46.7 million on March 31, 2020 [36] - Free cash flow for the quarter was positive at $11.3 million, a significant increase from $1.8 million in the prior year quarter [37] Q&A Session Summary Question: Insights on growth and product portfolio success - Management noted that success has been seen in selling additional modules to current customers, with a higher number of instances of selling additional products compared to the previous year [47] Question: Customer interest from recent conferences - Management indicated that confidence levels among sales and engineering teams have improved, with integrated demos showcasing the power of connected solutions [56] Question: Market dynamics affecting new customer sales - Management clarified that the slowdown in new customer sales is due to postponed technology investment decisions rather than market share loss [64]