Revenue Growth - Total net revenue increased by $39.4 million, or 19.9%, in fiscal 2024 compared to fiscal 2023, reaching $237.5 million[200] - Subscription and maintenance revenue grew by $19.8 million, or 16.7%, driven by a 29.6% increase in subscription-based revenue[200] - Professional services revenue surged by $14.2 million, or 39.2%, due to higher sales and service activity[200] - Total net revenue increased by $35.4 million, or 21.8%, in fiscal 2023 compared to fiscal 2022, reaching $198.1 million[216] - Subscription and maintenance revenue grew by $19.3 million, or 19.5%, driven by a 27.5% increase in subscription-based revenue[217] Profitability - Gross profit increased by $23.4 million, or 19.4%, with a gross profit margin slightly decreasing from 61.0% to 60.7%[201] - Operating income rose by $2.9 million, or 22.4%, reaching $15.8 million, with an operating income percentage of 6.6%[198] - Gross profit increased by $19.3 million, or 19.0%, with a gross profit margin decreasing from 62.4% to 61.0%[218] - Operating income increased to $12.9 million in fiscal 2023, with an operating income percentage of 6.5% compared to 3.9% in fiscal 2022[216] Expenses - Product development expenses increased by $6.5 million, or 12.9%, due to hiring and increased compensation rates[203] - Sales and marketing expenses rose by $5.7 million, or 25.2%, reflecting hiring and expanded marketing activities[204] - Operating expenses, excluding legal settlements and other charges, rose by $14.5 million, or 15.6%, in fiscal 2023 compared to fiscal 2022[219] - Sales and marketing expenses surged by $8.0 million, or 54.2%, due to increased investments in marketing activities and key hires[221] Cash Flow and Financial Position - Cash flows provided by operating activities were $48.2 million in fiscal 2024, up from $34.5 million in fiscal 2023[237] - As of March 31, 2024, the company had cash on hand of $144.9 million, with 95% held in the United States[236] - Cash flows used in financing activities in fiscal 2024 were $8.6 million, including share repurchases of $6.9 million and $1.7 million in preferred stock dividends[242] - Cash flows used in financing activities in fiscal 2023 were $11.1 million, with share repurchases of $9.3 million and $1.8 million in preferred stock dividends[243] - Cash flows used in financing activities in fiscal 2022 were $4.9 million, primarily from share repurchases of $3.0 million and $1.8 million in preferred stock dividends[243] Taxation - The effective tax rate for fiscal 2024 was not meaningful due to the release of valuation allowances against deferred tax assets[212] - The effective tax rate for fiscal 2023 was 7.5%, significantly higher than 0.5% in fiscal 2022, due to adjustments to deferred tax assets[230] - The company anticipates a potential release of valuation allowances on deferred tax assets, which could result in significant income tax benefits[233] Revenue Recognition - The company recognizes subscription service revenue over a one-month period based on typical monthly invoicing and renewal cycles[254] - The company recognizes revenue for hardware sales when the product is shipped to the customer, fulfilling obligations affecting customer acceptance[253] - The company utilizes the market approach to determine standalone selling price by maximizing observable data points from recently executed customer contracts[257] International Operations - Revenue from international operations constituted 6% of total revenue in fiscal 2024, down from 7% in both fiscal 2023 and 2022[262] Other Financial Information - The cash surrender value of corporate-owned life insurance policies was recorded at $1.0 million, with future proceeds owed to beneficiaries approximating $0.1 million[244] - The company has not entered into any off-balance sheet arrangements that could affect its financial condition or results of operations[245]

Financial Data and Key Metrics Changes - Fiscal 2024 fourth quarter revenue reached a record $62.2 million, a 17.6% increase from $52.9 million in the prior year quarter [14] - Full fiscal year 2024 revenue was a record $237.5 million, up 19.9% from the previous year [11][15] - Adjusted EBITDA for Q4 was $11 million, compared to $8.1 million in the prior year quarter, with full fiscal year adjusted EBITDA at $37.1 million [18] Business Line Data and Key Metrics Changes - Subscription software and services sales in fiscal 2024 were both records, growing by 29.6% and 39.2% respectively from the previous year [11][15] - Professional services revenue increased by 43.9% year-over-year to a record $14.7 million in Q4 [16] - The average number of products per customer property increased to 2.2 from 2.0 in FY23 [15] Market Data and Key Metrics Changes - Sales to gaming casinos in the US remained the top vertical, while sales in the Americas Hotels and Resorts vertical grew by 16% over fiscal 2023 [7] - APAC sales were about 45% higher than the previous year, although not yet at record levels [7] - Subscription revenue from PMS and related modules increased by more than 90% over the past two years [12] Company Strategy and Development Direction - The company has completed the modernization of core products and is focused on creating high value for customers through integrated solutions [6] - The company aims to expand its market share in international regions and establish itself as a modern provider [28] - The management emphasized the importance of building reference customers to drive growth in international markets [28] Management Comments on Operating Environment and Future Outlook - Management expects fiscal 2025 revenue to grow between 16% and 18%, driven by subscription revenue growth of at least 27% [13] - The company is optimistic about its competitive position and the potential for future revenue growth due to ongoing investments [21] - Management noted that the turnaround phase is over, and the company is entering a new growth phase [21] Other Important Information - The company reported a cash and marketable securities balance of $144.9 million as of March 31, 2024, compared to $112.8 million a year earlier [19] - Free cash flow for the full fiscal year was $40.1 million, up from $27.2 million in the prior year [19] Q&A Session Summary Question: Margin trajectory outlook for the coming year - Management expects margins to remain similar to FY24, with slight increases anticipated [24] Question: Investments in APAC and Europe - The company has established a full sales team in APAC and is focused on building its reputation and reference customers [28] Question: Property management side pipeline and deal sizes - The company has multiple avenues for growth, with increasing deal sizes and a focus on establishing more marquee implementations [30] Question: Sustainability of service margins - Management indicated that service margins are expected to stabilize in the high 20s, with potential for improvement as product quality increases [39][40] Question: Success of the ResortSuite acquisition - The acquisition has been successful, retaining and growing recurring revenue while integrating valuable personnel into the company [54]

Company Performance - Agilysys reported quarterly earnings of $0.32 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and up from $0.26 per share a year ago, representing an earnings surprise of 33.33% [1] - The company achieved revenues of $62.22 million for the quarter ended March 2024, surpassing the Zacks Consensus Estimate by 0.62% and increasing from $52.9 million year-over-year [1] - Over the last four quarters, Agilysys has consistently surpassed consensus EPS and revenue estimates [1] Market Performance - Agilysys shares have declined approximately 3.6% since the beginning of the year, while the S&P 500 has gained 9.5% [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $65.91 million, and for the current fiscal year, it is $0.99 on revenues of $278.44 million [4] - The Computer - Integrated Systems industry, to which Agilysys belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [4]

Revenue Growth - Total net revenue for fiscal 2024 increased 19.9% to a record $237.5 million compared to $198.1 million in fiscal 2023[4] - Recurring revenue reached a record $138.1 million, accounting for 58.1% of total net revenue, with subscription revenue growing 29.6% year over year[4] - The company expects fiscal 2025 revenue to be between $275 million and $280 million, with subscription revenue growth exceeding 27%[8] - Total net revenue for the three months ended March 31, 2024, was $62,221,000, a 17.5% increase from $52,897,000 in the same period of 2023[22] Profitability Metrics - Adjusted EBITDA for fiscal 2024 was a record $37.1 million, compared to $30.3 million in the prior year[4] - Net income attributable to common shareholders for fiscal 2024 was $85.0 million, or $3.17 per diluted share, compared to $12.7 million, or $0.49 per diluted share, in fiscal 2023[4] - Operating income for the year ended March 31, 2024, was $15,753,000, representing a 22.5% increase from $12,875,000 in 2023[22] - Adjusted EBITDA for the year ended March 31, 2024, was $37,069,000, an increase from $30,291,000 in 2023[28] Cash Flow and Liquidity - Free cash flow for fiscal 2024 was $40.1 million, up from $27.2 million in fiscal 2023[4] - The company reported a net cash provided by operating activities of $48,186,000 for the year ended March 31, 2024, compared to $34,463,000 in 2023[26] - Net cash provided by operating activities for the three months ended March 31, 2024, was $29,807,000, compared to $16,783,000 in 2023, indicating a 77.7% increase[30] - Free cash flow for the twelve months ended March 31, 2024, was $40,059,000, up from $27,225,000 in 2023, marking a 47.0% increase[30] Margins - Gross margin for fiscal 2024 was 60.7%, slightly down from 61.0% in the prior year[4] - The company reported a gross margin of 61.5% in Q4 2024, compared to 60.8% in the same quarter of the previous year[4] - Gross profit margin improved to 61.5% for the three months ended March 31, 2024, compared to 60.8% in the same period of 2023[22] Shareholder Metrics - Adjusted diluted earnings per share for the twelve months ended March 31, 2024, was $1.10, up from $0.97 in 2023, reflecting a 13.4% growth[29] - The basic weighted average shares outstanding increased to 26,913,000 for the three months ended March 31, 2024, from 24,825,000 in 2023, a growth of 8.4%[29] - The company reported a net income attributable to common shareholders of $2,961,000 for the three months ended March 31, 2024, down from $3,616,000 in 2023, a decrease of 18.1%[29] Expenses and Investments - Total operating expenses for the year ended March 31, 2024, were $128,503,000, up from $107,944,000 in 2023[22] - Capital expenditures for the twelve months ended March 31, 2024, totaled $8,127,000, compared to $7,238,000 in 2023, reflecting an increase of 12.3%[30] - Share-based compensation increased to $4,622,000 for the three months ended March 31, 2024, compared to $3,548,000 in 2023, a rise of 30.3%[29] Asset Growth - Cash and cash equivalents increased to $144,891,000 as of March 31, 2024, compared to $112,842,000 in 2023[24] - Total assets grew to $350,430,000 as of March 31, 2024, up from $243,036,000 in 2023[24] Tax and Amortization - The company experienced a significant tax event adjustment of $(69,067,000) for the twelve months ended March 31, 2024[29] - Amortization of internal-use software and intangibles decreased to $1,366,000 for the twelve months ended March 31, 2024, from $1,743,000 in 2023, a decline of 21.6%[29] Subscription Revenue - Subscription revenue comprised 57.0% of total recurring revenue in Q4 2024, up from 50.6% in Q4 2023[4] - Subscription and maintenance revenue increased to $36,588,000 for the three months ended March 31, 2024, up 16.5% from $31,368,000 in 2023[22] - Significant growth in subscription and services revenue indicates a strong competitive position in the hospitality software market[7]

Core Viewpoint - Agilysys (AGYS) is expected to report a quarterly earnings per share (EPS) of $0.24, reflecting a year-over-year decline of 7.7%, while revenues are anticipated to increase by 16.9% to $61.84 million [1] Group 1: Earnings and Revenue Estimates - Analysts have maintained the consensus EPS estimate for the upcoming quarter over the last 30 days, indicating a reevaluation of initial projections [1] - The 'Net revenue- Subscription and maintenance' is projected to reach $36.78 million, representing a year-over-year increase of 17.2% [2] - The 'Net revenue- Professional services' is estimated at $13.48 million, suggesting a significant year-over-year growth of 32.3% [2] - 'Net revenue- Products' is forecasted to be $11.60 million, indicating a modest increase of 2.2% from the prior-year quarter [2] Group 2: Stock Performance and Market Position - Agilysys shares have decreased by 4.6% over the past month, contrasting with the Zacks S&P 500 composite's decline of 0.2% [3] - With a Zacks Rank of 3 (Hold), AGYS is expected to closely follow the overall market performance in the near term [3]

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]