Financial Data and Key Metrics Changes - Fiscal 2024 Q2 revenue reached a record $58.6 million, a 22.8% increase from $47.7 million in the prior year period, marking the seventh consecutive record revenue quarter [17][23][29] - Recurring revenue grew 18% year-over-year, with subscription revenue increasing by 29.1% [17][25] - Adjusted EBITDA for the quarter was $8.1 million, representing 13.7% of revenue, which is ahead of expectations [22][28] Business Line Data and Key Metrics Changes - Product revenue increased by 19.8% to $12.6 million, while professional services revenue surged by 43.8% to a record $11.7 million [23][24] - Subscription revenue constituted 53.6% of total recurring revenue, up from 48.9% in the same quarter last year [18][25] - Services revenue improved to $11.7 million, with services margins at 23.6%, slightly below the 25% target [20][26] Market Data and Key Metrics Changes - Sales from non-gaming resorts, hotels, and cruise ships showed significant growth, with international sales in Europe and APAC also performing well [10][11] - The company added 17 new customers in Q2, with 76% being fully subscription agreements, and 70 new properties added [15][16] - The average deal size for new property deals was approximately 25% higher than previous quarters [15] Company Strategy and Development Direction - The company is focused on enhancing its product offerings and expanding its market share, particularly in the Property Management System (PMS) segment [14][31] - Continued investment in sales and marketing is planned to maintain business momentum and capitalize on growth opportunities [31] - The company aims to improve service margins while ensuring customer satisfaction remains high [20][31] Management's Comments on Operating Environment and Future Outlook - Management noted no signs of slowdown in business momentum despite macroeconomic challenges, emphasizing the hospitality industry's ongoing need for technology solutions [11][30] - The company expects subscription revenue growth for the full fiscal year 2024 to be 28%, up from previous guidance of 25% [21][29] - Management remains optimistic about the future, citing strong sales momentum and a robust backlog [30][31] Other Important Information - The company raised its full-year fiscal 2024 revenue guidance to $235 million to $238 million, reflecting better-than-expected project implementations and sales performance [21][29] - Cash and marketable securities as of September 30, 2023, were $107.4 million, indicating a stable financial position [29] Q&A Session Summary Question: Growth rate breakdown between new logo wins, expansion with existing clients, and full expansion - Management indicated that new customer sales have significantly increased compared to the previous year, contributing to growth alongside existing customer expansions and larger deal sizes [35][36] Question: Margin expansion breakdown - Management noted that gross margins were ahead of expectations due to higher revenue levels, with subscription revenue contributing positively to margin expansion [38][39] Question: Impact of the Marriott contract on sales - Management highlighted that superior marketing efforts and product demonstrations are driving opportunities, with a focus on establishing more reference customers [43][44] Question: Headcount additions and capacity for service delivery - Management confirmed that while headcount is settled, there is still room for incremental investments if market conditions warrant [46][47] Question: Playing offense versus defense in sales - Management explained that the company is now focused on sharing positive customer success stories rather than addressing complaints, indicating a shift in customer engagement strategy [49][51] Question: Cybersecurity impacts on sales - Management stated that while cybersecurity incidents are common in hospitality, they have not directly impacted sales, and the company is well-prepared to assist customers [52][54] Question: Performance of managed food service - Management noted that while the FSM business is recovering, resorts and cruise ships have been standout performers in recent sales [58] Question: Opportunities with mid-size management companies - Management indicated that progress with mid-size management companies is ongoing, primarily focusing on point-of-sale solutions [60][62] Question: Growth potential for POS and PMS - Management expressed confidence in the growth potential for both POS and PMS, with POS being more established but still having low market share [64][65]

Revenue Growth - Total net revenue increased by $8.6 million, or 18.0%, during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023[82] - Products revenue increased by $1.7 million, or 15.7%, driven by higher sales and deliveries to new customers and expansion with existing customers[84] - Subscription and maintenance revenue rose by $4.4 million, or 15.9%, attributed to continued growth in subscription-based service revenue, which increased by 27.4%[84] - Professional services revenue increased by $2.4 million, or 27.7%, due to higher sales and service activity from new and existing customers[84] Profitability and Expenses - Total gross profit increased by $4.6 million, or 16.0%, while gross profit margin decreased from 60.0% to 59.0%[85] - Operating expenses increased by $6.1 million, or 24.1%, during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023[86] - Product development expenses rose by $1.8 million, or 15.3%, due to increased hiring and salary costs[86] - Sales and marketing expenses increased by $1.9 million, or 34.9%, driven by higher marketing activity and commission expenses[87] - General and administrative expenses increased by $2.0 million, or 27.4%, due to higher salaries and cloud computing subscription charges[88] Cash Management - Interest income increased significantly to $1.1 million from $0.1 million, reflecting improved cash management[89] - As of June 30, 2023, the company had cash and cash equivalents of $107.1 million, with 92% located in the United States[96][97] - Cash flow from operating activities for the three months ended June 30, 2023, was $22 thousand, a decrease from $101 thousand in the same period of 2022[98] - Cash-based earnings were $5.9 million, with net income of $1.5 million and non-cash expenses of $4.4 million[99] - Cash flow used in investing activities was $(3,067) thousand, primarily for property and equipment purchases[100] - Cash flow used in financing activities was $(2,702) thousand, including $1.8 million for share repurchases and $0.9 million in preferred stock dividends[100] Financial Position and Risks - There were no significant changes to contractual obligations as of June 30, 2023, except for new operating leases[101] - The company has not entered into any off-balance sheet arrangements that could affect its financial condition[102] - There have been no material changes in significant accounting policies since March 31, 2023[103] - Forward-looking statements indicate management's expectations but involve risks and uncertainties that could lead to different outcomes[104] - There have been no material changes in market risk exposures since March 31, 2023[105]

Financial Data and Key Metrics Changes - Fiscal 2024 Q1 revenue reached a record $56.1 million, an 18% increase from $47.5 million in the prior year [11][18] - Adjusted EBITDA for the quarter was $6.3 million, representing 11.2% of net revenue, slightly ahead of expectations but the lowest EBITDA percentage in three years [15][23] - Free cash flow was a loss of $3 million compared to breakeven in the prior year quarter, affected by working capital adjustments typical in the first half of the year [16][24] Business Line Data and Key Metrics Changes - Software subscription revenue grew by 27.4%, constituting 52.2% of total recurring revenue [11][20] - Professional services revenue increased by 27.7% to a record $11.2 million, with expectations for continued sequential growth [12][19] - Product revenue increased by 15.7% to $12.8 million, expected to level out around $12 million per quarter for the remainder of the year [19] Market Data and Key Metrics Changes - The best sales quarter in APAC in about 3.5 years, with strong performance in the U.S. Hotels, Resorts, and Cruise Ships vertical [7][24] - Total backlog across products, services, and recurring revenue was 96% of record levels, 46% higher than the end of Q1 last fiscal year [8][18] Company Strategy and Development Direction - The company is focused on enhancing its end-to-end hospitality-focused software solutions, with a strong emphasis on cloud-native technology [6][14] - Management highlighted the importance of improving services implementation efficiency to match sales success, indicating a positive outlook for future growth [8][13] - The company aims to maintain competitive pricing while ensuring value through its comprehensive software solutions [48][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2024 revenue and profitability guidance, citing strong sales momentum and backlog levels [27][24] - The company noted that the first half of the fiscal year tends to be more challenging for cash management and profitability, with expectations for improved performance in the second half [15][17] - Management acknowledged the competitive landscape, particularly in the APAC region, but indicated a bullish outlook following recent sales successes [62] Other Important Information - The company has added 20 new customers in Q1, with 18 signing full subscription SaaS agreements [9] - The average tenure of sales personnel is above 7.5 years, with a significant contribution from newer team members [10] Q&A Session Summary Question: Commentary on PMS pipeline and larger deals - Management indicated that there are several significant deals in progress, not limited to hotel chains, but also multi-property opportunities [30] Question: Details on professional services team headcount - Management confirmed that hiring has gone well, with the team nearly at the target headcount for the fiscal year [33] Question: Updates on the Marriott deal - Management reported that hiring for the services team is on track, and deliverables for the Marriott project are progressing according to plan [38] Question: Record sales quarter and go-to-market strategy - Management attributed the record sales to a combination of new customers, new properties, and upselling to existing customers, supported by enhanced marketing efforts [41][44] Question: Pricing strategy in the market - Management stated that they remain competitive in pricing but are not the lowest vendor, focusing on the value of their comprehensive solutions [48][49] Question: Guidance for the fiscal year - Management reiterated that they are on track for the fiscal year, with Q1 performance slightly above plan, but guidance remains unchanged [51][70]

Revenue Growth - Total net revenue increased by $35.4 million, or 21.8%, in fiscal 2023 compared to fiscal 2022, reaching $198.1 million[167] - Products revenue rose by $7.7 million, or 21.4%, driven by higher sales to new and existing customers[168] - Subscription and maintenance revenue grew by $19.3 million, or 19.5%, with subscription-based revenue increasing by 27.5%[168] - Professional services revenue increased by $8.4 million, or 30.4%, due to heightened sales and service activity[168] - Total net revenue for fiscal 2022 increased by $25.5 million, or 18.6%, compared to fiscal 2021, reaching $162.6 million[185] - Product revenue rose by $9.2 million, or 34.6%, driven by higher sales as customers reopened their locations[186] - Subscription and maintenance revenue grew by $10.4 million, or 11.7%, with subscription-based revenue increasing by 28.0%[186] Profitability - Gross profit increased by $19.3 million, or 19.0%, with a gross profit margin of 61.0%, down from 62.4%[169] - Operating income rose to $12.9 million, with an operating income percentage of 6.5%, up from 3.9%[167] - Operating income improved to $6.3 million in fiscal 2022 from a loss of $20.96 million in fiscal 2021, marking a 130.2% increase[185] - Gross profit increased by $12.2 million, or 13.6%, while gross profit margin decreased from 65.2% to 62.4%[187] Operating Expenses - Operating expenses, excluding legal settlements and other charges, increased by $14.5 million, or 15.6%[170] - Sales and marketing expenses surged by $8.0 million, or 54.2%, due to increased marketing activities and key hires[172] - Operating expenses decreased by $14.9 million, or 13.9%, compared to fiscal 2021, representing a 21.5% reduction as a percentage of total revenue[188] Cash Flow and Liquidity - Cash flow from operating activities was $34.5 million in fiscal 2023, up from $28.5 million in fiscal 2022[205] - As of March 31, 2023, the company had $112.8 million in cash on hand, providing adequate funds for liquidity requirements[204] - Cash flows provided by operating activities were $28.4 million in fiscal 2021, primarily due to an operating loss of $21.0 million adjusted for $44.0 million in non-cash expenses[207] - Cash flows used in investing activities in fiscal 2023 were $6.9 million, which included $7.3 million in purchases of property and equipment[208] - Cash flows used in investing activities in fiscal 2022 were $25.7 million, primarily due to $24.5 million in cash paid for business combinations[209] - Cash flows used in financing activities in fiscal 2023 were $11.1 million, consisting of $9.3 million in share repurchases and $1.8 million in preferred stock dividends[210] Tax and Deferred Assets - The effective tax rate for fiscal 2023 was 7.5%, significantly higher than the previous year's 0.5%[181] - The company recorded $132.0 million in federal net operating loss carryforwards expiring between fiscal years 2033 to 2039[201] - Valuation allowances for deferred tax assets may be released within the next 12 months, potentially resulting in significant income tax benefits[184] Revenue Recognition - The company recognizes subscription service revenue over a one-month period based on typical monthly invoicing and renewal cycles[223] - Professional services revenues are recognized over time as the services are performed, reflecting the simultaneous receipt and consumption of benefits by the customer[225] - The company utilizes the market approach to determine standalone selling prices for its goods and services based on observable data points from customer contracts[226] International Operations - Revenue from international operations represented 7% of total revenue for fiscal years 2023 and 2022, and 8% for fiscal year 2021[231] 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[213] - The company has not entered into any off-balance sheet arrangements that could affect its financial condition[214] - Interest income significantly increased to $2.2 million from $59, reflecting higher earnings on cash equivalents[177]

Financial Data and Key Metrics Changes - Fiscal 2023 full year revenue reached $198.1 million, a 22% increase from $162.6 million in fiscal 2022, which was 19% higher than $137.2 million in fiscal 2021 [17][33] - Q4 fiscal 2023 revenue was $52.9 million, a 13.6% increase from $46.6 million in Q4 fiscal 2022 [32] - Recurring revenue for fiscal 2023 was approximately $118 million, with subscription revenue increasing 27.5% year-over-year to $58.2 million [18][35] Business Line Data and Key Metrics Changes - Global software subscription sales in fiscal 2023 were 18% higher than fiscal 2022, marking a record year [10] - Managed food services sales approached pre-pandemic levels, indicating a strong recovery [9] - APAC sales increased but remained below pre-pandemic levels, with ongoing challenges in decision-making processes [9][10] Market Data and Key Metrics Changes - EMEA region saw a 46% increase in sales during fiscal 2023 [8] - The gaming casino sales vertical in EMEA and the hotels, resorts, and cruise ships vertical achieved record sales in fiscal 2023 [9] - APAC remains a challenging market, but there are expectations for improved sales in fiscal 2024 [10][63] Company Strategy and Development Direction - The company is focused on expanding its product portfolio and enhancing its cloud-native technologies to maintain competitive advantages [6][7] - Significant investments are planned for fiscal 2024 to support growth opportunities, particularly in cloud management and product development [29][30] - The company aims to triple its current PMS install base of about 300,000 rooms over the next three to four years, driven by the Marriott project [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for solid revenue growth despite macroeconomic volatility [6][7] - The company anticipates fiscal 2024 revenue growth of 16% to 19%, driven by subscription revenue growth of 25% [28][41] - Management noted that technology investment decisions in the hospitality sector are less impacted by economic conditions compared to lower-end markets [45] Other Important Information - Fiscal 2023 was a record year for services revenue, exceeding previous highs [12] - The company entered fiscal 2024 with record backlog levels across all revenue lines, indicating strong future revenue potential [23] - Cash and marketable securities as of March 31, 2023, were $112.8 million, up from $97 million a year earlier [39] Q&A Session Summary Question: Impact of Marriott announcement on HRC pipeline - Management noted that the Marriott announcement has increased credibility and participation in PMS deals, leading to improved sales momentum [49][51] Question: Timing of revenue recognition for Marriott project - Management indicated that the rollout for the Marriott project is expected to begin in early fiscal 2026, with ongoing product enhancements throughout fiscal 2024 [54] Question: Increase in expenses for growth initiatives - Management explained that the increase in expenses is necessary to support large projects and expand product development teams, particularly for the Marriott project [58][59] Question: Performance of managed food services and APAC market - Management highlighted improvements in managed food services due to recovery in healthcare and education sectors, while APAC remains a challenging market with expected improvements in fiscal 2024 [61][63] Question: Backlog growth and revenue guidance - Management confirmed that backlog growth is expected to exceed revenue growth due to implementation delays, with a strong sales momentum anticipated [66][78]

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]