Agilysys(AGYS) - 2023 Q4 - Annual Report

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]