Agilysys(US:AGYS)2021-10-27 16:00Revenue 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].