Agilysys(AGYS) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fiscal 2024 Q1 revenue reached a record $56.1 million, an 18$47.5 million in the prior year [11][18] - Adjusted EBITDA for the quarter was $6.3 million, representing 11.2$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$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]