Agilysys(AGYS) - 2023 Q4 - Earnings Call Transcript

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]