Agilysys(AGYS) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fiscal 2022 Q4 revenue reached a record $46.6 million, an 18$162.6 million, slightly ahead of the annual revenue level achieved during fiscal 2020 [17] - Adjusted EBITDA for Q4 was $7.5 million, approximately 16.1$27.3 million [19][20] - Gross margin for Q4 was 59.5%, lower than the previous year due to increased product and services revenue [14][30] Business Line Data and Key Metrics Changes - Subscription revenue grew to 48% of total recurring revenue, the highest level thus far, with a 33% year-over-year increase [13][29] - Subscription software sales of PMS and related modules were 53% higher than the previous best year [11] - Product revenue increased by 60% in Q4 compared to the prior year, while professional services revenue was up 35.4% [27][30] Market Data and Key Metrics Changes - Sales in the APAC region decreased by 15% compared to last year and by about 50% compared to fiscal 2020 [9] - EMEA sales showed a 74% improvement over the prior year, slightly better than fiscal 2020 [9] - The gaming casinos and resort verticals, which represent about 70% of the business, continue to show exceptional strength [7] Company Strategy and Development Direction - The company is focused on transitioning to a cloud SaaS-based business model while maintaining strong product margins [15][16] - The acquisition of ResortSuite is expected to enhance product offerings and customer engagement [22][23] - The company aims to achieve annual revenue in the range of $190 million to$195 million for fiscal 2023, driven by subscription revenue growth of around 30% [25][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery in the hospitality industry, particularly in hotel chains and cruise ships [35] - The company is confident in achieving subscription revenue growth of 30% without needing dramatic increases in bookings [56][58] - Management highlighted the importance of modern technology and integrated solutions as competitive advantages [51] Other Important Information - The company ended fiscal 2022 with a cash balance of $97 million, slightly down from the previous year due to the ResortSuite acquisition [32] - Customer retention levels were reported to be excellent, marking the best year in many years [19] Q&A Session Summary Question: On the PMS side, are there more conversations and demand from hotel customers? - Management confirmed increased conversations and sizable sales opportunities in PMS across hotels, resorts, and gaming customers [40] Question: How is the recovery in Europe and Asia compared to the US market? - Management indicated that Europe is recovering faster than Asia, with significant opportunities emerging in both regions [44] Question: Were there any one-time impacts influencing the year-end results? - Management clarified that there were no one-time impacts; sales were steady throughout the fiscal year [47][48] Question: What is the competitive advantage in terms of product offerings? - Management emphasized the integration of modern technology and end-to-end solutions as key competitive advantages [51] Question: What type of bookings growth is needed to achieve the subscription growth guidance? - Management stated that no dramatic bookings growth is needed, as steady growth will suffice to meet the subscription revenue target [56][58]