Agilysys(US:AGYS)2020-10-28 01:09Financial Data and Key Metrics Changes - Q2 fiscal year 2021 revenue was $34.4 million, representing a 15% sequential growth over Q1 and a 16% year-over-year decline compared to Q2 of the previous fiscal year [8][31] - Adjusted EBITDA for Q2 fiscal 2021 was $8.6 million, significantly higher than previous quarters, marking the first positive GAAP EPS and highest adjusted EPS since the company focused entirely on hospitality software solutions [22][35] - Total recurring revenue reached $22.3 million, a year-over-year increase of 10%, with subscription revenue growing by 24% [10][32] Business Line Data and Key Metrics Changes - Product revenue increased by 25% sequentially, while services revenue increased by 35% over Q1, although both remained down year-over-year by 45% and 35% respectively [8][31] - Sales measured by annual contract value increased by nearly 30% sequentially compared to Q1, but remained at about two-thirds of prior fiscal year Q2 levels [11][31] - Add-on software modules accounted for roughly 34% of sales deal value during Q2, up from 13% in the same period last year [33] Market Data and Key Metrics Changes - The hospitality industry remains challenged, but certain segments are showing signs of recovery, particularly regional resorts and casinos [51][52] - The company signed agreements adding 10 new customers and 55 new properties, indicating a stable customer base despite the pandemic [21] Company Strategy and Development Direction - The company is focused on transitioning to a cloud-native SaaS applications-led business model, with an emphasis on product innovation and customer service [14][24] - The pandemic has accelerated the adoption of mobile and contactless solutions in the hospitality industry, positioning the company to meet future demands [14][43] - The company anticipates potential acquisition opportunities as smaller competitors may struggle due to the pandemic [60][62] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of calendar 2021, expecting a culmination of positive factors including product modernization and a recovering hospitality industry [40][42] - The company expects a modest 5% sequential revenue increase in Q3 over Q2, with adjusted EBITDA projected to decrease to about $7 million due to the reversal of salary reductions [28][29] Other Important Information - Cash and marketable securities improved to $85.7 million as of September 30, 2020, compared to $46.7 million on March 31, 2020 [36] - Free cash flow for the quarter was positive at $11.3 million, a significant increase from $1.8 million in the prior year quarter [37] Q&A Session Summary Question: Insights on growth and product portfolio success - Management noted that success has been seen in selling additional modules to current customers, with a higher number of instances of selling additional products compared to the previous year [47] Question: Customer interest from recent conferences - Management indicated that confidence levels among sales and engineering teams have improved, with integrated demos showcasing the power of connected solutions [56] Question: Market dynamics affecting new customer sales - Management clarified that the slowdown in new customer sales is due to postponed technology investment decisions rather than market share loss [64]