Agilysys(US:AGYS)2020-07-29 02:54Financial Data and Key Metrics Changes - Q1 fiscal 2021 revenue was $29.8 million, a 22% decline compared to Q1 of fiscal 2020 [8][35] - Recurring revenue increased 2% year-over-year despite one-time COVID relief provided to customers [9][35] - Adjusted EBITDA during the quarter was $3.4 million, better than original expectations [28][40] - Gross profit margin increased to 62.2% compared to 52.1% in the first quarter of fiscal 2020 [38] Business Line Data and Key Metrics Changes - Product revenues were down 52% year-over-year, while services revenues decreased by 45% [35] - Subscription revenue grew by 8.6% for Q1 fiscal 2021, comprising around 37% of total recurring revenue [36] - The extent of sale agreements closed during the quarter was about 60% in value terms compared to the same quarter last year [11] Market Data and Key Metrics Changes - The hospitality industry faced significant challenges due to COVID-19, impacting all revenue areas [9][35] - Regional resorts and tribal casinos showed decent rebounds and continued technology investments [13][52] - The APAC and EMEA businesses began to pick up in July after a decline [14] Company Strategy and Development Direction - The company aims to be an end-to-end industry-focused technology solutions provider, leveraging modern cloud and SaaS-native technology [20][27] - New product offerings, including IG OnDemand and rGuest Express, are designed to meet immediate customer needs and enhance guest experiences [21][22] - The company is focused on increasing the pace of product innovation and improving customer service levels [29][30] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the near-term future and bullishness about long-term growth prospects [33] - The company expects Q2 fiscal 2021 revenue to be about 15% sequentially higher than Q1 [31] - Management acknowledged significant marketplace uncertainties but remains confident in the company's financial health and ability to execute growth plans [34][68] Other Important Information - The company signed agreements adding 10 new customers and 32 new properties during the quarter [15] - The cash balance as of June 30, 2020, was $74.6 million, up from $46.7 million on March 31, 2020 [41] - Free cash flow in the quarter was negative $5.2 million, primarily due to working capital [42] Q&A Session Summary Question: Bookings trends within the quarter and July - Management noted that new customer business and new product sales are performing better than expected, while new site activations have slowed [46][47] Question: Conversion rates for OnDemand free trials - Management is optimistic about the conversion rates from the OnDemand free trials, expecting a significant portion of customers to continue using the product [49] Question: Strength in gaming and regional casinos - Management observed a pickup in business from regional resorts and tribal casinos, with ongoing interest in technology investments [52][53] Question: Competitive landscape for new offerings - Management highlighted that their integrated offerings provide a competitive advantage over peers who rely on third-party vendors [55] Question: Confidence in one-time COVID relief - Management expressed cautious optimism that the one-time relief measures would not need to be extended, but acknowledged the uncertainty of future needs [60]