Yahoo Finance Agilysys Inc (AGYS) (Q4 2024) Earnings Call Transcript Highlights: Strong Growth and Strategic ...
Q4 Revenue: $62.2 million, up 17.6% year-over-year.
Full Year Revenue: $237.5 million, up 19.9% from the previous year.
Q4 Subscription Revenue: $5 million increase year-over-year.
Full Year Subscription Revenue: $75.5 million, significant growth from POS and PMS modules.
Q4 Services Revenue: Grew 43.9% year-over-year.
Full Year Services Revenue: Increased 39.2% from the previous year.
Q4 Gross Profit Margin: 61.5%.
Full Year Gross Profit Margin: 60.7%.
Q4 Adjusted EBITDA: $11 million, up from $8.1 million in the year-ago quarter.
Full Year Adjusted EBITDA: $37.1 million, representing 15.6% of revenue.
Q4 Net Income: $3 million.
Full Year Free Cash Flow: $40.1 million, up from $27.2 million in the prior year.
Fiscal 2025 Revenue Guidance: Expected to be between $275 million to $280 million.
Fiscal 2025 Adjusted EBITDA Guidance: Projected at 16% of revenue.
Release Date: May 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Agilysys Inc (NASDAQ:AGYS) reported its ninth consecutive record revenue quarter and another successful fiscal year with record revenue and profitability levels.
The company has successfully reengineered and modernized all core products into cloud-native software solutions, enhancing their competitiveness in the hospitality industry.
Agilysys Inc (NASDAQ:AGYS) has become one of the approved POS vendors for all Marriott properties in the US and Canada, opening up significant new sales growth avenues.
The company achieved a record annual contract value of sales wins involving new customers in fiscal 2024, which was about 40% higher than the previous fiscal year.
Agilysys Inc (NASDAQ:AGYS) reported strong international growth, with APAC sales up about 45% from the previous year, indicating successful expansion into global markets.
Negative Points
Despite overall growth, product bookings decreased by 12% in fiscal 2024, indicating potential challenges in this area.
Point-of-sale (POS) terminal hardware sales declined compared to the previous fiscal year, which could impact overall revenue from hardware sales.
The number of new customers added in the most recent quarter was lower than the recent range, suggesting a slowdown in new customer acquisition.
The company faces intense competition, particularly in APAC and EMEA, where it needs to establish a stronger reputation and trust among potential customers.
Agilysys Inc (NASDAQ:AGYS) is still in the process of building reference customers for its new products, which is crucial for gaining trust and expanding sales.
Q & A Highlights
Q: Could you guys talk about how we should think about the margin trajectory throughout the coming year? And maybe just give us a quick reminder on where we are in terms of the ramp down for implementation related to the Marriott deal? A: William Wood, CFO of Agilysys, indicated that the margin outlook for FY25 should be similar to FY24, with gross margins expected to be slightly higher but within the same range. He noted that costs are typically higher in the first half of the year due to audit fees and professional fees, as well as more trade shows occurring during the summer.
Q: Where are you in terms of your ongoing investments in APAC and Europe, and hitting full stride to where you feel like you're at the run rate that you're going to achieve ultimately? A: Ramesh Srinivasan, CEO of Agilysys, explained that the main challenge in APAC and Europe is establishing Agilysys as a modern provider and building enough reference customers. He mentioned that the company has made significant progress in FY24 compared to FY23, with several successful marquee implementations.
Q: How much near-term pipeline do you have for the property management side, and how much of the performance this quarter of an average of 10 modules do you feel like is a normal deal size that we can push on a go-forward basis? A: Ramesh Srinivasan responded that the breadth of the platform is now in place, and there is no significant development investment needed apart from ongoing R&D efforts. He highlighted multiple avenues for growth across every vertical, including gaming casinos and hotels, with low market share in several areas offering substantial growth opportunities.
Q: Was the record ACV in the quarter anchored at all by one or a couple of these huge deals or was it broadly distributed? A: Ramesh Srinivasan clarified that the sales successes were broad-based and not dependent on any one big customer. He noted that the sales team had two consecutive good sales quarters, with deals tending to be much bigger than in previous years.
Q: What is the benefit of adding Agilysys as a point-of-sale vendor versus a third party, especially in context with the Marriott point-of-sale hunting license? A: Ramesh Srinivasan explained that the point-of-sale agreement with Marriott should be considered independently of other agreements like PMS. He emphasized the long-term benefits of having an ecosystem of products from one vendor but advised thinking of the POS and PMS agreements as independent in the short term.
Q: Can you give us an indication of what type of ROIC you see with the resorts suite acquisition and how successful it has been? A: Ramesh Srinivasan described the resorts suite acquisition as highly successful, highlighting the retention and growth of recurring revenue and the integration of key personnel into Agilysys's management team. He expressed satisfaction with the acquisition, noting it brought great customers and personnel, and would be willing to make a similar acquisition if the opportunity arose.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
