Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Agilysys Inc (AGYS, Financial) reported a record revenue of $68.3 million for fiscal 2025 Q2, marking the 11th consecutive record revenue quarter.
- The acquisition of Book4Time has increased the number of customer properties using at least one Agilysys product by 30%.
- Subscription revenue grew by 36.6% year over year, with a significant portion attributed to the Book4Time acquisition.
- The company added 18 new customers in Q2, with an average of 5.4 products per deal, indicating strong cross-selling opportunities.
- Agilysys Inc (AGYS) raised its full-year revenue guidance to $280-$285 million, with subscription revenue growth expected to exceed 38%.
Negative Points
- Product revenue decreased by 16.7% year over year, posing a challenge for the company.
- The APAC region experienced a challenging quarter, with deals taking longer to close.
- The transition phase for the point of sale (POS) business has been tough, affecting sales and product revenue.
- Despite the acquisition, the company's market share remains low in most sales verticals.
- The services backlog is increasing, which may indicate potential delays in project implementations.
Q & A Highlights
Q: Can you clarify the subscription revenue guidance increase and the contribution from Book4Time?
A: The guidance includes about $10 million from Book4Time, resulting in a 38% increase, with over 25% being organic growth. The property management segment is expected to grow faster than the overall subscription guidance, while POS should also see growth. - William Wood, CFO
Q: Why might margins not scale faster in the second half despite business leverage?
A: Margins are expected to remain consistent due to product revenue returning, which will lower gross margins slightly from the current 63%. Operating leverage is evident in OpEx and subscription revenue, but product revenue's slow start affects the overall margin. - William Wood, CFO
Q: What is the market opportunity for selling Agilysys products to Book4Time's existing customers?
A: There are over 1,000 Book4Time properties without other Agilysys products. The sales and customer success teams have strong relationships with these customers, presenting significant cross-selling opportunities. The spa market itself is growing, offering further potential. - Ramesh Srinivasan, CEO
Q: How does the Book4Time acquisition impact Agilysys' future M&A strategy?
A: The success of past acquisitions like ResortSuite and early positive signs from Book4Time encourage a cautious, opportunistic approach. Agilysys remains conservative, focusing on filling product gaps and potential geographic expansion. - Ramesh Srinivasan, CEO
Q: How is Agilysys addressing the challenges in the APAC market?
A: APAC presents challenges with longer deal cycles, but Agilysys is working on larger opportunities and increasing marketing efforts. Establishing a strong presence against well-established competitors is ongoing, with a focus on thought leadership and market penetration. - Ramesh Srinivasan, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
