Agilysys (NASDAQ:AGYS) Posts Q1 Sales In Line With Estimates

Petr Huřťák /
2024/05/13 4:18 pm EDT

Hospitality industry software provider Agilysys (NASDAQ:AGYS) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 17.6% year on year to $62.22 million. The company's outlook for the full year was also close to analysts' estimates with revenue guided to $277.5 million at the midpoint. It made a non-GAAP profit of $0.32 per share, improving from its profit of $0.26 per share in the same quarter last year.

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Agilysys (AGYS) Q1 CY2024 Highlights:

  • Revenue: $62.22 million vs analyst estimates of $61.95 million (small beat)
  • EPS (non-GAAP): $0.32 vs analyst estimates of $0.28 (13.3% beat)
  • Management's revenue guidance for the upcoming financial year 2025 is $277.5 million at the midpoint, in line with analyst expectations and implying 16.9% growth (vs 19.9% in FY2024)
  • Gross Margin (GAAP): 61.5%, up from 60.8% in the same quarter last year
  • Free Cash Flow of $29.34 million, up 161% from the previous quarter
  • Market Capitalization: $2.20 billion

Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased to report our ninth consecutive record revenue quarter and another record fiscal year with respect to overall revenue and profitability. The final fiscal year results were significantly better than our expectations at the beginning of the year and at the high end of revised increased expectations during the year.

Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ:AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.

Hospitality & Restaurant Software

Enterprise resource planning (ERP) and customer relationship management (CRM) are two of the largest software categories dominated by the likes of Microsoft, Oracle, and Salesforce.com. Today, the secular trend of mass customization is driving vertical software that customizes ERP and CRM functions for specific industry requirements. Restaurants are a prime example where a set of customized software providers have sprung up in recent years to create unique operating systems that blend tax and accounting software, order management and delivery, along with supply chain management. Hotels and other hospitality providers are another example.

Sales Growth

As you can see below, Agilysys's revenue growth has been strong over the last three years, growing from $36.34 million in Q4 2021 to $62.22 million this quarter.

Agilysys Total Revenue

This quarter, Agilysys's quarterly revenue was once again up 17.6% year on year. However, its growth did slow down a little compared to last quarter as the company increased revenue by $1.66 million in Q1 compared to $1.95 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

For the upcoming financial year, management expects revenue to be $277.5 million at the midpoint, growing 16.9% year on year compared to the 19.9% increase in FY2024.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Agilysys's free cash flow came in at $29.34 million in Q1, up 123% year on year.

Agilysys Free Cash Flow

Agilysys has generated $40.06 million in free cash flow over the last 12 months, a solid 16.9% of revenue. This strong FCF margin stems from its asset-lite business model, giving it optionality and plenty of cash to reinvest in its business.

Key Takeaways from Agilysys's Q1 Results

We feel positive about Agilysys's free cash flow generation this quarter, which beat analysts' estimates. We were also glad its revenue forecast for next year was in line with expectations. On the other hand, its gross margin fell. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 4.8% after reporting and currently trades at $84.22 per share.

So should you invest in Agilysys right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.