Summary
Agilysys reported fiscal 2022 second quarter revenue of $37.9 million, up 10.3% from the prior-year quarter. Gross profit was $24.3 million, up 4.8%. Recurring revenue reached a record $24.0 million, or 63.4% of total net revenue. Subscription revenue also set a record at $11.1 million and rose 21.7% over the fiscal 2021 second quarter. Subscription revenue made up 46.0% of total recurring revenues. The top line grew, but profitability declined. Gross margin was 64.0%, down 3.4 percentage points. Operating income fell 81.5% to $1.1 million, and operating margin was 3.0%, down 14.7 percentage points. Net income dropped 83.3% to $0.98 million. Diluted EPS was $0.02, down $0.20. Adjusted EBITDA was $6.3 million, and free cash flow was $3.2 million.
Cash generation weakened in the quarter. Operating cash flow was $3.7 million, down 68.2% from the prior-year quarter. Year to date, operating cash flow was $11.7 million, up 75.7%. Capital expenditures were $0.5 million in the quarter, up 124.6%. Deferred revenue ended the quarter at $30.6 million, essentially flat versus the prior-year quarter. Management said it believes cash flow from operations, cash on hand, and access to capital markets will meet short- and long-term liquidity requirements.
The quarter's operational momentum was strong. The CEO called it the best sales quarter measured in Annual Contract Value since the pandemic started. Subscription sales increased for three consecutive quarters. The quarter was the highest ever subscription sales quarter and the highest new customer win sales quarter in five years. Total backlog across product, services, and recurring revenue remained at record levels. One-time revenue was at the low end of the guidance range. ARR sales of PMS solutions increased 115% compared to pre-pandemic levels in the second quarter of fiscal 2020. The transition to a fully modern, cloud-native software applications provider is essentially complete. The company now offers cloud-native subscription-license-based software applications for virtually every need across the hospitality software solutions spectrum. These applications can also be implemented on-premise based on customer preference.
Guidance remains unchanged. Agilysys reiterated full year fiscal 2022 revenue guidance of $160 to $170 million and Adjusted EBITDA guidance of slightly better than 15% of revenue. The company remains cautiously optimistic. Management said the speed at which it overcomes short-term one-time revenue challenges will determine where it comes out within the range. Risks include lingering pandemic effects in managed food services and international regions. Global supply chain challenges affected POS terminals and payment device deliveries, delaying hardware and associated software product revenue. Services revenue continued to be challenged by project delays. Labor shortages at customer sites also pose a risk. The company continues to monitor the impact of COVID-19 on the hospitality industry, with a primary focus on the safety of employees and customers.
The income statement shows the strain from higher costs. Operating expenses increased, driven by restored base pay, higher share-based compensation, a return of travel costs, and increased marketing event and trade show activity. Gross margin pressure came from a higher proportion of third-party products and from professional services, where implementation teams remained fully staffed while projects were delayed. Severance and other charges increased due to one-time payment of certain service provider charges and modified business taxes on share-based compensation related to the exercise of stock-settled appreciation rights granted to the CEO in December 2016. Legal settlements, net increased due to settlement of a lawsuit involving a former employee. The company's recurring revenue base and record backlog provide some support, but the quarter's profit decline shows the ongoing mix and cost pressures. The transition to cloud-native products is complete, yet near-term one-time revenue remains challenged by supply chain and pandemic effects.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $37.9M | $38.7M | -2.2% | $34.4M | +10.3% |
| Gross profit | $24.3M | $24.9M | -2.5% | $23.2M | +4.8% |
| Gross margin | 64.0% | 64.2% | -0.2 pp | 67.4% | -3.4 pp |
| Research & development | $11.4M | $11.5M | -0.9% | $8.3M | +37.8% |
| Sales & marketing | $3.4M | $3.1M | +12.2% | $2.4M | +45.7% |
| General & administrative | $6.5M | $7.0M | -6.9% | $5.2M | +25.0% |
| Operating income (loss) | $1.1M | $2.0M | -45.1% | $6.0M | -81.5% |
| Operating margin | 3.0% | 5.3% | -2.3 pp | 17.6% | -14.6 pp |
| Net income (loss) | $982.0K | $2.0M | -50.2% | $5.9M | -83.3% |
| Net margin | 2.6% | 5.1% | -2.5 pp | 17.1% | -14.5 pp |
| Diluted EPS | $0.02 | $0.06 | -$0.04 | $0.22 | -$0.20 |
Risks
COVID-19 remains the primary disclosed risk; Agilysys says the full extent of the pandemic's adverse effect cannot be predicted. MD&A notes it has impacted the ability to complete certain implementations, delayed revenue recognition, and could affect contract renewals and accounts receivable collections, with subscription revenue effects possibly not fully reflected for some time.
Operating expenses excluding legal settlements, severance and other charges increased 30.3% in FY2022 Q2 compared with FY2021 Q2 due to restored base pay, employee benefits, share-based compensation, travel, and marketing events. This contributed to operating income decreasing 81.5% in FY2022 Q2 and operating margin decreasing to 3.0% from 17.6%.
Professional services gross profit decreased $0.2 million in FY2022 Q2 due to delays in certain professional service projects. Professional services gross margin decreased from 32.7% to 24.5% because implementation teams were fully staffed while projects were delayed.
SaaS KPIs
All quarters →Adjusted EBITDA
Free Cash Flow
Recurring Revenue
Recurring Revenue % of Total Net Revenue
Subscription Revenue % of Total Recurring Revenue
Subscription Revenue Growth YoY
Summary, forecast, risks and KPIs are extracted from AGILYSYS INC's SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.