Revenue Stream Floats Agilysys
November 11, 2013 Dan Burger
The hospitality and gaming industry flies when the overall global economy flies. And although the economy is not exactly soaring, it is off the ground. Hotels and casinos are expanding with more choices, new locations, and indications that competition does not allow any napping. That’s good for a software company like Agilysys, which is counting on brick and mortar growth and a highly competitive hotel/gaming market to stimulate IT spending. The second quarter financial results for Agilysys indicate a net revenue pop of 10 percent year-on-year with the identical gain when comparing the first half of fiscal 2014 with 2013. That’s not a bad measure of success.
Agilysys is best known in the IBM midrange community for its hospitality and gaming software that is dominant in those markets. It counts on the gaming industry for 50 percent of its revenue. The remaining segments are managed food services, which accounts for 28 percent of revenue; hotels and resorts, which represent 17 percent of revenue; and cruise, which contributes 4 percent.
With a closer look at total net revenue in Q2, Agilysys increased it take from one year ago by $2.4 million, bringing in $26.6 million this quarter compared to $24.2 million in Q2 2012. Product sales, which traditionally account for 50 percent of revenue, increased 30 percent, while revenue from support, maintenance and subscription services chipped in with a 3 percent increase. The introduction of several new products–Insight Mobile Manager and InfoGenesis Mobile–aided the product sales revenue.
Also on the fiscal report card, Agilysys reported that several project installations were pushed from Q2 into Q3, with the financial impact being a 9 percent decrease in year-over-year revenue.
Domestic revenues, which drive 90 percent Agilysys’ revenue stream, were up 8 percent during Q2. International revenues jumped up 29 percent. The completion of several projects gets much of the credit there.
Compared to the net revenue from Q1 2013, the Q2 financials show a 9 percent increase.
The financial results in Q2 reflect the classification of the Agilysys’ former Retail Solutions Group as a discontinued operation. The conclusion of the retail business sale was recorded July 1, 2013. The net sale price paid by Kyrus Solutions was approximately $36 million. The retail solutions group has an estimated 200 customers. None of those customers run their business on the IBM i platform.
During Q2, which ended September 30, the gaming segment noted software sales to Treasure Island Resort & Casino (InfoGenesis Point-of-Sale and DataMagine signature capture solutions); Muckleshoot Indian Casino (InfoGenesis Point-of-Sale solution); and Resorts World (LMS property management solution) for its latest property, Resorts World Casino in New York City.
James Dennedy, president and CEO of Agilysys, remarked that the Q2 financial results “reflect the market acceptance of several recent significant product releases as well as the investments we continue to make in product development.” He also added that the company’s capital investment program includes “an ongoing identification of select M&A opportunities intended to accelerate our product roadmap and expand our addressable markets.”