AGILYSYS INC
For the period ended Dec 31, 2024. Filed Jan 21, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Jan 21, 2025
AGYS$121.09+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-28.
0000950170-24-117726
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-01-21.
0000950170-25-007222
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 103 current paragraphs.
67 unchanged; 34 reworded; 2 added; 2 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
For the three months ended December 31, 2024, income tax provision and the effective tax rate were primarily driven by the tax effects of share-based compensation, GILTI and the mix of earnings in the U.S. and India.
Current report
First Nine Months of Fiscal 2025 Compared to First Nine Months of Fiscal 2024
Removed paragraphs (2)
Previous report
For the three months ended September 30, 2024, income tax provision and the effective tax rate were primarily driven by activity in the U.S. and India.
Previous report
First Half Fiscal 2025 Compared to First Half Fiscal 2024
Reworded paragraphs (34)
Previous wording
During the three and six months ended September 30, 2024, global macroeconomic conditions were, and continue to be, influenced by a number of factors, including, but not limited to, political unrest, armed conflicts, labor shortages and natural disasters. We believe such conditions are impacting customer spending and provider pricing decisions resulting in decreased demand, increased costs, and reduced margins particularly in areas outside of the United States.
Current wording
During the three and nine months ended December 31, 2024, global macroeconomic and geopolitical conditions were, and continue to be, influenced by a number of factors, including, but not limited to, political unrest, armed conflicts, foreign currency fluctuations, labor shortages and natural disasters. We believe such conditions are impacting customer spending and provider pricing decisions resulting in decreased demand, increased costs, and reduced margins particularly in areas outside of the United States.
Previous wording
Second Fiscal Quarter 2025 Compared to Second Fiscal Quarter 2024
Current wording
Third Fiscal Quarter 2025 Compared to Third Fiscal Quarter 2024
Previous wording
Net revenue. Total net revenue increased $9.7 million, or 16.5%, during the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. Products revenue decreased $2.1 million, or 16.7%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses and to their decreasing need for hardware due to improvements we have made to our technology enabling more support for consumer grade devices our customers can source elsewhere. Subscription and maintenance revenue increased $7.2 million, or 21.0%, compared to the second quarter of fiscal 2024 driven by continued growth in subscription-based service revenue including $2.1 million in Book4Time subscription-based revenue. Total subscription revenue, including Book4Time subscription revenue, increased 36.6% during the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. Professional services revenue increased $4.6 million, or 39.2%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Current wording
Net revenue. Total net revenue increased $9.0 million, or 14.9%, during the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. Products revenue decreased $2.0 million, or 15.8%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses and to their decreasing need for hardware due to improvements we have made to our technology enabling more support for consumer grade devices our customers can source elsewhere. Subscription and maintenance revenue increased $9.3 million, or 26.4%, compared to the third quarter of fiscal 2024 driven by continued growth in subscription-based service revenue including service to Book4Time customers. Total subscription revenue increased 45.1% during the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. Professional services revenue increased $1.7 million, or 13.5%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Previous wording
Gross profit and gross profit margin. Our total gross profit increased $8.1 million, or 23.1%, during the second quarter of fiscal 2025 and total gross profit margin increased from 59.9% to 63.3% compared to the second quarter of fiscal 2024 driven by changes in the composition of revenue by category. Products gross profit decreased $0.6 million, or 9.7%, and products gross profit margin increased from 46.6% to 50.5% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $6.2 million, or 23.3%, and gross profit margin increased from 77.2% to 78.7% as revenue increases outpaced variable costs as a result of certain cost control measures. Professional services gross profit increased $2.5 million, or 91.5%, and gross profit margin increased from 23.6% to 32.4% reflecting improved utilization rates from efficiency gains on multi-solution implementations and revenue associated with a large development service contract.
Current wording
Gross profit and gross profit margin. Our total gross profit increased $6.0 million, or 15.9%, during the third quarter of fiscal 2025 and total gross profit margin increased from 62.5% to 63.0% compared to the third quarter of fiscal 2024 driven by changes in the composition of revenue by category. Products gross profit decreased $0.8 million, or 14.1%, and products gross profit margin increased from 47.1% to 48.0% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $7.1 million, or 25.6%, and gross profit margin decreased from 79.0% to 78.5% as variable costs increased ahead of related revenue. Professional services gross profit decreased $0.2 million, or 5.8%, and gross profit margin decreased from 32.2% to 26.7% reflecting lower utilization rates due to higher non-billable hours on new, more complex solution implementations over the comparable three-month periods and customer delays on certain projects.
Previous wording
Operating expenses, excluding other charges, net and legal settlements, increased $5.6 million, or 18.0%, during the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024.
Current wording
Operating expenses, excluding other (gains) charges, net, and legal settlements, increased $5.1 million, or 16.5%, during the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024.
Previous wording
Product development. Product development increased $1.6 million, or 10.9%, in the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Current wording
Product development. Product development increased $0.4 million, or 2.9%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Previous wording
Sales and marketing. Sales and marketing increased $2.4 million, or 37.4%, in the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024 due to hiring and increased compensation rates across our sales teams along with higher volume of marketing event and trade show activity.
Current wording
Sales and marketing. Sales and marketing increased $2.9 million, or 46.9%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to hiring and increased compensation rates across our sales teams, sales team additions from the Book4Time acquisition, and higher volume of marketing event and trade show activity.
Previous wording
General and administrative. General and administrative increased $1.4 million, or 15.7%, in the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024 due to investments in our information security and information technology infrastructure and increased compensation rates across our administrative teams.
Current wording
General and administrative. General and administrative increased $0.5 million, or 5.3%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to ongoing investments in our information security and information technology infrastructure and increased compensation rates across our administrative teams.
Previous wording
Depreciation of fixed assets. Depreciation of fixed assets decreased $0.3 million, or 24.3%, in the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024 due to the timing of assets reaching their useful life.
Current wording
Depreciation of fixed assets. Depreciation of fixed assets increased $0.1 million, or 8.4%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to the addition of fixed assets.
Previous wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $0.6 million, or 160.5%, in the second quarter of fiscal 2025 compared with the second quarter of fiscal 2024 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Current wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $1.3 million in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Previous wording
Other charges, net. Other charges, net consist of losses on asset disposals, severance costs and acquisition costs related to business combinations.
Current wording
Other (gains) charges, net. Other (gains) charges, net, consist of (gains) losses on asset disposals, severance costs, charitable contributions, employee retention credits, and acquisition costs related to business combinations.
Previous wording
Legal settlements. Legal settlements consist of settlements of employment and other business-related matters.
Current wording
Legal settlements. Legal settlements consist of certain customer and employment settlements and other business-related matters.
Previous wording
Other (expense), net. Other (expense), net mainly consists of movement of foreign currencies against the US dollar.
Current wording
Other income, net. Other income, net, mainly consists of movement of foreign currencies against the U.S. dollar.
Previous wording
For the three months ended September 30, 2023, income tax provision and the effective tax rate were primarily driven by activity within the foreign jurisdictions in which the company operates as valuation allowances were recorded against deferred tax assets in the U.S. and Canada. We released valuation allowances recorded against Canadian, U.S. Federal and certain state deferred tax assets in the period ending December 31, 2023.
Current wording
For the three months ended December 31, 2023, income tax (benefit) and the effective tax rate were primarily driven by the release of valuation allowances recorded against deferred tax assets in the U.S. and Canada.
Previous wording
The following table presents our consolidated revenue and operating results for the six months ended September 30, 2024 and 2023:
Current wording
The following table presents our consolidated revenue and operating results for the nine months ended December 31, 2024 and 2023:
Previous wording
Net revenue. Total net revenue increased $17.1 million, or 14.9%, during the first half of fiscal 2025 compared to the first half of fiscal 2024. Products revenue decreased $5.0 million, or 19.8%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses and to their decreasing need for hardware due to improvements we have made to our technology enabling more support for consumer grade devices our customers can source elsewhere. Subscription and maintenance revenue increased $13.1 million, or 19.7%, compared to the first half of fiscal 2024 driven by continued growth in subscription-based service revenue including $2.1 million in Book4Time subscription-based service revenue. Total subscription revenue, including Book4Time subscription revenue, increased 34.4% during the first half of fiscal 2025 compared to the first half of fiscal 2024. Professional services revenue increased $9.0 million, or 39.5%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Current wording
Net revenue. Total net revenue increased $26.1 million, or 14.9%, during the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. Products revenue decreased $7.0 million, or 18.4%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses and to their decreasing need for hardware due to improvements we have made to our technology enabling more support for consumer grade devices our customers can source elsewhere. Subscription and maintenance revenue increased $22.4 million, or 22.0%, compared to the first nine months of fiscal 2024 driven by continued growth in subscription-based service revenue including service to Book4Time customers. Total subscription revenue increased 38.2% during the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. Professional services revenue increased $10.8 million, or 30.2%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Previous wording
Gross profit and gross profit margin. Our total gross profit increased $14.9 million, or 21.9%, during the first half of fiscal 2025 and total gross profit margin increased from 59.4% to 63.0% compared to the first half of fiscal 2024 driven by changes in the composition of revenue by category. Products gross profit decreased $2.1 million, or 17.7%, and products gross profit margin increased from 47.6% to 48.9% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $11.6 million, or 22.8%, and gross profit margin increased from 76.7% to 78.7% as revenue increases outpaced variable costs as a result of certain cost control measures. Professional services gross profit increased $5.5 million, or 106.7% and gross profit margin increased from 22.4% to 33.1% reflecting improved utilization rates from efficiency gains on multi-solution implementations and revenue associated with a large development service contract.
Current wording
Gross profit and gross profit margin. Our total gross profit increased $21.0 million, or 19.8%, during the first nine months of fiscal 2025 and total gross profit margin increased from 60.5% to 63.0% compared to the first nine months of fiscal 2024 driven by changes in the composition of revenue by category. Products gross profit decreased $3.0 million, or 16.5%, and products gross profit margin increased from 47.4% to 48.6% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $18.7 million, or 23.8%, and gross profit margin increased from 77.5% to 78.6% as revenue increases outpaced variable costs as a result of certain cost control measures. Professional services gross profit increased $5.2 million, or 56.5% and gross profit margin increased from 25.9% to 31.1% reflecting improved utilization rates from efficiency gains on multi-solution implementations and revenue associated with a large development service contract.
Previous wording
Operating expenses, excluding other charges, net and legal settlements, increased $7.6 million, or 12.1%, during the first half of fiscal 2025 compared with the first half of fiscal 2024.
Current wording
Operating expenses, excluding other charges, net and legal settlements, increased $12.7 million, or 13.6%, during the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024.
Previous wording
Product development. Product development increased $3.0 million, or 10.7%, in the first half of fiscal 2025 compared with the first half of fiscal 2024 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Current wording
Product development. Product development increased $3.4 million, or 8.0%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Previous wording
Sales and marketing. Sales and marketing increased $2.1 million, or 15.4%, in the first half of fiscal 2025 compared with the first half of fiscal 2024 due to hiring and increased compensation rates across our sales teams along with higher volume of marketing event and trade show activity.
Current wording
Sales and marketing. Sales and marketing increased $5.0 million, or 25.1%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to hiring and increased compensation rates across our sales teams, sales team additions from the Book4Time acquisition, and higher volume of marketing event and trade show activity.
Previous wording
General and administrative. General and administrative increased $2.5 million, or 13.7%, in the first half of fiscal 2025 compared with the first half of fiscal 2024 due to investments in our information security and information technology infrastructure, increased compensation rates across our administrative teams and, during the quarter ended June 30, 2024, payroll taxes associated with certain exercises of stock-settled appreciation rights.
Current wording
General and administrative. General and administrative increased $3.0 million, or 10.9%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to ongoing investments in our information security and information technology infrastructure, increased compensation rates across our administrative teams and, during the quarter ended June 30, 2024, payroll taxes associated with certain exercises of stock-settled appreciation rights.
Previous wording
Depreciation of fixed assets. Depreciation of fixed assets decreased $0.4 million, or 17.9%, in the first half of fiscal 2025 compared with the first half of fiscal 2024 due to the timing of assets reaching their useful life.
Current wording
Depreciation of fixed assets. Depreciation of fixed assets decreased $0.3 million, or 10.0%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to the timing of assets reaching their useful life.
Previous wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $0.4 million, or 48.8%, in the first half of fiscal 2025 compared with the first half of fiscal 2024 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Current wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $1.7 million, or 147.9%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Previous wording
Other charges, net. Other charges, net consist of losses on asset disposals, severance costs and acquisition costs related to business combinations.
Current wording
Other (gains) charges, net. Other (gains) charges, net, consist of (gains) losses on asset disposals, severance costs, charitable contributions, employee retention credits, and acquisition costs related to business combinations.
Previous wording
Legal settlements. Legal settlements consist of settlements of employment and other business-related matters.
Current wording
Legal settlements. Legal settlements consist of certain customer and employment settlements and other business-related matters.
Previous wording
Other (expense), net. Other (expense), net mainly consists of movement of foreign currencies against the US dollar.
Current wording
Other income (expense), net. Other income (expense), net, mainly consists of movement of foreign currencies against the U.S. dollar.
Previous wording
For the six months ended September 30, 2024, income tax (benefit) and the effective tax rate were primarily driven by the impact of discrete excess tax benefits associated with Share-Based Compensation.
Current wording
For the nine months ended December 31, 2024, income tax provision and the effective tax rate were primarily driven by the impact of discrete excess tax benefits associated with Share-Based Compensation.
Previous wording
For the six months ended September 30, 2023, income tax provision and the effective tax rate were primarily driven by activity within the foreign jurisdictions in which the company operates as valuation allowances were recorded against deferred tax assets in the U.S. and Canada. We released valuation allowances recorded against Canadian, U.S. Federal and certain state deferred tax assets in the period ending December 31, 2023.
Current wording
For the nine months ended December 31, 2023, income tax (benefit) and the effective tax rate were primarily driven by the release of valuation allowances recorded against deferred tax assets in the U.S. and Canada.
Previous wording
We have expanded our business in part by investing in strategic growth through business acquisitions. We have used cash as consideration in our business acquisitions, including $144.9 million of net cash, partially funded by our Revolving Facility, during the six months ended September 30, 2024, to complete the acquisition of Book4Time. We completed no business combinations during the six months ended September 30, 2023.
Current wording
We have expanded our business in part by investing in strategic growth through business acquisitions. We have used cash as consideration in our business acquisitions, including $144.9 million of net cash, partially funded by our Revolving Facility, during the nine months ended December 31, 2024, to complete the acquisition of Book4Time. We completed no business combinations during the nine months ended December 31, 2023.
Previous wording
At September 30, 2024, 100% of our cash and cash equivalents, of which 89% were located in the United States, were deposited in bank accounts or invested in highly liquid investments including commercial paper and treasury bills with original maturity from the date of acquisition of three months or less and money market funds. We determine the fair value of commercial paper using significant other observable inputs based on pricing from independent sources that use quoted prices in active markets for identical assets or other observable inputs including benchmark yields and interest rates. We believe credit risk is limited with respect to our cash and cash equivalents.
Current wording
At December 31, 2024, 100% of our cash and cash equivalents, of which 87% were located in the United States, were deposited in bank accounts or invested in highly liquid investments including commercial paper and treasury bills with original maturity from the date of acquisition of three months or less and money market funds. We determine the fair value of commercial paper using significant other observable inputs based on pricing from independent sources that use quoted prices in active markets for identical assets or other observable inputs including benchmark yields and interest rates. We believe credit risk is limited with respect to our cash and cash equivalents.
Previous wording
We believe that cash flow from operating activities, cash on hand of $54.9 million as of September 30, 2024, and access to capital markets will provide adequate funds to meet our short- and long-term liquidity requirements.
Current wording
We believe that cash flow from operating activities, cash on hand of $60.8 million as of December 31, 2024, and access to capital markets will provide adequate funds to meet our short- and long-term liquidity requirements.
Previous wording
Cash flow provided by operating activities. Due to cash-based earnings of $19.2 million and a decrease of $11.5 million due to changes in net operating assets and liabilities. Cash-based earnings is net income of $15.5 million and $3.7 million of non-cash adjustments.
Current wording
Cash flow provided by operating activities. Due to cash-based earnings of $36.5 million and a decrease of $8.5 million due to changes in net operating assets and liabilities. Cash-based earnings is net income of $19.3 million and $17.2 million of non-cash adjustments.
Previous wording
Cash flow used in investing activities. Consists primarily of $144.9 million in cash paid for business combination, net of cash acquired, and property and equipment purchases, which decreased during the six months ended September 30, 2024 compared to the six months ended September 30, 2023 due primarily to leasehold improvements and equipment purchases for our new office lease in Chennai, India during the six months ended September 30, 2023.
Current wording
Cash flow used in investing activities. Consists primarily of $144.9 million in cash paid for business combination, net of cash acquired, and property and equipment purchases, which decreased during the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023 due primarily to leasehold improvements and equipment purchases for our new office lease in Chennai, India during the nine months ended December 31, 2023.
Previous wording
Cash flow provided by financing activities. Consists primarily of $49.7 million in debt proceeds, net of issuance costs, and a reduction from $3.9 million to $1.4 million in the repurchase of shares to satisfy employee tax withholding on share-based compensation and a reduction from $0.9 million to zero in preferred stock dividend payments during the respective periods.
Current wording
Cash flow provided by financing activities. Consists primarily of $49.6 million in debt proceeds, net of issuance costs, and debt repayments of $12.0 million during the nine months ended December 31, 2024, and a reduction from $5.7 million to $2.8 million in the repurchase of shares to satisfy employee tax withholding on share-based compensation and a reduction from $1.7 million to zero in preferred stock dividend payments during the respective periods.