AGYS Investor Presentation June 2015 (FINAL) · Strong balance sheet as of Q4 FY 2015: $75 million...

TECHNOLOGY | INNOVATION | SOLUTIONS

Investor PresentationJune 2015


Forward-looking Statements & Non-GAAP

Financial Information

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Forward-Looking Language

This presentation and all publicly available documents, including the documents incorporated herein and therein by reference,contain, and our officers and representatives may from time to time make, "forward-looking statements" within the meaningof the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can beidentified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy,""future," "likely," "may," "should," "will" and similar references to future periods, including statements on the slides in thispresentation titled “Total Addressable Market,” “Business Outlook,” and “Investment Highlights.” Forward-looking statementsare not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Thesestatements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors,assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-lookingstatements. Factors that could cause or contribute to such differences or that might otherwise impact the business include therisk factors set forth in Item 1A of the company’s Annual Report for the fiscal year ended March 31, 2015. Copies are availablefrom the SEC or the Agilysys website. We undertake no obligation to update any such factor or to publicly announce the resultsof any revisions to any forward-looking statements contained herein whether as a result of new information, future events orotherwise.

Use of Non-GAAP Financial Information

To supplement the unaudited condensed consolidated financial statements presented in accordance with U.S. GAAP in thispresentation, certain non-GAAP financial measures as defined by the SEC rules are used. These non-GAAP financial measuresinclude adjusted EBITDA from continuing operations, adjusted operating income (loss) from continuing operations, adjustedincome (loss) from continuing operations, and adjusted cash provided by continuing operations. Management believes thatsuch information can enhance investors' understanding of the company's ongoing operations. See the tables on slide 20 & 21for reconciliations to the comparable GAAP measures.


Key Financial Statistics

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•Adjusted EBITDA ^

Market Stats

Stock Price (6/12/15) $9.30 Diluted Shares Outstanding 22.3M

52 Week High $14.52 Diluted Market Capitalization $207M

52 Week Low $8.72 Total Debt (at 3/31/2015) $0.2M

Average Daily Volume (3 months) 37,089Cash & Marketable Securities

(at 3/31/2015)

$75.1M

Basic Shares Outstanding 22.3M Enterprise Value $133M

Financial Metrics & Valuation (FY15)

Revenue $103.5M

Adjusted EBTIDA^ $1.2M

EPS from Continuing Ops. ($0.51)

EV/Revenue 1.3x

($9.3)

$1.8

$6.5

$1.2

($20.0)

($10.0)

$0.0

$10.0

FY12 FY13 FY14 FY15

^Non-GAAP measure, see reconciliation on slide 20 & 21

All historical numbers reflect the sale of RSG and UK entity


Agilysys Builds Lasting Connections

Transforming the hospitality industry through better guest experiences

TeamCustomers / Guests

Community Investors

Connecting Our customers with their guests Our customers with our team Our team with their communities

Lasting Connections

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TECHNOLOGY | INNOVATION | SOLUTIONSTECHNOLOGY | INNOVATION | SOLUTIONS

Established In-Market Product Offerings: Interfaced, Not Common Platform

Workforce

Management(Staff)

2% of Revenue

Property

Management(Book, Arrive, Order)

28% of Revenue

Property


28% of Revenue

Property


28% of Revenue

Point-of-Sale(Order)

56% of Revenue

Inventory &

Procurement(Procure)

11% of Revenue

Document

Management(Order, Procure)

3% of Revenue

Note: Revenue contribution figures represent percentage of fiscal year ended March 31, 2015.

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Key Differentiators

The best hospitality knowledge coupled with the best technology talent

Competitive Strengths

Scalability

Support deployments from single

lane café (POS) to 8,000 room

property (PMS) on a single

instance

Scalability Scalability

High levels of customer

service and satisfaction leads to

industry-leading average customer

life of over ten years

Customer Engagement

Scalability

Successfully running mission

critical operations for high profile

accounts

Stability Scalability

Handle disconnected scenarios for

weeks at a time

Offline Capabilities

ScalabilityFull-service product suite supports

customers’ business operations

Integrated Suite

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rGuest Technology Development Strategy & Plan

• Shifting focus from product-centric solutions with a high number of softwaremodules and operating silos to integrated platform centric solution forLodging, F&B and Payments applications

• Designed to run as a Software as a Service (“SaaS”)-based platform on thepublic cloud, private cloud, on premise, or in a hybrid configuration

• Changes the guest interaction dynamic from “Transaction” to “ExperienceManagement”

• Transforms Agilysys to a SaaS business

• Primary focus now on subscription services revenue model compared to legacylicense and maintenance revenue model

• Continue to provide customers an upgrade and/or migration path frompreviously purchased Agilysys products to new rGuest application

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rGuest Platform & Product Offering Overview: End-to-End Solutions

Agilysys’ Unified

Platform for

Delivering its Next

Generation Offerings

PromotePromote

StaffStaff

SurveySurvey

PromotePromote

SupplySupply

Seat Reserve

Seat Stay

Buy Stay

UpsellUpsell

ProfileAnalyze

NextGen OfferingToday’s OfferingGuest Lifecycle

PayPay

SuggestSuggest

OrderOrder

MarketMarket

DiscoverDiscover

Book / ReserveBook / Reserve

ArriveArrive

AnalyzeAnalyze

ProcureProcure

StaffStaff

ExperienceExperience

Current offering

Future offering

PayPay

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rGuest: Managing the Guest Experience

RESERVE/BOOK11

ARRIVE/PLAN22

ORDER/ENJOY55

ORDER/REST44

SIT33

DEPART66

REFLECT77

rGuest rGuest Seat

11

rGuest rGuest Pay

RESERVE/BOOK

rGuest rGuest Seat

33 SIT

rGuest rGuest Buy

44

rGuest rGuest Stay

ORDER

rGuest rGuest Pay

55

44

rGuest rGuest Buy

ORDER55

rGuest rGuest Analyze

77

rGuest rGuest Promote

REFLECT

rGuest rGuest Seat

22

rGuest rGuest Stay

ARRIVE/PLAN


rGuest rGuest Buy

rGuest rGuest Stay

DEPART

rGuest rGuest Pay

66

rGuest rGuest Buy

44

rGuest rGuest Stay

ORDER

rGuest rGuest Pay

55


Current Offering Future Offering

DISCOVER00

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rGuest Platform Value Proposition

Guest Recruitment,

Improve Recruitment

Guest Recruitment,

Improve Recruitment

Personalized Service,

Strengthen Connection

Personalized Service,

Strengthen Connection

Revenue & Profit Growth,

Increase Wallet Share

Revenue & Profit Growth,

Increase Wallet Share

Optimize

Operations,

Reduce Costs

Optimize

Operations,

Reduce Costs

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Delivering Vision Through the rGuest Platform

Common User

Interface

Common User

Interface

Shared ConfigurationShared

Configuration

Common ServicesCommon Services

Cloud technologyCloud

technology

Open architectureOpen

architecture

Rich Integrations

Rich Integrations

• Common services allow rapid innovation across the Agilysys suite of applications

• Common User Interface through-out all applications

• Shared configuration and management to reduce overhead of managing multiple systems

• Designed from the ground upfor today’s trends andtomorrow’s innovations

• Cloud delivered, but futureoptions for on premise andhybrid scenarios

• Built with an open SOA architecture in mind for partner and customer application integration

• Allows for rich data integration for Agilysys applications as well as customers and partners

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Product Status

Insight Mobile Manager (IMM) v1.x for LMS & Visual One

rGuest Analyze

rGuest Supply

rGuest Buy (POS)

Initial Release: Mid 2015

rGuest Pay

rGuest SeatrGuest Stay (PMS)

Limited Release Available

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Total Addressable Market is Growing

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$12B+

Market Opportunity

$4B

Addressed

Market

AGYS

Product roadmap significantly expands total addressable market

Industry growth expected at 5-7% annually (commissioned IHL and STR study)


Significant Room for Growth in Markets We Serve

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$4B in annual spending on existing software services

and recurring software maintenance for current product portfolio

49%

24%

18%

9%

Revenue Mix by Market (FY15)Gaming

Pinnacle Entertainment

Sands Casino & Resort

The Cosmopolitan of Las Vegas

Valley View Casino & Hotel

Caesars Palace

Casino Del Sol

Boyd Gaming

Ho-Chunk Gaming

Oxford Casino

Maryland Live! Casino

Hotels, Resorts, and Cruise

The Broadmoor Colorado Springs

The Breakers Palm Beach

The SeaPines Resort

Black Rock Oceanfront Resort

Royal Caribbean International

The Landmark London

Pinehurst

Vail Resorts

Royal Lahaina Resort

Norwegian Cruise Lines

Food Service

Compass Group

Benchmarc Restaurants by Marc Murphy

Sugar Factory

BRguest Hospitality

Savor

Restaurants, Universities, Stadia and

Healthcare

Yale University

Vanderbilt University

California State University at Fullerton – Auxiliary Services Corporation


Historical Financial Results

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All numbers in thousands, except per share data

*All historical numbers reflect the sale of RSG and UK entity

^ Non-GAAP measure, see reconciliation on slide 20 & 21

$82,051 $94,008

$101,261 $103,514

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

FY12 FY13 FY14 FY15

Revenue *

($1,909)

$3,235

$876

($5,000)

($3,000)

($1,000)

$1,000

$3,000

$5,000

FY13 FY14 FY15

Adjusted Cash from

Continuing Operations^

($9,311)

$1,836

$6,450

$1,174

($15,000)

($10,000)

($5,000)

$0

$5,000

$10,000

FY12 FY13 FY14 FY15

Adjusted EBITDA^

($37,493)

($6,214)($2,895)

($11,497)

($50,000)

($40,000)

($30,000)

($20,000)

($10,000)

$0

FY12 FY13 FY14 FY15

Loss from Continuing Operations *


Recurring Revenue Contribution Focus

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FY11

FY12

FY13

FY14

FY15

48.9%

55.3%

52.2%

52.5%

54.1%

36.2%

28.9%

33.0%

34.2%

30.8%

14.9%

15.8%

14.8%

13.3%

15.1%

Product Mix

(as % of total revenue)

Recurring Revenue (support, maintenance & subscription)

Product Revenue

Professional Services Revenue

• Recurring revenues

comprised 54% of the

Company’s FY15 revenue

versus 49% in FY11

• Leveraging growing market

share and installed product

base to offer an increased

level of recurring services

• Expanding SaaS-based

product offerings to create

an ongoing customer

relationship and foster

enhanced recurring

revenues

SaaS revenues up 11% in

fiscal 2015 vs fiscal 2014


Strong Balance Sheet

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Consolidated Balance Sheet (unaudited) in thousands

March 31,

2015

March 31,

2014

Cash, cash equivalents and marketable securities $75,067 $99,566

Other current assets 29,950 30,288

Long-term assets 76,508 61,041

Total assets $181,525 $190,895

Current liabilities $50,610 $48,143

Other liabilities 6,727 9,879

Total liabilities $57,337 $58,022

Shareholders’ equity 124,188 132,873

Total liabilities and shareholders’ equity $181,525 $190,895

Cash and liquid investments of $75 million

Fully valued federal net operating losses of approximately $170M


FY16 Outlook

• Revenue Outlook• Flat to slightly above fiscal 2015 result of $103.5M

• Gross margin• Expected to be consistent with fiscal 2015 in high 50% range

• Adjusted EBITDA• Will show incrementally greater profitability over fiscal 2015 adjusted

EBITDA of $1.2M

• Year-end cash of approximately $50 million• Reflects ongoing investment in transition to a SaaS company and in

rGuest platform development

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Investment Highlights

� Agilysys’ solutions drive substantial customer benefits including increased revenue, reduced cost, enhanced guest experiences, and improved morale

� Significant growth opportunities through cross-selling, next-gen SaaS product rollout, new market penetration and international expansion

� Strong industry demand and upsell opportunities to our over 3,000+customers

� Strong balance sheet as of Q4 FY 2015:

� $75 million of cash and marketable securities as of Q4 FY 2015

� Year-over-year normalized deferred revenue growth of 10% to $34.3 million

� $170 million in net operating losses

54%Recurring Revenue

FY15

78%Recurring RevenueGross Margins

95%+Renewal Rate in FY2015

$12B+Market

Opportunity

10+Year Average Customer

Relationship

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Non-GAAP Reconciliation

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2012 2013 2014 2015

Net (loss) income (22,783)$ (1,298)$ 17,097$ (11,497)$

(Loss) Income from discontinued operations, net of taxes 14,710 4,916 19,992 -

Loss from continuing operations (37,493) (6,214) (2,895) (11,497)

Income tax (benefit) expense (9,181) (3,118) (2,491) (1,054)

Loss before income taxes (46,674) (9,332) (5,386) (12,551)

Depreciation of fixed assets 3,963 2,137 2,074 2,225

Amortization of intangibles 3,585 3,284 6,414 3,461

Amortization of developed technology 1,656 805 312 1,294

Interest (income) expense 840 253 61 (62)

EBITDA (b) (36,630) (2,853) 3,475 (5,633)

Share-based compensation 2,397 1,638 2,119 3,140

Asset write-offs and other fair value adjustments 9,681 120 327 1,836

Restructuring, severance and other charges 15,247 1,495 1,392 1,482

Other non-operating (income) expense (6) (228) (863) 146

Legal settlements - 1,664 - 203

Adjusted EBITDA from continuing operations (a) (9,311)$ 1,836$ 6,450$ 1,174$

(a) Adjusted EBITDA from continuing operations, a non-GAAP financial measure, is defined as income from continuing operations before income taxes,

interest expense (net of interest income), depreciation and amortization (including amortization of developed technology), and excluding charges relating to

i) legal settlements, ii) restructuring, severance, and other charges, iii) asset write-offs and other fair value adjustments, iv) share-based compensation, and

v) other non-operating (income) expense

(b) EBITDA is defined as net income before income taxes, interest expense, depreciation and amortization

Fiscal year ended

(In thousands)

March 31,

AGILYSYS, INC.

RECONCILIATION OF ADJUSTED EBITDA TO NET (LOSS) INCOME

(UNAUDITED)


Non-GAAP Reconciliation

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2012 2013 2014 2015

Operating loss (45,840)$ (9,307)$ (6,188)$ (12,467)$

Share-based compensation expense 2,397 1,638 2,119 3,140

Amortization of intangibles 3,585 3,284 6,414 3,461

Asset write-offs and other fair value adjustments 9,681 120 327 1,836

Restructuring, severance and other charges 15,247 1,495 1,392 1,482

Legal settlements - 1,664 - 203

Impact from revision to prior period financial statements 1,052 - - -

Adjusted operating (loss) income from continuing operations (a) (13,878) (1,106) 4,064 (2,345)

Other (income) expenses, net 834 25 (802) 84

Cash income tax expense (b) 264 105 60 65

Adjusted (loss) income from continuing operations (a) (14,976)$ (1,236)$ 4,806$ (2,494)$

2013 2014 2015

Operating activities:

Net cash used in operating activities from continuing operations (13,050)$ 1,384$ (2,186)$

Non-recurring cash items:

Payments for restructuring, severance and other charges 6,673 1,741 1,348

Payments for legal settlements - 110 1,714

BEP/SERP payments 4,468 - -

Adjusted cash provided by continuing operations (a) (1,909)$ 3,235$ 876$

(a) Non-GAAP financial measure

(b) Taxes calculated based upon our estimated cash tax payments, exclusive of payments related to AMT

AGILYSYS, INC.

RECONCILIATION OF OPERATING LOSS FROM CONTINUING OPERATIONS

(UNAUDITED)

TO ADJUSTED OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS

AGILYSYS, INC.

(In thousands)

Fiscal year ended

March 31,

(In thousands)

RECONCILIATION OF OPERATING CASH FLOWS FROM CONTINUING OPERATIONS

(UNAUDITED)

Fiscal year ended

March 31,

TO ADJUSTED CASH FLOWS FROM CONTINUING OPERATIONS

AGYS Investor Presentation June 2015 (FINAL) · Strong balance sheet as of Q4 FY 2015: $75 million...

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Transcript of AGYS Investor Presentation June 2015 (FINAL) · Strong balance sheet as of Q4 FY 2015: $75 million...