Agilysys Makes Dough From Hospitality And Services

November 5, 2012 Dan Burger

Led by an economic exclamation point in its hospitality business dominated by hotels and casinos, Agilysys found a way to make some revenue gains during the second quarter of its fiscal 2013 year ended in September. Agilysys reported a 9 percent year-over-year gain in its hospitality segment, which allowed the company to post a net revenue gain of 3 percent. A retail segment that was off 1 percent from the same quarter one year ago was a bit of drag total revenue, which inched ahead to $54.2 million.

A summary of the first six months of 2013 shows the hospitality segment moving upward at an 11 percent clip, while the retail business was 7 percent off the 2012 pace.

Agilysys includes three categories in the revenue section of its financial report: products; support, maintenance, and subscription services; and professional services.

Its largest source of revenue comes from products, where the retail side carries more than twice the load of hospitality. In the just-ended quarter, product revenue totaled $24.9 million, a decline of 7 percent. For the first six months of the fiscal year, that same category was off 10 percent, coming in at $49 million.

Support, maintenance, and subscription services raked in $19.5 million for the quarter and $37.9 million for the half-year. That’s an uptick of 8 percent and 7 percent, respectively. It is in this segment where the hospitality business more than doubles the retail business.

Professional services, the smallest of the revenue producers, chipped in with $9.8 million for fiscal Q2 and $18.9 million for the past six months. Those are increases of 8 percent and 20 percent respectively. Retail business tops hospitality business by approximately one-third in this segment.

The retail business at Agilysys generated $30 million in the three months period ending September 30, which is slightly less than the $30.4 million during those months in fiscal 2012. The six-month comparison is $59.3 million in the first half of fiscal 2013 to $63.5 million in the first half of fiscal 2012.

The slip in retail revenue seems to have been overlooked in the remarks by Agilysys chief financial officer Robb Ellis that accompanying the financial reports. “We are very pleased with our first-half results and the momentum the company is gaining in the markets we serve,” Ellis said.

In the operating expense category, the company showed half-year product development costs to be on par with a year ago, while exhibiting a 7 percent decrease in the costs of sales and marketing as well as a 19 percent drop in expenses related to general and administrative tasks.

Compared to the retail software and services numbers, the hospitality business looked much better. Here $24.2 million was brought to the top line in the recent three-month time frame compared to $22.3 million in the year-to-year match-up. And the six-month comparison shows $46.6 million this time around versus $41.8 million last time.

The product revenue declines versus services revenue increases are not surprising considering that Agilysys has moved away from hardware sales to concentrate on software and services. It has been almost six years since Agilysys sold a big chunk of its hardware business to Arrow Electronics and the remaining portion was sold off in June 2011.