Why Hospitality Software Provider Agilysys Shares Are Surging Today

Hospitality software provider Agilysys Inc AGYS shares are trading higher by 8% after it reported Q2 FY24 results.

Net revenue rose 22.8% Y/Y to $58.6 million, surpassing the consensus of $56.79 million.

Recurring revenue (comprising subscription and maintenance charges) stood at $34.2 million (vs. $29.0 million a year ago). Subscription revenue grew 29.1% Y/Y, accounting for 53.6% of total recurring revenue.

"Our implementation efficiency continues to improve as the re-engineered core products and newly developed experience enhancer add-on software modules are performing well in the field and creating considerable value for customers. Excellent selling success momentum highlighted by one of our best sales quarters and the best ever first half of fiscal year April to September sales measured in annual contract value terms drove aggregate recurring revenue, product and services backlog to a near record level," said Ramesh Srinivasan, President and CEO.

Adjusted EBITDA rose to $8.1 million from $7.4 million in the prior year. Adjusted EPS of $0.25 exceeded the consensus of $0.19. 

As of Q2, the company's cash balance was $107.4 million.

Outlook: The company raised FY24 outlook for revenue to $235 million-$238 million (from $230 million-$235 million) vs. consensus of $233.74 million.

AGYS also boosted subscription revenue growth guidance to 28% Y/Y (prior 25%) and adjusted EBITDA margin expectations to 14% (from 13% earlier).

"Successful implementations of a couple of larger projects contributed to high sequential subscription revenue growth this quarter. The first half of the fiscal year has been stronger than expected on the back of our sales investments and product innovation. We are pleased to be in a position to raise our full year guidance of total revenue, subscription revenue growth and Adjusted EBITDA levels. We continue to be disciplined with our growth management efforts," added Srinivasan.

Price Action: AGYS shares are up 8.33% at $69.22 premarket on the last check Tuesday.