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What changed in AGILYSYS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AGILYSYS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+209 added−203 removedSource: 10-K (2023-05-19) vs 10-K (2022-05-23)

Top changes in AGILYSYS INC's 2023 10-K

209 paragraphs added · 203 removed · 154 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

58 edited+18 added−12 removed46 unchanged
Biggest changeHistory and Significant Events Organized in 1963 as Pioneer-Standard Electronics, Inc., an Ohio corporation, we began operations as a distributor of electronic components and, later, enterprise computer solutions. Exiting the former business in fiscal 2003 with the sale of our Industrial Electronic Division, we used the proceeds to reduce debt and fund growth of our enterprise solutions business.
Biggest changeReference herein to any particular year or quarter refers to periods within our fiscal year ended March 31. For example, fiscal 2023 refers to the fiscal year ended March 31, 2023. History and Significant Events Organized in 1963 as Pioneer-Standard Electronics, Inc., an Ohio corporation, we began operations as a distributor of electronic components and, later, enterprise computer solutions.
Products, Support and Professional Services We are a leading developer and marketer of software-enabled solutions and services to the hospitality industry, including software solutions fully integrated with third party hardware and operating systems; support, maintenance and subscription services; and professional services.
Products, Support and Professional Services We are a leading developer and marketer of software-enabled solutions and services to the hospitality industry, including software solutions fully integrated with third party hardware and operating systems; subscription and maintenance; and professional services.
We make all benefit and employment-related decisions in compliance with established equal employment opportunity statutes and without regard to religion, national origin, age, gender, race, color, ancestry, sexual orientation, disability, marital status, citizenship, pregnancy, medical condition or any other protected class status, as defined by local, state or federal laws.
We make all benefit and employment-related decisions in compliance with equal employment opportunity statutes and without regard to religion, national origin, age, gender, race, color, ancestry, sexual orientation, disability, marital status, citizenship, pregnancy, medical condition or any other protected class status, as defined by local, state or federal laws.
Today, we are focused on providing state-of-the-art, end-to-end solutions that enhance guest experiences and allow our customers to promote their brands. We help our customers win the guest recruitment battle and, in turn, grow revenue, reduce costs and increase efficiency.
Today, we are focused on providing state-of-the-art, end-to-end solutions that enhance guest and staff experiences and allow our customers to promote their brands. We help our customers win the guest recruitment battle and, in turn, grow revenue, reduce costs and increase efficiency.
IG Buy Kiosk is currently deployed at more than 270 customer sites across the country, including corporate cafeterias at a top five U.S. bank, a top 40 U.S. law firm, one of the nation’s largest technology manufacturers, and at a national financial services firm.
IG Kiosk is currently deployed at more than 270 customer sites across the country, including corporate cafeterias at a top five U.S. bank, a top 40 U.S. law firm, one of the nation’s largest technology manufacturers, and at a national financial services firm.
We concentrate on serving the needs of customers in a range of customer-focused settings where brand differentiation is important and guest recruitment is intense. Our customer base is highly fragmented.
We concentrate on serving the needs of customers in a range of 12 customer-focused settings where brand differentiation is important and guest recruitment is intense. Our customer base is highly fragmented.
Apart from providing the functionality for managing back of house operations like house-keeping, engineering and maintenance, the rGuest service platform proactively tracks events and exceptions that take place in the hotel or resort and drive targeted action to ensure high level of guest satisfaction at all times.
Apart from providing the functionality for managing back of house operations like house-keeping, engineering and maintenance, the Agilysys service platform proactively tracks events and exceptions that take place in the hotel or resort and drive targeted action to ensure high level of guest satisfaction at all times.
DataMagine provides robust indexing and archiving features to allows easy contextual based document retrieval. 10 Agilysys Seat solution is a guest-centric reservation and wait list management solution that helps operators to book any venue. The solution allows operators to manage restaurant, cabana and auditorium reservations.
DataMagine provides robust indexing and archiving features to allows easy contextual based document retrieval. 10 Agilysys Reserve solution is a guest-centric reservation and wait list management solution that helps operators to book any venue. The solution allows operators to manage restaurant, cabana and auditorium reservations.
Agilysys IG Buy’s intuitive guest-facing order and pay experiences transfer the control and convenience to the end user. The self-service components reduce on-site labor needed to manage venue operations, while improving guest throughput, check size, order accuracy, guest experience and satisfaction.
Agilysys IG Kiosk’s intuitive guest-facing order and pay experiences transfer the control and convenience to the end user. The self-service components reduce on-site labor needed to manage venue operations, while improving guest throughput, check size, order accuracy, guest experience and satisfaction.
Third party hardware and operating system revenue is typically driven by new customer wins and existing customer hardware refresh purchases. Support, Maintenance and Subscription Services: Technical software support, software maintenance and software subscription services are a significant portion of our consolidated revenue and typically generate higher profit margins than products revenue.
Third party hardware and operating system revenue is typically driven by new customer wins and existing customer hardware refresh purchases. Subscription and Maintenance: Software subscription and maintenance services are a significant portion of our consolidated revenue and typically generate higher profit margins than products revenue.
Agilysys InfoGenesis® POS is an award-winning point of sale solution that combines a fast, intuitive and highly customizable terminal application with powerful, flexible reporting and configuration capabilities in the back office management portal. The system is easy to set up, and its scalable architecture enables customers to add workstations without having to build out expensive infrastructure.
Agilysys InfoGenesis® POS is a core F&B solution. An award-winning point of sale solution that combines a fast, intuitive and highly customizable terminal application with powerful, flexible reporting and configuration capabilities in the back office management portal. The system is easy to set up, and its scalable architecture enables customers to add workstations without having to build out expensive infrastructure.
With an innovative doll house view approach, patrons have the ability to select and book a specific seat in a restaurant or a specific cabana on a pool deck online. With built in price yielding capabilities, rGuest Seat allows operators to maximize revenue opportunities for various locations.
With an innovative doll house view approach, patrons have the ability to select and book a specific seat in a restaurant or a specific cabana on a pool deck online. With built in price yielding capabilities, Agilysys Reserve allows operators to maximize revenue opportunities for various locations.
Drury Hotels Prairie Band Casino & Resort Banner Health Ellis Island Hotel, Casino and Brewery Resorts World Bimini Boyd Gaming Corporation Golden Nugget Lake Charles Rosen Hotels & Resorts Caesars Entertainment Grand Central Hotel in Belfast Rosewood Castiglion Del Bosco Cal Dining at UC Berkeley Grand Sierra Resort and Casino Royal Caribbean Group Camelback Lodge & Waterpark Hialeah Park Seaport District – NYC Carnival UK Hilton Worldwide Spooky Nook Sports Cartoon Network Hotel Intercontinental Hotel Group Stations Casino Casino del Sol Resort Kiawah The Venetian Resort Hotel Casino Catholic Charities Kimpton Hotels The Kessler Collection Chukchansi Gold Resort & Casino Longwood University Treehouse – London Compass Group North America Maryland Live!
Drury Hotels Prairie Band Casino & Resort Banner Health Ellis Island Hotel, Casino and Brewery Resorts World Bimini Boyd Gaming Corporation Golden Nugget Lake Charles Rosen Hotels & Resorts Caesars Entertainment Grand Central Hotel in Belfast Rosewood Castiglion Del Bosco Cal Dining at UC Berkeley Grand Sierra Resort and Casino Royal Caribbean Group Camelback Lodge & Waterpark Hialeah Park Spooky Nook Sports Carnival UK Hilton Worldwide Stations Casino Cartoon Network Hotel Intercontinental Hotel Group The Kessler Collection Casino del Sol Resort Kimpton Hotels The Sea Pines Resort Catholic Charities Longwood University The Venetian Resort Hotel Casino Chukchansi Gold Resort & Casino Marriott International Treehouse – London Compass Group North America Maryland Live!
The rGuest service platform provides a unified communication and messaging service for guest and staff interaction as well as internal staff interaction.
The Agilysys service platform provides a unified communication and messaging service for guest and staff interaction as well as internal staff interaction.
Our integrated yet modular products allow hospitality operators to recruit and retain customers into their facilities, increase their wallet share from each guest and improve the overall experience throughout the entire guest journey – from the initial customer touch point through post-visit interactions.
Our integrated yet modular products allow hospitality operators to recruit and delight customers at their facilities, increase their wallet share from each guest, retain valuable staff and improve the overall experience throughout the entire guest journey – from the initial customer touch point through post-visit interactions.
Competition exists with respect to developing and maintaining relationships with customers, pricing for products and solutions, and customer support and service. We compete with other full-service providers that sell and service bundled POS and PMS solutions comprised of hardware, software, support, subscription and services.
Competition exists with respect to developing and maintaining relationships with customers, pricing for products and solutions, and customer support and service. We compete with other full-service providers who sell and deliver bundled POS and PMS solutions comprised of software, hardware, subscription, maintenance, and professional services.
With a foundation platform of modern integration APIs, the solution is also capable of integrating with a variety of ancillary applications allowing our customers to keep their entire technology estate. InfoGenesis POS is available as a cloud-based or on-premise solution.
With a foundation platform of modern integration APIs, the solution is also capable of integrating with a variety of ancillary applications allowing our customers to keep their entire technology estate. InfoGenesis POS is available as a cloud-based or on-premise solution. Agilysys IG Kiosk is a core F&B solution.
These companies, some of which are much larger than we are, include Oracle Corp., Shiji, 12 Amadeus IT Group and Infor. We also compete with smaller software companies like Maestro. In addition, we compete with PMS systems that are designed and maintained in-house by large hotel chains.
These companies, some of which are much larger than we are, include Oracle Corp., Shiji, Amadeus IT Group and Infor. We also compete with smaller software companies who prodive either POS or PMS solutions like Maestro. In addition, we compete with PMS systems that are designed and maintained in-house by large hotel chains.
Our innovative software solutions described above have been purpose-built to serve the unique needs of the following hospitality verticals: casinos, hotels, resorts, cruise ships, managed foodservice providers, sports and entertainment, and healthcare. We operate across North America, Europe, Asia-Pacific and India with headquarters located in Alpharetta, GA. Some verticals we serve continue to face uncertainties with the COVID-19 pandemic.
Our innovative software solutions described above have been purpose-built to serve the unique needs of the following hospitality verticals: casinos, hotels, resorts, cruise ships, managed foodservice providers, sports and entertainment, and healthcare. We operate across North America, Europe, the Middle East, Asia-Pacific and India with headquarters located in Alpharetta, GA.
Visual One provides an integrated solution with interfaces to leading global distribution systems, casino management systems, hospitality automation and our other products. Agilysys Stay PMS is the company’s cloud-native SaaS property management system that optimizes operational efficiency, increases revenue and enhances guest service.
Versa provides an integrated solution with interfaces to leading global distribution systems, casino management systems, hospitality automation and our other products. Agilysys Stay PMS is a core H&L solution. It is the company’s cloud-native SaaS property management system that optimizes operational efficiency, increases revenue and enhances guest service.
We continue to feel good about our opportunity to win market share given our relative competitive strength in the industry. Customers Our customers include large, medium-sized and boutique hospitality providers, both owned and franchised, as well as divisions or departments of large corporations in the hospitality industry.
We are well positioned to win market share given our relative competitive strength in the industry. Customers Our customers include large, medium-sized and boutique hospitality providers, both owned and franchised, as well as divisions or departments of large corporations in the hospitality industry.
Our software solutions are required to run the operations of the hospitality business and designed to drive substantial customer benefits through increased revenue, improved operational efficiency, enhanced guest experience and improved employee morale. In addition, many of our solutions enable social distancing capabilities for our customers.
Our products have been enabling mission-critical core hospitality operations for more than four decades. Our software solutions are required to run the operations of the hospitality business and designed to drive substantial customer benefits through increased revenue, improved operational efficiency, enhanced guest experience and improved employee morale. In addition, many of our solutions enable social distancing capabilities for our customers.
Agilysys Visual One® PMS is installed in hotels and resorts ranging from 50-1,500 rooms. It is a complete hospitality solution expanding beyond traditional PMS solutions enabling the resort to run its end-to-end operations, including front desk, housekeeping, maintenance, accounting, and condo owner management, with tight integration to Agilysys Sales & Catering, Spa, Golf, and Activities.
It is a complete hospitality solution expanding beyond traditional PMS solutions enabling the resort to run its end-to-end operations, including front desk, housekeeping, maintenance, accounting, and condo owner management, with tight integration to Agilysys Sales & Catering, Spa, Golf, and Activities.
We present revenue and costs of goods sold in three categories: • Products (hardware and software) • Support, maintenance and subscription services • Professional services Total revenue for these three specific areas is as follows: Year ended March 31, (In thousands) 2022 2021 2020 Products $ 35,956 $ 26,714 $ 44,230 Support, maintenance and subscription services 98,958 88,565 83,680 Professional services 27,722 21,897 32,847 Total $ 162,636 $ 137,176 $ 160,757 Products: Products revenue is comprised of revenue from the sale of software along with third party hardware and operating systems.
We present revenue and costs of goods sold in three categories: • Products • Subscription and maintenance • Professional services Total revenue for these three specific areas is as follows: Year ended March 31, (In thousands) 2023 2022 2021 Products $ 43,638 $ 35,956 $ 26,714 Subscription and maintenance 118,285 98,958 88,565 Professional services 36,142 27,722 21,897 Total $ 198,065 $ 162,636 $ 137,176 Products: Products revenue is comprised of revenue from the sale of software along with third party hardware and operating systems.
It is a full business intelligence solution that collects data from Agilysys point of sale and property management solutions and helps food & beverage and property operators gain critical insight into business operations and performance.
Agilysys Analyze is a cloud-based data analytic platform focused on the needs of the hospitality industry. It is a full business intelligence solution that collects data from Agilysys point of sale and property management solutions and helps food & beverage and property operators gain critical insight into business operations and performance.
This is accomplished by developing and deploying innovative solutions that increase data speed and accuracy, integrate 4 with other enterprise systems and create a common infrastructure for managing guest data thereby enabling more effective management, intelligent upselling, reduced shrinkage, improved brand recognition and better control of the guest relationship.
This is accomplished by developing and deploying innovative solutions that increase data speed and accuracy, integrate with other enterprise systems and create a common infrastructure for managing guest data thereby enabling more effective management, intelligent upselling, reduced shrinkage, improved brand recognition and better control of the guest relationship. 4 Our strategy is to increase the proportion of revenue we derive from subscription services, cloud applications, ongoing support and maintenance agreements, and professional services.
The solution also allows operators to capture increased revenue through add-ons and upsells of premium rooms. rGuest Service is our integrated service optimization platform that allows our customers to provide an integrated hospitality experience for their guests while driving greater operational efficiency by connecting departments across the hotel – front desk, house-keeping, concierge, maintenance, bell desk, food runners, wait staff, etc.
Agilysys Service is our integrated service optimization platform that allows our customers to provide an integrated hospitality experience for their guests while driving greater operational efficiency by connecting departments across the hotel – front desk, house-keeping, concierge, maintenance, bell desk, food runners, wait staff, etc.
Prior to COVID-19, we estimated our total addressable market to be approximately $4.8 billion in annual recurring revenue opportunity. While the size of the opportunity might face pressure in an economic downturn, we feel it is still in the billions of dollars and we are only a fraction of that size.
We estimate our total addressable market to be approximately $5 billion in annual recurring revenue opportunity. While the size of the opportunity might face pressure in an economic downturn, we feel it remains in the billions of dollars while our business represents only a fraction of that size.
Item 1. B usiness. Overview Agilysys has been driving hospitality software innovations for more than 40 years, delivering cloud-native SaaS and on-premise ready guest-centric technology solutions for gaming, hotels, resorts and cruise lines, corporate foodservice management, restaurants, universities, stadiums and healthcare.
Item 1. B usiness. Overview Agilysys has been a leader in hospitality software for more than 40 years, delivering innovative state-of-the-art cloud-native SaaS and on-premise solutions for hotels, resorts and cruise lines, casinos, corporate foodservice management, restaurants, universities, stadiums, and healthcare.
In addition, running natively in a browser on both desktop and tablet devices, it delivers real-time operating metrics so that hotels can more accurately forecast demand and scale guest services accordingly. Virtual Check-in and Check-out Solutions Today’s hotels cater to guests with high expectations when it comes to technological efficiency.
In addition, running natively in a browser on both desktop and tablet devices, it delivers real-time operating metrics so that hotels can more accurately forecast demand and scale guest services accordingly.
Human Capital As of March 31, 2022, we employed approximately 1,400 employees, with approximately 63%, 30%, 3%, 3%, and 1% of our employees located in India, the United States, APAC, Canada, and EMEA, respectively. We consider our relationship with our employees to be good and a critical factor in our success.
Human Capital As of March 31, 2023, we employed approximately 1,600 employees, with approximately 66%, 30%, 3%, and 1% of our employees located in India, North America, Asia-Pacific, and EMEA, respectively. We consider our relationship with our employees to be good and a critical factor in our success.
Agilysys IG Flex is a mobility solution that offers full point of sale functionality on a Windows tablet in 6, 8, or 10” form factors. It provides a sleek, modern alternative to traditional point of sale installations and can be used as a slim fixed terminal or as a convertible mobile POS simply by removing the tablet from its base.
It provides a sleek, modern alternative to traditional point of sale installations and can be used as a slim fixed terminal or as a convertible mobile POS simply by removing the tablet from its base.
Guests can optionally be notified of order completion via an order status monitor (OSM) or via text message. 6 Agilysys IG Buy is an enterprise-class self-service, customer-facing kiosk point of sale solution for the hospitality industry. It is ideal for food & beverage venues such as buffets, grab ‘n go, corporate cafeterias and food courts.
An enterprise-class self-service, customer-facing kiosk point of sale solution for the hospitality industry. It is ideal for food & beverage venues such as buffets, grab ‘n go, corporate cafeterias and food courts.
Casino Vail Resorts Comanche Nation of Oklahoma MGM Valley View Casino & Hotel Costa Pacifica Oxford Casino Vanderbilt University The Cosmopolitan of Las Vegas Palm Garden Hotel Wendover Resorts 11 Industry and Markets We are a technology software solutions company exclusively focused on the hospitality industry. Our products have been enabling mission-critical core hospitality operations for more than four decades.
Casino UT Southwestern Medical Center Comanche Nation of Oklahoma MGM Vail Resorts Costa Pacifica Oxford Casino Valley View Casino & Hotel The Cosmopolitan of Las Vegas Palm Garden Hotel Wendover Resorts Industry and Markets We are a technology software solutions company exclusively focused on the hospitality industry.
The solution allows booking of one or more rooms and is seamlessly connected with our core PMS solutions to provide a flawless experience for guests and hotel operators. rGuest Book is the only booking engine in the market that seamlessly integrates with the core primary gaming system and allows for casino operators to enable their patrons to self-book their entitlements resulting in increased guest satisfaction and reduced operational expenses.
Agilysys Book is the only booking engine in the market that seamlessly integrates with the core primary gaming system and allows for casino operators to enable their patrons to self-book their entitlements resulting in increased guest satisfaction and reduced operational expenses. The solution also allows operators to capture increased revenue through add-ons and upsells of premium rooms.
Our PMS suite of applications consists of the core property management system, a commission free booking engine, self-service check in and check out solutions, spa, golf, retail, accounting, sales and catering, service request optimization and condo management applications. Agilysys LMS™ is an on-premise or hosted, web and mobile-enabled, PMS solution targeting the operator with large, complex operations.
Our H&L suite of applications consists of the core property management system (PMS), and experience enhancers including a commission-free booking engine, self-service check in and check out solutions, spa, golf, retail, sales & catering, service request optimization and residence management applications. Agilysys LMS™ is a core H&L solution.
This included acquiring businesses focused on higher-margin and more specialized solutions for the hospitality and retail industries. At the same time, we changed our name to Agilysys, Inc.
Exiting the former business in fiscal 2003 with the sale of our Industrial Electronic Division, we used the proceeds to reduce debt and fund growth of our enterprise solutions business. This included acquiring businesses focused on higher-margin and more specialized solutions for the hospitality and retail industries. At the same time, we changed our name to Agilysys, Inc.
It runs 24/7 to automate every aspect of hotel operations in properties from 100 to over 7,000 rooms, and has interfaces to a wide array of industry applications including but not limited to all core casino management systems and leading global distribution systems. Its foundation expands to incorporate modules for activities scheduling, attraction ticketing and more.
An on-premise or hosted, web and mobile-enabled, PMS solution targeting the operator with large, complex operations. It runs 24/7 to automate every aspect of hotel operations in properties from 100 to over 7,000 rooms, and has interfaces to a wide array of industry applications including but not limited to all core casino management systems and leading global distribution systems.
Resort operations with multiple amenities can integrate with rGuest Book and allow patrons to book both their resort reservation and their golf tee time simultaneously. 9 rGuest Book is a commission-free, easy-to-use reservation system that’s designed to move guests effortlessly through the booking process of hotel rooms, spa appointments and golf tee times for a single guest itinerary.
Hospitality & Leisure (H&L) Experience Enhancer Solutions: Agilysys Book is a commission-free, easy-to-use reservation system that’s designed to move guests effortlessly through the booking process of hotel rooms, spa appointments and golf tee times for a single guest itinerary.
It supports ordering for multiple guests at a table over the course of a meal using their own devices making the ordering process touchless while freeing up staff to spend more time with guests. The result is dramatically increased revenue opportunities and more chances to enhance guest service.
It supports ordering for multiple guests at a table over the course of a meal using their own devices making the ordering process touchless while freeing up staff to spend more time with guests. Agilysys IG OnDemand allows our customers to immediately offer an online ordering platform that is natively integrated with their physical location operations.
Integrated with our booking engine, rGuest Book, customers can book both their hotel room and their spa appointments from a single place giving operators additional opportunities to upsell and cross sell various amenities that they can offer. rGuest Golf is a guest centric golf management software that offers golf property managers complete pro shop management with tee time scheduling, member profile/billing, tournament management and Web and e-mail access bundled into one solution.
Integrated with our booking engine, Agilysys Book, customers can book both their hotel room and their spa appointments from a single place giving operators additional opportunities to upsell and cross sell various amenities that they can offer.
Point of Sale (POS) Solutions: Agilysys POS solution suite allows customers to provide their guests with an omni-channel experience within their property.
Food & Beverage (F&B) Ecosystem Solutions: Agilysys Food & Beverage Ecosystem solutions allow customers to provide their guests with an omni-channel experience within their property.
Agilysys’ Eatec® solution provides core purchasing, inventory, recipe, forecasting, production and sales analysis functions and is unique in offering catering, restaurant, buffet management and nutrition modules in a single web-enabled solution.
Manage revenue allocations and splits, including expenses allocated between individual owners, the association and the property by leveraging an integrated and powerful set of Residence Management tools. 11 Inventory & Procurement Ecosystem Solutions: Agilysys’ Eatec® solution provides core purchasing, inventory, recipe, forecasting, production and sales analysis functions and is unique in offering catering, restaurant, buffet management and nutrition modules in a single web-enabled solution.
With rGuest Express - Kiosk, it’s easy to elevate service levels without adding front-line staff. rGuest Express - Kiosk provides ID verification to allow for hotels to enforce security standards efficiently and to allow the guest to bypass the front desk and observe social distancing guidelines. rGuest Express - Mobile simplifies check-in and check-out even further and at the same time allows operators to offer mobile keys, concurrent dining reservations or room upsells, all on a personal mobile device such as a smart phone or tablet.
With Agilysys Express - Kiosk, it’s easy to elevate service levels without adding front-line staff. Agilysys Express - Kiosk provides ID verification to allow for hotels to enforce security standards efficiently and to allow the guest to bypass the front desk and observe social distancing guidelines.
Agilysys offers the most comprehensive software solutions in the hospitality industry, including point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications, to manage the entire guest journey. Agilysys is also known for its world class customer-centric service and recent investments in research and development, having modernized virtually all its longstanding trusted software solutions.
The Company’s software solutions include point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications that manage and enhance the entire guest journey. Agilysys also is known for its world-class customer-centric service. Many of the top hospitality companies around the world use Agilysys solutions to improve guest loyalty, drive revenue growth, and increase operational efficiencies.
With rGuest Express - Mobile, it’s easy to reduce wait times and empower guests by putting the power of choice in the palm of their hand. rGuest - Express Mobile allows for digital ID verification before securely delivering the digital room key to the guest phone allowing operators to maintain security standards while allowing the guest to bypass the front desk.
With Agilysys Express - Mobile, it’s easy to reduce wait times and empower guests by putting the power of choice in the palm of their hand.
Using the built-in guest management system, operators can build guest profiles and provide a superior experience while driving repeat guests. Agilysys Analyze is a cloud-based data analytic platform focused on the needs of the hospitality industry.
Using the built-in guest management system, operators can build guest profiles and provide a superior experience while driving repeat guests. Agilysys Digital Marketing provides a flexible hospitality marketing automation solution supporting guest email and SMS marketing communications through event and campaign-based rules.
Out-of-the-box analysis helps hospitality operators manage costs, minimize loss due to fraud, boost item sales, increase server productivity, occupancy, room revenue, and other profit enhancing capabilities. Agilysys Digital Marketing provides a flexible hospitality marketing automation solution supporting guest email and SMS marketing communications through event and campaign-based rules.
Out-of-the-box analysis helps hospitality operators manage costs, minimize loss due to fraud, boost item sales, increase server productivity, occupancy, room revenue, and other profit enhancing capabilities. Hospitality & Leisure (H&L) Ecosystem Solutions: Agilysys offers the most comprehensive suite of hospitality & leisure applications to serve the needs of our integrated resort and hospitality customers.
Some of the largest hospitality companies around the world use Agilysys solutions to help improve guest loyalty, drive revenue growth and increase operational efficiencies. Agilysys operates across North America, Europe, the Middle East, Asia-Pacific and India with headquarters located in Alpharetta, GA. The Company has just one reportable segment serving the global hospitality industry.
Agilysys operates across North America, Europe, the Middle East, Asia-Pacific, and India, with headquarters in Alpharetta, GA. The Company has just one reportable segment serving the global hospitality industry. Our principal executive offices are located at 1000 Windward Concourse, Suite 250, Alpharetta, Georgia, 30005.
Property Management Systems (PMS): Agilysys offers the most comprehensive suite of property management applications to serve the needs of our integrated resort and hospitality customers. Our platforms enable our customers to provide a seamless experience to their guests while driving operational 7 efficiencies throughout the value chain.
Our solutions enable our customers to provide a seamless experience to their guests while driving operational efficiencies throughout the value chain.
However, we lead with our core POS and PMS solutions discussed above and focus on selling these complimentary ecosystem solutions into our customer base. 8 rGuest Express - Kiosk simplifies check-in and check-out, optimizes staff productivity and enhances the guest experience by enabling a seamless self-service option for guests to use in the hotel lobby at a kiosk.
Agilysys Express Kiosk simplifies check-in and check-out, optimizes staff productivity and enhances the guest experience by enabling a seamless self-service option for guests to use in the hotel lobby at a kiosk. More properties are turning to kiosks to reduce overhead and offer more self-service options.
Agilysys IG Digital Menu Board provides large screen menu and image display on commercial television monitors. It will display a venue menu that is linked directly to the actual items available in the IG OnDemand system, not a pdf or a website link, so it can easily reflect the latest items and pricing.
It will display a venue menu that is linked directly to the actual items available in the IG OnDemand system, not a pdf or a website link, so it can easily reflect the latest items and pricing. 7 IG PanOptic AI-powered self-checkout kiosk allows guests to place multiple food items on the kiosk tray all at one time where our AI service uses computer vision & AI to scan the items, recognize them and add them to the cart.
The platform-driven and cloud-based solution allows for easy deployments and management at scale resulting in a lowered overall cost of ownership. Agilysys IG OnDemand provides a visual, interactive food and beverage ordering experience to any mobile device – phone, tablet, laptop – with a browser-based self-service experience.
The platform-driven and cloud-based solution allows for easy deployments and management at scale resulting in a lowered overall cost of ownership. 6 Food & Beverage Experience Enhancer Solutions: Agilysys IG Flex is a mobility solution that offers full point of sale functionality on a Windows tablet in 6, 8, or 10” form factors.
SWS Direct streamlines operations, provides enhanced bidding and request for pricing services, and offers supplier registration tools and self-service maintenance capabilities. Agilysys DataMagine™ document management solution is a U.S.-patented imaging module and archiving solution that allows users to securely capture and retrieve documents and system-generated information.
Agilysys DataMagine™ document management solution is a U.S.-patented imaging module and archiving solution that allows users to securely capture and retrieve documents and system-generated information. DataMagine integrates with other Agilysys products, adding functionality and providing seamless workflows that cross functional areas.
Agilysys Pay offers contactless payment options on all markets as well as supporting various wallet payment options like Apple Pay®, Google Pay®, AliPay®, and WeChat®. Agilysys Spa software covers all aspects of running a spa, from scheduling guests for services to managing staff schedules.
Agilysys Pay offers contactless payment options on all markets as well as supporting various wallet payment options like Apple Pay®, Google Pay®, AliPay®, and WeChat®. Agilysys eCash offers guests the convenience of cashless tender. Create charge accounts for memberships, employees, students, comps or any other type of charge you define.
To resolve this disconnect and more effectively align with the business operations of our customers, we have evolved our approach to be focused on delivering integrated “platform-centric” solutions for Lodging and Food & Beverage functions, including the applications necessary to support this ecosystem. 5 Our technology platform is aimed at transitioning our product and services offerings to better address the needs of hospitality operators as they focus on building better connections with guests before, during and post-visit.
To resolve this disconnect and more effectively align with the business operations of our customers, we have evolved our approach to be focused on delivering integrated “ecosystem cloud” solutions for Hospitality & Leisure, Food & Beverage and Inventory & Procurement functions through the Agilysys Hospitality Experience Cloud.
Using a simple, intuitive interface, guests can easily order and reorder from anywhere across the property, driving order velocity and volume. Agilysys IG OnDemand allows our customers to immediately offer an online ordering platform that is natively integrated with their physical location operations.
Using a simple, intuitive interface, guests can easily order and reorder from anywhere across the property, driving order velocity and volume. It also can meet the need for a tableside order and pay experience.
The result is improved central reservations efficiency, increased revenue from cross-property sales and upsells, and superior guest service. Representative Agilysys clients include: 7 Cedars Casino Dickies Arena Pinehurst Resort AVI Foodsystems, Inc.
The result is improved central reservations efficiency, increased revenue from cross-property sales and upsells, and superior guest service. Agilysys Loyalty & Promotions provides a comprehensive loyalty and promotions management solution to help operators track guest preferences and craft a wide variety of programs and offers.
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Our principal executive offices are located at 1000 Windward Concourse, Suite 250, Alpharetta, Georgia, 30005. Reference herein to any particular year or quarter refers to periods within our fiscal year ended March 31. For example, fiscal 2022 refers to the fiscal year ended March 31, 2022.
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The Company delivers modular and integrated software solutions and expertise to businesses seeking to maximize Return on Experience (ROE) through hospitality encounters that are both personal and profitable. Over time, customers achieve High Return Hospitality by consistently delighting guests, retaining staff and growing margins.
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Our strategy is to increase the proportion of revenue we derive from subscription services, cloud applications, ongoing support and maintenance agreements, and professional services.
Added
The Agilysys Hospitality Experience Cloud™ offers solution ecosystems that combine core operational systems for property management (PMS), point-of-sale (POS) and Inventory and Procurement (I&P) with Experience Enhancers™ that meaningfully improve interactions for guests and for employees across 5 dimensions such as digital access, mobile convenience, self-service control, personal choice, payment options, service coverage and real-time insights to improve decisions.
Removed
We offer an end-to-end solution that helps our customers improve the guest experience, optimize staff efficiency, increase top-line performance and reduce operating costs, which leads to opportunities for higher profitability.
Added
Core solutions and Experience Enhancers are selectively combined in Hospitality Solution Studios™ tailored to specific hospitality settings and business needs.
Removed
Agilysys IG OnDemand Full Service is a complete contactless self-service F&B ordering solution that offers an intuitive guest-facing order and pay experience. IG OnDemand allows guests to place and pay for orders using their own device - phone, tablet, laptop – for pick-up or delivery orders, as well as for a tableside order and pay experience.
Added
Guests can optionally be notified of order completion via an order status monitor (OSM) or via text message. Agilysys IG OnDemand provides a visual, interactive food and beverage ordering experience to any mobile device – phone, tablet, laptop – with a browser-based self-service experience.
Removed
An emerging trend in the hotel industry that has accelerated in the COVID-19 environment where social distancing is often the norm, is the ability for guests to check themselves in or out of their room without interacting with the front desk.
Added
Agilysys IG Digital Menu Board provides large screen menu and image display on commercial television monitors.
Removed
To that end, we offer software modules that enable this approach and are fully integrated with our core PMS solutions. Point of Sale and Property Management Ecosystem Offerings: The following solutions integrate with and are complementary to our point of sale or property management systems, or both.
Added
A central database supports an efficient eCash transaction process for all your accounts. An array of fields and extra settings make managing eCash accounts seamless. A flexible easy to use solution to create and manage Gift Cards from adding balances to cards, to checking balances, and enabling guests to use them for purchases across outlets on the property.
Removed
These solutions, for the most part, can stand alone and do not require POS or PMS to be functional.
Added
Its foundation expands to incorporate modules for activities scheduling, attraction ticketing and more. 8 Agilysys Versa PMS is a core H&L solution. It is installed in hotels and resorts ranging from 50-1,500 rooms.
Removed
More properties are turning to kiosks to reduce overhead and offer more self-service options.
Added
The solution allows booking of one or more rooms and is seamlessly connected with our core PMS solutions to provide a flawless experience for guests and hotel operators.
Removed
Properties are turning to mobility at an ever-increasing pace to improve efficiency.
Added
Agilysys Express Mobile simplifies check-in and check-out even further and at the same time allows operators to offer mobile keys, concurrent dining reservations or room upsells, all on a personal mobile device such as a smart phone or tablet. Properties are turning to mobility at an ever-increasing pace to improve efficiency.
Removed
Customers are given the option of using our robust built in retail POS module or they may choose to leverage the power of InfoGenesis. Staff can easily schedule and personalize reservations for guests which then appear on itineraries, confirmations, and folios.
Added
Agilysys - Express Mobile allows for digital ID verification before securely delivering the digital room key to the guest phone allowing operators to maintain security standards while allowing the guest to bypass the front desk. 9 Agilysys Spa software covers all aspects of running a spa, from scheduling guests for services to managing staff schedules.
Removed
DataMagine integrates with other Agilysys products, adding functionality and providing seamless workflows that cross functional areas.
Added
Agilysys Golf is a guest centric golf management software that offers golf property managers complete pro shop management with tee time scheduling, member profile/billing, tournament management and Web and e-mail access bundled into one solution. Customers are given the option of using our robust built in retail POS module or they may choose to leverage the power of InfoGenesis.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

35 edited+18 added−21 removed62 unchanged
Biggest changeIf integration of our acquired businesses is not successful, we may not realize the potential benefits of an acquisition or suffer other adverse effects. We may have exposure to greater than anticipated tax liabilities. Some of our products and services may be subject to sales taxes in states where we have not collected and remitted such taxes from our customers.
Biggest changeThe process of integrating acquired businesses into our operations may result in unforeseen difficulties and may require a disproportionate amount of resources and management attention. If integration of our acquired businesses is not successful, we may not realize the potential benefits of an acquisition or suffer other adverse effects.
If any of these providers experience financial, operational, or quality assurance difficulties, or if any cease production, or there is any other disruption in the services we or our customers receive, including as a result of the acquisition of a supplier or partner by a 15 competitor, macroeconomic issues like those described above (such as the COVID-19 pandemic or the 2022 Russian invasion of Ukraine), or otherwise, we will be required to locate and migrate to alternative sources or providers, to internally develop the applicable technologies, to redesign our products, or to remove certain features from our products or to reduce our service levels, any of which would likely increase our expenses, create delays, or negatively impact our revenues.
If any of these providers experience financial, operational, or quality assurance difficulties, or if any cease production, or there is any other disruption in the services we or our customers receive, including as a result of the acquisition of a supplier or partner by a competitor, macroeconomic issues like those described above (such as the COVID-19 pandemic or the 2022 Russian invasion of Ukraine), or otherwise, we will be required to locate and migrate to alternative sources or providers, to internally develop the applicable technologies, to redesign our products, or to remove certain features from our products or to reduce our service levels, any of which would likely increase our expenses, create delays, or negatively impact our revenues.
The rapid rate of technological change in the hospitality market makes it likely we will face competition from new products designed by companies not currently competing with us. We believe our competitive ability depends on our product offerings, our experience in the hospitality industry, our product development and systems integration capability, and our customer service organization.
The rapid rate of technological change in the hospitality market makes it likely we will face competition from new products designed by companies not currently competing with us. We believe our 14 competitive ability depends on our product offerings, our experience in the hospitality industry, our product development and systems integration capability, and our customer service organization.
Ongoing labor shortages or increasing labor costs could negatively impact our financial condition, results of operations, or cash flows, especially if rising costs outpace our revenue growth. Our international operations have many associated risks. We continue to strategically manage our presence in international markets, and these efforts require significant management attention and financial resources.
Ongoing labor shortages or 15 increasing labor costs could negatively impact our financial condition, results of operations, or cash flows, especially if rising costs outpace our revenue growth. Our international operations have many associated risks. We continue to strategically manage our presence in international markets, and these efforts require significant management attention and financial resources.
Any general weakening of, and related declining corporate confidence in, the global economy or the curtailment in corporate spending could cause current or potential customers to reduce or eliminate their information technology budgets and spending, which could cause customers to delay, decrease or cancel purchases of our products and services; cause customers not to pay us; or to delay payment for previously purchased products and services.
Any general weakening 13 of, and related declining corporate confidence in, the global economy or the curtailment in corporate spending could cause current or potential customers to reduce or eliminate their information technology budgets and spending, which could cause customers to delay, decrease or cancel purchases of our products and services; cause customers not to pay us; or to delay payment for previously purchased products and services.
Customers in bankruptcy may not have sufficient assets to pay us unpaid fees or reimbursements we are owed under their agreements with us. If a significant number of customers file for bankruptcy or otherwise fail to pay amounts owed to us, our revenues and liquidity could be adversely affected.
Customers in bankruptcy may not have sufficient assets to pay us unpaid fees or reimbursements we are owed under their agreements 18 with us. If a significant number of customers file for bankruptcy or otherwise fail to pay amounts owed to us, our revenues and liquidity could be adversely affected.
Because of these inherent complexities and challenges, lack of success in international markets could adversely affect our business, results of operations, cash flow, and financial condition. We have international offices in Canada, the United Kingdom, China, Hong Kong, Malaysia, the Philippines, Singapore, and India.
Because of these inherent complexities and challenges, lack of success in international markets could adversely affect our business, results of operations, cash flow, and financial condition. We have international offices in Canada, the United Kingdom, Dubai, China, Hong Kong, Malaysia, the Philippines, Singapore, and India.
If our competitors discount certain products or 14 services, we may have to lower prices on certain products or services in order to attract or retain customers. Any such price modifications would likely reduce margins and could have adverse effects.
If our competitors discount certain products or services, we may have to lower prices on certain products or services in order to attract or retain customers. Any such price modifications would likely reduce margins and could have adverse effects.
International sales are subject to many risks and difficulties, including those arising from the following: building and maintaining a competitive presence in new markets; staffing and managing foreign operations; complying with a variety of foreign laws; producing localized versions of our products; developing integrations between our products and other locally-used products; import and export restrictions and tariffs, enforcing contracts and collecting accounts receivable; unexpected changes in regulatory requirements; reduced protection for intellectual property rights in some countries; potential adverse tax treatment; language and cultural barriers; currency fluctuations; and political and economic instability abroad.
International sales are subject to many risks and difficulties, including those arising from the following: building and maintaining a competitive presence in new markets; staffing and managing foreign operations; complying with a variety of foreign laws; producing localized versions of our products; developing integrations between our products and other locally-used products; import and export restrictions and tariffs, enforcing contracts and collecting accounts receivable; unexpected changes in regulatory requirements; reduced protection for intellectual property rights in some countries; potential adverse tax treatment; language and cultural barriers; foreign currency fluctuations; inflation and any regulatory actions to counter inflation; and political and economic instability abroad.
A key element of our long-term strategy is to continue to invest in and grow our business and operations, both organically and through acquisitions. Investments in new markets, solutions, and technologies, R&D, infrastructure and systems, geographic expansion, and headcount are critical components for achieving this strategy.
A key element of our long-term strategy is to continue to invest in and grow our business and operations, both organically and through acquisitions. Investments in new markets, solutions, and technologies, research and development, infrastructure and systems, geographic expansion, and headcount are critical components for achieving this strategy.
Because we conduct our business internationally, changes in global, national, or regional economies, governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues), political unrest, armed conflicts ( such as the 2022 Russian invasion of Ukraine ), natural disasters, or outbreaks of disease (such as the COVID-19 pandemic) may impact our business.
Because we conduct our business internationally, changes in global, national, or regional economies, governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues), political unrest, armed conflicts (such as the Russia-Ukraine war), natural disasters, or outbreaks of disease (such as the COVID-19 pandemic) may impact our business.
If we are unable to attract and retain qualified personnel when and where they are needed or to manage effectively our remote workforce, our ability to operate and grow our business could be impaired. Moreover, if we are not able to properly balance our investments in personnel with revenues, our profitability may be adversely affected.
If we are unable to attract and retain qualified personnel when and where they are needed, our ability to operate and grow our business could be impaired. Moreover, if we are not able to properly balance our investments in personnel with revenues, our profitability may be adversely affected.
In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations. We may incur goodwill and intangible asset impairment charges that adversely affect our operating results.
We believe we have appropriately accrued for these contingencies. In the event that actual results differ from these reserves, we may need to make adjustments, which could materially impact our financial condition and results of operations. We may incur goodwill and intangible asset impairment charges that adversely affect our operating results.
These events, and any related operational disruptions, unauthorized access, or misappropriation of information (including personally identifiable information or personal data), could create costly litigation, significant financial liability, and a loss of confidence in our ability to serve customers and cause current or potential customers to choose another provider, all of which could have a material adverse effect on our business, financial condition, reputation, and results of operations.
These events, and any related operational disruptions, unauthorized access, or misappropriation of information (including personally identifiable information or personal data), could create costly litigation, significant financial liability, and a loss of confidence in our ability to serve customers and cause current or potential customers to choose another provider, all of which could have a material adverse effect on our business, financial condition, reputation, and results of operations. 16 We are subject to laws and regulations governing the protection of personally identifiable information.
Customers that we serve may be or become insolvent. Most of our customers have been significantly affected by the COVID-19 pandemic. Loss of revenue and other operating challenges may cause some of our customers to declare bankruptcy or cause their 18 lenders to declare a default, accelerate the related debt, or foreclose on their property.
Customers that we serve may be or become insolvent. Loss of revenue and other operating challenges may cause some of our customers to declare bankruptcy or cause their lenders to declare a default, accelerate the related debt, or foreclose on their property.
Factors affecting the trading price of our common stock may include: • uncertainties the COVID-19 pandemic has caused for the global economy; • economic news or other events generally causing volatility in the trading markets; • our operating results failing to meet the expectation of securities analysts or investors in a particular period or failure of securities analysts to publish reports about us or our business; • announcements by us or our competitors of acquisitions, new offerings or improvements, significant contracts, commercial relationships or capital commitments; • our ability to market new and enhanced solutions on a timely basis; and • any major change in our board or management; general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism. 19 On May 22, 2020, we sold $35 million of preferred stock with a 5.25% cumulative dividend and convertible into common stock at a conversion price of $20.1676 per share.
Factors affecting the trading price of our common stock may include: • uncertainties in the global economy; • economic news or other events generally causing volatility in the trading markets; • our operating results failing to meet the expectation of securities analysts or investors in a particular period or failure of securities analysts to publish reports about us or our business; • announcements by us or our competitors of acquisitions, new offerings or improvements, significant contracts, commercial relationships or capital commitments; • our ability to market new and enhanced solutions on a timely basis; and • any major change in our board or management • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
For example, our business is impacted by decreases in travel and leisure activities resulting from weak economic conditions, increases in energy prices and changes in currency values, political instability, heightened travel security measures, travel advisories, disruptions in air travel, and concerns over disease, violence, war, or terrorism.
Our business is negatively impacted by decreases in travel and leisure activities resulting from weak economic conditions, increases in energy prices and changes in currency values, political instability, heightened travel security measures, travel advisories, disruptions in air travel, and concerns over disease, violence, war, or terrorism. For example, the COVID-19 pandemic caused significant disruption of businesses and supply chains worldwide.
Instabilities or downturns in the hospitality industry, such as those resulting from the impact of COVID-19, as discussed above, could disproportionately impact our revenue, as customers may exit the industry or delay, cancel or reduce planned expenditures for our products.
Instabilities or downturns in the hospitality industry, such as those resulting from the impact of COVID-19, could disproportionately impact our revenue, as customers may exit the industry or delay, cancel or reduce planned expenditures for our products. Consolidation in the gaming and other hospitality industries could adversely affect our business.
We have implemented security measures and controls intended to protect our IT infrastructure, data centers and other systems and data against cyber-attacks. Despite our implementation of security measures and controls, our systems and those of third parties upon whom we rely are vulnerable to attack from numerous threat actors, including sophisticated nation-state and nation-state-supported actors.
Despite our implementation of security measures and controls, our systems and those of third parties upon whom we rely are vulnerable to attack from numerous threat actors, including sophisticated nation-state and nation-state-supported actors.
Similarly, increases in energy prices can result in higher ingredient and food costs for our customers with restaurant operations, which may adversely affect demand for our customers’ restaurant businesses, and in turn, our business, financial results and liquidity. COVID-19 has adversely impacted our business and may further impact our business, financial results and liquidity for an unknown period of time.
Similarly, increases in energy prices can result in higher ingredient and food costs for our customers with restaurant operations, which may adversely affect demand for our customers’ restaurant businesses, and in turn, our business, financial results and liquidity. Our business may be adversely impacted by international trade disputes.
Our stock has been volatile and we expect that it will continue to be volatile. Our stock price has been volatile, and we expect it will continue to be volatile. For example, during the year ended March 31, 2022, the trading price of our common stock ranged from a high close of $58.45 to a low close of $35.31.
Risks Relating to Our Finances and Capital Structure Our stock has been volatile and we expect that it will continue to be volatile. During the year ended March 31, 2023, the trading price of our common stock ranged from a low close of $32.41 to a high close of $87.33.
Any failure to protect our intellectual property rights would diminish or eliminate the competitive advantages that we derive from our proprietary technology. 17 We may be subject to claims of infringement of third-party intellectual property rights. Third parties may assert claims that our software or technology infringe, misappropriate, or otherwise violate their intellectual property or other proprietary rights.
We cannot be certain that the steps we have taken will prevent unauthorized use of our technology. Any failure to protect our intellectual property rights would diminish or eliminate the competitive advantages that we derive from our proprietary technology. 17 We may be subject to claims of infringement of third-party intellectual property rights.
We collect, process, transmit, and/or store (on our systems and those of third-party providers) customer transactional data, as well as their and our customers’ and employees’ personally identifiable information and/or other data and information.
A failure to comply with applicable privacy or data protection laws could harm our reputation and have a material adverse effect on our business. We collect, process, transmit, and/or store (on our systems and those of third-party providers) customer transactional data, as well as their and our customers’ and employees’ personally identifiable information and/or other data and information.
For certain products and services, including our cloud hosting operations, we rely on third-party providers, which may create significant risk exposure for us. We maintain relationships with third parties to provide certain services to us or to our customers, including cloud hosting and other cloud-based services.
We maintain relationships with third parties to provide certain services to us or to our customers, including cloud hosting and other cloud-based services.
Such claims may be made by our competitors seeking to obtain a competitive advantage or by other parties. The risk of claims may increase as the number of software products that we offer and competitors in our market increase and overlaps occur.
The risk of claims may increase as the number of software products that we offer and competitors in our market increase and overlaps occur.
However, a natural disaster, fire, power shortage, pandemic, act of terrorism or other catastrophic event occurring in either geographic location that prevents or substantially impairs our employees’ ability to work, either in the office or from home, could make it difficult or impossible for us to deliver our products and services to customers. 16 Regulatory Matters, Data Privacy, Information Security, and Product Functionality Cyber-attacks involving our systems and data could expose us to liability or harm our reputation and have a material adverse effect on our business.
While we maintain crisis management and disaster response plans, a natural disaster, fire, power shortage, pandemic, act of terrorism or other catastrophic event occurring in either geographic location that prevents or substantially impairs our employees’ ability to work, either in the office or from home, could make it difficult or impossible for us to deliver our products and services to customers.
We have reserves for certain state sales tax contingencies based on the likelihood of obligation. These contingencies are included in “Other non-current liabilities” in our Consolidated Balance Sheets. We believe we have appropriately accrued for these contingencies.
Some of our products and services may be subject to sales taxes in states where we have not collected and remitted such taxes from our customers. We have reserves for certain state sales tax contingencies based on the likelihood of obligation. These contingencies are included in “Other non-current liabilities” in our Consolidated Balance Sheets.
We can provide no assurance that we will be able to identify and acquire targeted businesses or obtain financing for such acquisitions on satisfactory terms. The process of integrating acquired businesses into our operations may result in unforeseen difficulties and may require a disproportionate amount of resources and management attention.
As part of our operating history and growth strategy, we have acquired other businesses. In the future, we may continue to seek acquisitions. We can provide no assurance that we will be able to identify and acquire targeted businesses or obtain financing for such acquisitions on satisfactory terms.
We depend on the services of our management and employees to continuously run and grow our business. To grow successfully, we must retain existing employees and attract new qualified employees, including in growth areas we may enter. Retention is an industry challenge given the competitive technology labor market, especially with the remote work options brought on by the COVID-19 pandemic.
To grow successfully, we must retain existing employees and attract new qualified employees, including in growth areas we may enter. Retention is an industry challenge given the competitive technology labor market. As we grow, we must also enhance and expand our workforce to execute on new and larger opportunities and challenges.
As of March 31, 2022, we had $32.8 million and $20.2 million of goodwill and intangible assets, net, respectively, on our Consolidated Balance Sheets. We review our goodwill and intangible assets for impairment on at least an annual basis.
As of March 31, 2023, we had $32.6 million of goodwill and $18.1 million of intangible assets, net, on our Consolidated Balance Sheet. We review our indefinite-lived intangible assets including goodwill for impairment on at least an annual basis or more frequently if an event or events indicate the potential for impairment.
Moreover, these types of contractual protections offer limited practical benefits to us in the event our relationship with a key provider is interrupted. If we cannot retain and recruit qualified personnel, or if labor costs continue to rise, our ability to operate and grow our business may be impaired and our financial results may suffer.
If we cannot retain and recruit qualified personnel, or if labor costs continue to rise, our ability to operate and grow our business may be impaired and our financial results may suffer. We depend on the services of our management and employees to continuously run and grow our business.
We may be at a disadvantage to larger companies with greater brand recognition or financial resources or to start-ups or other emerging companies in trending market sectors. Remote employment arrangements also come with challenges, including with respect to collaboration, training, and corporate culture, especially at a significant scale.
The market for qualified personnel is competitive in the geographies in which we operate and may be limited especially in technology areas. We may be at a disadvantage to larger companies with greater brand recognition or financial resources or to start-ups or other emerging companies in trending market sectors.
Dilution upon the conversion of the preferred stock in the future may negatively impact the price of our common stock. Additionally, our ownership base has been and may continue to be concentrated in a few shareholders, which could increase the volatility of our common share price over time. We may encounter risks associated with maintaining large cash balances.
Additionally, our ownership base has been and may continue to be concentrated in a few shareholders, which could increase the volatility of our common share price over time. If we acquire new businesses, we may not be able to successfully integrate them or attain the anticipated benefits.
If a customer, or any other person, seeks redress from us as a result of a security breach of our software, our business could be adversely affected. We may not be able to enforce or protect our intellectual property rights.
If a customer, or any other person, seeks redress from us as a result of a security breach of our software, our business could be adversely affected. For certain products and services, including our cloud hosting operations, we rely on third-party providers, which may create significant risk exposure for us.
We rely on a combination of copyright, patent, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We cannot be certain that the steps we have taken will prevent unauthorized use of our technology.
Moreover, these types of contractual protections offer limited practical benefits to us in the event our relationship with a key provider is interrupted. We may not be able to enforce or protect our intellectual property rights. We rely on a combination of copyright, patent, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights.
Removed
As discussed below under “ COVID-19 has adversely impacted our business and may further impact our business, financial results and liquidity for an unknown period of time ,” our performance has been affected by these conditions associated with COVID-19 and could be further materially affected going forward if these conditions continue for an additional extended period or in other circumstances that we are unable to foresee or mitigate.
Added
The resulting travel, work and social restrictions along with actions by governmental authorities to contain the COVID-19 outbreak led to a significant decrease in global economic activity and global trade.
Removed
The global spread and unprecedented impact of COVID-19 has resulted in disruption to our business, the hospitality industry and the global economy.
Added
While COVID-19 restrictions have since eased globally, a resurgence of the COVID-19 pandemic or a future pandemic, depending on its duration and severity, could materially adversely impact the global economy and our industry, operations and financial condition and performance.
Removed
The COVID-19 pandemic has led government and other authorities around the world to impose measures intended to control its spread, including restrictions on freedom of movement, gatherings of large numbers of people, and business operations such as travel bans, border closings, business closures, quarantines, shelter-in-place orders, and social distancing measures.
Added
Regulatory Matters, Data Privacy, Information Security, and Product Functionality Cyber-attacks involving our systems and data could expose us to liability or harm our reputation and have a material adverse effect on our business. We have implemented security measures and controls intended to protect our IT infrastructure, data centers and other systems and data against cyber-attacks.
Removed
Even as these restrictions have been relaxed in many parts of the world, including across the United States, they remain effective in other parts of the world and have frequently been re-imposed in many locations after having been relaxed as a result of additional outbreaks.
Added
Third parties may assert claims that our software or technology infringe, misappropriate, or otherwise violate their intellectual property or other proprietary rights. Such claims may be made by our competitors seeking to obtain a competitive advantage or by other parties.
Removed
As a result, the COVID-19 pandemic and its consequences have significantly reduced demand for gaming, hotels, resorts, cruises, corporate foodservice, restaurants, university cafeterias, and stadiums and have had a material detrimental impact on global commercial activity across these hospitality industries that we serve, and in some cases, has caused the closure of our customers’ businesses.
Added
On May 22, 2020, we sold $35 million of preferred stock with a 5.25% cumulative dividend and convertible into common stock at a conversion price of $20.1676 per share. Dilution upon the conversion of the preferred stock in the future may negatively impact the price of our common stock.
Removed
Business closures have resulted in our inability to complete certain implementations and negatively impacted our ability to recognize revenue.
Added
Our financial results may be significantly impacted by changes in our tax position. We are subject to taxes in the United States and numerous foreign jurisdictions.
Removed
We saw an improvement in the overall business environment and the hospitality market we serve during the second half of our fiscal 2021 (the year ended March 31, 2021) that continued through our fiscal 2022 as our customers re-opened their locations for business and our suppliers resumed operations that had been closed or reduced due to the pandemic.
Added
Our future effective tax rates could be impacted by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation allowance on deferred tax assets (including our net operating loss carryforwards), changes in unrecognized tax benefits, or changes in tax laws or their interpretation.
Removed
Based on the improved business 13 environment and our financial performance, we have resumed certain levels of spending; however, we will continue to assess spending activity as the facts and circumstances surrounding the pandemic evolve. Any resulting cost controls may have an adverse impact on our business, particularly if they remain in place for an extended period.
Added
Any of these changes could have a material adverse effect on our profitability. In addition, the tax authorities in the jurisdictions in which we operate, including the United States, may from time to time review the pricing arrangements between us and our foreign subsidiaries or among our foreign subsidiaries.
Removed
As the pandemic has evolved, we have also adapted our pandemic response based on the conditions of the locations in which we and our customers and suppliers operate.
Added
An adverse determination by one or more tax authorities in this regard may have a material adverse effect on our financial results. We have significant deferred tax assets which can provide us with significant future cash tax savings if we are able to use them, including significant net operating losses.
Removed
We expect to incur additional costs to the extent we further resume business-related travel and our employees return to our office locations, the timing and extent of which remains undetermined at this time.
Added
However, the extent to which we will be able to use these net operating losses may be impacted, restricted, or eliminated by a number of factors, including changes in tax rates, laws or regulations, and whether we generate sufficient future taxable income.
Removed
We expect the office activity will vary significantly from region to region based on factors such as the availability of vaccines and the spread and overall impact of any new virus variants.
Added
To the extent that we are unable to utilize our net operating losses or other losses, our results of operations, liquidity, and financial condition could be materially adversely impacted.
Removed
Notwithstanding the recovery in the business environment since the early part of the pandemic, given the uncertainty associated with the pandemic, our ability to predict how it will impact our business, financial condition, liquidity, and financial results in future periods is limited. Our business may be adversely impacted by international trade disputes.
Added
When we cease to have net operating losses available to us in a particular tax jurisdiction, either through their expiration, disallowance, or utilization, our cash tax liability will increase in that jurisdiction.
Removed
As we grow, we must also enhance and expand our workforce to execute on new and larger opportunities and challenges. The market for qualified personnel is competitive in the geographies in which we operate and may be limited especially in technology areas.
Added
We are exposed to foreign currency exchange rate fluctuations that could negatively impact our financial results. 19 We earn revenue, pay expenses, own assets, and incur liabilities in countries using currencies other than the U.S. dollar, including the British pound sterling, euro, Indian rupee, Australian dollar, Singapore dollar, and Canadian dollar, among others.
Removed
We maintain crisis management and disaster response plans, and during the COVID-19 pandemic, substantially all of our employees throughout the world have been capable of working from home for months at a time without significantly impacting our business.
Added
Because our consolidated financial statements are presented in U.S. dollars, we must translate revenue, expenses, assets, and liabilities of entities using non-U.S. dollar functional currencies into U.S. dollars using currency exchange rates in effect during or at the end of each reporting period, meaning that we are exposed to the impact of changes in currency exchange rates.
Removed
We are subject to laws and regulations governing the protection of personally identifiable information. A failure to comply with applicable privacy or data protection laws could harm our reputation and have a material adverse effect on our business.
Added
In addition, the revaluation and settlement of monetary assets and liabilities denominated in currencies other than the U.S. dollar impact our net income with associated gains or losses recorded within other income (expense), net. We may have exposure to greater than anticipated tax liabilities.
Removed
For additional information regarding the potential impact of COVID-19 on our business, see “ COVID-19 has adversely impacted our business and may further impact our business, financial results and liquidity for an unknown period of time ” above for additional information. Consolidation in the gaming and other hospitality industries could adversely affect our business.
Added
We assess as needed whether there have been impairments in our other intangible assets. We make assumptions and estimates in our assessments that can be complex and subjective.
Removed
Risks Relating to Our Finances and Capital Structure If we acquire new businesses, we may not be able to successfully integrate them or attain the anticipated benefits. As part of our operating history and growth strategy, we have acquired other businesses. In the future, we may continue to seek acquisitions.
Added
In our assumptions and estimates we consider whether negative factors exist such as deteriorating economic conditions, disruptions to our business, inability to effectively integrate acquired businesses, intensified competition, market capitalization declines, or significant changes in use of the intangible assets.
Removed
As of March 31, 2020, we determined the net realizable value of intangible assets consisting of capitalized software development costs for certain solutions within our rGuest suite of products no longer exceeded their carrying value, and as a result, recorded non-cash impairment charges of $22.0 million.
Added
To the extent that such factors or other negative factors emerge, we may record non-cash impairment charges in the future that could negatively impact our financial condition and results of operations. We may encounter risks associated with maintaining large cash balances.
Removed
The impact of the COVID-19 pandemic on the hospitality industry resulted in significantly lower sales and cash flow projections for the related rGuest solutions after evaluating the Company’s strategy for market development and continued costs to support the software. As a result, we recorded impairment charges to reduce the net realizable value of the related assets to zero.
Removed
Our future operating results and the market price of our common stock could be materially adversely affected if we are required to write down the carrying value of goodwill or other intangible assets in the future. We have incurred losses in recent years, and we may continue to incur losses in the future.
Removed
We have incurred operating losses in recent years, and we may continue to incur losses in the future as we continue to invest in our products. Our lack of consistent profitability limits the resources available to us to invest in developing new products, product upgrades and services and otherwise in improving business operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our current facilities and office space are sufficient to meet our needs and do not anticipate any difficulty securing additional space as needed.
Biggest changeWe believe our office space facilities are sufficient to meet our current needs and do not anticipate any difficulty securing additional space as needed.
In addition, we lease approximately 33,000 square feet of office space in Las Vegas, Nevada, 30,000 square feet of office space in Bellevue, Washington, of which we sublease 22,000 square feet to a third party, 5,000 square feet of office space in Santa Barbara, California, and 6,000 square feet of warehouse space in Roswell, Georgia.
In addition, we lease approximately 36,000 square feet of office space in Las Vegas, Nevada, 30,000 square feet of office space in Bellevue, Washington, of which we sublease 22,000 square feet to a third party, 5,000 square feet of office space in Santa Barbara, 20 California, and 6,000 square feet of warehouse space in Roswell, Georgia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn March 2022, the District Court granted summary judgment in favor of the defendants still facing the remaining claims. Subsequently, Ameranth 20 appealed the grant of summary judgment with the U.S. Court of Appeals for the Federal Circuit.
Biggest changeIn March 2022, the District Court granted summary judgment in favor of the defendants still facing the remaining claims. Subsequently, Ameranth appealed the grant of summary judgment with the U.S. Court of Appeals for the Federal Circuit.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of 5 Year Cumulative Total Return INDEXED RETURNS 22 Fiscal Years Ended March 31, Base Period Company Name / Index 2017 2018 2019 2020 2021 2022 Agilysys, Inc. $ 100.00 $ 126.14 $ 224.02 $ 176.72 $ 507.51 $ 422.01 Russell 2000 $ 100.00 $ 111.79 $ 114.09 $ 86.72 $ 168.96 $ 159.19 Peer Group $ 100.00 $ 115.62 $ 120.30 $ 115.48 $ 151.21 $ 164.88 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, of the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Biggest changeComparison of 5 Year Cumulative Total Return INDEXED RETURNS 22 Fiscal Years Ended March 31, Base Period Company Name / Index 2018 2019 2020 2021 2022 2023 Agilysys, Inc. $ 100.00 $ 177.60 $ 140.10 $ 402.35 $ 334.56 $ 692.11 Russell 2000 $ 100.00 $ 102.05 $ 77.57 $ 151.14 $ 142.39 $ 125.87 Peer Group $ 100.00 $ 105.73 $ 96.97 $ 130.61 $ 137.78 $ 108.26 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, of the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Dividends We did not pay dividends in fiscal 2022 or 2021 on our common stock and are unlikely to do so in the foreseeable future. We pay preferred stock dividends as described in Note 14, Preferred Stock, to our Consolidated Financial Statements under Item 8 of this Annual Report.
Dividends We did not pay dividends in fiscal 2023 or 2022 on our common stock and are unlikely to do so in the foreseeable future. We pay preferred stock dividends as described in Note 14, Preferred Stock , to our Consolidated Financial Statements under Item 8 of this Annual Report.
Shareholder Return Performance Presentation The following chart compares the value of $100 invested in our common shares, including reinvestment of dividends, with a similar investment in the Russell 2000 Index (the “Russell 2000”) and with the companies listed in the SIC Code 7373-Computer Integrated Systems Design for the period March 31, 2017 through March 31, 2022.
Shareholder Return Performance Presentation The following chart compares the value of $100 invested in our common shares, including reinvestment of dividends, with a similar investment in the Russell 2000 Index (the “Russell 2000”) and with the companies listed in the SIC Code 7373-Computer Integrated Systems Design for the period March 31, 2018 through March 31, 2023.
Item 5. Market for Registrant’s Common Equity, Related Sha reholder Matters and Issuer Purchases of Equity Securities. Market Information Our common shares, without par value, are traded on the NASDAQ Stock Market LLC under the symbol “AGYS”. As of May 13, 2022, there were 1,343 registered holders of our common shares, without par value.
Item 5. Market for Registrant’s Common Equity, Related Sha reholder Matters and Issuer Purchases of Equity Securities. Market Information Our common shares, without par value, are traded on the NASDAQ Stock Market LLC under the symbol “AGYS”. As of May 12, 2023, there were 1,233 registered holders of our common shares, without par value.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFiscal 2021 Compared to Fiscal 2020 Net Revenue and Operating Loss The following table presents our consolidated revenue and operating results for the fiscal years ended March 31, 2021 and 2020: Year ended March 31, Increase (decrease) (Dollars in thousands) 2021 2020 $ % Net revenue: Products $ 26,714 $ 44,230 $ (17,516 ) (39.6 )% Support, maintenance and subscription services 88,565 83,680 4,885 5.8 % Professional services 21,897 32,847 (10,950 ) (33.3 )% Total net revenue 137,176 160,757 (23,581 ) (14.7 )% Cost of goods sold: Products, inclusive of developed technology amortization 13,506 36,427 (22,921 ) (62.9 )% Support, maintenance and subscription services 17,985 19,248 (1,263 ) (6.6 )% Professional services 16,309 24,130 (7,821 ) (32.4 )% Total cost of goods sold 47,800 79,805 (32,005 ) (40.1 )% Gross profit $ 89,376 $ 80,952 $ 8,424 10.4 % Gross profit margin 65.2 % 50.4 % Operating expenses: Product development $ 55,345 $ 41,463 $ 13,882 33.5 % Sales and marketing 14,196 19,864 (5,668 ) (28.5 )% General and administrative 33,273 24,374 8,899 36.5 % Depreciation of fixed assets 2,832 2,574 258 10.0 % Amortization of internal-use software and intangibles 1,959 2,541 (582 ) (22.9 )% Impairments — 23,740 (23,740 ) (100.0 )% Severance and other charges 2,529 582 1,947 334.5 % Legal settlements 200 (125 ) 325 (260.0 )% Operating loss $ (20,958 ) $ (34,061 ) $ 13,103 (38.5 )% Operating loss percentage (15.3 )% (21.2 )% 29 The following table presents the percentage relationship of our Consolidated Statement of Operations line items to our consolidated net revenues for the periods presented: Year ended March 31, 2021 2020 Net revenue: Products 19.5 % 27.5 % Support, maintenance and subscription services 64.6 52.1 Professional services 15.9 20.4 Total net revenue 100.0 % 100.0 % Cost of goods sold: Products, inclusive of developed technology amortization 9.8 % 22.6 % Support, maintenance and subscription services 13.1 12.0 Professional services 11.9 15.0 Total cost of goods sold 34.8 % 49.6 % Gross profit 65.2 % 50.4 % Operating expenses: Product development 40.4 % 25.8 % Sales and marketing 10.3 12.4 General and administrative 24.4 15.2 Depreciation of fixed assets 2.1 1.6 Amortization of internal-use software and intangibles 1.4 1.6 Severance and other charges 1.8 0.4 Legal settlements 0.1 (0.1 ) Operating loss (15.3 )% (21.2 )% Net revenue.
Biggest changeWe use the following terms to describe revenue: • Revenue – We present revenue net of sales returns and allowances. • Products revenue – Revenue earned from the sales of software licenses, third party hardware and operating systems. • Subscription and maintenance revenue – Revenue earned from the ongoing delivery of software updates, upgrades, bug fixes, technical support, and transaction-based fees over the period covered by subscription or maintenance agreements with our customers for both proprietary and remarketed solutions. • Professional services revenue – Revenue earned from the delivery of implementation, integration and installation services for proprietary and remarketed products. 25 Results of Operations Fiscal 2023 Compared to Fiscal 2022 Net Revenue and Operating Income The following table presents our consolidated revenue and operating results for the fiscal years ended March 31, 2023 and 2022: Year ended March 31, Increase (decrease) (Dollars in thousands) 2023 2022 $ % Net revenue: Products $ 43,638 $ 35,956 $ 7,682 21.4 % Subscription and maintenance 118,285 98,958 19,327 19.5 % Professional services 36,142 27,722 8,420 30.4 % Total net revenue 198,065 162,636 35,429 21.8 % Cost of goods sold: Products 22,994 19,251 3,743 19.4 % Subscription and maintenance 26,262 21,141 5,121 24.2 % Professional services 27,990 20,712 7,278 35.1 % Total cost of goods sold 77,246 61,104 16,142 26.4 % Gross profit $ 120,819 $ 101,532 $ 19,287 19.0 % Gross profit margin 61.0 % 62.4 % Operating expenses: Product development $ 50,260 $ 46,332 $ 3,928 8.5 % Sales and marketing 22,716 14,730 7,986 54.2 % General and administrative 30,669 27,734 2,935 10.6 % Depreciation of fixed assets 1,769 2,210 (441 ) (20.0 )% Amortization of internal-use software and intangibles 1,743 1,654 89 5.4 % Other charges 435 1,584 (1,149 ) (72.5 )% Legal settlements 352 969 (617 ) nm Operating income $ 12,875 $ 6,319 $ 6,556 nm Operating income percentage 6.5 % 3.9 % nm - not meaningful 26 The following table presents the percentage relationship of our Consolidated Statement of Operations line items to our consolidated net revenues for the periods presented: Year ended March 31, 2023 2022 Net revenue: Products 22.1 % 22.1 % Subscription and maintenance 59.7 60.8 Professional services 18.2 17.1 Total net revenue 100.0 % 100.0 % Cost of goods sold: Products 11.6 % 11.8 % Subscription and maintenance 13.3 13.0 Professional services 14.1 12.8 Total cost of goods sold 39.0 % 37.6 % Gross profit 61.0 % 62.4 % Operating expenses: Product development 25.3 % 28.4 % Sales and marketing 11.5 9.1 General and administrative 15.5 17.1 Depreciation of fixed assets 0.9 1.4 Amortization of internal-use software and intangibles 0.9 1.0 Other charges 0.2 1.0 Legal settlements 0.2 0.5 Operating income 6.5 % 3.9 % Net revenue.
Our strategic plan specifically focuses on: 24 • Putting the customer first • Focusing on product innovation and development • Improving our liquidity • Increasing organizational efficiency and teamwork • Developing our employees and leaders • Growing revenue by improving the breadth and depth of our product set across both point-of-sale and property management applications • Growing revenue through international expansion The primary objective of our ongoing strategic planning process is to create shareholder value by capitalizing on growth opportunities, increasing profitability and strengthening our competitive position within the specific technology solutions and end markets we serve.
Our strategic plan specifically focuses on: • Putting the customer first • Focusing on product innovation and development • Improving our liquidity • Increasing organizational efficiency and teamwork • Developing our employees and leaders 24 • Growing revenue by improving the breadth and depth of our product set across both point-of-sale and property management applications • Growing revenue through international expansion The primary objective of our ongoing strategic planning process is to create shareholder value by capitalizing on growth opportunities, increasing profitability and strengthening our competitive position within the specific technology solutions and end markets we serve.
Gross profit and gross profit margin. Our total gross profit increased $12.2 million, or 13.6%, in fiscal 2022 and total gross profit margin decreased from 65.2% to 62.4%. Products gross profit increased $3.5 million and gross profit margin decreased from 49.4% to 46.5% due to a higher proportion of third-party products over proprietary software revenue.
Our total gross profit increased $12.2 million, or 13.6%, in fiscal 2022 and total gross profit margin decreased from 65.2% to 62.4%. Products gross profit increased $3.5 million and gross profit margin decreased from 49.4% to 46.5% due to a higher proportion of third-party products over proprietary software revenue.
Legal settlements. Legal settlements increased $0.8 million during fiscal 2022 compared to fiscal 2021 due to an increase in settlements of employment and other business-related matters.
Legal settlements increased $0.8 million during fiscal 2022 compared to fiscal 2021 due to an increase in settlements of employment and other business-related matters.
Income Taxes Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2022 2021 $ % Income tax expense (benefit) $ 33 $ (208 ) $ (241 ) nm Effective tax rate 0.5 % 1.0 % nm – not meaningful For fiscal 2022, the effective tax rate was different than the statutory rate due primarily to adjustments to deferred tax assets including increases in valuation allowances that reduce deferred tax assets and to the recording of net operating losses in a number of foreign jurisdictions offset by current year expense in other foreign jurisdictions. 28 Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next 12 months an immaterial reduction in unrecognized tax benefits may occur as a result of the expiration of various statutes of limitations.
Income Taxes Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2022 2021 $ % Income tax (benefit) expense $ 33 $ (208 ) $ (241 ) nm Effective tax rate 0.5 % 1.0 % nm – not meaningful For fiscal 2022, the effective tax rate was different than the statutory rate due primarily to adjustments to deferred tax assets including increases in valuation allowances that reduce deferred tax assets and to the recording of net operating losses in a number of foreign jurisdictions offset by current year expense in other foreign jurisdictions. 31 Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next 12 months an immaterial reduction in unrecognized tax benefits may occur as a result of the expiration of various statutes of limitations.
Shares issued pursuant to awards under this plan may be made out of treasury or authorized but unissued shares. We record compensation expense related to stock-settled stock appreciation rights, restricted shares, and performance shares granted to certain employees and non-employee directors based on the fair value of the awards on the grant date.
Shares issued pursuant to awards under this plan may be made out of treasury or authorized but unissued shares. We record compensation expense related to stock-settled stock appreciation rights, restricted shares, restricted stock units and performance shares granted to certain employees and non-employee directors based on the fair value of the awards on the grant date.
Our software licenses typically provide for a perpetual right to use our software. Generally, our contracts do not provide significant services of integration and customization and installation services are not required to be purchased directly from us. The software is delivered before related services are provided and is functional without professional services, updates and technical support.
Our proprietary software licenses typically provide for a perpetual right to use our software. Generally, our contracts do not provide significant services of integration and customization and installation services are not required to be purchased directly from us. The software is delivered before related services are provided and is functional without professional services, updates and technical support.
The majority of our contracts are governed by a master service agreement between us and the customer, which sets forth the general terms and conditions of any individual contract between the parties, which is then supplemented by a customer order to specify the different goods and services, the associated prices, and any additional terms for an individual contract.
The majority of our contracts are governed by a master service agreement between us and the customer, which sets forth the general terms and conditions of any individual contract between the parties, which is then supplemented by a customer order to specify the different 33 goods and services, the associated prices, and any additional terms for an individual contract.
Operating expenses Operating expenses, excluding the charges for legal settlements, severance and other charges, decreased $14.9 million, or 13.9%, in fiscal 2022 compared with fiscal 2021. As a percent of total revenue, operating expenses have decreased 21.5% in fiscal 2022 compared with fiscal 2021. Product development. Product development includes all expenses associated with research and development.
Operating expenses Operating expenses, excluding the charges for legal settlements and other charges, decreased $14.9 million, or 13.9%, in fiscal 2022 compared with fiscal 2021. As a percent of total revenue, operating expenses have decreased 21.5% in fiscal 2022 compared with fiscal 2021. Product development. Product development includes all expenses associated with research and development.
Revenue – Defined As required by the SEC, we separately present revenue earned as products revenue, support, maintenance and subscription services revenue or professional services revenue in our Consolidated Statements of Operations. In addition to the SEC requirements, we may, at times, also refer to revenue as defined below.
Revenue – Defined As required by the SEC, we separately present revenue earned as products revenue, subscription and maintenance revenue or professional services revenue in our Consolidated Statements of Operations. In addition to the SEC requirements, we may, at times, also refer to revenue as defined below.
Product development decreased $9.0 million, or 16.3%, during fiscal 2022 as compared to fiscal 2021 due to an increase of $4.4 million in payroll and other operating expenses as we continue to manage market compensation pressures offset by a decrease in share-based compensation expense of $13.4 million due to significant charges resulting from accelerated vesting of stock-settled appreciation rights (SSARs) upon their market condition satisfaction in February 2021. 27 Sales and marketing.
Product development decreased $9.0 million, or 16.3%, during fiscal 2022 as compared to fiscal 2021 due to an increase of $4.4 million in payroll and other operating expenses as we continue to manage market compensation pressures offset by a decrease in share-based compensation expense of $13.4 million due to significant charges resulting from accelerated vesting of stock-settled appreciation rights (SSARs) upon their market condition satisfaction in February 2021. 30 Sales and marketing.
For stock option and stock-settled appreciation right (SSAR) grants subject only to a service condition, we estimate the fair value on the grant date using the Black-Scholes-Merton option pricing model with inputs including the closing market price at grant date, exercise price and assumptions regarding the risk-free interest rate, expected volatility of our common shares based on historical volatility, and expected 34 term as estimated using the simplified method.
For stock option and stock-settled appreciation right grants subject only to a service condition, we estimate the fair value on the grant date using the Black-Scholes-Merton option pricing model with inputs including the closing market price at grant date, exercise price and assumptions regarding the risk-free interest rate, expected volatility of our common shares based on historical volatility, and expected term as estimated using the simplified method.
The transaction price is determined based on the consideration to which we will be entitled and expect to receive in exchange 33 for transferring goods or services to the customer.
The transaction price is determined based on the consideration to which we will be entitled and expect to receive in exchange for transferring goods or services to the customer.
Some of the largest hospitality companies around the world use Agilysys solutions to help improve guest loyalty, drive revenue growth and increase operational efficiencies. The Company has just one reportable segment serving the global hospitality industry. Agilysys operates across North America, Europe, Asia-Pacific, and India with headquarters located in Alpharetta, Georgia.
Some of the largest hospitality companies around the world use Agilysys solutions to help improve guest loyalty, drive revenue growth and increase operational efficiencies. The Company has just one reportable segment serving the global hospitality industry. Agilysys operates across North America, Europe, the Middle East, Asia-Pacific, and India with headquarters located in Alpharetta, Georgia.
Other (Income) Expenses Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2022 2021 $ % Other (income) expense: Interest (income) $ (59 ) $ (107 ) $ (48 ) 44.9 % Interest expense 12 20 8 40.0 % Other (income) expense, net (145 ) 338 483 nm Total other (income) expense, net $ (192 ) $ 251 $ 443 nm nm – not meaningful Interest income.
Other Income (Expenses) Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2022 2021 $ % Other income (expense): Interest income $ 59 107 $ 48 (44.9 )% Interest (expense) (12 ) (20 ) $ (8 ) nm Other income (expense), net 145 (338 ) (483 ) nm Total other income (expense), net $ 192 $ (251 ) $ (443 ) nm nm – not meaningful Interest income.
Accordingly, each of the rights to access the software, the maintenance services, and any hosting services is not considered a distinct performance obligation in the context of the contract and should be combined into a single performance obligation to be recognized over the contract period.
Accordingly, each of the rights to access the software, the maintenance services, any hosting services, and any transaction-based services is not considered a distinct performance obligation in the context of the contract and should be combined into a single performance obligation to be recognized over the contract period.
Amortization of internal-use software and intangibles decreased $0.3 million or 15.6% in fiscal 2022 as compared to fiscal 2021 due to a lower unamortized cost base following the impairment of intangibles in fiscal 2020. Severance and other charges. Severance and other charges decreased $0.9 million due to a significant reduction in employee terminations during fiscal 2022 compared to fiscal 2021.
Amortization of internal-use software and intangibles decreased $0.3 million or 15.6% in fiscal 2022 as compared to fiscal 2021 due to a lower unamortized cost base following the impairment of intangibles in fiscal 2020. Other charges. Other charges decreased $0.9 million due to a significant reduction in employee terminations during fiscal 2022 compared to fiscal 2021. Legal settlements.
Support, maintenance and subscription services gross profit increased $7.2 million and gross profit margin decreased from 79.7% to 78.6% as certain variable costs increased ahead of related revenue.
Subscription and maintenance gross profit increased $7.2 million and gross profit margin decreased from 79.7% to 78.6% as certain variable costs increased ahead of related revenue.
Revenue for hardware sales is recognized when the product is shipped to the customer and when obligations that affect the customer’s final acceptance of the arrangement have been fulfilled. Hardware is purchased from suppliers and provided to the end-user customers via drop-ship or from inventory.
We recognize revenue for hardware sales when the product is shipped to the customer and when obligations that affect the customer’s final acceptance of the arrangement have been fulfilled. Hardware is purchased from suppliers and provided to the end-user customers via drop-ship or from inventory.
Support, maintenance and subscription services revenue increased $10.4 million, or 11.7%, driven by continued growth in subscription-based revenue, which increased 28.0% in fiscal 2022 compared to fiscal 2021. Professional services revenue increased $5.8 million, or 26.6%, due to higher sales and service activity as our customers shift their focus to implementing technology to improve their operations.
Subscription and maintenance revenue increased $10.4 million, or 11.7%, driven by continued growth in subscription-based revenue, which increased 28.0% in fiscal 2022 compared to fiscal 2021. Professional services revenue increased $5.8 million, or 26.6%, due to higher sales and service activity as our customers shift their focus to implementing technology to improve their operations. Gross profit and gross profit margin.
For restricted share and SSAR grants subject to a market condition, we estimate the fair value on the grant date through a lattice option pricing model that utilizes a Monte Carlo analysis with inputs including the closing market price at grant date, share price threshold and assumptions regarding the risk-free interest rate and expected volatility of our common shares based on historical volatility.
For restricted share, restricted stock unit and SSAR grants subject to a market condition, we estimate the fair value on the grant date through a lattice option pricing model that utilizes a Monte Carlo analysis with inputs including the closing market price at grant date, share price threshold, performance period term and assumptions regarding the risk-free interest rate and expected volatility of our common shares based on historical volatility.
Cash flows used in investing activities in fiscal 2021 were $1.4 million due primarily to the purchase of property and equipment, including internal use software. 32 Cash flows used in investing activities in fiscal 2020 were $3.4 million due primarily to the purchase of property and equipment, including internal use software. Cash flow provided by (used in) financing activities.
Cash flows used in investing activities in fiscal 2021 were $1.4 million due primarily to the purchase of property and equipment, including internal use software. Cash flow (used in) provided by financing activities.
Liquidity and Capital Resources Overview Our cash requirements consist primarily of working capital needs, capital expenditures, payments of preferred stock dividends, and operating expenses including payments of lease obligations. Our contractual obligations consist primarily of operating leases for office space and preferred stock dividends.
Liquidity and Capital Resources Overview Our cash requirements consist primarily of working capital needs, capital expenditures, and payments of contractual obligations. Our contractual obligations consist primarily of operating leases for office space and preferred stock dividends.
The fair value of restricted share grants subject only to a service condition is based on the closing price of our common shares on the grant date.
The fair value of restricted share and restricted stock unit grants subject only to a service condition is based on the closing price of our common shares on the grant date.
Inputs for SSAR grants subject to a market condition also include exercise price, remaining contractual term, and suboptimal exercise factor. Forfeitures of awards are recognized as they occur. Additional information regarding the assumptions used to value share-based compensation awards is provided in Note 13, Share-Based Compensation , to our Consolidated Financial Statements.
Inputs for SSAR grants subject to a market condition also include exercise price, remaining contractual term, and suboptimal exercise factor. Forfeitures of awards are recognized as they occur. Additional information regarding the assumptions used to value share-based compensation awards is provided in Note 13, Share-Based Compensation , to our Consolidated Financial Statements included under Item 8 of this Annual Report.
We use the following terms to describe revenue: • Revenue – We present revenue net of sales returns and allowances. • Products revenue – Revenue earned from the sales of software licenses, third party hardware and operating systems. • Support, maintenance and subscription services revenue – Revenue earned from the sale of proprietary and remarketed ongoing support, maintenance and subscription services. • Professional services revenue – Revenue earned from the delivery of implementation, integration and installation services for proprietary and remarketed products. 25 Results of Operations Fiscal 2022 Compared with Fiscal 2021 Net Revenue and Operating Income (Loss) The following table presents our consolidated revenue and operating results for the fiscal years ended March 31, 2022 and 2021: Year ended March 31, Increase (decrease) (Dollars in thousands) 2022 2021 $ % Net revenue: Products $ 35,956 $ 26,714 $ 9,242 34.6 % Support, maintenance and subscription services 98,958 88,565 10,393 11.7 % Professional services 27,722 21,897 5,825 26.6 % Total net revenue 162,636 137,176 25,460 18.6 % Cost of goods sold: Products 19,251 13,506 5,745 42.5 % Support, maintenance and subscription services 21,141 17,985 3,156 17.5 % Professional services 20,712 16,309 4,403 27.0 % Total cost of goods sold 61,104 47,800 13,304 27.8 % Gross profit $ 101,532 $ 89,376 $ 12,156 13.6 % Gross profit margin 62.4 % 65.2 % Operating expenses: Product development $ 46,332 $ 55,345 $ (9,013 ) (16.3 )% Sales and marketing 14,730 14,196 534 3.8 % General and administrative 27,734 33,273 (5,539 ) (16.6 )% Depreciation of fixed assets 2,210 2,832 (622 ) (22.0 )% Amortization of internal-use software and intangibles 1,654 1,959 (305 ) (15.6 )% Severance and other charges 1,584 2,529 (945 ) (37.4 )% Legal settlements 969 200 769 nm Operating income (loss) $ 6,319 $ (20,958 ) $ 27,277 nm Operating income (loss) percentage 3.9 % (15.3 )% nm - not meaningful 26 The following table presents the percentage relationship of our Consolidated Statement of Operations line items to our consolidated net revenues for the periods presented: Year ended March 31, 2022 2021 Net revenue: Products 22.1 % 19.5 % Support, maintenance and subscription services 60.8 64.6 Professional services 17.1 15.9 Total net revenue 100.0 % 100.0 % Cost of goods sold: Products 11.8 % 9.8 % Support, maintenance and subscription services 13.0 13.1 Professional services 12.8 11.9 Total net cost of goods sold 37.6 % 34.8 % Gross profit 62.4 % 65.2 % Operating expenses: Product development 28.4 % 40.4 % Sales and marketing 9.1 10.3 General and administrative 17.1 24.4 Depreciation of fixed assets 1.4 2.1 Amortization of internal-use software and intangibles 1.0 1.4 Severance and other charges 1.0 1.8 Legal settlements 0.5 0.1 Operating income (loss) 3.9 % (15.3 )% Net revenue.
Fiscal 2022 Compared to Fiscal 2021 Net Revenue and Operating Loss The following table presents our consolidated revenue and operating results for the fiscal years ended March 31, 2022 and 2021: Year ended March 31, Increase (decrease) (Dollars in thousands) 2022 2021 $ % Net revenue: Products $ 35,956 $ 26,714 $ 9,242 34.6 % Subscription and maintenance 98,958 88,565 10,393 11.7 % Professional services 27,722 21,897 5,825 26.6 % Total net revenue 162,636 137,176 25,460 18.6 % Cost of goods sold: Products, inclusive of developed technology amortization 19,251 13,506 5,745 42.5 % Subscription and maintenance 21,141 17,985 3,156 17.5 % Professional services 20,712 16,309 4,403 27.0 % Total cost of goods sold 61,104 47,800 13,304 27.8 % Gross profit $ 101,532 $ 89,376 $ 12,156 13.6 % Gross profit margin 62.4 % 65.2 % Operating expenses: Product development $ 46,332 $ 55,345 $ (9,013 ) (16.3 )% Sales and marketing 14,730 14,196 534 3.8 % General and administrative 27,734 33,273 (5,539 ) (16.6 )% Depreciation of fixed assets 2,210 2,832 (622 ) (22.0 )% Amortization of internal-use software and intangibles 1,654 1,959 (305 ) (15.6 )% Other charges 1,584 2,529 (945 ) (37.4 )% Legal settlements 969 200 769 384.5 % Operating income (loss) $ 6,319 $ (20,958 ) $ 27,277 (130.2 )% Operating income (loss) percentage 3.9 % (15.3 )% 29 The following table presents the percentage relationship of our Consolidated Statement of Operations line items to our consolidated net revenues for the periods presented: Year ended March 31, 2022 2021 Net revenue: Products 22.1 % 19.5 % Subscription and maintenance 60.8 64.6 Professional services 17.1 15.9 Total net revenue 100.0 % 100.0 % Cost of goods sold: Products, inclusive of developed technology amortization 11.8 % 9.8 % Subscription and maintenance 13.0 13.1 Professional services 12.8 11.9 Total cost of goods sold 37.6 % 34.8 % Gross profit 62.4 % 65.2 % Operating expenses: Product development 28.4 % 40.4 % Sales and marketing 9.1 10.3 General and administrative 17.1 24.4 Depreciation of fixed assets 1.4 2.1 Amortization of internal-use software and intangibles 1.0 1.4 Other charges 1.0 1.8 Legal settlements 0.5 0.1 Operating income (loss) 3.9 % (15.3 )% Net revenue.
The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible.
The ultimate realization of deferred tax assets depends on various factors including the generation of taxable income during the future periods in which the underlying temporary differences are deductible.
Interest income consists of interest earned on cash equivalents including short-term investments in commercial paper, treasury bills and money market funds. Interest expense. Interest expense consists of costs associated with finance leases. Other expense, net. Other expense, net consists mainly of the impact of foreign currency due to movement of European and Asian currencies against the US dollar.
Interest income consists of interest earned on cash equivalents including short-term investments in commercial paper, treasury bills and money market funds. Interest (expense). Interest expense consists of costs associated with finance leases. Other income, net. Other income, net mainly consists of movement of foreign currencies against the U.S. dollar.
We are consistently subject to tax audits; due to the nature of examinations in multiple jurisdictions, changes could occur in the amount of gross unrecognized tax benefits during the next 12 months which cannot be estimated at this time.
We are consistently subject to tax audits. Due to the nature of examinations in multiple jurisdictions, changes could occur in the amount of gross unrecognized tax benefits during the next 12 months that we cannot anticipate.
Depreciation of fixed assets increased $0.3 million or 10.0% in fiscal 2021 as compared to fiscal 2020 due to an increased level of assets with shorter useful lives. Amortization of internal-use software and intangibles.
Depreciation of fixed assets decreased $0.4 million or 20.0% in fiscal 2023 as compared to fiscal 2022 due to an increased level of assets with shorter useful lives. Amortization of internal-use software and intangibles.
Adopted and Recently Issued Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, to our Consolidated Financial Statements included under Item 8 of this Annual Report for additional information about recent accounting pronouncements recently adopted and those not yet effective.
Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies , to our Consolidated Financial Statements included under Item 8 of this Annual Report for additional information about accounting pronouncements.
Agilysys offers the most comprehensive software solutions in the industry, including point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications, to manage the entire guest journey. Agilysys is also known for its world class customer-centric service. During recent years, Agilysys has made major investments in R&D and has successfully modernized virtually all its longstanding trusted software solutions.
Agilysys offers the most comprehensive software solutions in the industry, including point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications, to manage the entire guest journey. Agilysys is also known for its world class customer-centric service.
We believe there is limited credit risk with respect to our cash balances. We believe that cash flow from operating activities, cash on hand of $97.0 million as of March 31, 2022, and access to capital markets will provide adequate funds to meet our short-and long-term liquidity requirements.
We believe that cash flow from operating activities, cash on hand of $112.8 million as of March 31, 2023, and access to capital markets will provide adequate funds to meet our short-and long-term liquidity requirements.
Cash Flow Year ended March 31, (In thousands) 2022 2021 2020 Net cash provided by (used in): Operating activities $ 28,475 $ 28,407 $ 10,575 Investing activities (25,679 ) (1,391 ) (3,447 ) Financing activities (4,901 ) 25,316 (1,116 ) Effect of exchange rate changes on cash (104 ) 195 (130 ) (Decrease) increase in cash $ (2,209 ) $ 52,527 $ 5,882 Cash flow provided by operating activities.
Cash Flow Year ended March 31, (In thousands) 2023 2022 2021 Net cash provided by (used in): Operating activities $ 34,463 $ 28,475 $ 28,407 Investing activities (6,870 ) (25,679 ) (1,391 ) Financing activities (11,094 ) (4,901 ) 25,316 Effect of exchange rate changes on cash (628 ) (104 ) 195 (Decrease) increase in cash $ 15,871 $ (2,209 ) $ 52,527 Cash flow provided by operating activities.
Cash flow used in investing activities . Cash flows used in investing activities in fiscal 2022 were $25.7 million due to $24.5 million in cash paid for business combinations, net of cash acquired, and $1.2 million in purchases of property and equipment, including internal use software.
Cash flows used in investing activities in fiscal 2023 were $6.9 million due to $7.3 million in purchases of property and equipment, including internal use software and $0.4 million in cash received from final working capital adjustments related to the ResortSuite acquisition. 32 Cash flows used in investing activities in fiscal 2022 were $25.7 million due to $24.5 million in cash paid for business combinations, net of cash acquired, and $1.2 million in purchases of property and equipment, including internal use software.
Operating expenses Operating expenses, excluding the charges for legal settlements, impairments, severance and other charges, increased $16.8 million, or 18.5%, in fiscal 2021 compared with fiscal 2020. As a percent of total revenue, operating expenses have increased 22.0% in fiscal 2021 compared with fiscal 2020. Product development. Product development includes all expenses associated with research and development.
Operating expenses Operating expenses, excluding the charges for legal settlements and other charges, increased $14.5 million, or 15.6%, in fiscal 2023 compared with fiscal 2022. As a percent of total revenue, operating expenses have decreased 2.9% in fiscal 2023 compared with fiscal 2022. Product development. Product development includes all expenses associated with research and development.
Interest income consists of interest earned on short-term investments in commercial paper, money market funds and interest-bearing bank accounts. Interest expense. Interest expense consists of costs associated with finance leases. Other expense, net. Other expense, net consists mainly of the impact of foreign currency due to movement of European and Asian currencies against the US dollar.
Interest income consists of interest earned on cash equivalents including short-term investments in commercial paper, treasury bills and money market funds. Interest (expense). Interest expense consists of costs associated with finance leases. Other income (expense), net. Other income (expense), net mainly consists of movement of foreign currencies against the U.S. dollar.
These services represent a stand-ready obligation that is concurrently delivered and has the same pattern of transfer to the customer; we account for these support and maintenance services as a single performance obligation recognized over the term of the maintenance agreement.
These services represent a stand-ready obligation that is concurrently delivered and has the same pattern of transfer to the customer; we account for these maintenance services as a single performance obligation. Maintenance revenue includes the same services provided by third-parties for remarketed software. We recognize substantially all maintenance revenue over the contract period of the maintenance agreement.
Cash flows provided by operating activities were $10.6 million in fiscal 2020. The provision of cash was due primarily to our operating loss of $34.1 million adjusted for $46.2 million in non-cash expense including impairment charges, depreciation, amortization, and share-based compensation and a decrease of approximately $1.5 million in net operating assets and liabilities.
Cash flows provided by operating activities were $34.5 million in fiscal 2023. The provision of cash was due primarily to our net income of $14.6 million adjusted for $16.4 million in non-cash expense including depreciation, amortization, and share-based compensation and an increase of $3.5 million from the changes in operating assets and liabilities.
The Company recognizes subscription revenue over a one-month period based on the typical monthly invoicing and renewal cycle in accordance with our customer agreement terms.
The Company recognizes subscription revenue over a one-month period based on the typical monthly invoicing and renewal cycle in accordance with our customer agreement terms. We derive maintenance service revenue from providing unspecified updates, upgrades, bug fixes, and technical support services for our proprietary software.
Income Taxes Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2021 2020 $ % Income tax (benefit) expense $ (208 ) $ 201 $ 409 nm Effective tax rate 1.0 % (0.6 )% nm – not meaningful 31 For fiscal 2021, the effective tax rate was different than the statutory rate due primarily to adjustments to deferred tax assets including increases in valuation allowances that reduce deferred tax assets and to the recording of net operating losses in a number of foreign jurisdictions offset by current year expense in other foreign jurisdictions.
Income Taxes Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2023 2022 $ % Income tax expense $ 1,182 $ 33 $ (1,149 ) nm Effective tax rate 7.5 % 0.5 % nm – not meaningful For fiscal 2023, the effective tax rate was different than the statutory rate due primarily to adjustments to deferred tax assets including decreases in valuation allowances that reduce deferred tax assets.
At March 31, 2021, we had $199.1 million of federal net operating loss carryforwards that expire, if unused, in fiscal years 2031 to 2038, and $46.8 million of federal net operating loss carryforwards that can be carried forward indefinitely. We also had $165.6 million of state net operating loss carryforwards that expire, if unused, in fiscal years 2022 through 2041.
As of March 31, 2023, we had $132.0 million of federal net operating loss carryforwards that expire, if unused, in fiscal years 2033 to 2039, and $43.8 million of federal net operating loss carryforwards that can be carried forward indefinitely.
We disclose our lease obligations in Note 6, Leases, and preferred stock dividends in Note 14, Preferred Stock, to our Consolidated Financial Statements included under Item 8 of this Annual Report. At March 31, 2022, all $97.0 million of our cash on hand was deposited in bank accounts, of which 93% are located in the United States.
We disclose our lease obligations in Note 6, Leases , and preferred stock dividends in Note 14, Preferred Stock , to our Consolidated Financial Statements included under Item 8 of this Annual Report.
Because of our losses in prior periods, we have recorded a valuation allowance offsetting substantially all of our deferred tax assets. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible.
The ultimate realization of deferred tax assets depends on various factors including the generation of taxable income during the future periods in which the underlying temporary differences are deductible.
Severance and other charges increased $1.9 million due to an increase in non-restructuring severance activity during fiscal 2021 compared to fiscal 2020. Legal settlements. Legal settlements consist of settlements of employment and other business-related matters.
Legal settlements decreased $0.6 million during fiscal 2023 compared to fiscal 2022 due to an decrease in settlements of employment and other business-related matters.
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative SSP basis. Share-based compensation. We have an equity incentive plan under which we may grant non-qualified stock options, incentive stock options, stock-settled stock appreciation rights, time-vested restricted shares, restricted share units, performance-vested restricted shares, and performance shares.
Revenue is recorded net of any applicable taxes collected and remitted to governmental agencies. 34 Share-based compensation. We have an equity incentive plan under which we may grant non-qualified stock options, incentive stock options, stock-settled stock appreciation rights, restricted shares, restricted stock units and performance shares.
Cash flows used in financing activities in fiscal 2020 were $1.1 million and primarily comprised of share repurchases to satisfy employee tax withholding on share-based compensation. Investments Investments in Corporate-Owned Life Insurance Policies Agilysys invests in corporate-owned life insurance policies for certain former executives, for which some are endorsement split-dollar life insurance arrangements.
Investments Investments in Corporate-Owned Life Insurance Policies Agilysys invests in corporate-owned life insurance policies for certain former executives, for which some are endorsement split-dollar life insurance arrangements.
Because of our losses in prior periods, management believes that it is more-likely-than-not that we will not realize the benefits of these deductible differences and have recorded a valuation allowance substantially offsetting our deferred tax assets.
Although the timing and outcome of tax settlements remain uncertain, we expect that, as a result of the expiration of various statutes of limitations, a reduction in unrecognized tax benefits including related penalties and interest is more likely than not to occur during the next 12 months. 28 Because of our losses in prior periods, we have recorded a valuation allowance offsetting substantially all of the Company's deferred tax assets.
Our Business Agilysys has been a leader in hospitality software for more than 40 years, delivering innovative cloud-native SaaS and on-premise guest-centric technology solutions for gaming, hotels, resorts and cruise, corporate foodservice management, restaurants, universities, stadiums and healthcare.
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. Our Business Agilysys has been a leader in hospitality software for more than 40 years, delivering innovative state-of-the-art cloud-native SaaS and on-premise guest-centric technology solutions.
Other (Income) Expenses Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2021 2020 $ % Other (income) expense: Interest (income) $ (107 ) (380 ) $ (273 ) (71.8 )% Interest expense 20 9 $ (11 ) nm Other expense, net 338 176 (162 ) (92.0 )% Total other expense (income), net $ 251 $ (195 ) $ (446 ) nm nm – not meaningful Interest income.
Other Income (Expenses) Year ended March 31, (Unfavorable) favorable (Dollars in thousands) 2023 2022 $ % Other income (expense): Interest income $ 2,192 $ 59 $ (2,133 ) nm Interest (expense) — (12 ) (12 ) nm Other income, net 697 145 (552 ) nm Total other income, net $ 2,889 $ 192 $ (2,697 ) nm nm – not meaningful Interest income.
The customer can only benefit from the software and software maintenance when provided the right to access the software.
Our subscription service revenue is primarily based on rates per location, including rates per points of sale and per room. We recognize certain subscription service revenue on a per-transaction basis. The customer can only benefit from the software and software maintenance when provided the right to access the software.
Management believes that this information, discussion, and disclosure is important in making decisions about investing in Agilysys. Overview Recent Developments COVID-19 Pandemic The World Health Organization declared COVID-19 a pandemic on March 11, 2020. COVID-19 has had a significant impact on our business during the year ended March 31, 2022.
Management believes that this information, discussion, and disclosure is important in making decisions about investing in Agilysys.
Support, maintenance and subscription services revenue increased $4.9 million, or 5.8%, driven by continued growth in subscription-based revenue, which increased 15.5% in fiscal 2021 compared to fiscal 2020. Subscription revenue sales were led by our add on software modules, including modules enabling social distancing and contactless capabilities.
Subscription and maintenance revenue increased $19.3 million, or 19.5%, driven by continued growth in subscription-based revenue, which increased 27.5% in fiscal 2023 compared to fiscal 2022. Professional services revenue increased $8.4 million, or 30.4%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations. Gross profit and gross profit margin.
Removed
The extent to which COVID-19 will continue impacting our financial condition and results of operations remains uncertain and depends on various factors, including the ongoing or recurring impact on our customers, partners, and suppliers and on the operation of the global markets in general.
Added
Overview Recent Developments Macroeconomic Conditions During the year ended March 31, 2023, global macroeconomic conditions were, and continue to be, influenced by a number of factors, including, but not limited to, the COVID-19 pandemic, the Russia-Ukraine war, labor shortages, supply chain disruptions, inflation, and the erosion of foreign currencies relative to the U.S. dollar.
Removed
Because an increasing portion of our business is based on a subscription model, the effect of COVID-19 on our results of operations may also not be fully reflected for some time. While we have previously taken certain cost reduction measures, we may take further actions that alter our business operations in response to changes in the global environment.
Added
Customers around the world include: branded and independent hotels; multi-amenity resort properties; casinos; property, hotel and resort management companies; cruise lines; corporate dining providers; higher education campus dining providers; food service management companies; hospitals; lifestyle communities; senior living facilities; stadiums; and theme parks.
Removed
As a result, the ultimate impact of the COVID-19 pandemic and the effects of the operational alterations we have made in response on our business, financial condition, liquidity, and financial results cannot be predicted at this time.
Added
Total revenue increased $35.4 million, or 21.8%, in fiscal 2023 compared to fiscal 2022. Products revenue increased $7.7 million, or 21.4%, due to higher sales and deliveries to new customers and expansion with existing customers.
Removed
Total revenue decreased $23.6 million, or 14.7%, in fiscal 2021 compared to fiscal 2020. Products revenue decreased $17.5 million, or 39.6%, due to delayed customer purchasing decisions as the timing of the hospitality recovery from the COVID-19 pandemic remained unclear during fiscal 2021.
Added
Our total gross profit increased $19.3 million, or 19.0%, in fiscal 2023 and total gross profit margin decreased from 62.4% to 61.0%. Products gross profit increased $3.9 million and gross profit margin increased from 46.5% to 47.3% due to a higher proportion of proprietary software revenue over third-party products.
Removed
Professional services revenue decreased $11.0 million, or 33.3%, due to delays in implementation services due to customer property restrictions, property closures and lower sales from delayed customer purchasing decisions as the timing of the hospitality recovery from the COVID-19 pandemic remained unclear. Gross profit and gross profit margin.
Added
Subscription and maintenance gross profit increased $14.2 million and gross profit margin decreased from 78.6% to 77.8% as certain variable costs increased ahead of related revenue.
Removed
Our total gross profit increased $8.4 million, or 10.4%, in fiscal 2021 and total gross profit margin increased from 50.4% to 65.2%. Products gross profit increased $5.4 million and gross profit margin increased from 17.6% to 49.4% driven mostly by the absence of software development cost amortization during fiscal 2021.
Added
Professional services gross profit increased $1.1 million and gross profit margin decreased from 25.3% to 22.6% reflecting lower utilization rates due to higher non-billable hours on new, more complex solution implementations over the comparable annual periods.
Removed
Support, maintenance and subscription services gross profit increased $6.1 million and gross profit margin increased 269 basis points to 79.7% due to increased subscription revenue on a relatively flat cost base.
Added
Product development increased $3.9 million, or 8.5%, during fiscal 2023 as compared to fiscal 2022 due to hiring and higher salary and incentive rates across our development teams, increased travel, and higher subscription charges for cloud computing arrangements. 27 Sales and marketing.
Removed
Professional services gross profit decreased $3.1 million and gross profit margin decreased slightly from 26.5% to 25.5% due to the delay in professional service projects and the fixed costs of maintaining a minimum required professional services team as customers continued to work towards re-opening their locations and accept implementations and installations.
Added
Sales and marketing increased $8.0 million, or 54.2%, in fiscal 2023 compared with fiscal 2022 due to various sales and marketing investments including several key hires, significantly higher levels of marketing event and trade show activity and increased commission expense on higher sales levels. General and administrative.
Removed
Product development increased $13.9 million, or 33.5%, during fiscal 2021 as compared to fiscal 2020 due to the continued expansion of our R&D teams and significant share-based compensation charges resulting from the accelerated vesting of stock-settled appreciation rights (SSARs) upon their market condition satisfaction in February 2021. 30 Sales and marketing.
Added
General and administrative increased $2.9 million, or 10.6%, in fiscal 2023 compared to fiscal 2022 due to investments in our information security and information technology infrastructure along with hiring and increased salary and incentive rates across our administrative teams, higher rent, increased travel, and higher subscription charges for cloud computing arrangements. Depreciation of fixed assets.
Removed
Sales and marketing decreased $5.7 million, or 28.5%, in fiscal 2021 compared with fiscal 2020 due to reduced commission expense as a result of lower sales levels, significantly reduced travel, layoffs, temporary reductions in employee benefits, and the absence of in-person trade shows and conference activity.
Added
Amortization of internal-use software and intangibles increased $0.1 million or 5.4% in fiscal 2023 as compared to fiscal 2022 due to the addition of certain intangible assets that began amortizing in January 2022 subsequent to the acquisition of ResortSuite Inc.
Removed
The decrease was slightly offset by an increase in stock-based compensation charges resulting from the accelerated vesting of SSARs. General and administrative. General and administrative increased $9.0 million, or 37.0%, in fiscal 2021 compared to fiscal 2020. The change is due primarily to significant share-based compensation charges resulting from the accelerated vesting of SSARs. Depreciation of fixed assets.
Added
(ResortSuite) as described in Note 15, Business Combination , to our Consolidated Financial Statements under Item 8 of this Annual Report. Other charges. Other charges decreased $1.1 million due to a significant reduction in non-recurring charges including ResortSuite acquisition costs during fiscal 2023 compared to fiscal 2022. Legal settlements.
Removed
Amortization of internal-use software and intangibles decreased $0.6 million or 22.9% in fiscal 2021 as compared to fiscal 2020 due to a lower unamortized cost base following the impairment of intangibles in fiscal 2020. Impairments. There were no impairments in fiscal 2021. Impairments totaled $23.7 million in fiscal 2020.
Added
We also had $133.9 million of state net operating loss carryforwards that expire, if unused, in fiscal years 2024 through 2042. We maintain valuation allowances for deferred tax assets until we have sufficient evidence to support the reversal of all or some portion of the allowances.
Removed
The impairments resulted from specific capitalized software development costs supporting certain software applications. The impact of the COVID-19 pandemic on the hospitality industry resulted in economic conditions that made it difficult to project future sales and revenue accurately for the impacted solutions at the time of impairment determination.
Added
Based on recent earnings and anticipated future earnings, we believe it is reasonably possible that within the next 12 months we will have sufficient positive evidence to conclude that a significant portion of our valuation allowances will no longer be needed. Releasing the valuation allowances would result in the recognition of certain deferred tax assets and significant income tax benefits.
Removed
After evaluating the Company’s strategy for market development and continued costs to support the software, an impairment charge was required. We recorded impairment charges to reduce the net realizable value of the related assets to zero during the 2020 fiscal year. Severance and other charges.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor the fiscal years 2022, 2021 and 2020, revenue from international operations was 7%, 8% and 9%, respectively of total revenue. The effects of foreign currency on operating results did not have a material impact on our results of operations for the 2022, 2021 and 2020 fiscal years.
Biggest changeFor the fiscal years 2023, 2022 and 2021, revenue from international operations was 7%, 7% and 8%, respectively of total revenue. The effects of foreign currency on operating results did not have a material impact on our results of operations for the 2023, 2022 and 2021 fiscal years.

Other AGYS 10-K year-over-year comparisons