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What changed in AGILYSYS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AGILYSYS INC's 2023 and 2024 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 2024 report.

+203 added−147 removedSource: 10-K (2024-05-22) vs 10-K (2023-05-19)

Top changes in AGILYSYS INC's 2024 10-K

203 paragraphs added · 147 removed · 113 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDrury 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!
Biggest changeEllis Island Hotel, Casino and Brewery Resorts World Bimini Banner Health Golden Nugget Lake Charles Rosen Hotels & Resorts Boyd Gaming Corporation Grand Sierra Resort and Casino Rosewood Castiglion Del Bosco Caesars Entertainment Hialeah Park Royal Caribbean Group Cal Dining at UC Berkeley Hilton Worldwide Spooky Nook Sports Camelback Lodge & Waterpark Inspire Resort Korea Station Casinos Carnival UK Intercontinental Hotel Group The Kessler Collection Cartoon Network Hotel Kimpton Hotels The Sea Pines Resort Casino del Sol Resort Longwood University The Venetian Resort Hotel Casino Catholic Charities Marina Bay Sands Singapore Treehouse – London Chukchansi Gold Resort & Casino Marriott International UT Southwestern Medical Center Compass Group North America Maryland Live!
Reference 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.
Reference herein to any particular year or quarter refers to periods within our fiscal year ended March 31. For example, fiscal 2024 refers to the fiscal year ended March 31, 2024. 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.
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.
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 provide 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.
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.
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.
With our omni-channel suite of software products, we are uniquely positioned to offer solutions that allow customers to adhere to social distancing guidelines, offer contactless solutions at every point of the guest journey, and maximize operational efficiency all while providing an improved guest experience.
With our omni-channel suite of software products, we are uniquely positioned to offer solutions that allow customers to offer contactless solutions at every point of the guest journey, and maximize operational efficiency all while providing an improved guest experience.
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.
Item 1. B usiness. Overview Agilysys has been a leader in hospitality software for more than 45 years, delivering innovative cloud-native SaaS and on-premise solutions for hotels, resorts and cruise lines, casinos, corporate foodservice management, restaurants, universities, stadiums, and healthcare.
SWS Direct streamlines operations, provides enhanced bidding and request for pricing services, and offers supplier registration tools and self-service maintenance capabilities. Representative Agilysys clients include: 7 Cedars Casino Dickies Arena Pinehurst Resort AVI Foodsystems, Inc.
SWS Direct streamlines operations, provides enhanced bidding and request for pricing services, and offers supplier registration tools and self-service maintenance capabilities. Representative Agilysys clients include: 7 Cedars Casino Drury Hotels Prairie Band Casino & Resort AVI Foodsystems, Inc.
Seasonality Occasionally, the timing of large one-time orders, such as those associated with significant remarketed product sales around large customer refresh cycles or significant volume rollouts, creates variability in our quarterly results. Competition Our solutions face a highly competitive market.
Seasonality Occasionally, the timing of large one-time orders, such as those associated with significant remarketed product sales around large customer refresh cycles or significant volume rollouts, creates variability in our quarterly results.
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.
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 3655 Brookside Parkway, Suite 300, Alpharetta, Georgia, 30022.
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.
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.
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.
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) 2024 2023 2022 Products $ 49,083 $ 43,638 $ 35,956 Subscription and maintenance 138,069 118,285 98,958 Professional services 50,312 36,142 27,722 Total $ 237,464 $ 198,065 $ 162,636 Products: Products revenue is comprised of revenue from the sale of software along with third party hardware and operating systems.
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.
Human Capital As of March 31, 2024, we employed approximately 1,900 employees, with approximately 70%, 26%, 2%, 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 Quick Pay allows guests to use their own mobile device, scan a QR code on the InfoGenesis check, review a digital copy of the check, add a tip & initiate payment, maintaining a fully touchless guest payment experience.
Servers are readily available to satisfy each guest’s immediate requests while providing faster service. Agilysys IG Quick Pay allows guests to use their own mobile device, scan a QR code on the InfoGenesis check, review a digital copy of the check, add a tip & initiate payment, maintaining a fully touchless guest payment experience.
The information posted on our website is not incorporated into this Annual Report. Reports, proxy and information statements, and other information regarding issuers that file electronically, are maintained on the SEC website, http://www .sec.gov .
Reports, proxy and information statements, and other information regarding issuers that file electronically, are maintained on the SEC website, http://www .sec.gov .
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.
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 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.
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 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 offer our employees pay and benefits packages that we believe are competitive with others throughout our industry, as well as within the local markets in which we operate, and align individual performance with our success. We are committed to providing our employees with an environment free of discrimination, harassment and workplace violence.
We believe we offer fair, competitive compensation and benefits that support our employees’ overall well-being and foster their growth and development. We offer our employees pay and benefits packages that we believe are competitive with others throughout our industry, as well as within the local markets in which we operate, and align individual performance with our success.
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.
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. We believe we are well positioned to win market share given our relative competitive strength in the industry.
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.
Casino Vail Resorts Comanche Nation of Oklahoma MGM Valley View Casino & Hotel The Cosmopolitan of Las Vegas Oxford Casino Wendover Resorts Dickies Arena Pinehurst Resort 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.
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.
It is available for iOS and Android mobile devices. 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.
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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.
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Agilysys IG Fly is a mobile handheld all-in-one POS solution that empowers staff to do it all on one device: table-side, pool-side, popup-side, wherever-side, keeping guests happy and servers hustling. It allows properties to boost guest spending with sleek handheld devices that facilitate order placement and payment acceptance without servers ever leaving guests.
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Our senior management team is responsible for developing and executing our human capital strategy. We seek employees who share a passion for technology and its ability to improve our customers’ businesses in hospitality. We believe we offer fair, competitive compensation and benefits that support our employees’ overall well-being and foster their growth and development.
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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 Agilysys Guest App is a downloadable customer-branded mobile guest engagement that app that provides a frictionless guest experience from booking to check-out.
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It combines a selection of Agilysys mobile applications in a single convenient app, including Agilysys Book for room, golf and spa reservations; Agilysys Express Mobile for mobile check in/out and digital room keys; and an administrative portal that provides a full content management system for complete control of branding, options, property images and more.
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We operate across North America, Europe, the Middle East, Asia-Pacific and India with headquarters located in Alpharetta, GA. 12 We estimate our total addressable market to be approximately $5 billion in annual recurring revenue opportunity.
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Our senior management team is responsible for developing and executing our human capital strategy. Agilysys’ key human capital management objectives are to attract, retain and develop talent to deliver on our strategy.
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Accordingly, we seek employees who share a passion for technology and its ability to improve our customers’ businesses in hospitality in accordance with our mission statement: helping our customers improve employee and guest experiences, with dedication to past, present and future customer investments in our products and services.
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We believe that our culture is essential to maintaining high quality services and solutions. Our culture impacts the quality of the employees we hire, the way we develop and maintain solutions, and the way we communicate and interact with our customers and each other.
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Our culture is the cornerstone representing our values, our behaviors, our way of working and how we approach our business. To reinforce our culture, we operate according to the Agilysys Code of Business Conduct, available on our website http://www .agilysys.com , which mandates full compliance with applicable laws and regulations and helps to preserve the integrity of our Company.
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For example, we recently launched an employee stock purchase plan to allow employees to share in the success of the company. Our employee town halls, conducted several times annually, play a vital role in fostering transparency, engagement, alignment, and a sense of community.
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These town halls provide a platform to recognize and celebrate employee achievements, milestones, and contributions, and provide an opportunity for employees to ask questions of leadership. As recognition for our commitment to our employees, we were awarded a LinkedIn Top Company 2024 Award for midsize employers.
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We are committed to providing our employees with an environment free of discrimination, harassment and workplace violence.
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Intellectual Property 13 We rely on a combination of patent, trade secret, copyright, and trademark laws, a variety of contractual arrangements, such as license agreements, assignment agreements, confidentiality and non-disclosure agreements, and confidentiality procedures and technical measures to gain rights to and protect the intellectual property used in our business.
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We do not believe that our business is dependent on any single item of intellectual property, or that any single item of intellectual property is material to the operation of our business.
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However, since we consider trademarks to be a valuable asset of our business, we have an ongoing trademark and service mark registration program pursuant to which we register our brand names and product names, taglines, and logos in the United States and other countries to the extent we determine registration to be appropriate and cost effective.
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We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost effective. Despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, or challenged.
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See the sections titled “Risk Factors,” including the section titled “Risk Factors — We may not be able to enforce or protect our intellectual property rights” for a description of the risks related to our intellectual property. Competition Our solutions face a highly competitive market.
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For information about governmental regulations applicable to our business, refer to Item 1A Risk Factors included elsewhere in this Annual Report.
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Copies are also available without charge by a written request to Agilysys, Inc., Attention: Investor Relations, 3655 Brookside Parkway, Suite 300, Alpharetta, Georgia 30022 or by requesting copies through our website, under “Investor Relations.” The information posted on our website is not incorporated into this Annual Report.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIncreased tariffs, including on goods imported from China, or the institution of additional protectionist trade measures could adversely affect our supply costs, and in turn, our business, financial results and liquidity. Our future success will depend on our ability to develop new products, product upgrades and services that achieve market acceptance.
Biggest changeOur future success will depend on our ability to develop new solutions, product upgrades and services that achieve market acceptance. Our business is characterized by rapid and continual changes in technology and evolving industry standards.
Personally identifiable information is increasingly subject to legislation and regulations in numerous jurisdictions with regard to privacy and data security such as such as the California Consumer Privacy Act and the European Union’s General Data Protection Regulation.
Personally identifiable information is increasingly subject to legislation and regulations in numerous jurisdictions with regard to privacy and data security such as the California Consumer Privacy Act and the European Union’s General Data Protection Regulation.
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.
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; • any major change in our board or management; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
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.
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. 20 We rely on a combination of copyright, patent, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights.
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.
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.
For example, if one of our current customers merges or consolidates with a company that relies on another provider’s products or services, it could decide to reduce or cease its purchases of products or services from us, which could have an adverse effect on our business. Insolvencies in the hospitality industry could adversely affect our business.
For example, if one of our current customers merges or consolidates with a company that relies on another provider’s products or services, it could decide to reduce or cease its purchases of products or services from us, which could have an adverse effect on our business. 21 Insolvencies in the hospitality industry could adversely affect our business.
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.
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.
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.
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, rules and regulations; 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.
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.
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.
Our systems, and those of our third-party providers, have and could in the future become subject to cyber-attacks, including using computer viruses, credential harvesting, dedicated denial of services attacks, malware, social engineering, and other means for obtaining unauthorized access to, or disrupting the operation of, our systems and those of our third-party providers.
Our systems, and those of our third-party providers, have and could in the future become subject to cyber-attacks, including using computer viruses, 18 credential harvesting, dedicated denial of services attacks, malware, social engineering, and other means for obtaining unauthorized access to, or disrupting the operation of, our systems and those of our third-party providers.
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 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. We may be subject to claims of infringement of third-party intellectual property rights.
Natural disasters or other catastrophic events affecting our principal facilities could cripple our business. Natural disasters or other catastrophic events, particularly those affecting employees in our Alpharetta headquarters or India research and development center, may cause damage or disruption to our operations, and thus could have a negative effect on us.
Natural disasters or other catastrophic events affecting our principal facilities could cripple our business. 16 Natural disasters or other catastrophic events, particularly those affecting employees in our Alpharetta headquarters or India research and development center, may cause damage or disruption to our operations, and thus could have a negative effect on us.
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.
We are exposed to foreign currency exchange rate fluctuations that could negatively impact our financial results. 22 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.
Item 1A. R isk Factors. Risks Relating to Our Business Markets, Competition, and Operations Our business is impacted by changes in macroeconomic and/or global conditions.
Item 1A. R isk Factors. Risks Relating to Our Business Markets, Competition, and Operations Our business is impacted by changes in macroeconomic and global conditions.
If we are unable to properly execute on growth initiatives, manage our investments, and enhance our existing operations and infrastructure, our results of operations and market share may be materially adversely affected. Our dependence on certain strategic partners makes us vulnerable to the extent we rely on them.
If we are unable to properly execute on growth initiatives, manage our investments, and enhance our existing operations and infrastructure, our results of operations and market share may be materially adversely affected. Our dependence on certain suppliers makes us vulnerable to the extent we rely on them.
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.
Instabilities or downturns in the hospitality industry, such as those resulting from the impacts of pandemics, 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.
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.
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, 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.
To be successful in such efforts, we must be able to properly allocate limited investment funds and other resources, prioritize among opportunities, balance the extent and timing of investments with the associated impact on profitability, balance our focus between new areas and the servicing of our existing customers, capture efficiencies and economies of scale, and compete in the new areas, or with the new solutions, in which we have invested.
To succeed in such efforts, we must be able to properly deploy financial and other resources, prioritize among opportunities, balance the extent and timing of investments with the associated impact on profitability, balance our focus between new areas and the servicing of our existing customers, capture efficiencies and economies of scale, and compete in the new areas, or with the new solutions, in which we have invested.
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.
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, natural disasters, or disease outbreaks may impact our business.
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.
The market for qualified personnel is competitive in the geographies in which we operate and may be limited in the software development disciplines we seek to expand. 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.
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.
If we cannot retain and recruit qualified personnel due to rising labor costs or other reasons, our ability to operate and grow our business may be impaired and our financial performance may suffer. We depend on the services of our management and employees to continuously run and grow our business.
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.
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 revenue growth, our profitability may be adversely affected. Our international operations have many associated risks.
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.
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, 2024, the trading price of our common stock ranged from a low close of $63.77 to a high close of $91.40.
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.
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.
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.
To grow successfully, we must retain existing employees and attract new qualified employees, particularly in growth areas we have identified. Employee retention is an industry challenge especially given the competitive labor market for software developers. As we grow, we must also enhance and expand our workforce to execute on new and larger opportunities.
We may not be able to successfully penetrate international markets, or, if we do, there can be no assurance that we will grow our business in these markets at the same rate as in North America.
We continue to strategically manage our presence in international markets, and these efforts require significant management attention and financial resources. We may not be able to successfully penetrate international markets, or, if we do, there can be no assurance that we will grow our business in these markets at the same rate as in North America.
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.
Cyberattacks on our systems and “supply-chain” attacks on systems of third parties upon whom we rely, 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.
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.
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.
We cannot estimate with any certainty when we will, if ever, receive significant revenues from these investments. If we are not successful in managing these risks and challenges, or if our new products, product upgrades, and services are not technologically competitive or do not achieve market acceptance, our business and operating results could be adversely affected.
If we are not successful in managing these risks and challenges, or if our new products, product upgrades, and services are not technologically competitive or do not achieve market acceptance, our business and operating results could be adversely affected.
However, such investments and efforts present challenges and risks and may not be successful (financially or otherwise), especially in new areas in which we have little or no experience, and even if successful, may negatively impact our profitability in the short-term.
Our investments in research and development may result in products or services that generate less revenue than we anticipate. Such investments present challenges and risks and may not be successful financially or otherwise, especially in new areas in which we have little or no experience, and even if successful, may negatively impact our short-term profitability.
We may also experience security breaches that may remain undetected for an extended period and, therefore, have a greater impact on our systems, our products, the proprietary data contained therein, our customers and ultimately, our business.
We may also experience security breaches that may remain undetected for an extended period and, therefore, have a greater impact on our systems, our products, the proprietary data contained therein, our customers and ultimately, our business. For example, we use Progress Software’s MOVEit Transfer application to enable file transfers with some of our customers.
Our business is characterized by rapid and continual changes in technology and evolving industry standards. We believe that in order to remain competitive in the future we need to continue to develop new products, product upgrades and services, requiring the investment of significant financial resources.
We believe that in order to remain competitive in the future we need to continue to develop new products, product upgrades and services, requiring the investment of significant financial resources.
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.
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.
We maintain relationships with third parties to provide certain services to us or to our customers, including cloud hosting and other cloud-based services.
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.
While we believe our internal control over financial reporting is effective, a controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that control issues and instances of fraud, if any, within our company have been detected. Item 1B. Unresolv ed Staff Comments. None.
Accordingly, although the Company’s management has concluded that our internal controls are effective as of March 31, 2024, we cannot provide absolute assurance that the objectives of our controls system are met. No evaluation of internal controls can provide absolute assurance that control matters and instances of fraud, if any, within our Company have been detected. Item 1B.
Our ability to attract and retain customers depends to a large extent on our relationships with our customers and our reputation for high quality services and solutions. As a result, if a customer is not satisfied with our products and services, our reputation may be damaged.
If we fail to meet our customers’ performance expectations, our reputation may be harmed, and we may be exposed to legal liability. Our ability to attract and retain customers depends to a large extent on our relationships with our customers and our reputation for high quality services and solutions.
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.
Some of our products and services may be subject to sales taxes in jurisdictions where we have not collected and remitted such taxes from our customers. We believe we have appropriately accrued for these contingencies. In the event actual results differ, we may need to make adjustments, which could materially impact our financial condition and results of operations.
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 business, markets, growth prospects and business model could be materially impacted or altered as a result of adverse changes in travel and leisure activities due to a pandemic or other wide-ranging and sustained events. 14 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.
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.
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. 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.
Our future success depends on our ability to execute on growth or strategic initiatives, properly manage investments in our business and operations, and enhance our existing operations and infrastructure. Our success also depends on our ability to execute on other growth or strategic initiatives we are pursuing.
Our future success depends on our ability to execute on strategic initiatives, to properly manage investments in our business, and to enhance our existing operations and infrastructure. Our long-term strategy is focused on continually investing in and growing our business and operations, both organically and through acquisitions.
In particular, we believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. Our investments in research and development may result in products or services that generate less revenue than we anticipate.
Investments in new markets, solutions, and technologies, research and development, infrastructure and systems, geographic expansion, and talent are critical components for realizing our strategy. In particular, we believe we must continue to dedicate a significant 15 amount of resources to our research and development efforts to maintain our competitive position.
While we generally take steps to reduce the likelihood that disputes will result in litigation, litigation is very commonplace and could have an adverse impact on our business. If we fail to maintain an effective system of internal controls, we may not be able to detect fraud, which could have a material adverse impact on our business.
Furthermore, difficulties or delays in applying new accounting principles could result in a failure to meet our financial reporting obligations. If we fail to maintain an effective system of internal controls, we may be unable to prevent or detect fraud or internal control deficiencies including material weaknesses, which could have a material adverse impact on our business.
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.
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 rely on information technology networks and systems, some of which are owned and operated by third parties, to collect, process, transmit, and store electronic information on behalf of our customers.
Actual or perceived security vulnerabilities in our software products may result in reduced sales or liabilities. Our software may be used in connection with processing personal data and other sensitive data (e.g., credit card numbers). It may be possible for the data to be compromised if our customer does not maintain appropriate security procedures.
In addition, it may be possible for customer and guest data to be compromised from customers’ information technology systems if our customer does not maintain appropriate data privacy and information security procedures.
Removed
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.
Added
Our product development activities also could be impacted by competition from products with new features or leveraging new technologies, such as artificial intelligence (AI), that render our existing products less competitive or obsolete. We may not respond effectively to the technological requirements of the changing market.
Removed
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.
Added
If we need new technologies or if we are not able to develop new products or product upgrades acceptable to customers to remain competitive, the development, acquisition, and implementation of those new products, product upgrades or technologies may require us to make significant capital investments.
Removed
Even after COVID-19 subsides, our business, markets, growth prospects and business model could be materially impacted or altered as a result of adverse changes in travel and leisure activities.
Added
Regulatory Matters, Information Security, Data Privacy, and Product Stability Our products and services may not function properly if we experience significant coding or configuration errors.
Removed
We depend on third-party manufacturers and suppliers located outside of the United States, including in China, in connection with the supply of certain of our hardware products and related components. Accordingly, our business is subject to risks associated with international supply.
Added
Despite testing prior to the release and throughout the lifecycle of a product or service, our on-premise and cloud-based solutions sometimes contain coding or configuration errors that can impact their function, performance and security, and result in other negative consequences. The detection and correction of any errors in released on-premise or cloud-based solutions can be time consuming and costly.
Removed
For example, in recent years the United States has imposed and extended greater restrictions on international trade and significant increases in tariffs on goods imported into the United States from China and other countries.
Added
Errors in our on-premise and cloud-based solutions could affect their ability to properly function, integrate or operate with other software or hardware offerings, could result in service interruptions, delays or outages, could create security vulnerabilities in our products or services, could delay the development or release of new products or services or new versions of products or services, and could adversely affect market acceptance of our products or services.
Removed
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.
Added
This includes third-party software products or services incorporated into our own. If we experience any of these errors, or if there are delays in releasing our on-premise or cloud-based solutions or new versions of these offerings, our sales could be affected and revenues could decline.
Removed
While the market for talent in our industry has been competitive for many years, in recent quarters, the labor market has become even tighter, increasing the difficulty and lead time in filling open positions with qualified candidates.
Added
Customers rely on our on-premise and cloud-based solutions and related services to run their businesses, and errors in our solutions and related services could expose us to product liability, performance and warranty claims as well as significant harm to our brand and reputation, which could impact our future sales.
Removed
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.
Added
Implementation of software solutions often involves a significant commitment of resources, and any failure to deliver as promised on a significant implementation could adversely affect our business. The implementation of software solutions often involves a significant commitment of resources and is subject to a number of significant risks over which we may or may not have control.
Removed
In those instances, the customer may attempt to seek damages from us.
Added
These risks include: • the features of the implemented software may not meet the expectations or fit the business model of the customer; • our pool of implementation personnel cannot quickly and easily be augmented for complex implementation projects, such that resources issues, if not planned and managed effectively, could lead to costly project delays; • customer-specific factors, such as the stability, functionality, interconnection and scalability of the customer’s pre-existing information technology infrastructure, as well as financial or other circumstances could destabilize, delay or prevent the completion of the implementation process; and • customers and their partners may not fully or timely perform the actions required to be performed by them to ensure successful implementation, including measures we recommend to safeguard against technical and business risks.
Removed
While we believe that all of our current software complies with applicable industry security requirements and that we take appropriate measures to reduce the possibility of breach through our development and implementation processes, we cannot assure that our customers’ systems will not be breached, or that all unauthorized access to our software can be prevented.
Added
As a result of these and other risks, some of our customers may incur large, unplanned costs in connection with the purchase and installation of our solutions. Also, implementation projects could take longer than planned or fail. We may not be able to reduce or eliminate protracted installation or significant additional costs.
Removed
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.
Added
Significant delays or unsuccessful customer implementation projects could result in cancellation or renegotiation of existing agreements, claims from customers, harm our reputation and negatively impact our operating results. We use open-source software in our solutions that may subject our solutions to general release or require us to re-engineer our solutions.
Removed
Although on May 11, 2022, judgement was entered for us and against Ameranth on all claims in that suit, Ameranth has pending appeals that may affect the judgement. If we fail to meet our customers’ performance expectations, our reputation may be harmed, and we may be exposed to legal liability.
Added
We use open-source software in our solutions and may use more open-source software in the future. From time to time, there have been claims by companies claiming ownership of software that was previously thought to be open-source and that was incorporated by other companies into their products.
Removed
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.
Added
As a result, we could be subject to suits by parties claiming ownership of what we believe to be open-source software.
Removed
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.
Added
Some open-source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the open-source software and that we license these modifications or derivative works under the terms of a particular open-source license or other license granting third parties certain rights of further use.
Removed
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.
Added
If we combine or, in some cases, link our proprietary software solutions with or to open-source software in a certain manner, we could, under certain of the open-source licenses, be required to release the source code of our proprietary software solutions or license such proprietary solutions under the terms of a particular open-source license or other license granting third parties certain rights of further use. 17 In addition to risks related to license requirements, usage of open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties or controls on origin of the software.
Removed
Other Risk Factors We are subject to litigation, which may be costly. As a company that does business with many customers, employees and suppliers, we are subject to litigation. The results of such litigation are difficult to predict, and we may incur significant legal expenses if any such claim were filed.
Added
In addition, open-source license terms may be ambiguous and many of the risks associated with usage of open-source cannot be eliminated, and could, if not properly addressed, negatively affect our business.
Added
If we were found to have inappropriately used open-source software, we may be required to seek licenses from third parties in order to continue offering our software, to re-engineer our solutions, to discontinue the sale of our solutions in the event re-engineering cannot be accomplished on a timely basis or take other remedial action that may divert resources away from our development efforts, any of which could adversely affect our business, operating results and financial condition.
Added
We are subject to complex, evolving regulatory requirements that may be difficult and expensive to comply with and that could negatively impact us or our business.
Added
Our business and operations are subject to a variety of regulatory requirements in the countries in which we operate or in which we offer our solutions, including, among other things, with respect to data privacy, artificial intelligence (“AI”), information security, trade compliance, tax, and labor matters.
Added
In addition, as we are increasingly building and licensing from third party providers new and evolving technologies, such as AI, machine learning, analytics, and biometrics, as part of our offerings, our business and operations may become subject to additional complex and evolving regulatory requirements pertaining to the sale or use of these technologies.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn 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.
Biggest changeIn addition, we lease approximately 36,000 square feet of office space in Las Vegas, Nevada, 8,000 square feet of office space in Bellevue, Washington, 5,000 square feet of office space in Santa Barbara, California, and 6,000 square feet of warehouse space in Roswell, Georgia.
Internationally, we lease approximately 101,000 square feet of office space in Chennai, India, 7,000 square feet in Toronto, Canada, and lease several other smaller office locations throughout Europe and Asia. Our major leases contain renewal options for periods of up to 10 years.
Internationally, we lease approximately 182,000 square feet of office space in Chennai, India, 7,000 square feet in Toronto, Canada, and lease several other smaller office locations throughout Europe and Asia. Our major leases contain renewal options for periods of up to 10 years.
Item 2. P roperties. Our corporate headquarters are located in Alpharetta, Georgia where we lease approximately 33,000 square feet of office space.
Item 2. P roperties. Our corporate headquarters are located in Alpharetta, Georgia where we lease approximately 22,000 square feet of office space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−5 removed2 unchanged
Biggest changeAlthough on May 11, 2022, judgement was entered for us and against Ameranth on all claims in that suit, Ameranth has pending appeals that may affect the judgement. At this time, we are not able to predict the outcome of Ameranth’s pending appeal on their claims against us, or any possible monetary exposure associated with the lawsuit.
Biggest changeOn May 11, 2022, final judgement was entered for us and against Ameranth on all claims in that suit. In March 2024, we settled all remaining issues with Ameranth, although the case remains open pending court approval of the settlement agreement. Item 4. Mine Safe ty Disclosures. Not applicable. 25
Removed
The case against us was consolidated with similar cases brought by Ameranth against more than 30 other defendants. All but one of the patents at issue in the case were invalidated by the U.S. Court of Appeals for the Federal Circuit in 2016.
Removed
In September 2018, the District Court found the one surviving Ameranth patent invalid and granted summary judgment in favor of the movant co-defendants. This judgment was affirmed by the U.S.
Removed
Court of Appeals for the Federal Circuit in November 2019 with respect to all claims except for two, which were not asserted against Agilysys, and Ameranth’s writ of certiorari to the United States Supreme Court was denied in October 2020. In December 2021, the District Court denied Ameranth’s motion to assert additional claims against the defendants.
Removed
In 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.
Removed
However, we dispute the allegations of wrongdoing and are vigorously defending ourselves in this matter. Item 4. Mine Safe ty Disclosures. Not applicable. 21 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe current practice of the Board of Directors is to retain any available earnings for use in the operations and growth of our business, both organically and through acquisitions.
Biggest changeDividends We did not pay dividends in fiscal 2024 or 2023 on our common stock and are unlikely to do so in the foreseeable future. The current practice of the Board of Directors is to retain any available earnings for use in the operations and growth of our business, both organically and through acquisitions.
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.
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, 2019 through March 31, 2024.
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 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 Global Select Market under the symbol “AGYS”. As of May 17, 2024, there were 1,059 registered holders of our common shares, without par value.
Comparison 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.
Comparison of 5 Year Cumulative Total Return INDEXED RETURNS 27 Fiscal Years Ended March 31, Base Period Company Name / Index 2019 2020 2021 2022 2023 2024 Agilysys, Inc. $ 100.00 $ 78.89 $ 226.55 $ 188.38 $ 389.70 $ 397.92 Russell 2000 $ 100.00 $ 76.01 $ 148.10 $ 139.53 $ 123.34 $ 147.65 Peer Group $ 100.00 $ 96.67 $ 126.72 $ 135.34 $ 116.39 $ 156.20 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.
Removed
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.

Item 7. Management's Discussion & Analysis

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

39 edited+11 added−10 removed62 unchanged
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.
Biggest changeFiscal 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, inclusive of developed technology amortization 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, net 435 1,584 (1,149 ) nm Legal settlements 352 969 (617 ) nm Operating income $ 12,875 $ 6,319 $ 6,556 nm Operating income percentage 6.5 % 3.9 % 34 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, inclusive of developed technology amortization 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, net 0.2 1.0 Legal settlements 0.2 0.5 Operating income 6.5 % 3.9 % Net revenue.
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.
Other Income (Expenses) Year ended March 31, Favorable (unfavorable) (Dollars in thousands) 2023 2022 $ % Other income (expense): Interest income $ 2,192 $ 59 $ 2,133 nm Interest (expense) — (12 ) 12 nm Other income (expense), net 697 145 552 nm Total other income (expense), net $ 2,889 $ 192 $ 2,697 nm nm – not meaningful Interest income.
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.
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.
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.
Income Taxes Year ended March 31, Unfavorable (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.
(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.
(ResortSuite) as described in Note 15, Business Combination , to our Consolidated Financial Statements under Item 8 of this Annual Report. Other charges, net. Other charges, net 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.
As the principal contact with the customer, we recognize revenue and cost of goods sold when we are notified by the supplier that the product has been shipped. In certain limited instances, as shipping terms dictate, revenue is recognized upon receipt at the point of destination or upon installation at the customer site.
As the principal contact with the customer, we recognize revenue and cost of goods sold when we ship or are notified by the supplier that the product has been shipped. In certain limited instances, as shipping terms dictate, revenue is recognized upon receipt at the point of destination or upon installation at the customer site.
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.
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 29 • 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.
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.
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. 36 Because of our losses in prior periods, we have recorded a valuation allowance offsetting substantially all of the Company's deferred tax assets.
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.
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 45 years, delivering innovative state-of-the-art cloud-native SaaS and on-premise guest-centric technology solutions.
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.
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 38 goods and services, the associated prices, and any additional terms for an individual contract.
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.
Revenue is recorded net of any applicable taxes collected and remitted to governmental agencies. 39 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.
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.
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. 35 Sales and marketing.
Cash flows provided by operating activities were $28.5 million in fiscal 2022. The provision of cash was due primarily to our net income of $6.5 million adjusted for $17.7 million in non-cash expense including depreciation, amortization, and share-based compensation and an increase of $4.3 million from the changes in operating assets and liabilities.
Cash flows provided by operating activities were $28.5 million in fiscal 2022. The provision of cash was due primarily to our net income of $6.5 million adjusted for $17.7 million in non-cash expense including depreciation, amortization, and share-based compensation and an increase of $4.3 million from the changes in operating assets and liabilities. Cash flow used in investing activities .
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.
Legal settlements decreased $0.6 million during fiscal 2023 compared to fiscal 2022 due to a decrease in settlements of employment and other business-related matters.
At March 31, 2023, 100% of our cash and cash equivalents, of which 93% were located in the United States, were deposited in bank accounts or invested in highly liquid investments including commercial paper and treasury bills with original maturity from the date of acquisition of three months or less and money market funds.
At March 31, 2024, 100% of our cash and cash equivalents, of which 95% were held in the United States, were deposited in bank accounts or invested in highly liquid investments including commercial paper and treasury bills with original maturity from the date of acquisition of three months or less and money market funds.
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.
Interest income consists of interest earned on cash equivalents including short-term investments in commercial paper, treasury bills and money market funds. Other (expense) income, net. Other (expense) income, net mainly consists of movement of foreign currencies against the U.S. dollar.
Professional services revenues primarily consist of fees for consulting, installation, integration and training and are generally recognized over time as the customer simultaneously receives and consumes the benefits of the professional services as the services are being performed.
Professional services revenues primarily consist of fees for consulting, implementation, installation, integration and training and are generally recognized over time as the customer simultaneously receives and consumes the benefits of the professional services as the services are being performed. Certain professional development services are recognized upon delivery of the developed solutions to the customer.
The terminology, definitions, and applications of terms we use to describe our revenue may be different from those used by other companies and caution should be used when comparing these financial measures to those of other companies.
In addition to the SEC requirements, we may, at times, also refer to revenue as defined below. The terminology, definitions, and applications of terms we use to describe our revenue may be different from those used by other companies and caution should be used when comparing these financial measures to those of other companies.
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 Year ended March 31, (In thousands) 2024 2023 2022 Net cash provided by (used in): Operating activities $ 48,186 $ 34,463 $ 28,475 Investing activities (7,602 ) (6,870 ) (25,679 ) Financing activities (8,558 ) (11,094 ) (4,901 ) Effect of exchange rate changes on cash 23 (628 ) (104 ) Increase (decrease) in cash $ 32,049 $ 15,871 $ (2,209 ) Cash flow provided by operating activities.
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.
We record compensation expense related to stock-settled stock appreciation rights, restricted shares, restricted stock units, performance shares, and employee stock purchase plan shares granted to certain employees and non-employee directors based on the fair value of the awards on the grant date.
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.
We believe that cash flow from operating activities, cash on hand of $144.9 million as of March 31, 2024, and access to capital markets will provide adequate funds to meet our liquidity requirements for at least the next twelve months, as well as our long-term liquidity requirements.
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.
Operating expenses Operating expenses, excluding the charges for legal settlements and other charges, increased $19.6 million, or 18.3%, in fiscal 2024 compared with fiscal 2023. As a percent of total revenue, operating expenses have decreased 0.7% in fiscal 2024 compared with fiscal 2023. Product development. Product development includes all expenses associated with research and development.
We determine the fair value of commercial paper using significant other observable inputs based on pricing from independent sources that use quoted prices in active markets for identical assets or other observable inputs including benchmark yields and interest rates. We believe credit risk is limited with respect to our cash and cash equivalents.
Certain bank account balances may exceed federally insured limits. We determine the fair value of commercial paper using significant other observable inputs based on pricing from independent sources that use quoted prices in active markets for identical assets or other observable inputs including benchmark yields and interest rates.
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.
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 flow used in financing activities.
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.
Subscription and maintenance revenue increased $19.8 million, or 16.7%, driven by continued growth in subscription-based revenue, which increased 29.6% in fiscal 2024 compared to fiscal 2023. Professional services revenue increased $14.2 million, or 39.2%, 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.
Cash flows provided by operating activities were $28.4 million in fiscal 2021. The provision of cash was due primarily to our operating loss of $21.0 million adjusted for $44.0 million in non-cash expense including depreciation, amortization, and share-based compensation and an increase of approximately $5.4 million from the changes in operating assets and liabilities.
Cash flows provided by operating activities were $48.2 million in fiscal 2024. The provision of cash was due primarily to our net income of $86.2 million adjusted for $48.1 million in non-cash expense including depreciation, amortization, share-based compensation, deferred income taxes, gains on asset disposals and an increase of $10.1 million from the changes in operating assets and liabilities.
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. Legal settlements decreased $0.3 million during fiscal 2024 compared to fiscal 2023 due to a decrease in settlements of employment and other business-related matters.
At March 31, 2022, we had $196.3 million of federal net operating loss carryforwards that expire, if unused, in fiscal years 2031 to 2038, and $42.8 million of federal net operating loss carryforwards that can be carried forward indefinitely. We also had $166.8 million of state net operating loss carryforwards that expire, if unused, in fiscal years 2023 through 2041.
As of March 31, 2024, we had $78.5 million of federal net operating loss carryforwards that expire, if unused, in fiscal years 2033 to 2039, and $42.5 million of federal net operating loss carryforwards that can be carried forward indefinitely.
Profitability and industry leading growth will be achieved through tighter management of operating expenses and sharpening the focus of our investments to concentrate on growth opportunities that offer the highest returns.
Profitability and industry-leading growth will be achieved through tighter management of operating expenses and sharpening the focus of our investments to concentrate on growth opportunities that offer the highest returns. 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.
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.
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. We disclose our lease obligations in Note 6, Leases , to our Consolidated Financial Statements included under Item 8 of this Annual Report.
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. Because of our losses in prior periods, we have recorded a valuation allowance offsetting substantially all the Company’s deferred tax assets.
Federal and certain State deferred tax assets, consisting primarily of Net Operating Losses. 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.
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.
Subscription and maintenance gross profit increased $15.2 million and gross profit margin decreased from 77.8% to 77.6% as certain variable costs increased ahead of related revenue. Professional services gross profit increased $6.1 million and gross profit margin increased from 22.6% to 28.4% reflecting improved utilization rates from efficiency gains on multi-solution implementations.
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.
Amortization of internal-use software and intangibles decreased $0.4 million or 21.6% in fiscal 2024 as compared to fiscal 2023 due to the full amortization of certain intangible assets. Other charges, net. Other charges, net increased $1.3 million due to a significant increase in severance charges, common stock registration costs and certain compliance costs during fiscal 2024 compared to fiscal 2023.
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.
Management believes that this information, discussion, and disclosure is important in making decisions about investing in Agilysys. Overview Recent Developments Macroeconomic Conditions During the year ended March 31, 2024, global macroeconomic conditions were, and continue to be, influenced by a number of factors, including, but not limited to, political unrest, armed conflicts, labor shortages and natural disasters.
Total revenue increased $25.5 million, or 18.6%, in fiscal 2022 compared to fiscal 2021. Products revenue increased $9.2 million, or 34.6%, due to higher sales and deliveries as our customers re-open their locations for business.
Total revenue increased $39.4 million, or 19.9%, in fiscal 2024 compared to fiscal 2023. Products revenue increased $5.4 million, or 12.5%, due to higher sales and deliveries to new customers and expansion with existing customers.
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.
Other Income (Expenses) Year ended March 31, Favorable (unfavorable) (Dollars in thousands) 2024 2023 $ % Other income (expense): Interest income $ 5,083 $ 2,192 $ 2,891 131.9 % Other (expense) income, net (152 ) 697 (849 ) nm Total other income, net $ 4,931 $ 2,889 $ 2,042 70.7 % nm – not meaningful Interest income.
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 $23.4 million, or 19.4%, in fiscal 2024 and total gross profit margin decreased from 61.0% to 60.7% compared to fiscal 2023 driven by changes in the composition of revenue by category. Products gross profit increased $2.1 million and gross profit margin decreased from 47.3% to 46.4% due to the composition of hardware products delivered.
During fiscal 2021, the $25.3 million provided by financing activities consisted primarily of $34.0 million in preferred stock issuance proceeds from the MAK Capital investment, net of issuance costs, offset by $7.5 million for the repurchase of shares to satisfy employee tax withholding on share-based compensation and $1.1 million in preferred stock dividends.
Cash flows used in financing activities in fiscal 2024 were $8.6 million due to share repurchases of $6.9 million to satisfy employee tax withholding on share-based compensation, and $1.7 million in preferred stock dividends.
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.
Cash flows used in investing activities in fiscal 2024 were $7.6 million due to $8.1 million in purchases of property and equipment, including internal use software and $0.5 million in cash received from the sale of fixed assets located at our India research and development center. 37 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.
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Management believes that this information, discussion, and disclosure is important in making decisions about investing in Agilysys.
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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. • 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, development and installation services for proprietary and remarketed products. 30 Results of Operations Fiscal 2024 Compared to Fiscal 2023 Net Revenue and Operating Income The following table presents our consolidated revenue and operating results for the fiscal years ended March 31, 2024 and 2023: Year ended March 31, Increase (decrease) (Dollars in thousands) 2024 2023 $ % Net revenue: Products $ 49,083 $ 43,638 $ 5,445 12.5 % Subscription and maintenance 138,069 118,285 19,784 16.7 % Professional services 50,312 36,142 14,170 39.2 % Total net revenue 237,464 198,065 39,399 19.9 % Cost of goods sold: Products 26,318 22,994 3,324 14.5 % Subscription and maintenance 30,870 26,262 4,608 17.5 % Professional services 36,020 27,990 8,030 28.7 % Total cost of goods sold 93,208 77,246 15,962 20.7 % Gross profit $ 144,256 $ 120,819 $ 23,437 19.4 % Gross profit margin 60.7 % 61.0 % Operating expenses: Product development $ 56,739 $ 50,260 $ 6,479 12.9 % Sales and marketing 28,439 22,716 5,723 25.2 % General and administrative 36,279 30,669 5,610 18.3 % Depreciation of fixed assets 3,896 1,769 2,127 120.2 % Amortization of internal-use software and intangibles 1,366 1,743 (377 ) (21.6 )% Other charges, net 1,756 435 1,321 303.7 % Legal settlements 28 352 (324 ) nm Operating income $ 15,753 $ 12,875 $ 2,878 22.4 % Operating income percentage 6.6 % 6.5 % nm - not meaningful 31 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, 2024 2023 Net revenue: Products 20.7 % 22.1 % Subscription and maintenance 58.1 59.7 Professional services 21.2 18.2 Total net revenue 100.0 % 100.0 % Cost of goods sold: Products 11.1 % 11.6 % Subscription and maintenance 13.0 13.3 Professional services 15.2 14.1 Total cost of goods sold 39.3 % 39.0 % Gross profit 60.7 % 61.0 % Operating expenses: Product development 23.9 % 25.3 % Sales and marketing 12.0 11.5 General and administrative 15.3 15.5 Depreciation of fixed assets 1.6 0.9 Amortization of internal-use software and intangibles 0.6 0.9 Other charges, net 0.7 0.2 Legal settlements 0.0 0.2 Operating income 6.6 % 6.5 % Net revenue.
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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.
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Product development increased $6.5 million, or 12.9%, during fiscal 2024 as compared to fiscal 2023 due to hiring and increased compensation rates across our development teams, increased travel, and higher rent. 32 Sales and marketing.
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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.
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Sales and marketing increased $5.7 million, or 25.2%, in fiscal 2024 compared with fiscal 2023 due to hiring and increased salary, incentive and employee benefits rates across our sales and marketing teams, and continued expansion of marketing event and trade show activity. General and administrative.
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Professional services gross profit increased $1.4 million and gross profit margin decreased slightly from 25.5% to 25.3% due to continued hiring and training of new staff to meet increasing project backlogs from ongoing sales activity and certain project delays.
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General and administrative increased $5.6 million, or 18.3%, in fiscal 2024 compared to fiscal 2023 due to investments in our information security infrastructure along with hiring and increased compensation rates across our administrative teams, increased travel, and higher subscription charges for cloud computing arrangements. Depreciation of fixed assets.
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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.
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Depreciation of fixed assets increased $2.1 million or 120.2% in fiscal 2024 as compared to fiscal 2023 due significant capital expenditures over the last two fiscal years to build out new office space leases and to properly equip growing teams across the Company. Amortization of internal-use software and intangibles.
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Sales and marketing increased $0.5 million, or 3.8%, in fiscal 2022 compared with fiscal 2021 due to an increase of $3.4 million in payroll, travel, advertising, promotion and other operating expenses as we invest in our sales and marketing teams and return to travel for in-person selling and increased marketing event and trade show activity offset by a decrease in share-based compensation expense of $2.9 million due to significant charges resulting from the accelerated vesting of SSARs upon their market condition satisfaction in February 2021.
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Income Taxes Year ended March 31, Favorable (Dollars in thousands) 2024 2023 $ % Income tax (benefit) provision $ (65,511 ) $ 1,182 $ (66,693 ) nm Effective tax rate nm 7.5 % nm – not meaningful For fiscal 2024, the effective tax rate was different than the statutory rate due primarily to the release of valuation allowances recorded against U.S.
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General and administrative decreased $5.5 million, or 16.6%, in fiscal 2022 compared to fiscal 2021 due to an increase of $3.7 million in payroll and other expenses after restoring base pay, employee benefits and various operational activities offset by a decrease in share-based compensation expense of $9.2 million due to significant charges resulting from the accelerated vesting of SSARs upon their market condition satisfaction in February 2021.
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We also had $111.8 million of state net operating loss carryforwards that expire, if unused, in fiscal years 2025 through 2043. We maintain valuation allowances for deferred tax assets until we have sufficient 33 evidence to support the reversal of all or some portion of the allowances.
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Depreciation of fixed assets. Depreciation of fixed assets decreased $0.6 million or 22.0% in fiscal 2022 as compared to fiscal 2021 due to an increased level of assets with shorter useful lives. Amortization of internal-use software and intangibles.
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Based on recent earnings and anticipated future earnings, we released a significant portion of the valuation allowances previously maintained against our deferred tax assets.
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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.
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We believe credit risk is limited with respect to our cash and cash equivalents.
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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.
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Shares issued pursuant to awards under this plan may be made out of treasury or authorized but unissued shares.
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For employee stock purchase plan grants, 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 and assumptions regarding the risk-free interest rate, expected term, and expected volatility of our common shares over the offering period based on historical volatility.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed1 unchanged
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.
Biggest changeFor the fiscal years 2024, 2023 and 2022, revenue from international operations was 6%, 7% and 7%, 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 2024, 2023 and 2022 fiscal years.
Fluctuations in the value of other currencies could materially impact our revenue, expenses, operating profit and net income. 35
Fluctuations in the value of other currencies could materially impact our revenue, expenses, operating profit and net income. 40

Other AGYS 10-K year-over-year comparisons