Agilysys, Inc. (NASDAQ:AGYS) stock fell 11.16% (As on May 17, 11:12:08 AM UTC-4, Source: Google Finance) though the company beat analyst expectations in Q4 FY2023 quarter. Recurring revenue (comprised of subscription and maintenance charges) was a record $31.4 million, or 59.3% of total net revenue compared to $26.6 million, or 57.1% of total net revenue for the same period in fiscal 2022. Subscription revenue increased 23.9% year over year and was 50.6% of total recurring revenue compared to 48.1% of total recurring revenue in the fourth quarter of fiscal 2022. Gross margin was 60.8% in the fiscal 2023 fourth quarter compared to 59.5% in the comparable prior-year period. Net income attributable to common shareholders in the fiscal 2023 fourth quarter was $3.6 million compared to $1.5 million, in the comparable prior-year period. Adjusted EBITDA (non-GAAP) was $8.1 million compared to $7.5 million in the comparable prior-year period. Free cash flow (non-GAAP) in the fiscal 2023 fourth quarter was $13.2 million compared to free cash flow of $6.5 million in the fiscal 2022 fourth quarter (reconciliation included in financial tables). Ending cash balance was $112.8 million, compared to ending cash balance of $97.0 million as of fiscal 2022 year-end.

AGYS in the fourth quarter of FY 23 has reported the adjusted earnings per share of 26 cents, beating the analysts’ estimates for the adjusted earnings per share of 22 cents. The company had reported the adjusted revenue growth of 13.6 percent to $52.9 million in the fourth quarter of FY 23, beating the analysts’ estimates for revenue of $52.1 million.

Moreover, the demand for the state-of-the-art cloud native products has remained strong during each of the past three quarters. Full year fiscal 2023 was the best sales year and the January through March fourth quarter was the best sales quarter, both by a fair distance, measured in annual contract value terms. This selling success has driven backlog across all three revenue lines, recurring revenue, product and services  to record levels. The company is well positioned to achieve a revenue level of $230 to $235 million during fiscal year 2024. Increased investments across multiple business areas to drive future revenue growth beyond fiscal 2024 are resulting in reduced profitability expectations for this year with Adjusted EBITDA expected to be 13% of revenue for the full fiscal year, with profitability levels increasing throughout.