# EDGAR Filing Document

**Accession Number:** 0000078749
**File Stem:** 0000950170-23-001083
**Filing Date:** 2023-1
**Character Count:** 29549
**Document Hash:** 6106214775e75c0b82fdc8a997db15f1
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-001083.hdr.sgml**: 20230124

**ACCESSION NUMBER**: 0000950170-23-001083

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230124

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230124

**DATE AS OF CHANGE**: 20230124

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** AGILYSYS INC
- **CENTRAL INDEX KEY:** 0000078749
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
- **IRS NUMBER:** 340907152
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-05734
- **FILM NUMBER:** 23548189

**BUSINESS ADDRESS:**
- **STREET 1:** 1000 WINDWARD CONCOURSE
- **STREET 2:** SUITE 250
- **CITY:** ALPHARETTA
- **STATE:** GA
- **ZIP:** 30005
- **BUSINESS PHONE:** 7708107800

**MAIL ADDRESS:**
- **STREET 1:** 1000 WINDWARD CONCOURSE
- **STREET 2:** SUITE 250
- **CITY:** ALPHARETTA
- **STATE:** GA
- **ZIP:** 30005

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PIONEER STANDARD ELECTRONICS INC
- **DATE OF NAME CHANGE:** 19920703

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549** 

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**FORM** 8-K

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**CURRENT REPORT** 

**Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934** 

**Date of Report (Date of earliest event reported):** January 24, 2023

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AGILYSYS, INC.

**(Exact name of Registrant as Specified in Its Charter)** 

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| | | |
|:---|:---|:---|
| Delaware | 000-5734 | 34-0907152 |
| **(State or Other Jurisdiction**<br>**of Incorporation)** | **(Commission File Number)** | **(IRS Employer**<br>**Identification No.)** |
| 1000 Windward Concourse**,** Suite 250<br>Alpharetta**,** Georgia |  | 30005 |
| **(Address of Principal Executive Offices)** |  | **(Zip Code)** |

---

**Registrant's Telephone Number, Including Area Code: (**770**)** 810-7800

Not Applicable

**(Former Name or Former Address, if Changed Since Last Report)** 

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| **<br>Title of each class** | **Trading<br>Symbol(s)** | **<br>Name of each exchange on which registered** |
| Common Stock, without par value | AGYS | NASDAQ Global Market |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 2.02 Results of Operations and Financial Condition.**

On January 24, 2023, Agilysys, Inc. issued a press release announcing its results for fiscal 2023 third quarter. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

The information contained in this report as well as in Exhibit 99.1 is furnished and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and such information shall not be deemed to be incorporated by reference in any of the Company's filings under the Securities Act of 1933, as amended, or the Exchange Act.

**Item 9.01 Financial Statements and Exhibits.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)<u>Exhibits</u>. The following item is furnished as an exhibit to this current report on Form 8-K:

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| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description** |
| 99.1 | [<u>Press release issued by Agilysys, Inc. dated January 24, 2023, announcing its results for the third quarter and period ended December 31, 2022.</u>](agys-ex99_1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | | |
|:---|:---|:---|
|  | Company Name | Company Name |
| Date: January 24, 2023 | By: | /s/ William David Wood III |
|  |  | **William David Wood III** |
|  |  | **Chief Financial Officer** |
|  |  | **(Principal Financial Officer)** |

---

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## Exhibit 99.1

**Exhibit 99.1**

![img128410533_0.jpg](img128410533_0.jpg)

**AGILYSYS FISCAL 2023 THIRD QUARTER REVENUE RISES 26.5% TO RECORD $49.9M**

**Includes Recurring Revenue of $30.2M and Subscription Revenue Growth of 28.8%**

**Quarter Positive Adjusted EBITDA of $8.1M and GAAP EPS of $0.13 Per Share**

**Raises Fiscal 2023 Annual Revenue Guidance to $195M to $198M; Reiterates Greater Than 15% Adjusted EBITDA**

**ALPHARETTA, GA – January 24, 2023 -** Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of hospitality software solutions that deliver High Return Hospitality, today reported operating results for its fiscal 2023 third quarter and period ended December 31, 2022.

**Summary of Fiscal 2023 Third Quarter Financial Results**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Total net revenue increased 26.5% to a record $49.9 million, compared to total net revenue of $39.5 million in the comparable prior-year period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Recurring revenue (comprised of subscription and maintenance charges) was a record $30.2 million, or 60.4% of total net revenue compared to $25.1 million, or 63.7% of total net revenue for the same period in fiscal 2022. Subscription revenue increased 28.8% year over year and was 49.8% of total recurring revenue compared to 46.4% of total recurring revenue in the third quarter of fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Gross margin was 61.7% in the fiscal 2023 third quarter compared to 62.6% in the comparable prior-year period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Net income attributable to common shareholders in the fiscal 2023 third quarter was $3.4 million, or $0.13 per diluted share compared to $1.1 million, or $0.04 per diluted share in the comparable prior-year period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted EBITDA (non-GAAP) was $8.1 million compared to $6.6 million in the comparable prior-year period (reconciliation included in financial tables).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adjusted diluted EPS (non-GAAP) was $0.26 per share in the fiscal 2023 third quarter compared to $0.19 per share in the comparable prior-year period (reconciliation included in financial tables).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Free cash flow (non-GAAP) in the fiscal 2023 third quarter was $11.7 million compared to free cash flow of $9.9 million in the fiscal 2022 third quarter (reconciliation included in financial tables). Ending cash balance was $105.8 million, compared to ending cash balance of $97.0 million as of fiscal 2022 year-end.

Ramesh Srinivasan, President and CEO of Agilysys, commented, "We are pleased to announce another record revenue quarter. The positive momentum in our selling success, which started around August of calendar year 2022, has continued at a healthy pace. Our extraordinary investments in product innovation to create state-of-the-art cloud-native hospitality industry focused end-to-end software solutions over the past five plus years, combined with the current increasing focus on sales and marketing, continue to yield good results. In our opinion, this industry has been underserved for decades with respect to software innovations which are essential to better serve increasingly technology savvy guests and internal staff. We expect the current escalating demand for such solutions in the hospitality industry to overcome any macro-economic challenges during the short and medium term.

Subscription revenue grew 28.8% while one-time revenue, consisting of product and services revenue, was 38% higher than the comparable quarter last fiscal year. Adjusted EBITDA improved to 16.1% of revenue.

Even excluding the recent Marriott PMS selection announcement from both sales and backlog, this October to December Q3 fiscal 2023 was our best selling success quarter since the current management team took charge about six years ago. The continued selling success has driven the combined product, services and recurring revenue backlog back to record levels. We are well positioned to beat the full-year revenue guidance provided at the start of our fiscal 2023 year. We now expect fiscal 2023 full-year revenue to be in the range of $195 to $198 million and adjusted EBITDA levels to be slightly higher than 15% of revenue, in line with prior guidance."

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**Fiscal 2023 Outlook**

The Company announced it is raising full-year fiscal 2023 revenue guidance to be $195 to $198 million, inclusive of close to 30% subscription revenue growth year over year and is reiterating its Adjusted EBITDA guidance of greater than 15% of revenue.

Dave Wood, Chief Financial Officer, commented, "We are making excellent progress across all aspects of our business. Our recent investments in sales and marketing along with the value propositions of our cloud native solutions are putting us in a strong position to win a good portion of sales opportunities. We continue to grow subscription revenue at a consistent pace. Our focus remains on managing a profitable business while executing well on our strategies for organic, consistent revenue growth over the medium and long term."

**2023 Third Quarter Conference Call and Webcast**

Agilysys is hosting a conference call and webcast today, January 24, 2023, at 4:30 p.m. ET. Both the call and the webcast are open to the public. Interested parties can register for the call at https://register.vevent.com/register/BI92e7fb3f342349caafb48725c1a83416. After registration, an email confirmation with a personalized PIN will be provided along with further access details. Please plan to register fifteen minutes prior to the presentation to receive confirmation and further instruction in a timely manner.

Interested parties can also access the conference call live on the Events and Presentations page of Agilysys.com. Approximately two hours after the call has concluded, an archived version of the webcast will be available for replay at the same location.

**Forward-Looking Language**

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, our revenue, subscription revenue and Adjusted EBITDA guidance for the 2023 fiscal year and statements we make regarding the hospitality industry's need for and investment in technology and our ability to continue profitable growth.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the effect of the COVID-19 pandemic on our business and the success of any measures we have taken or may take in the future in response thereto; the impact other macroeconomic factors may have on the overall business environment and the risks described in the Company's filings with the Securities and Exchange Commission, including the Company's reports on Form 10-K and Form 10-Q. Additionally, references to "record" financial and business levels in this document refer only to the time period after Agilysys made the transformation to an entirely hospitality focused software solutions company in FY2014.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement that may be made from time to time, whether written or oral, whether as a result of new information, future developments or otherwise.

**Use of Non-GAAP Financial Information**

To supplement the unaudited consolidated financial statements presented in accordance with U.S. GAAP in this press release, certain non-GAAP financial measures as defined by the SEC rules are used. These non-GAAP financial measures include EBITDA, Adjusted EBITDA, adjusted net income, adjusted basic earnings per share, adjusted diluted earnings per share and free cash flow. Management believes that such information can enhance investors' understanding of the Company's ongoing operations.

The Company has included the following non-GAAP financial measures in this press release: adjusted net income, adjusted basic earnings per share and adjusted diluted earnings per share. The Company believes these non-GAAP financial measures provide valuable insight into the Company's overall profitability from core operations before certain non-cash and non-recurring charges. The Company defines adjusted net income as net income before amortization expense (including amortization of developed technology), share-based compensation, convertible preferred stock issuance costs, and one-time charges including severance and other charges, impairments and legal settlements, less the related income tax effect of these adjustments, as applicable, and defines adjusted earnings per share as adjusted net income divided by basic and diluted weighted average shares outstanding.

See the accompanying tables below for the definitions and reconciliation of these non-GAAP measures to the most closely related GAAP measures.

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**About Agilysys**

Agilysys is well known for its long heritage of hospitality-focused technology innovation. The Company delivers modular and integrated software solutions and expertise to businesses seeking to maximize Return on Experience (ROE) through hospitality encounters that are both personal and profitable. Over time, customers achieve High Return Hospitality by consistently delighting guests, retaining staff and growing margins. Customers around the world include: branded and independent hotels; multi-amenity resort properties; casinos; property, hotel and resort management companies; cruise lines; corporate dining providers; higher education campus dining providers; food service management companies; hospitals; lifestyle communities; senior living facilities; stadiums; and theme parks. The Agilysys Hospitality Cloud™ combines core operational systems for property management (PMS), point-of-sale (POS) and Inventory and Procurement (I&P) with Experience Enhancers™ that meaningfully improve interactions for guests and for employees across dimensions such as digital access, mobile convenience, self-service control, personal choice, payment options, service coverage and real-time insights to improve decisions. Core solutions and Experience Enhancers are selectively combined in Hospitality Solution Studios™ tailored to specific hospitality settings and business needs. Agilysys operates across the Americas, Europe, the Middle East, Africa, Asia-Pacific, and India with headquarters located in Alpharetta, GA. For more information visit <u>Agilysys.com</u>.

\# \# \#

**Investor Contact:**

Jessica Hennessy

Senior Director Corporate Strategy & Investor Relations

Agilysys, Inc.

770-810-6116 or <u>investorrelations@agilysys.com</u>

- Financial tables follow -

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AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended<br>December 31, | Three months ended<br>December 31, | Nine months ended<br>December 31, | Nine months ended<br>December 31, |
| (In thousands, except per share data) | **2022** | 2021 | **2022** | 2021 |
| **Net revenue:** |  |  |  |  |
| Products | $**10697** | $8101 | $**32291** | $24244 |
| Subscription and maintenance | **30154** | 25136 | **86917** | 72371 |
| Professional services | **9069** | 6223 | **25960** | 19463 |
| &nbsp;&nbsp;&nbsp;Total net revenue | **49920** | 39460 | **145168** | 116078 |
| **Cost of goods sold:** |  |  |  |  |
| Products | **5368** | 4400 | **16682** | 12420 |
| Subscription and maintenance | **6767** | 5421 | **19223** | 15184 |
| Professional services | **7009** | 4923 | **20627** | 14634 |
| &nbsp;&nbsp;&nbsp;Total cost of goods sold | **19144** | 14744 | **56532** | 42238 |
| **Gross profit** | **30776** | 24716 | **88636** | 73840 |
| Gross profit margin | **61.7%** | 62.6% | **61.1%** | 63.6% |
| **Operating expenses:** |  |  |  |  |
| Product development | **12416** | 11210 | **36550** | 34074 |
| Sales and marketing | **5886** | 3943 | **16619** | 10418 |
| General and administrative | **7928** | 6804 | **22850** | 20330 |
| Depreciation of fixed assets | **437** | 495 | **1371** | 1609 |
| Amortization of internal-use software and intangibles | **430** | 267 | **1326** | 1077 |
| Other charges | **93** | 381 | **374** | 1187 |
| Legal settlements | **104** | 4 | **104** | 371 |
| &nbsp;&nbsp;&nbsp;Total operating expense | **27294** | 23104 | **79194** | 69066 |
| **Operating income** | **3482** | 1612 | **9442** | 4774 |
| **Other (income) expense:** |  |  |  |  |
| Interest income | **(704)** | (10) | **(1186)** | (45) |
| Interest expense | **—** | 4 | **—** | 5 |
| Other (income) expense, net | **(384)** | 52 | **(799)** | **53** |
| **Income before taxes** | **4570** | 1566 | **11427** | 4761 |
| Income tax expense | **678** | 24 | **920** | 265 |
| **Net income** | $**3892** | $1542 | $**10507** | $4496 |
| Series A convertible preferred stock dividends | **(459)** | (459) | **(1377)** | (1377) |
| **Net income attributable to common shareholders** | $**3433** | $1083 | $**9130** | $3119 |
| **Weighted average shares outstanding - basic** | **24703** | 24477 | **24651** | 24315 |
| **Net income per share - basic:** | $**0.14** | $0.04 | $**0.37** | $0.13 |
| **Weighted average shares outstanding - diluted** | **26070** | 25392 | **25780** | 25327 |
| **Net income per share - diluted:** | $**0.13** | $0.04 | $**0.35** | $0.12 |

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AGILYSYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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| | | |
|:---|:---|:---|
| (In thousands, except share data) | December 31, 2022 (Unaudited) | March 31,<br>2022 |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $**105818** | $96971 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for expected credit losses<br> of $655 and $318, respectively | **31953** | 25175 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract assets | **2531** | 1669 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | **10349** | 6940 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | **8432** | 5418 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | **159083** | 136173 |
| Property and equipment, net | **9696** | 6345 |
| Operating lease right-of-use assets | **14823** | 9889 |
| Goodwill | **33569** | 32759 |
| Intangible assets, net | **19165** | 20178 |
| Deferred income taxes, non-current | **2380** | 2664 |
| Other non-current assets | **7445** | 6154 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $**246161** | $214162 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $**9752** | $9766 |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract liabilities | **55915** | 46095 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | **11728** | 10552 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities, current | **3734** | 5049 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finance lease obligations, current | **3** | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | **81132** | 71466 |
| Deferred income taxes, non-current | **1679** | 938 |
| Operating lease liabilities, non-current | **12509** | 5649 |
| Finance lease obligations, non-current | **—** | 2 |
| Other non-current liabilities | **3929** | 3304 |
| Commitments and contingencies |  |  |
| Series A convertible preferred stock, no par value | **35000** | 35459 |
| Shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common shares, without par value, at $0.30 stated value; 80,000,000<br> shares authorized; 31,606,831 shares issued; and 25,184,727<br> and 24,728,532 shares outstanding at December 31, 2022<br> and March 31, 2022, respectively | **9482** | 9482 |
| &nbsp;&nbsp;&nbsp;&nbsp;Treasury shares, 6,422,104 and 6,878,299 at December 31, 2022<br> and March 31, 2022, respectively | **(1926)** | (2063) |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital in excess of stated value | **56166** | 49963 |
| &nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | **49148** | 40018 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | **(958)** | (56) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | **111912** | 97344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $**246161** | $214162 |

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AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

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| | | |
|:---|:---|:---|
|  | Nine Months Ended | Nine Months Ended |
|  | December 31, | December 31, |
| (In thousands) | **2022** | 2021 |
| **Operating activities** |  |  |
| Net income | $**10507** | $4496 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of property & equipment | **—** | 123 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation of fixed assets | **1371** | 1609 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of internal-use software and intangibles | **1326** | 1077 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | **(378)** | (491) |
| &nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | **9410** | 10802 |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities | **(4556)** | 4199 |
| Net cash provided by operating activities | **17680** | 21815 |
| **Investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures | **(3616)** | (1078) |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional investments in corporate-owned life insurance policies | **(27)** | (3) |
| Net cash used in investing activities | **(3643)** | (1081) |
| **Financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of preferred stock dividends | **(1836)** | (1836) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of common shares to satisfy employee tax withholding | **(2924)** | (2902) |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments under long-term obligations | **(3)** | (16) |
| Net cash used in financing activities | **(4763)** | (4754) |
| **Effect of exchange rate changes on cash** | **(427)** | (38) |
| Net increase in cash and cash equivalents | **8847** | 15942 |
| Cash and cash equivalents at beginning of period | **96971** | 99180 |
| **Cash and cash equivalents at end of period** | $**105818** | $115122 |

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AGILYSYS, INC.

RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA

(UNAUDITED)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Nine months ended | Nine months ended |
| (In thousands) | December 31, | December 31, | December 31, | December 31, |
|  | **2022** | 2021 | **2022** | 2021 |
| **Net income** | $**3892** | $1542 | $**10507** | $4496 |
| Income tax expense | **678** | 24 | **920** | 265 |
| **Income before taxes** | **4570** | 1566 | **11427** | 4761 |
| Depreciation of fixed assets | **437** | 495 | **1371** | 1609 |
| Amortization of internal-use software and intangibles | **430** | 267 | **1326** | 1077 |
| Amortization of developed technology acquired | **39** |  | **120** |  |
| Interest income, net | **(704)** | (6) | **(1186)** | (40) |
| **EBITDA (a)** | **4772** | 2322 | **13058** | 7407 |
| Share-based compensation | **3466** | 3839 | **9410** | 10802 |
| Other charges | **93** | 381 | **374** | 1187 |
| Other non-operating (income) expense | **(384)** | 52 | **(799)** | 53 |
| Legal settlements | **104** | 4 | **104** | 371 |
| **Adjusted EBITDA (b)** | $**8051** | $6598 | $**22147** | $19820 |

---

(a) EBITDA, a non-GAAP financial measure, is defined as net income before income taxes, interest income (net of interest expense), depreciation and amortization (including amortization of developed technology)

(b) Adjusted EBITDA, a non-GAAP financial measure, is defined as net income before income taxes, interest income (net of interest expense), depreciation and amortization (including amortization of developed technology), and excluding charges relating to i) legal settlements, ii) other charges, iii) share-based compensation, and iv) other non-operating (income) expense

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AGILYSYS, INC.

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME FOR ADJUSTED EARNINGS PER SHARE

(UNAUDITED)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Nine months ended | Nine months ended |
| (In thousands, except per share data) | December 31, | December 31, | December 31, | December 31, |
|  | **2022** | 2021 | **2022** | 2021 |
| **Net income attributable to common shareholders** | $**3433** | $1083 | $**9130** | $3119 |
| Amortization of developed technology acquired | **39** |  | **120** |  |
| Amortization of internal-use software and intangibles | **430** | 267 | **1326** | 1077 |
| Share-based compensation | **3466** | 3839 | **9410** | 10802 |
| Other charges | **93** | 381 | **374** | 1187 |
| Legal settlements | **104** | 4 | **104** | 371 |
| Income tax adjustments | **(913)** | (657) | **(2280)** | (1868) |
| **Adjusted net income (a)** | $**6652** | $4917 | $**18184** | $14688 |
| Basic weighted average shares outstanding | **24703** | 24477 | **24651** | 24315 |
| Diluted weighted average shares outstanding | **26070** | 25409 | **25780** | 25296 |
| **Adjusted basic earnings per share (b)** | $**0.27** | $0.20 | $**0.74** | $0.60 |
| **Adjusted diluted earnings per share (b)** | $**0.26** | $0.19 | $**0.71** | $0.58 |

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(a) Adjusted net income, a non-GAAP financial measure, is defined as net income attributable to common shareholders before amortization expense (including amortization of developed technology), share-based compensation, and one-time charges including other charges and legal settlements, less the related income tax effect of these adjustments, as applicable, at the Company's current combined federal and state income statutory tax rate. No income tax effect applies to one-time charges when a valuation allowance offsets their related deferred tax assets

(b) Adjusted earnings per share, a non-GAAP financial measure, is defined as adjusted net income divided by basic and diluted weighted average shares outstanding

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AGILYSYS, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(UNAUDITED)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three months ended | Three months ended | Nine months ended | Nine months ended |
| (In thousands) | December 31, | December 31, | December 31, | December 31, |
|  | **2022** | 2021 | **2022** | 2021 |
| **Net cash provided by operating activities** | $**14563** | $10142 | $**17680** | $21815 |
| Capital expenditures | **(2819)** | (292) | **(3616)** | (1078) |
| **Free cash flow (a)** | $**11744** | $9850 | $**14064** | $20737 |

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(a) Free cash flow, a non-GAAP financial measure, is defined as net cash provided by operating activities, less capital expenditures

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