What happened 

Shares of Agilysys (AGYS -2.46%), a hospitality software and services company, were plummeting this morning after the company reported its first-quarter results. Agilysys beat analysts' consensus top- and bottom-line estimates, but investors may have been concerned that the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) was flat and free cash flow sank year-over-year. 

The tech stock was down by 10.7% as of 11:55 a.m. ET. 

So what 

Agilysys reported sales of $47.5 million in the quarter -- an increase of nearly 23% year over year -- which beat Wall Street's consensus estimate of $45.6 million. That increase was due to a jump in recurring revenue, which reached $27.7 million in the quarter. 

A person looking at a smartphone and holding their head in their hand.

Image source: Getty Images.

Agilysys' earnings also beat expectations, with non-GAAP (adjusted) earnings per share of $0.21 -- which were flat on a year-over-year basis -- outpacing analysts' average estimate of $0.18.  

"We are pleased to report a second consecutive record revenue quarter, despite lingering pandemic related industry challenges in international regions and managed food services," Agilysys CEO Ramesh Srinivasan said in a press release. 

But investors' strong negative reaction to the company's stock today may be driven by the fact that Agilysys' EBITDA fell from $6.9 million in the year-ago quarter to $6.7 million in the first quarter. They also had their eye on the company's declining free cash flow.

NASDAQ: AGYS

Agilysys
Today's Change
(-2.46%) -$1.71
Current Price
$67.74
Arrow-Thin-Down
AGYS

Key Data Points

Market Cap
$2B
Day's Range
$66.89 - $68.75
52wk Range
$63.71 - $142.64
Volume
240,224
Avg Vol
372,211
Gross Margin
60.17%
Dividend Yield
N/A

The company said EBITDA fell "due to expected increased spend in sales, marketing and professional services and certain additional costs" and that free cash flow declined by $7.7 million because of additional payments the company made for inventory as it tries to protect itself against supply chain issues.  

Now what 

Agilysys reiterated its full-year revenue guidance with a range between $190 million and $195 million. Analysts' consensus revenue estimate for the full year is about $193 million. 

Agilysys' share price drop today is a good example of how investors are being extra cautious about technology stocks right now, even when companies beat Wall Street's consensus estimates.