ALPHARETTA, Ga.--(BUSINESS WIRE)--Agilysys, Inc. (Nasdaq: AGYS), a leading global provider of hospitality software and services, today announced that the Saskatchewan Indian Gaming Authority (SIGA) has chosen Agilysys InfoGenesis POS and Agilysys Eatec inventory and procurement solutions for enterprise-wide use across all seven of its casino properties in Saskatchewan. This milestone represents a major advancement in SIGA's strategy to modernize its operations at scale. This modernization initi. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 000-5734 AGILYSYS, INC. Identification No.) Alpharetta, Georgia 30022 (Address of principal executive offices) (Zip Code) ...

Market Overview - The S&P 500 has reached new all-time highs despite ongoing macroeconomic challenges [1] - Macroeconomic headwinds include risks related to trade deals and declining consumer spending [1] Analyst Background - Gary Alexander has extensive experience in covering technology companies and advising startups [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications [1]

Core Insights - Agilysys reported revenue of $76.68 million for the quarter ended June 2025, reflecting a year-over-year increase of 20.7% [1] - The earnings per share (EPS) for the quarter was $0.33, up from $0.30 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $74.47 million by 2.96%, while the EPS fell short of the consensus estimate of $0.39 by 15.38% [1] Revenue Breakdown - Product revenue was $9.95 million, slightly below the estimated $10.49 million, representing a year-over-year increase of 0.8% [4] - Subscription and maintenance revenue reached $48.62 million, surpassing the estimated $46.62 million, with a significant year-over-year increase of 27.8% [4] - Professional services revenue amounted to $18.1 million, exceeding the estimated $17.26 million, and showed a year-over-year growth of 16.1% [4] Stock Performance - Agilysys shares have returned 6.2% over the past month, outperforming the Zacks S&P 500 composite's return of 5.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Agilysys reported quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.39 per share, but showing an increase from $0.30 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was -15.38%, while the previous quarter saw a positive surprise of +107.69% with earnings of $0.54 per share against an expectation of $0.26 [2] - Agilysys generated revenues of $76.68 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 2.96% and up from $63.51 million year-over-year [3] Stock Performance - Agilysys shares have declined approximately 12.5% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [4] - The current Zacks Rank for Agilysys is 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $77.12 million, and for the current fiscal year, it is $1.65 on revenues of $309.99 million [8] - The Computer - Integrated Systems industry, to which Agilysys belongs, is currently ranked in the top 21% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]

Financial Data and Key Metrics Changes - Q1 fiscal 2026 revenue reached a record $76.7 million, a 20.7% increase from $63.5 million in the prior year [25][16] - Subscription revenue grew by 44% year over year, with organic subscription revenue increasing by 24% [17][27] - Recurring revenue, including subscription and annual maintenance, reached $48.6 million, 28% higher than the prior year, representing 63.4% of total revenue [17][27] - Adjusted EBITDA for Q1 was $12.5 million, slightly higher than $12.1 million in the previous year [30] Business Line Data and Key Metrics Changes - Subscription software sales were up 79% year over year, marking the fourth consecutive record sales quarter for subscription sales [26][17] - Professional services revenue increased by 16% year over year, reaching a record $18.1 million [27][16] - Foodservice Management (FSM) vertical saw a significant turnaround, achieving the best sales quarter in two and a half years [6][9] Market Data and Key Metrics Changes - International sales were the second highest on record, indicating strong momentum in the international market [8][9] - The casino gaming sales vertical had its best Q1 period on record, 15% higher than the previous best [8][9] - The company added 24 new customers in Q1, with an average of six products purchased per customer [11][15] Company Strategy and Development Direction - The company is focused on expanding its integrated ecosystem of hospitality software solutions, which is seen as a competitive advantage [12][44] - There is a strong emphasis on AI integration within product offerings to enhance customer experience and operational efficiency [13][80] - The company plans to maintain a disciplined approach to M&A, focusing on opportunities that complement its product set or expand market share [90][92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the annual revenue guidance of $308 million to $312 million for fiscal 2026 [21][32] - The company anticipates continued growth in subscription revenue, raising its guidance from 25% to 27% for the fiscal year [19][32] - Management noted that operational challenges from the previous fiscal year have been largely resolved, leading to improved sales visibility [72][26] Other Important Information - The company remains debt-free after paying off its credit revolver [31] - The user conference in Q1 was a significant cost driver, impacting sales and marketing expenses [47][30] Q&A Session Summary Question: Sales capacity and productivity trends - Management indicated that sales capacity has increased by 45% year over year, with a focus on hotel and resort verticals [36][38] Question: International market momentum - Management noted that the product ecosystem is strong, and the focus is on installing new projects to create reference customers [42][46] Question: Cost impact of the user conference - The user conference significantly impacted sales and marketing expenses, accounting for most of the increase in that line item [47][50] Question: Sales organization improvements - Management confirmed that the sales structure is in a good place, with ongoing investments in marketing to enhance presence [56][57] Question: Subscription revenue visibility - Management expressed strong visibility into subscription revenue backlog and ongoing sales momentum [85][86] Question: M&A strategy - Management remains patient and conservative regarding M&A, focusing on opportunities that complement existing products or expand market share [90][92]

Financial Data and Key Metrics Changes - Q1 fiscal 2026 revenue reached a record $76.7 million, a 20.7% increase from $63.5 million in the prior year [15][24] - Subscription revenue grew by 44% year over year, with organic subscription revenue increasing by 24% [16][26] - Recurring revenue, including subscription and annual maintenance, reached $48.6 million, up 28% from the prior year [16][26] - Adjusted net income for Q1 was $9.3 million, compared to $8.3 million in the prior year [29] Business Line Data and Key Metrics Changes - Subscription software sales were up 79% year over year, marking a record quarter [25][26] - Professional services revenue increased by 16% year over year, reaching a record $18.1 million [26] - Food Service Management (FSM) vertical saw a significant turnaround, achieving the best sales quarter in two and a half years [8][9] Market Data and Key Metrics Changes - International sales were the second highest for Q1, indicating strong momentum in the international market [8][9] - Casino gaming sales vertical had its best Q1 period on record, up 15% from the previous best [9] Company Strategy and Development Direction - The company is focused on expanding its integrated ecosystem of hospitality software solutions, which is seen as a competitive advantage [12][44] - There is a strong emphasis on AI integration into products to enhance customer experience and operational efficiency [13][80] - The company plans to maintain a disciplined approach to M&A, focusing on opportunities that complement its product set or expand market share [92][95] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the annual revenue guidance of $308 million to $312 million for fiscal 2026 [20][32] - The company anticipates continued growth in subscription revenue, raising its guidance from 25% to 27% for the fiscal year [18][32] - Management noted that operational challenges from the previous fiscal year are largely behind them, contributing to improved sales visibility [73][88] Other Important Information - The company remains debt-free after paying off its credit revolver [30] - The user conference in Q1 significantly impacted sales and marketing expenses, which are expected to normalize throughout the year [28][47] Q&A Session Summary Question: Sales capacity and productivity trends - Management indicated that sales capacity has increased by 45% year over year, with a focus on hotel resorts and the establishment of an inside sales team [36][38] Question: International market momentum - Management noted that the international business is gaining traction, primarily through larger deals, and emphasized the importance of creating reference customers [42][46] Question: User conference costs impact on profit margins - The user conference was a significant contributor to increased sales and marketing expenses, with costs estimated to be around $3 million [47][49] Question: Subscription revenue visibility and growth potential - Management confirmed strong visibility in subscription revenue backlog and highlighted the potential for growth from faster go-lives and better cross-sales [85][88] Question: M&A strategy - Management remains patient and conservative regarding M&A opportunities, focusing on complementary products or market share gains [92][95]

[Financial Highlights & Business Update](index=1&type=section&id=Financial%20Highlights%20%26%20Business%20Update) Agilysys achieved its 14th consecutive record revenue quarter, driven by strong subscription growth, despite a decrease in GAAP net income Q1 FY2026 Financial Highlights (YoY) | Metric | Q1 FY2026 | Q1 FY2025 | Change | | :--- | :--- | :--- | :--- | | Total Net Revenue | $76.7M | $63.5M | +20.7% | | Recurring Revenue | $48.6M | $38.0M | +27.9% | | Subscription Revenue | $31.9M (approx) | $22.1M (approx) | +44.3% | | Net Income | $4.9M | $14.1M | -65.2% | | Adjusted EBITDA | $12.5M | $12.1M | +3.3% | | Adjusted Diluted EPS | $0.33 | $0.30 | +10.0% | | Free Cash Flow | $(5.0)M | $0.2M | N/A | - The company achieved its **14th consecutive record revenue quarter**, with top-line growth of approximately **21% YoY**[4](index=4&type=chunk) - Q1 FY2026 was the **second-highest selling quarter** in the company's history, with annual contract value **24% higher** than the same period last year, leading to record levels of recurring and services revenue backlog[5](index=5&type=chunk) [Fiscal 2026 Outlook](index=1&type=section&id=Fiscal%202026%20Outlook) Agilysys raised its FY2026 subscription revenue growth guidance while maintaining total revenue and Adjusted EBITDA margin forecasts - The company raised its full fiscal year 2026 subscription revenue growth guidance to **27%** year-over-year, an increase from the original guidance of **25%**[6](index=6&type=chunk)[7](index=7&type=chunk) - Full year fiscal 2026 total revenue guidance is maintained at **$308 million to $312 million**[7](index=7&type=chunk) - Adjusted EBITDA expectations for the full fiscal year remain at **20% of revenue**[7](index=7&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the consolidated financial statements, detailing Q1 FY2026 performance, including income, balance sheet, and cash flow changes [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 FY2026 Income Statement (in thousands) | Line Item | Q1 2026 (ended Jun 30, 2025) | Q1 2025 (ended Jun 30, 2024) | | :--- | :--- | :--- | | **Total net revenue** | **$76,675** | **$63,512** | | Gross profit | $47,294 | $39,868 | | *Gross profit margin* | *61.7%* | *62.8%* | | Total operating expense | $42,773 | $34,121 | | Operating income | $4,521 | $5,747 | | **Net income** | **$4,890** | **$14,106** | | **Net income per share - diluted** | **$0.17** | **$0.50** | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $55,564 | $73,041 | | Total current assets | $108,527 | $123,527 | | **Total assets** | **$426,046** | **$434,370** | | Total current liabilities | $97,554 | $111,024 | | Debt, non-current | $12,000 | $24,000 | | **Total shareholders' equity** | **$283,219** | **$265,886** | | **Total liabilities and shareholders' equity** | **$426,046** | **$434,370** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 FY2026 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2026 (ended Jun 30, 2025) | Q1 2025 (ended Jun 30, 2024) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(4,346) | $1,098 | | Net cash used in investing activities | $(633) | $(869) | | Net cash used in financing activities | $(12,924) | $(925) | | **Net decrease in cash and cash equivalents** | **$(17,477)** | **$(780)** | | Cash and cash equivalents at end of period | $55,564 | $144,111 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP to non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2026 (ended Jun 30, 2025) | Q1 2025 (ended Jun 30, 2024) | | :--- | :--- | :--- | | Net income | $4,890 | $14,106 | | EBITDA | $7,186 | $6,717 | | **Adjusted EBITDA** | **$12,487** | **$12,118** | [Reconciliation of Net Income to Adjusted Net Income](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) Adjusted Net Income & EPS Reconciliation (in thousands, except per share data) | Line Item | Q1 2026 (ended Jun 30, 2025) | Q1 2025 (ended Jun 30, 2024) | | :--- | :--- | :--- | | Net income | $4,890 | $14,106 | | **Adjusted net income** | **$9,285** | **$8,311** | | Diluted weighted average shares outstanding | 28,289 | 28,127 | | **Adjusted diluted earnings per share** | **$0.33** | **$0.30** | [Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow](index=11&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) Free Cash Flow Reconciliation (in thousands) | Line Item | Q1 2026 (ended Jun 30, 2025) | Q1 2025 (ended Jun 30, 2024) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(4,346) | $1,098 | | Capital expenditures | $(633) | $(869) | | **Free cash flow** | **$(4,979)** | **$229** | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides administrative and legal details, including conference call information, forward-looking statements, and a corporate profile - The company hosted a conference call and webcast on July 21, 2025, to discuss the quarterly results[9](index=9&type=chunk) - The press release contains forward-looking statements, including revenue and Adjusted EBITDA guidance, which are subject to risks and uncertainties[11](index=11&type=chunk)[12](index=12&type=chunk) - Agilysys is a global provider of hospitality software solutions, serving a wide range of customers including hotels, resorts, casinos, cruise lines, and stadiums[17](index=17&type=chunk)[19](index=19&type=chunk)

Summary of Agilysys (AGYS) FY Conference Call - June 03, 2025 Company Overview - Agilysys is a leading software provider for the hospitality industry, specializing in POS solutions and property management systems (PMS) [2][5] - The company has a global presence in approximately 118 countries, with major offices in Alpharetta, Atlanta, and Las Vegas [10][12] Core Business and Market Segments - Casino gaming constitutes about 50% of Agilysys' revenue, making it the largest vertical for the company [13] - Other significant verticals include hotels, resorts, cruise ships, and food service management (FSM) [14][18] - Agilysys has established relationships with major clients such as Royal Caribbean and Carnival UK in the cruise sector [15] Product Offerings - The company has developed a modern cloud-native hospitality ecosystem that includes POS, PMS, and inventory procurement systems [7][24] - Agilysys emphasizes customer-centric solutions, allowing for both cloud and on-premise installations [33][35] - The product suite includes loyalty promotions, digital marketing, and guest-facing kiosks, enhancing guest experiences [50][51] Financial Performance - Agilysys reported a revenue of $275.6 million for the fiscal year ending March 2025, with guidance for $308 million to $312 million for the next fiscal year [72][74] - Subscription revenue has grown by 27% annually over the last four years, with a projected growth of 25% for the upcoming year [36][74] - Recurring revenue constitutes approximately 62% of total revenue, with subscription revenue being a significant driver [71][72] Growth Opportunities - The company has identified international markets as a significant growth area, currently representing only 8% of total revenue [25][22] - Agilysys aims to increase its market share in PMS, currently connected to less than 300,000 rooms, with potential to triple this through new contracts like the one with Marriott [63][64] Challenges and Strategic Focus - Agilysys faces challenges in brand recognition and market presence, as it is perceived as an older company [77][78] - The company is focused on product innovation and customer satisfaction, with a strong emphasis on R&D, employing 1,500 out of 2,300 employees in this area [41][43] - The management is committed to maintaining a hospitality-focused strategy, avoiding distractions from other markets [39][40] Technological Advancements - Agilysys is integrating AI into its products to enhance efficiency and improve customer interactions, such as in booking systems and image generation for menus [55][57] - The company has modernized its product offerings, ensuring that all core products are cloud-native and capable of on-premise deployment [34][46] Conclusion - Agilysys is positioned for significant growth within the hospitality technology sector, leveraging its innovative product suite and expanding into international markets while addressing brand recognition challenges [66][70]

Core Insights - Five stocks have been added to the Zacks Rank 1 (Strong Buy) List, indicating strong potential for investment returns Company Summaries - **PVH (PVH)**: Specializes in designing and marketing branded apparel, with a Zacks Consensus Estimate for current year earnings increasing by 8.3% over the last 60 days [1] - **Maximus (MMS)**: Operates global government health and human services programs, with a Zacks Consensus Estimate for current year earnings increasing by 6.7% over the last 60 days [2] - **Allianz (ALIZY)**: Provides property-casualty insurance, life/health insurance, and asset management services, with a Zacks Consensus Estimate for current year earnings increasing by 6.3% over the last 60 days [2] - **Popular (BPOP)**: Offers a comprehensive suite of banking and financial services, with a Zacks Consensus Estimate for current year earnings increasing by 4.8% over the last 60 days [3] - **Agilysys (AGYS)**: A leading provider of IT solutions for corporate and public-sector customers, with a Zacks Consensus Estimate for current year earnings increasing by 4.4% over the last 60 days [4]