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]

Revenue Growth - Total net revenue increased by $38.2 million, or 16.1%, in fiscal 2025 compared to fiscal 2024, reaching $275.6 million[192] - Subscription and maintenance revenue grew by $32.0 million, or 23.2%, driven by continued growth in subscription-based revenue, including service to Book4Time customers[192] - Professional services revenue increased by $13.9 million, or 27.7%, due to higher sales and service activity[192] - Total net revenue for fiscal 2024 was $237.5 million, an increase of $39.4 million or 19.9% compared to fiscal 2023[206] - Subscription and maintenance revenue grew by $19.8 million or 16.7%, driven by a 29.6% increase in subscription-based revenue[207] - Professional services revenue increased by $14.2 million or 39.2%, reflecting higher sales and service activity[207] - Revenue from international operations constituted 10% of total revenue in fiscal 2025, compared to 6% in fiscal 2024 and 7% in fiscal 2023[251] Profitability - Gross profit increased by $27.7 million, or 19.2%, with gross profit margin rising from 60.7% to 62.4%[194] - Operating income rose to $22.6 million, an increase of $6.8 million or 43.4%, with operating income percentage improving from 6.6% to 8.2%[192] - Gross profit rose by $23.4 million or 19.4%, while gross profit margin slightly decreased from 61.0% to 60.7%[208] - Operating expenses increased by $19.6 million or 18.3%, but as a percentage of total revenue, they decreased by 0.7%[209] Expenses - Product development expenses increased by $5.7 million, or 10.0%, due to hiring and increased compensation rates[196] - Sales and marketing expenses rose by $4.7 million, or 16.5%, attributed to hiring and expanded marketing activities[197] - Product development expenses rose by $6.5 million or 12.9% due to increased hiring and compensation rates[210] Cash Flow - Cash flow from operating activities for fiscal 2025 was $55.1 million, up from $48.2 million in fiscal 2024[226][227] - Cash flows used in investing activities for fiscal 2025 were $148.6 million, primarily due to $145.8 million for business combinations and property and equipment purchases[229] - Cash flows used in financing activities for fiscal 2025 were $21.9 million, driven by $49.6 million in debt proceeds and $26.0 million in debt repayments[232] - Cash flows used in financing activities for fiscal 2024 were $8.6 million, primarily due to share repurchases of $6.9 million[233] - Cash flows used in investing activities for fiscal 2024 were $7.6 million, mainly from $8.1 million in property and equipment purchases[230] - Cash flows used in investing activities for fiscal 2023 were $6.9 million, primarily due to $7.3 million in property and equipment purchases[231] Acquisitions - The company acquired Book4Time for $145.8 million, enhancing its position in the spa management SaaS market[183] - The company completed the acquisition of Book4Time for $145.8 million in net cash during the year ended March 31, 2025[224] Tax and Interest - Effective tax rate for fiscal 2025 was 9.4%, influenced by U.S. R&D credits and the release of valuation allowances against foreign deferred tax assets[203] - Interest income decreased by $1.3 million, or 25.6%, to $3.8 million, while total other income, net fell by $1.9 million, or 38.3%, to $3.0 million[201] - Interest income increased to $5.1 million in fiscal 2024, up from $2.2 million in fiscal 2023[216] Other Financial Information - The company had $78.5 million of federal net operating loss carryforwards expiring between fiscal years 2033 to 2039[220] - The cash surrender value of corporate-owned life insurance policies was $1.1 million, recorded under "Other non-current assets" as of the balance sheet date[234] - The present value of future proceeds owed to designated beneficiaries of corporate-owned life insurance policies was $0.1 million, recorded within "Other non-current liabilities"[234] - Share repurchases in fiscal 2025 amounted to $2.7 million to satisfy employee tax withholding on share-based compensation[232] - The company has not entered into any off-balance sheet arrangements that could affect its financial condition[235]

Core Viewpoint - Agilysis reported strong quarterly results that significantly exceeded analyst expectations, leading to a 22% increase in share price on the day of the announcement [1]. Financial Performance - In the fiscal fourth quarter of 2025, Agilysis achieved net revenue of over $74 million, a 19% increase compared to the same period last year, driven by a nearly 43% rise in subscription revenue [2]. - The company reported GAAP net income of $3.9 million, up from $3 million year-over-year, while non-GAAP net income per share rose to $0.54 from $0.32 in the fourth quarter of fiscal 2024 [4]. - The reported revenue surpassed analyst expectations, which were slightly under $71.6 million, and adjusted net income estimates were at $0.35 per share [4]. Management Commentary - CEO Ramesh Srinivasan highlighted the accelerating customer demand for their cloud-native hospitality software solutions, noting that product, recurring revenue, and services backlog reached all-time highs [5]. Future Guidance - For fiscal 2026, Agilysis is guiding for revenue between $308 million and $312 million, with adjusted EBITDA expected to be 20% of revenue [5].

Core Insights - The stock market is currently near year-to-date highs, recovering from previous declines related to tariffs, despite potential recession indicators emerging [1] Group 1: Market Conditions - The stock market has erased all declines that occurred post-tariff announcements, indicating a strong recovery [1] - There are signs that the economy may be entering a recession, as various indicators have begun to decline [1] Group 2: Analyst Background - Gary Alexander has extensive experience in technology sectors, having worked on Wall Street and in Silicon Valley, and has advised several seed-round startups [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, with his articles reaching audiences through popular trading apps like Robinhood [1]

Core Insights - Agilysys reported revenue of $74.27 million for the quarter ended March 2025, reflecting a year-over-year increase of 19.4% and surpassing the Zacks Consensus Estimate by 4.20% [1] - The company's EPS for the quarter was $0.54, significantly higher than the $0.32 reported in the same quarter last year, resulting in an EPS surprise of 107.69% compared to the consensus estimate of $0.26 [1] Revenue Breakdown - Net revenue from Products was $10.25 million, slightly above the average estimate of $10.03 million, but down 6.7% year-over-year [4] - Subscription and maintenance revenue reached $46.20 million, exceeding the average estimate of $45.39 million, with a year-over-year increase of 26.3% [4] - Professional services revenue was reported at $17.83 million, surpassing the estimated $15.85 million, marking a 21.7% increase compared to the previous year [4] Stock Performance - Agilysys shares have returned 23.8% over the past month, outperforming the Zacks S&P 500 composite, which saw a 13.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Group 1 - Agilysys reported quarterly earnings of $0.54 per share, exceeding the Zacks Consensus Estimate of $0.26 per share, and showing an increase from $0.32 per share a year ago, resulting in an earnings surprise of 107.69% [1] - The company achieved revenues of $74.27 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.20%, and up from $62.22 million year-over-year [2] - Agilysys has outperformed consensus EPS estimates in all four of the last quarters [2] Group 2 - The stock has underperformed the market, losing approximately 34.7% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.37 on revenues of $73.98 million, and for the current fiscal year, it is $1.63 on revenues of $317.63 million [7] - The Computer - Integrated Systems industry, to which Agilysys belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable industry outlook [8]

Financial Data and Key Metrics Changes - Fiscal year 2025 revenue reached a record $275.6 million, a 16% increase from the previous year, despite a 16% decline in one-time product revenue [18][24][29] - Q4 revenue was a record $74.3 million, up 19.4% from $62.2 million in the prior year quarter [15][23] - Subscription revenue for Q4 was $29.8 million, growing by 42.7% year-over-year, representing 64.4% of total recurring revenue [16][26] - Full fiscal year 2025 adjusted EBITDA was $53.8 million, compared to $37.1 million in the prior year [29] Business Line Data and Key Metrics Changes - Subscription SaaS software and services had a record sales year, with PMS and related add-on modules sales up 58% compared to the previous best year [7][8] - Managed food services (FSM) sales in Q4 were the best of the year, with sales in the second half of fiscal 2025 nearly double that of the first half [9][10] - POS sales in Q4 were 27% higher than Q3 and 16% higher than the previous highest Q2 quarter [8][24] Market Data and Key Metrics Changes - International sales showed positive signs of consistent growth, although still dependent on significant wins [10] - The current global demo plus stage sales pipeline is at a record level, 18% higher than the previous year [13] Company Strategy and Development Direction - The company is focused on maintaining investments in various areas, including cybersecurity, product innovation, and customer support, to fuel future revenue growth [21] - The modernization of the POS platform has been completed, enhancing adaptability and supply chain management [20] - The company aims to achieve subscription revenue growth of 25% in fiscal year 2026, with total revenue expected to be in the range of $308 million to $312 million [31][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future prospects despite macroeconomic challenges, citing a strong position in the hospitality technology market [20][35] - The company has seen significant growth in annual revenue and subscription revenue over the past three years, indicating a successful transformation [34] Other Important Information - The company has expanded its sales teams significantly, particularly in the hotels and resorts vertical, to enhance market presence [35] - The Book for Time acquisition has been successful, contributing positively to the company's product offerings and sales capabilities [96][97] Q&A Session Summary Question: What attributed to the success in POS bookings this quarter? - Management attributed the improvement to the installation of a fully modernized and unified POS platform, which has enhanced implementation ease and customer demand [39][40] Question: Can you update on the mix of customers using Agilysys implementation teams versus third-party support? - Most implementations are done by Agilysys teams due to the complexity of the software, and the growth in professional services revenue is expected to be normal [42][44] Question: What does the 2026 guidance for subscription revenue imply for organic growth? - The 25% growth includes benefits from the Book for Time acquisition, with organic growth expected to be in the 22-23% range [46] Question: Can you discuss the momentum in add-on sales? - Add-on modules are driving improvement, particularly on the PMS side, due to their value and integration into a unified ecosystem [50][52] Question: How is the beta testing with Marriott progressing? - The testing is going well, with positive feedback from property personnel, although it remains a complex transformational project [67][70] Question: What is the rationale for excluding the Marriott project from fiscal year 2026 guidance? - The project is still in the pilot phase, and its impact on the P&L is not expected to be material until mass rollout [83][84] Question: What is the outlook for international growth? - International markets present a significant growth opportunity, with current customers increasing their spending [92][93]