Agilysys(US:AGYS)2025-10-27 21:32Financial Data and Key Metrics Changes - Fiscal 2026 Q2 revenue reached a record $79.3 million, a 16.1% increase from $68.3 million in the prior year [23][13] - Recurring revenue grew 23% year-over-year to a record $51 million, driven mainly by a 33.1% increase in subscription revenue [13][24] - Adjusted net income for Q2 was $11.4 million, up from $9.5 million in the prior year, with adjusted diluted earnings per share increasing to $0.40 from $0.34 [28][30] Business Line Data and Key Metrics Changes - Subscription sales were up 59% year-over-year, with food service management (FSM) sales increasing more than 2.5 times [7][13] - Property management systems (PMS) products, including add-on modules, saw a 34% increase [7] - International sales grew by 36%, with gaming casino sales up 15% despite last year's record sales [7][8] Market Data and Key Metrics Changes - The total addressable market is significantly larger than the current size of the company, indicating substantial growth potential [8] - International sales levels had another strong quarter, growing by more than 35% over the prior year [8] - The company added 18 new customers in Q2, all of which were subscription-based sales agreements [10] Company Strategy and Development Direction - The company is focused on creating a comprehensive ecosystem of cloud-native hospitality software solutions, which has provided competitive advantages [5][6] - Increased use of AI tools is enhancing product development and operational efficiencies, contributing to a growing competitive advantage [21][20] - The company aims to maintain a clean balance sheet while focusing on profitable growth in the hospitality technology sector [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business momentum and the impact of AI on competitive positioning [17][31] - The company raised its full-year revenue guidance to $315 million-$318 million, reflecting strong sales momentum [30] - Management noted that the Marriott PMS project is progressing according to plan, with beta implementations underway [21] Other Important Information - The product backlog at the end of Q2 was 49% higher than at the end of Q1, providing better visibility for the rest of the fiscal year [16] - Professional services revenue reached a record $18.2 million, up 12% year-over-year [16][24] - The company continues to see strong customer retention and growth in revenue across both current and new customers [32] Q&A Session Summary Question: What has changed regarding record sales momentum? - Management attributed the momentum to product ecosystem improvements and increased senior talent, rather than just market adoption of cloud solutions [34][35] Question: Will the Marriott rollout impact margins? - Management expects the Marriott rollout to be margin accretive over time, with potential short-term investments [37][38] Question: How is international performance compared across regions? - Management noted strong performance in EMEA and APAC, driven by product improvements rather than a halo effect from major projects [42][43] Question: What is the current capacity for service delivery? - Management confirmed that capacity improvements have been completed, allowing for better handling of backlog [45][46] Question: Are efficiency gains expected in the second half of the fiscal year? - Management indicated that efficiency improvements are ongoing, with significant gains expected in the future [50][53] Question: Is the guidance increase related to the Marriott rollout? - Management clarified that the guidance increase is based on general sales momentum and not related to the Marriott PMS project [75][76]