Agilysys Q1 Earnings Call Highlights

Key Points

• Record results lifted Agilysys’ outlook: Fiscal Q1 revenue rose 14.3% year over year to $87.7 million, while net income nearly doubled to $9 million. The company raised its fiscal 2027 revenue guidance to $368 million–$373 million and expects subscription revenue growth of at least 32%.
• Subscription and PMS momentum accelerated: Subscription revenue increased 26.1% to $40.2 million, with PMS revenue up 39.7%; PMS subscription revenue exceeded POS subscription revenue for the first time. Recurring revenue reached 65.9% of total revenue, highlighting the company’s growing software mix.
• Large customer wins and product expansion support future growth: Agilysys secured three major seven-figure hospitality deals, added 102 properties and reported record backlog levels. Its Marriott rollout remains on schedule, while more than 30 AI features—including planned reservation and revenue-intelligence tools—are in development or deployment.

Agilysys NASDAQ: AGYS reported record fiscal 2027 first-quarter revenue, subscription revenue and profitability, prompting the hospitality software provider to raise its full-year revenue outlook.

Revenue for the quarter ended June 30 was $87.7 million, up 14.3% from $76.7 million in the prior-year period. President and Chief Executive Officer Ramesh Srinivasan said the result marked the company’s 18th consecutive quarterly revenue record and described the April-to-June period as Agilysys’ best first-quarter sales period on record.

The company raised its fiscal 2027 revenue guidance to a range of $368 million to $373 million, from its previous range of $365 million to $370 million. The updated outlook implies annual revenue growth of 15% to 17%. Agilysys also increased its expectation for subscription revenue growth to at least 32%, compared with its prior forecast of at least 30%.

Subscription Growth and Profitability

Subscription revenue rose 26.1% year over year to a record $40.2 million. Total recurring revenue increased 18.8% to $57.7 million and represented 65.9% of total revenue, compared with 63.4% in the year-earlier quarter.

Revenue from property-management-system, or PMS, products and related modules increased 39.7%, while point-of-sale, or POS, products and related modules grew 18.5%. Srinivasan said the quarter was the first in the company’s history in which subscription revenue from PMS products exceeded that of its POS ecosystem.

Add-on modules across PMS and POS accounted for 36% of total subscription revenue. Srinivasan said PMS has a greater number of available add-on modules than POS and that Agilysys continues to hold relatively low market share in PMS, providing room for expansion.

Professional services revenue rose 8.3% to a record $19.6 million. Chief Financial Officer Dave Wood said professional-services gross margin remained above 30% for a second consecutive quarter, reaching 35.4%.

Gross profit increased to $55.7 million from $47.3 million, while gross margin expanded to 63.5% from 61.7%. Operating income was $9.7 million, compared with $4.5 million a year earlier. Net income totaled $9 million, or $0.32 per diluted share, compared with $4.9 million, or $0.17 per diluted share, in the prior-year period.

Adjusted EBITDA rose to $18.3 million from $12.5 million and represented 20.8% of revenue. Despite the stronger-than-expected first-quarter margin, the company maintained its full-year adjusted EBITDA margin guidance of 24%, while continuing to expect an exit rate near 30% in the fourth quarter.

Sales Activity and Backlog

Srinivasan said Agilysys recorded three major seven-figure, multi-product ecosystem wins during the quarter, including two casino-gaming customers and a nine-property Australian resort group. The company said all three wins came against its primary competitor.

• A casino resort under construction on the Las Vegas Strip selected Agilysys for POS, PMS and other software modules.
• An Arizona casino resort switched to Agilysys from a competitor it had used for about two decades.
• A nine-property Australian resort group selected Agilysys PMS and related modules after using the company’s main competitor for more than two decades.

The company added 15 new customers, excluding Book4Time, during the quarter. Those customers signed subscription license-based agreements and licensed an average of nearly six products each. Agilysys also added 87 properties at existing customer organizations that had not previously used its software, bringing total new properties added during the period to 102.

In addition, Agilysys reported 106 instances of customers purchasing additional software products for properties already using at least one company product. Those transactions involved 206 products in total.

Wood said the number of new customers was toward the lower end of the company’s typical 15-to-20 range, but deal sizes were larger. Srinivasan said the last two quarters together represented the company’s strongest six-month sales period on record and that the sales pipeline is now larger than it was before that period began.

Implementation, Marriott and AI Plans

Agilysys said its Marriott PMS project remains on plan. Srinivasan said the company expects the rollout to take roughly another 18 to 24 months, noting that more complex full-service and premium properties are now approaching implementation after earlier deployments focused largely on select-service locations.

Management attributed faster backlog conversion partly to improved implementation efficiency as its modernized software products have matured. Srinivasan said the company is improving its change-management processes, data migration capabilities, customer training and product integrations based on lessons from the Marriott deployment.

The company continues to exclude the Marriott PMS rollout from its backlog calculations. Even so, management said combined product, services and recurring-revenue backlog reached record levels.

Agilysys also said it is advancing its artificial intelligence strategy. Srinivasan said the company has more than 30 AI-based features in development or deployment, with several being piloted at customer properties and others nearing completion of development and testing.

The company has built a centralized AI orchestration layer intended to route requests to appropriate large language models, manage token usage and support security, privacy, compliance and cost controls. Srinivasan said Agilysys is developing AI-native central reservation system and Revenue Intelligence modules, with initial customer beta implementations expected later in fiscal 2027.

Cash and marketable securities totaled $123.7 million as of June 30, up from $116.9 million at March 31. Free cash flow was $7.3 million in the first quarter, compared with negative $5 million in the year-earlier quarter.

About Agilysys (NASDAQ:AGYS)

Agilysys, Inc is a publicly traded technology company NASDAQ: AGYS that specializes in providing software and services to the hospitality industry. The company's solutions span property management, point-of-sale, inventory and procurement, workforce management, analytics and mobile guest engagement. These offerings are designed to streamline hotel and resort operations, enhance guest experiences and improve financial performance for clients across the lodging, gaming, cruise, senior living and higher-education markets.

Agilysys delivers its portfolio through both cloud-based and on-premises deployments, enabling hoteliers and hospitality operators to select the infrastructure model that best aligns with their operational requirements and IT strategies.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.