Agilysys Q4 Earnings Call Highlights

Key Points

• Agilysys posted record Q4 and full-year fiscal 2026 results, with Q4 revenue up 11.7% to $82.9 million and full-year revenue up 15.9% to $319.3 million. Subscription revenue was a major driver, rising 24.1% in Q4 and 30.2% for the year.
• Profitability and cash generation improved materially as gross margin expanded to 64.4% in Q4, adjusted EBITDA reached $67.7 million for the year, and free cash flow rose to $68.1 million. Cash and marketable securities increased to $116.9 million.
• Management issued upbeat fiscal 2027 guidance calling for revenue of $365 million to $370 million and subscription revenue growth of more than 30%. The company also highlighted AI product launches and said the Marriott PMS rollout remains on plan.

Agilysys NASDAQ: AGYS reported record fourth-quarter and full-year fiscal 2026 results, with management pointing to strong subscription demand, improved implementation capacity and growing use of artificial intelligence across its hospitality software platform as key drivers of momentum.

President and Chief Executive Officer Ramesh Srinivasan said the company’s fiscal fourth quarter was “an excellent overall business quarter” across sales, revenue and profitability, each of which reached a new quarterly record. He said the quarter was also the company’s highest sales quarter on record when measured by annual contract value, excluding any contribution from the Marriott property management system project.

For the fourth quarter, Agilysys reported revenue of $82.9 million, up 11.7% from $74.3 million in the prior-year period. Srinivasan said it marked the company’s 17th consecutive record revenue quarter. Subscription revenue rose 24.1% year over year to a record $36.9 million, while total recurring revenue reached $54.4 million, or 65.5% of total revenue.

Subscription Growth and Record Sales Highlight Fiscal 2026

For the full fiscal year, revenue rose 15.9% to a record $319.3 million. Recurring revenue increased 21.1% to $205.9 million, and subscription revenue climbed 30.2% to $137.1 million, ahead of the company’s initial expectation for 25% growth. Chief Financial Officer Dave Wood said the large PMS rollout contributed about 0.2 percentage points to fiscal 2026 subscription revenue growth, meaning subscription growth outside that project was approximately 30%.

Srinivasan said fiscal 2026 was a record sales year across multiple parts of the business, including international sales, subscription SaaS sales, managed food services and both point-of-sale and property management systems. He said subscription SaaS sales were 29% higher than the previous best year, while gaming subscription sales were 27% above the prior record.

The company also highlighted broad-based customer activity in the fourth quarter. Excluding Book4Time, Agilysys added 20 new customers, with those deals averaging seven products each. Nineteen of the 20 were subscription-based. The company also added 85 new properties from existing parent customers and recorded 129 instances of selling at least one additional product to properties already using one or more Agilysys products.

Srinivasan said retained recurring bookings, defined as the annual value of SaaS fees plus maintenance for perpetual licenses sold during the year net of annual recurring revenue lost to churn, reached an all-time record in fiscal 2026 and exceeded the previous best year by 43%.

Profitability Expands as Product Mix Shifts

Fourth-quarter gross profit was $53.4 million, compared with $45.1 million a year earlier. Gross margin expanded to 64.4% from 60.7% in the prior-year quarter. Wood said the company has “entered the beginning of the gross margin expansion part” of its journey, driven largely by product mix as subscription and recurring revenue represent a larger share of the business.

Fiscal 2026 operating income was $43 million, compared with $22.6 million in fiscal 2025. Net income was $38.8 million, or $1.37 per diluted share, compared with $23.2 million, or $0.82 per diluted share, in the prior year. Adjusted net income rose to $50.8 million from $43.8 million, while adjusted diluted earnings per share increased to $1.79 from $1.55.

Adjusted EBITDA was $21.5 million in the fourth quarter, up from $14.8 million a year earlier. For the full year, adjusted EBITDA increased to $67.7 million from $53.8 million, representing 21.2% of revenue. Free cash flow was $68.1 million for fiscal 2026, compared with $52.3 million in the prior year. Cash and marketable securities totaled $116.9 million at March 31, 2026, up from $73 million a year earlier.

Fiscal 2027 Guidance Calls for Continued Growth

Agilysys expects fiscal 2027 revenue of $365 million to $370 million. Management said product revenue is expected to remain roughly flat at about $40 million for the year, while professional services revenue is expected to grow in the 5% to 10% range. Recurring revenue is expected to grow around 20%, including subscription revenue growth of more than 30%.

Wood said subscription revenue growth in the fiscal first quarter should be similar to the company’s fourth-quarter exit rate of about 24%, then increase during the year as the large PMS rollout accelerates. Management expects adjusted EBITDA to rise to 24% of revenue for fiscal 2027, though first-quarter profitability is expected to be lower, in the 16% to 17% range, due to user conference expenses and the early phases of the large PMS rollout. The company expects to exit the fourth quarter at nearly 30% adjusted EBITDA margin.

Srinivasan said a 30% full-year adjusted EBITDA margin “is not too far off” as recurring revenue becomes a larger part of the mix and operating leverage improves. He also said product development-related operating expenses, excluding stock-based compensation, are expected to move into the high-teens percentage range in fiscal 2027 after being around 22% several years ago.

AI Strategy and New Products Take Focus

Management emphasized artificial intelligence as a central part of the company’s product strategy and internal operations. Srinivasan said Agilysys has defined four AI pillars: agentic AI, multimodal interfaces, hyper-personalization and intelligent revenue optimization. He said the company’s systems of record are becoming “intelligent systems of action.”

At its Inspire customer conference, Agilysys launched two AI-native modules: Revenue Intelligence and CRS. Srinivasan said the first beta implementations are expected later in fiscal 2027. Revenue Intelligence is designed to use data across property operations, not just room rates, to support real-time operating decisions. The CRS product is initially targeted to current PMS customers, with management saying a tightly integrated CRS and PMS could become increasingly important for hotel operators.

In response to analyst questions, Srinivasan said customer reaction to the new AI products has been positive, with some customers volunteering to serve as beta sites. He also said Agilysys is not seeing meaningful “AI anxiety” in customer conversations. Instead, he said AI-related capabilities are creating customer curiosity and, in some cases, shortening sales cycles.

Marriott PMS Rollout Remains on Plan

The company said the Marriott PMS project continues to make good progress and remains on plan. Srinivasan described it as one of the largest and most complex technology transformation projects in the hospitality industry. However, he cautioned analysts not to expect a perfect rollout cadence, noting that properties are moving from different existing technologies into the new system.

Srinivasan said the rollout will not be completed in one year and is expected to take at least two years, and possibly longer. He said the company has included a “careful” estimate of the rollout cadence in fiscal 2027 guidance. While he said the Marriott project has increased Agilysys’ visibility and credibility in property management system requests for proposals, he said any broader halo effect from live properties will take more time to develop.

“We are now about as bullish about our business as we’ve ever been,” Srinivasan said, citing strong sales levels, high customer retention, the modernized product ecosystem and increasing customer success stories as reasons for management’s confidence.

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.

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