Earnings call transcript: Agilysys Q1 2026 reports strong revenue growth

Agilysys Inc. reported its financial results for Q1 FY2026, showcasing significant revenue growth but missing earnings per share (EPS) expectations. The company posted an EPS of $0.33, falling short of the forecasted $0.36, an 8.33% miss. However, Agilysys exceeded revenue projections, reporting $76.7 million against an expected $74.35 million, a 3.16% surprise. Following the announcement, Agilysys’ stock rose by 1.71% in aftermarket trading, reflecting investor confidence in the company’s strategic direction. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong growth and profit metrics.

Key Takeaways

• Agilysys reported its 14th consecutive quarter of revenue growth, up 20.7% YoY.
• Subscription revenue grew by 44.3%, now comprising 65.6% of total revenue.
• The company missed EPS forecasts by 8.33% but exceeded revenue expectations.
• Stock price increased by 1.71% in aftermarket trading, indicating positive investor sentiment.

Company Performance

Agilysys continues to demonstrate robust growth, marking its 14th consecutive quarter of revenue increase. The company’s focus on subscription-based models has paid off, with significant gains in this area contributing to overall revenue growth. The integration of AI across its product lines and expansion of its sales team have positioned Agilysys to capitalize on the growing demand for cloud-based hospitality solutions.

Financial Highlights

• Revenue: $76.7 million, up 20.7% YoY
• Earnings per share: $0.33, missing forecast by 8.33%
• Subscription revenue: 44.3% YoY growth
• Recurring revenue: $48.6 million, up 28% YoY

Earnings vs. Forecast

Agilysys reported an EPS of $0.33 compared to a forecast of $0.36, resulting in an 8.33% miss. However, the company exceeded revenue expectations with a reported $76.7 million, surpassing the forecast by 3.16%. This revenue beat highlights the company’s strong sales execution and strategic focus on subscription growth.

Market Reaction

Following the earnings release, Agilysys’ stock rose by 1.71% in aftermarket trading, reaching $116. This positive movement reflects investor confidence in the company’s long-term growth strategy, despite the EPS miss. Trading at a P/E ratio of 139x and an EV/EBITDA multiple of 100x, InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value. The stock trades between its 52-week range of $63.71 to $142.64, with analyst targets ranging from $90 to $152 per share.

Outlook & Guidance

Agilysys has raised its subscription revenue growth guidance from 25% to 27%, indicating strong confidence in its business model. The company projects full-year revenue between $308 million and $312 million, with an adjusted EBITDA target of 20% of revenue. Continued focus on AI enhancements and potential strategic M&A opportunities are expected to drive future growth.

Executive Commentary

CEO Ramesh Srinivasan emphasized the company’s competitive edge, stating, "We are lucky to have completed all the required foundation modernization work across the product sets, while also creating an interconnected ecosystem of products." He also highlighted the importance of innovation: "Our current pace of innovation... does seem to be creating a serious competitive advantage."

Risks and Challenges

• Potential market saturation in the hospitality software sector could limit growth.
• Macroeconomic pressures may affect discretionary spending in hospitality industries.
• Execution risks associated with expanding AI integration and sales team expansion.

Q&A

During the earnings call, analysts inquired about the company’s sales team expansion and productivity, international sales momentum, and AI product integration strategy. Agilysys confirmed its confidence in financial guidance and discussed potential M&A opportunities, reinforcing its strategic direction.

Full transcript - Agilysys Inc (AGYS) Q1 2026:

Victor, Conference Operator: Good day, ladies and gentlemen, and welcome to the Gilasys twenty twenty six First Quarter Conference Call. As a reminder, today’s conference may be recorded. I would now like to turn the conference over to Jessica Hennessy, Senior Director of Corporate Strategy and Investor Relations at Agilysys. You may begin.

Jessica Hennessy, Senior Director of Corporate Strategy and Investor Relations, Agilysys: Thank you, Victor, and good afternoon, everybody. Thank you for joining the Agilysys fiscal twenty twenty six first quarter conference call. We will get started in just a minute with management’s comments, but before doing so, let me read the safe harbor language. Some statements made on today’s call will be predictive and are intended to be made as forward looking within the Safe Harbor protections of The U. S.

Private Securities Litigation Reform Act of 1995, including statements regarding our financial guidance. Although the company believes that its forward looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause results to differ materially. Important factors that could cause actual results to vary materially from these forward looking statements include our ability to achieve the provided guidance levels, maintaining sales momentum, the company’s ability to convert the backlog into revenue, and the risks set forth in the company’s reports on Form 10 ks and 10 Q, and other reports filed with the Securities and Exchange Commission. As a reminder, any references to record financial and business levels during this call refer only to the time period after Agilis has made the transformation to an entirely hospitality focused software solutions company in fiscal year twenty fourteen. With that, I’d now like to turn the call over to Mr.

Ramesh Srinivasan, President and CEO of Agilisys. Ramesh, please go ahead.

Ramesh Srinivasan, President and CEO, Agilysys: Thank you, Jess. Good evening. Welcome to our fiscal twenty twenty six first quarter earnings call.

: Joining Jess and me on

Ramesh Srinivasan, President and CEO, Agilysys: the call today is Dave Wood, CFO at our Alcerta Atlanta headquarters. Let me cover sales and selling success first before moving to revenue, profitability, guidance increase, and other details. We measure sales in annual contract value terms. We continue to exclude from our sales numbers all aspects of the Marriott Property Management System project, including those pertaining to services. Fiscal twenty twenty six Q1 April to June sales was the second best quarter on record, following the preceding fiscal twenty twenty five fourth quarter, which was the highest.

Sales during Q1 was 24% higher than the comparable prior year period and was easily the best Q1 April to June period sales level we have seen. Combined overall sales of the last two quarters were 19%, that is one nine, 19% higher than the preceding six month period. While combined sales of only recurring fee bookings, consisting of SaaS annual fees and annual maintenance fees, were 34% higher than the preceding six month period. Fiscal twenty twenty one April to June was our broadest and widest sales success quarter ever, with several different sales verticals achieving good to excellent sales levels. Q1 was the best sales quarter in food service management, FSM, vertical in the last two and a half years.

As reported during our previous calls, we went through a tough period with FSM sales during late fiscal twenty twenty four and the first half of fiscal twenty twenty five. We are happy to report that we are now back in full form with point of sale POS sales in the FSM vertical. Q1 was also the second highest sales quarter for international sales, while the sequentially preceding quarter was the highest. We have seen good signs of our international business picking up steam during the last two quarters and are continuing to see good momentum, especially with respect to large multi product deals. The casino gaming sales vertical also had its best Q1 April to June period on record, 15%, that is one-five, 15% higher than the previous best Q1 quarter.

There were several large sales wins during the quarter in gaming, including the Boyd Gaming subscription POS deal we announced in the May. We continue to see strength in the casino gaming sales vertical as customers broaden their portfolio of Agilysys products and expand investments in modern software solutions that help with improving guest experience and operational efficiencies. Most of the sales verticals performed very well in Q1 and across the last two quarters. The highlights of this recent six month period have been the impressive turnaround in the Foodservice Management vertical and International business picking up good momentum. Q1 fiscal twenty twenty six professional services sales was 20% higher than the comparable prior year quarter.

Q4 fiscal twenty twenty five and Q1 fiscal twenty twenty six are our two best services sales quarters on record and combined 21% higher than the immediately preceding six month period. Q1 fiscal twenty twenty six was the best ever quarter for subscription software sales by a wide margin, 25% higher than the previous test quarter, which was the preceding Q4 fiscal twenty twenty five, and seventy nine percent higher than the comparable prior year period. Q1 was the fourth consecutive record sales quarter for subscription sales. Subscription software sales specific to POS and POS related modules was 61% higher than the sequentially preceding fiscal twenty twenty five Q4 quarter. There is now ample evidence that our modernized set of cloud native software solutions is gaining serious traction in the hospitality industry, which has never been keener to improve technology solutions running their operations.

Our current pace of innovation, following many years of product modernization efforts, does seem to be creating a serious competitive advantage, which is becoming wider with each passing month. With respect to sales deals won during Q1 fiscal twenty twenty six, April to June, we added 24 new customers, excluding Book for Time, all of whom signed subscription license based sales agreements. Q1 was one of our highest quarters with respect to total annual contract value of new customer wins. These 24 customers purchased an average of six products each. New customer deals, which included PMS solutions, involved an average of as high as 14 products per deal.

The ability to provide an integrated ecosystem of software solutions that work well together and offer unique functional and feature advantages is becoming a fast growing differentiator for us. Our extensive investment in the development of an integrated product ecosystem has already become one of the primary reasons for our excellent current sales win ratio. Such an ecosystem also creates enormous amounts of connected data for a multi amenity resort or a similar customer property, which lends itself well to extracting significant differentiated value through use of AI and other tools. We are lucky to have completed all the required foundation modernization work across the product sets, while also creating an interconnected ecosystem of products, both of which are making the adoption of AI tools easier, more relevant, and effective. Various AI based product enhancements are now being included in the recent and upcoming version releases, such as enabling personalized upselling through a dynamic PMS upgrade engine to suggest appropriate room upgrades and add on amenities during check-in based on real time factors like current occupancy, guest loyalty status, past stay behavior, and even staffing levels.

AI assisted concierge services. AI powered natural language processing. AI enabled booking of a curated set of guest specific preferred amenities and creation of itineraries, AI driven demand and availability based pricing decisions, AI based conversational food ordering, AI enabled mechanisms for fulfillment of various guest requested tasks, enhanced data analysis, and creation of AI agents that can help with various analysis and execution tasks within a customer property. All such AI based enhancements currently being added to the product sets should produce tangible value for our customers and additional convenience for the guests they serve, thereby strengthening our growing competitive advantages. In addition, the use of AI tools is permeating across our internal business operations as well, making execution better and more efficient across several departments, including product development and professional services to improve coding and implementation efficiencies, quality and accuracy.

AI agents driven virtual assistant mechanisms for our customer support personnel, and other such improvements across sales, marketing, IT, information security, finance, and legal. We are also being careful and cautious, though, while using various AI tools to ensure no exposure of our internal data to the outside world. Getting back to sales success during the quarter, we also added 69 new properties that were not using any of our software solutions before, but the parent company was already a customer. Of the 105 new properties added during the quarter across new and current customers, 104 were either partially or fully subscription software license based. In addition, there were 93 instances of selling at least one additional software solution to properties which are already using one or more of our other products.

In total, these 93 deals involved the sale of two twenty four products. This was the second highest quarter with respect to total annual contract value sales of new products to current customer properties. The sequentially preceding fiscal twenty twenty five Q4 quarter was the highest. Moving on to revenue. Q1 fiscal twenty twenty six overall revenue was $76,700,000 a record for the fourteenth consecutive quarter.

Overall revenue was close to 21% higher than the comparable prior year quarter, driven by 44% year over year growth in subscription revenue and 16%, that is one six, 16% growth in professional services revenue. Organic subscription revenue grew by 24% year over year, which in turn was driven by a 48% increase in subscription revenue pertaining to property management systems, PMS and PMS related add on software modules, and a 16% increase in point of sale POS and POS related add on modules. We expect the year over year subscription revenue growth rate pertaining to POS to increase going forward, given the recent turnaround in POS sales levels and the ongoing pace of POS implementations. Overall, recurring revenue, including both subscription and annual maintenance, grew to a record $48,600,000 in Q1, 28% higher than the comparable prior year period, and 63.4% of total revenue. Subscription revenue was a record 65.6% of total revenue.

In absolute dollar terms, Q1 subscription revenue grew by $9,800,000 year over year, which is the highest level of year over year growth we have seen until now. While understandably not surging higher like subscription revenue is currently, annual maintenance recurring revenue was also a record high this quarter, about 5% higher year over year. This is a good indication of the fact that our subscription revenue growth is coming from new and additional projects for the most part and is not based on cannibalization of annual maintenance. We continue to allow our customers to make their own decisions regarding their timing of moving to the cloud. Customer centricity is a big part of our organization culture.

We exist to help our customers achieve their goals without any unnecessary pressure from their technology partners. Along with being record high quarters for subscription software sales, Q4 fiscal twenty twenty five and Q1 fiscal twenty twenty six were also the best two quarters for subscription project implementations, measured as the sum of annual recurring revenue, ARR, all subscription projects implemented during the period. The extent of subscription ARR installed in the field during the recent six months was 47% higher than the immediately preceding six month period. Both subscription sales and implementations in the field have been off to a faster start this fiscal year than we anticipated going in. We are therefore increasing the subscription growth guidance for full fiscal year 2026 from the originally stated 25% to 27%.

One time product revenue consisting of perpetual software licenses and hardware revenue was just shy of $10,000,000 a bit less than our already low ongoing expectations of this revenue line. Q1 was the lowest quarter in about four years with respect to perpetual software licenses in the one time product revenue bucket. An overwhelming number of customers are choosing the cloud option, which is reflected in the subscription revenue growth levels. The current versions of the POS products have a reduced hardware attach rate since they also work well on consumer grade hardware devices like the iOS operating system based iPads. We expect the one time product revenue line to remain around this level for the foreseeable future.

We also expect services revenue to remain around the levels of this quarter during the remainder of the fiscal year, as services revenue related to product development work on a couple of major projects has tapered off and is being replaced by growing normal implementations related professional services work. Despite excellent improvements in project implementation levels and record services revenue, strong sales drove the recurring and services revenue backlog to record levels. Fiscal twenty twenty six Q1 profitability was below annual expectations, mainly due to several once a year cost items falling in this quarter, including the high cost user conference. We remain confident that adjusted EBITDA will be 20 of revenue for the full fiscal year, in line with the original expectation. We also remain comfortable with the already provided annual revenue guidance of $3.00 $8,000,000 to $312,000,000 for fiscal twenty twenty six.

The Marriott PMS project continues to progress well and is proceeding according to plan. The testing of all integrations and connectivity across platforms in the lab test property is close to being completed, marking the completion of one of several rollout milestones. We expect implementation at a handful of test properties to start in a few months, which will be the next step in the project. All guidance details provided continue to exclude any significant subscription revenue from this project during fiscal twenty twenty six. With that, let me hand over the call to Dave for more color on financial and other business details.

Thank you, Ramesh.

Dave Wood, CFO, Agilysys: Taking a look at our financial results, beginning with the income statement. First quarter fiscal twenty twenty six revenue was a quarterly record of 76,700,000.0, a 20.7% increase from total net revenue of 63,500,000.0 in the comparable prior year period. One time revenue consisting of product and professional services was up 10.1% over the prior year quarter and in line with our expected 5% to 10% increase in one time revenue. Professional services revenue is running slightly ahead of plan through the first quarter. However, despite point of sale bookings being up 29% over the prior fiscal year, product sales, which include proprietary software and third party products, which are mainly hardware, were low causing product revenue for Q1 to be below expectations.

Recurring revenue was up 27.8% over the first quarter of the prior year and comfortably ahead of plan. Sales momentum was strong through Q1, leaving total backlog at record levels despite implementation velocity continuing to grow. Many of the operational challenges seen in our fiscal 2025 with point of sale sales and backlog deployments seem to be behind us. Subscription sales were up a staggering 79% over the prior fiscal year quarter, giving us a major head start to the current year. While we still have plenty of work left to do with sales, visibility into our business and fiscal year remain at all time highs.

Professional services revenue increased 16% over the prior year quarter to a record $18,100,000 Despite record professional services revenue, our services backlog remained at record levels. As a reminder, professional services revenue remains a good leading indicator for future subscription revenue growth. Total recurring revenue represented 63.4% of total net revenue for the fiscal first quarter compared to 59.9% of total net revenue in the first quarter of fiscal twenty twenty five. Subscription revenue grew 44.3% for the first quarter of fiscal twenty twenty six. Subscription sales and backlog were again both at record levels in Q1 and well ahead of our FY ’twenty six plan.

Despite subscription revenue coming in well above our 25% guidance, the backlog still increased by 23% over FY ’twenty five exit rates. We continue to be pleased with subscription sales and revenue growth levels. Moving down the income statement, gross profit was $47,300,000 compared to $39,900,000 in the first quarter of fiscal twenty twenty five. Gross profit margin was 61.7% compared to 62.8% in the first quarter of fiscal twenty twenty five. Gross margin was down slightly due to margins associated with one time revenue, while we continued to ramp up the newly hired professional services team members and continue to see a downward trend in on premise proprietary license revenue.

Combined, the three main operating expense line items, product development, sales and marketing, and general and administrative expenses, excluding stock based compensation, were 45.6% of revenue in the fiscal twenty twenty six first quarter compared to 43.8% of revenue in the prior year quarter. Excluding stock based compensation for the fiscal for the first quarter fiscal twenty twenty six, product development decreased slightly to 18.8% compared to 19% of revenue in the prior fiscal year. General and administrative expenses reduced for the quarter from 14.2% to 12% of revenue. Sales and marketing increased substantially from 10.5% of revenue to 14.7% of revenue, mostly due to timing of events with the user conference happening in fiscal Q1, along with the ramp up of the sales team throughout fiscal year twenty twenty five. As one would expect, the user conference is our most expensive event during the year.

Sales and marketing as a percentage of revenue should return to the normal levels for the fiscal year despite Q1 being higher than usual. Operating income for the first quarter of $4,500,000 net income of $4,900,000 and gain per diluted share of $0.17 are lower than the prior year first quarter income of $5700000.014100000.0, and a gain of $0.50 Adjusted net income, normalizing for certain non cash and non recurring charges, of 9,300,000.0 compares favorably to adjusted net income of 8,300,000.0 in the prior year first quarter, and adjusted diluted earnings per share of $0.33 increased slightly over the prior year at $0.30 For the twenty twenty six first quarter, adjusted EBITDA was 12,500,000.0 compared to $12,100,000 in the year ago quarter. As expected, Q1 FY twenty twenty six adjusted EBITDA was lower than the annual guidance due to the previously planned onetime events associated with the sales and marketing expense line items. We are still on track for 20% adjusted EBITDA for the full fiscal year. Moving to the balance sheet and cash flow statement.

Cash and marketable securities as of 06/30/2025 was $55,600,000 compared to $73,000,000 on 03/31/2025. As a reminder, Q1 is typically the lowest cash quarter due to timing of working capital events in the first half of the fiscal year. In addition to working capital adjustments, we paid down our credit revolver by $12,000,000 prior to June 30, and have since paid off the final $12,000,000 leaving us debt free as of July. Free cash flow in the quarter was a loss of 5,000,000 compared to an increase of $200,000 in the prior year quarter. As we’ve said in the past, adjusted EBITDA and free cash flow over a full fiscal year after normalizing the impact to CapEx continue to be good proxies for health of the business.

Full fiscal year twenty twenty six free cash flow will normalize in the second half of the fiscal year. For our fiscal year twenty twenty six, we are raising guidance for subscription revenue growth from 25% to 27% based on our current backlog and sales momentum. Guidance of top line revenue of $3.00 8,000,000 to $312,000,000 along with adjusted EBITDA of 20% remains the same for fiscal year twenty twenty six. In closing, we are extremely pleased with the start of fiscal year twenty twenty six. With that, I will now turn the call back over to Ramesh.

Ramesh Srinivasan, President and CEO, Agilysys: Thank you, Dave. In summary, we are pleased with the fiscal twenty twenty six Q1 April to June period results, our overall sales and business momentum, the continuing surge in subscription software sales, and the pace of project installations. The challenges with one time product revenue remain positive indicators of the successful transition of the business into a cloud subscription based software unit involving lesser levels of perpetual software licenses and hardware resell. Continuing increase in implementation related professional services revenue is a good indicator of the increased levels of project installations happening in the field now, which in turn augurs very well for future recurring revenue growth. Almost all our current implementations involve only the new state of the art modernized product versions, which are becoming increasingly smoother and enabling us to steadily reduce the need to maintain and enhance two different product sets spanning different generations of technology and instead increase resource levels focused on the use of next generation technologies to enhance product offerings, including through smart use of AI tools.

One final note. Compared to the same time last year, our current global quota carrying sales personnel and global professional services personnel strengths are about 4538% higher, respectively. Armed with a strong, superior set of products which are easier to sell and implement, we are well positioned for continued solid, disciplined, and profitable revenue growth, especially with respect to cloud subscription revenue. With that, Victor, let’s open up the call for questions.

Victor, Conference Operator: Our first question will come from the line of Stephen Sheldon from William Blair. Your line is open.

Stephen Sheldon, Analyst, William Blair: Hey, thanks. Appreciate you taking my questions. First, just on the sales capacity. I think, Ramesh, you just said that sales capacity, if I heard correctly, up 45% year over year. Can you give more detail about where you’re adding that capacity and how productivity has been trending for new additions?

And is there still a ways to go before this added capacity at the full production? I mean, obviously, you just had another really good sales quarter, but is that still, I guess, on the come as these new hires kind of ramp their production?

Ramesh Srinivasan, President and CEO, Agilysys: Yeah. So, Steven. Number one, we can do more, both with respect I’ll expand your question to answer services as well. Both with respect to sales and services, we can do more productivity improvements. That is, the current sales team can do more, and the current services team can do more.

So the bulk big increases that we wanted to do, we have gotten them done. Hereafter, there will be normal increases to both sales and services capacity as we go along. Since it’s a growing business and as business expands, we expect to hire more and more. Now the recent sales expansion has been mostly in the area of hotel resorts in that sales vertical, and also an inside sales team. We have created an inside sales team.

We never had a dedicated inside sales team before. We have one now, which is very handy to create more opportunities. And a lot of our expansion has been in the hotel and resorts vertical. Now, it is already showing good results for us because number one, we are knocking on more doors and number two, are opening more doors for us, which is crucial for us. Because our success rate, once customers take a detailed look at our company and our products, is very high, even more than what I can believe.

So it’s a matter of opening more doors for us, and that’s happening successfully. A lot of the sales success we have had in the recent six months has to do with the newer hires who are knocking on more doors and opening more doors. And the biggest thing we have achieved with the hiring of the sales team, Steven, is that we are covering the entire territory now, which we didn’t do a great job of before. So a lot more discipline in territory coverage. We are knocking on more doors.

We are opening more doors. So the recent sales expansion has really worked out well for us. But we have ways to go with respect to sales productivity. In terms of further expansion, that will happen as the business continues to grow.

Stephen Sheldon, Analyst, William Blair: Got it. I really appreciate that detail. And then on the international side, I mean, sounds like you’re seeing momentum there pick up. As we think about what you need to do to keep that going, I guess, is more about marketing and adding sales capacity? Or is there still a lot of work to do in terms of the product, in terms of integration and localization needed on the product side?

Guess, what are kind of the holdups for that to become a bigger part of the revenue mix over time?

Ramesh Srinivasan, President and CEO, Agilysys: Yeah. Product wise, there is not much more work to get done. Our products are in a good state now. Now, domestic and international, Steven, if you if if I’m asked to provide you one big the biggest advantage that we have, it is our ecosystem. It’s the fact that we have invested and created an ecosystem of hospitality products, which is going to be very difficult to duplicate by our competition.

You just can’t go create a modernized ecosystem of hospitality solutions just like that. It doesn’t happen overnight. So that’s our single biggest advantage now wherever we are selling. And that is resonating in international regions now because our international business momentum is now happening in two areas. One, our current customers are spending a lot more with us because they see the product sets we have.

And two, with the bigger deals that involve multiple products. Both of those are going well. The one negative about international momentum is still dependent on bigger home runs. And we are focused on the singles and doubles now in winning more medium and smaller sized deals as well, where the competition is higher. But our success currently is with larger customers who are buying multiple products from us because there there is virtually no competition to us now.

Now what do we need to do to maintain that momentum? We need to install these new projects that we have done well, create more reference customers, and that’s gonna create more business. And as the business improves, we will expand sales and marketing as well.

Stephen Sheldon, Analyst, William Blair: Great. And then just one quick follow-up. And maybe for Dave, I think you called out the Inspire user conference this year falling in 1Q. I think it was 4Q in March. Any any sense on how much of a cost that was, just as we think about the year over year trend and profit margins this quarter?

Ramesh Srinivasan, President and CEO, Agilysys: Yeah, it was most of

Dave Wood, CFO, Agilysys: the difference between the kind of normal percentage of sales and marketing as a percentage of revenue, we still look at that line, you know, around 13% of revenue for the year. So and sales and marketing was about 15% of revenue this quarter, so most of that was the the user conference. So for the year, we’ll normalize back to to similar percentages of what you you saw last year. So almost all of the sales increase was was associated with that.

Stephen Sheldon, Analyst, William Blair: So what we’d be right in thinking maybe roughly 3,000,000?

Dave Wood, CFO, Agilysys: Yeah. A little bit higher than that, but that’s pretty close. Think of it as as 12 to 14% revenue.

Ramesh Srinivasan, President and CEO, Agilysys: Okay.

Dave Wood, CFO, Agilysys: He’s talking about only the user conference. Oh, yeah. The user conference would be less than 3,000,000.

Ramesh Srinivasan, President and CEO, Agilysys: Yeah. Yeah. It would be less than three. Yeah. Sorry.

But overall, for the year, the guidance provided, the EBITDA 20% of revenue, we are comfortable with that, Steve.

Stephen Sheldon, Analyst, William Blair: Sounds good. Alright. Thank you.

Victor, Conference Operator: One moment for our next question. Our next question will come from the line of Matt Van Villais from Cantor Fitzgerald. Maybe

Matt Van Villais, Analyst, Cantor Fitzgerald: another follow-up on sort of the improvement in the overall sales organization and the growth there. But as you think about what Joe and even Terry joining on the marketing side, in terms of what their multiyear plan is to up level the entire go to market team and drive more top of the funnel as well. Where do you feel like we are in terms of them rolling out their respective plans that you’ve come up with? Is there still more to be done in terms of programmatic improvements? Or do we have most of the plan in place and this is the beginnings of the execution on that showing better results?

Ramesh Srinivasan, President and CEO, Agilysys: Yeah, I would say, Matt, as far as sales is concerned, I think we have a good plan in place, and we have implemented what we wanted to do this year. And the structure, the territory coverage, and the fundamental structure is there, and that is beginning to yield good results for us. But we are only in the beginning stages of seeing the benefits of that structure of better territory coverage, better organization of sales, more discipline around that, you know, in terms of how we knock on doors. All that is improving now. I think that the sales structure is in a good place now.

Now we will continue building on top of that foundation. Sales will continue to expand, but I think the structure is there. Marketing, we are it’s a matter of putting more investments into marketing. We have expanded our presence, which is the main thing we have to do in this this b to b vertical business. We have to show more presence, and we are doing that.

We are attending a lot more trade shows than we ever have. There’s a lot more thought leadership presence now where you see see at Elysis now, and that will continue to improve as we make more investments in marketing as well. Our content has improved a lot over the last year or so. So marketing, I think there are more investments to come to expand that. I think the sales structure is in a pretty good place, though we will continue expanding that further.

Matt Van Villais, Analyst, Cantor Fitzgerald: Alright. And then as you get Book for Time more fully integrated, how are you seeing that as a potential entry into customers that don’t have any of Joseph’s products today? Is it helping win deals, whether they were from existing customers or just new to Book for Time that are then discovering more offerings from Agilus and sort of winning deals that way? Or is it just another kind of tool in the toolkit here?

Ramesh Srinivasan, President and CEO, Agilysys: It is a conduit to winning more deals because there are hundreds of customers who use Book4Dime and don’t use any of the other Agilysys products. That is still in the beginning stages, right? It has turned out to be a bit more difficult than we thought, because selling one product versus selling multiple products takes a little bit more training and adjustment time. In fact, recently we won one significant sales agreement that involved multiple Agilysys products, which was a book for time customer. So all that is beginning to happen now, but we are still in the beginning stages of that.

In terms of tapping into the book for time customer base and selling more products to those customers, we are still in the early stages of that game.

Matt Van Villais, Analyst, Cantor Fitzgerald: And then just one quick follow-up on the EBITDA expectations for the year, just profitability in general. What would you see in the business over the next couple of months maybe that you might look and say, we’re going to hit the gas pedal and invest a little bit more in long term growth? Is there a scenario that we could see that 20% level maybe getting pressed a little bit lower because you have such good opportunities? Or are we far enough along in the year now that even if top line performance was strong enough, those costs would be more realized in fiscal twenty twenty seven?

Ramesh Srinivasan, President and CEO, Agilysys: We don’t see a risk of going below 20%, if that is your question, Matt. We are making significant investments. We continue to make significant investments. We will not sacrifice our long term growth possibilities for short term profitability. But having said that, we are comfortable.

We are a growing company. We are generating more revenue. And that is feeding into increasing resources where we need to increase. So we are comfortable with the 20% level. The other way I would answer your question is we are comfortable feeding the areas we need to feed to continue our growth without sacrificing on the 20% mark.

Logan Lilliehogg, Analyst, Craig Hallum Capital Group: Alright. Very helpful. Thank you.

Ramesh Srinivasan, President and CEO, Agilysys: Thank you, Matt.

Victor, Conference Operator: One moment for our next question. And our next question will come from the line of Brian Schwartz from Oppenheimer.

: Ramesh, in terms of the success that you’re having with the bookings, is it possible to maybe look a little bit under the covers between your core verticals, the HRC, the Food and Management and then obviously the smaller Cruise segment. But does the performance vary at all between new logos, expansion and ARPU gains with the bookings among those three different segments?

Ramesh Srinivasan, President and CEO, Agilysys: Overall, the big news about this quarter is we made a great comeback with FSM. We really are beginning to see momentum with international sales. Having said that, hotel resorts, casino gaming, and the verticals that we are normally strong at continue to do well. Cruise ships again had a good quarter in q one as well. So this was the broadest based sales success that we have seen in our history, in fact, in terms of this many verticals doing well at the same time in the same quarter was very encouraging to us.

Now on the other hand, this was also a good quarter for sales from new customers. And sales from current customers who continue to buy more products from us continues to be at record levels. So the only one where we can say we could improve further, that was not a great quarter, was a good quarter, was for new sites. And for that, as we sign more multi property big customers, that will also make a comeback during the subsequent quarters. So now in terms of new customer in each vertical, a lot of new customers are signing up with us in hotels resorts.

In gaming, it’s more skewed towards current customers buying a lot more from us. And we are beginning to sign a lot of new customers in FSM and international as well.

: Thank you. And then one follow-up for Dave. The subscription revenue growth in the quarter, it accelerated very slightly. And I was just wondering, was that reflective that maybe you had faster go lives, recognize revenue a little bit faster or you had a stronger start to the quarter? I’m just wondering what drove a little bit of the faster growth in the subscription revenue in the quarter.

Thank you.

Dave Wood, CFO, Agilysys: Yeah, I mean, was really both. I mean, we gave a lot of commentary. Obviously, the subscription bookings did a lot better than we expected. So sales, it obviously always starts with sales, and that was really strong for the quarter. And and then we, you know, we always look at the professional services line as a good leading indicator.

So I would say professional services being north of 18,000,000 was a was a was gave us a very strong start of the quarter to So it was really it was really both. I mean, it was a tremendously strong sales quarter. And it was kind of six months of some of the operational hiccups we had in our 2025 fiscal year kind of being behind us. And and, you know, I would also point out that it’s also good even despite those numbers being really strong.

Our subscription bookings still our subscription backlog still went up 23% over our March 31 exit. So, you know, sales were really good this quarter.

: Thank you for taking my questions.

Ramesh Srinivasan, President and CEO, Agilysys: Thank you, Brad.

Victor, Conference Operator: Thank you. One moment for our next question. Our next question will come from the line of Logan Lilliehogg from Craig Hallum Capital Group. Your line is open.

Logan Lilliehogg, Analyst, Craig Hallum Capital Group: Hey, guys. This is Logan hopping on for George this afternoon. Ramesh, you talked about some interesting ways that you guys are leveraging AI kind of for end customers through the product set. Can you maybe just give us a sense for where you think that road map goes in the next year and sort of what kind of differentiator you think that can be for you?

Ramesh Srinivasan, President and CEO, Agilysys: Yeah. Hi, Logan. Yeah. So before we talk about AI, the lucky part is and the good part is that we did the modernization over the last few years and also created an ecosystem of products. Both of them have placed us in a very good position where you can now infuse AI into our products in a very effective way that gives us competitive advantages that are going to be difficult to duplicate for the competition.

So we are now so you think of AI in sort of two different ways. One, what are we doing with our products? So there are a lot of enhancements in almost each of our in every one of our products that we are introducing now that are AI based, and they are adding tremendous advantages to the product. They are enhancing the product significantly. And there are various different things that we are doing, you know, an ability to do intelligent revenue upsell for customers, a way to do voice recognition when you do F and B ordering, invoice recognition and approval processing in our inventory procurement products, a natural language processing in our data analysis product.

And conversational ordering in our booking engine and while doing spa and golf bookings. So there are various different ways in which we are able to infuse AI into our products now. And thankfully, the products are modernized, and it is easy for us to do that. In our internal operations, also various departments are using AI, and we’re able to get a lot more done now with the current resource strength we have. So our products already have a competitive advantage, and now this use of AI infusion of AI related tools is gonna make that even better.

Logan Lilliehogg, Analyst, Craig Hallum Capital Group: Got it. Appreciate the color. That’s all for me. I’ll hop back in the queue.

Ramesh Srinivasan, President and CEO, Agilysys: Thank you, Logan.

Victor, Conference Operator: One moment for next question. Our next question will come from the line of Mayank Tandon from Needham. Your line is open.

Mayank Tandon, Analyst, Needham: Thank you. Good evening, Ramesh. Great to hear about the sales momentum coming into this year and continuing into this quarter. I was just wondering, is it safe to say that your subscription revenue is all under contract, or is there a business that you still have to win to hit your guidance? And just to extend the question further, I would ask you, if there is upside to the growth acceleration on the subscription side, where would that upside potentially come from?

Is it from new logos going live faster than expected? Is it from better cross sales success? If you could just expand on that. Thank you.

Ramesh Srinivasan, President and CEO, Agilysys: Yeah. So the start is great, Mike. We have started the year very well. As a general rule, we are happy to have this kind of visibility. In enterprise software, you can’t ask for much more.

So we have excellent visibility in terms of our subscription revenue backlog of projects that we have. And also, we have increased our services teams now, and we are in a good position to increase their level of implementations as well. So we saw an inflection point about a couple of quarters ago when both subscription sales and the level of implementation of subscription projects took a clear inflection upwards from what it was for the previous many quarters. So that inflection is really helping us now and is helping us get this year off started off very well. But in terms of achieving the annual revenue and other targets, it depends on both.

It depends on the starting backlog. It depends on continuing good sales levels. And for us, we are are lucky and happy that both of them are going very well. Our current sales momentum, especially with respect to subscription software sales, is going very well. And our rate of implementations of subscription products has also increased very well because the products are easier to implement now.

They have been in the field for two, three years, and they are becoming easy to implement. So as long as we continue the current rate of improvement and what we have been doing for the last six months or so, I think we will do well. And the rate of growth will continue to increase.

Mayank Tandon, Analyst, Needham: Got it. Very helpful. And then I wanted to ask you also about the M and A strategy going forward, given that you’ve had some early success with Book for Time. Good to hear. So just curious, is this maybe, you know, a reason to pursue further m and a?

Are you being opportunistic? And if you were to do more m and a, what would be potentially, you know, your focus area? Would it be around expanding your geographic reach? Would it be expanding your capability set? If you could just provide any color around that, that would be helpful.

Thank you.

Ramesh Srinivasan, President and CEO, Agilysys: Yes, Mayank. There are more opportunities that are coming our way than usual in M and A, but we remain patient. We’ve always said we remain patient, we remain conservative, we remain opportunistic. So this is an organic growth company. We have done all the product investments.

We have done all the investments to expand sales and services, and our products are in a great state now. The ecosystem is a big advantage for us. So there is enough organic growth ahead of and the organic growth ahead of us is huge. We are just beginning to scratch the the PMS area, and we have a long, long way to go as far as our growth is concerned. So we can comfortably grow well organically.

There is no reason for us to do anything desperate as far as m and a is concerned. But there are lots of opportunities coming our way. We look at them frequently, patiently, conservatively. We are not gonna do anything dramatic. Now to answer your question of what kind of m and a, they fall into two broad One could be complementary to our product set that fills a couple of gaps that we have in the ecosystem if a good opportunity comes along.

On the other hand, it could also be for market share gain. There could be companies that could take advantage of the fact we have modernized our system and give their customers an upgrade path that helps us build on our market share. So it could fall into one of those two broad categories. And we look at each opportunity with a very patient and conservative lens, Mayank.

Mayank Tandon, Analyst, Needham: Great. Thank you so much for answering my question. Congrats on the quarter.

Ramesh Srinivasan, President and CEO, Agilysys: Thank you, Mayank. Appreciate it.

Victor, Conference Operator: Thank you. I’m not showing any further questions in the queue at this moment. I would now like to turn the call back over to Ramesh, CEO, for closing remarks.

Ramesh Srinivasan, President and CEO, Agilysys: Thank you, Victor. Thank you all for your continued guidance and support. Please take great care. Enjoy the rest of the summer, and we’ll catch up with you all again soon. Thank you.

Victor, Conference Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

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