Agilysys (NASDAQ:AGYS) reported fiscal 2026 third-quarter results highlighted by record revenue, continued strong subscription growth, and an increase to full-year revenue guidance, while management pointed to improving implementation efficiency and steady demand across most end markets.
Sales trends and customer wins
President and CEO Ramesh Srinivasan said the company measures sales using annual contract value (ACV) and described the October-to-December quarter as the second-best fiscal third quarter for sales. He noted the company delivered its best-ever Q3 sales performance in the Hotels, Resorts, and Cruise Ships (HRC) vertical, citing new customer wins including Bolt Farm Treehouse in Tennessee and Sands Resorts in North Myrtle Beach, South Carolina.
Casino gaming, which management described as its strongest sales vertical for several years, experienced a “relative sales slowdown” in October and November but “recovered well” in December. Srinivasan said December was the best month in company history for overall global sales, and later added that some deals in gaming appeared postponed rather than lost.
Management highlighted momentum in Food Service Management (FSM), saying year-to-date FSM sales through the first three quarters of fiscal 2026 had already exceeded full-year sales in each of the prior two years, with fiscal 2026 potentially shaping up as a best-ever or near-best year for the vertical.
International sales were described as “somewhat lackluster” in Q3, though Srinivasan said international results are expected to remain “up and down” as the company works toward a more consistent mix of smaller and mid-sized deals in addition to large transactions. He also noted that cumulative international sales through three quarters were close to making fiscal 2026 the company’s second-best international sales year with one quarter remaining.
Customer additions and product mix
Srinivasan said Agilysys added 1,616 new customers during the quarter (excluding Book4Time), with all of those deals fully subscription-based and averaging about five products per deal. Nine of the new customers included purchases of the company’s property management system (PMS). In addition, 1,313 new customers signed up for Book4Time spa.
He added that Agilysys brought on 91 new properties that were new to Agilysys products, but where the parent company was already a customer. Of 120 new properties added during the quarter across categories that included Book4Time, 118 were either partially or fully subscription-based.
Agilysys also recorded 109 instances of selling new products to properties already using at least one company product, representing 248 additional products in total.
Marriott PMS project update
Management provided an update on the Marriott PMS project, emphasizing that it is excluded from Agilysys’ sales and backlog metrics. Srinivasan said pilot property implementations were completed successfully across the U.S. and Canada, and the project has moved into “implementation waves” expected to increase in size and scope in the coming months.
On the Q&A portion of the call, Srinivasan said the project is “being expertly managed” by Marriott personnel and called it one of the best, most collaborative customer-managed enterprise software projects he has seen. He added that the company believes full-year fiscal 2027 profitability should be higher than fiscal 2026, though he did not provide specific fiscal 2027 guidance.
Financial results: record revenue and rising profitability
For fiscal 2026 Q3, Agilysys reported record revenue of $80.4 million, up 15.6% from $69.6 million in the prior-year quarter, marking its 16th consecutive record revenue quarter. Product revenue was $10.7 million, roughly flat year over year. Professional services revenue was $17.7 million, up 22% year over year.
Recurring revenue reached a record $52.0 million, up 17.2%, and represented 64.7% of total revenue. Within recurring revenue, subscription revenue increased 23.1% to a record $34.9 million, which management said marked the 17th consecutive quarter with subscription revenue growth of at least 23% year over year. Annual maintenance revenue grew 6.8% year over year.
Srinivasan said POS-related subscription revenue grew 20% year over year, improving from mid-to-high teen growth in prior quarters, while PMS-related subscription revenue grew 30%. Add-on modules across PMS and POS, including Book4Time, represented 37% of total subscription revenue.
Chief Financial Officer Dave Wood said fiscal 2026 year-to-date revenue was $236.4 million, up 17.4% from the prior-year period. Gross profit for the quarter was $50.2 million versus $43.9 million a year ago, with gross margin at 62.5% compared to 63% in the prior-year quarter. Wood attributed the slight margin decline to one-time revenue margin dynamics as the company ramps newly hired professional services personnel.
Operating income was $11.7 million, net income was $9.9 million, and diluted earnings per share were $0.35, compared with operating income of $7.4 million, net income of $3.8 million, and diluted EPS of $0.14 in the prior-year quarter. Adjusted EBITDA was $17.3 million, up from $14.7 million a year ago, with year-to-date adjusted EBITDA at 19.5% of revenue and trending “just north” of the company’s full-year profitability target.
On cash flow and liquidity, Wood said cash and marketable securities were $81.5 million as of Dec. 31, 2025, compared with $73.0 million on March 31, 2025. He noted the company paid down its credit revolver by $24 million in the first half of the fiscal year and is now debt-free. Free cash flow was $22.7 million for the quarter, compared with $19.7 million in the prior-year quarter.
Backlog, implementation progress, and outlook
Management pointed to backlog and implementation execution as key supports for its outlook. Srinivasan said product backlog at quarter-end was about 85% of the prior quarter’s exit value and nearly doubled the level at the end of fiscal 2025 Q3. He also said services backlog declined sequentially, which he characterized as an indicator of improving implementation efficiency.
Srinivasan and Wood both cited progress in project deployment and staffing. Srinivasan said the quarter was the best on record for the total annual recurring revenue (ARR) of subscription projects implemented, with implemented subscription ARR up 40% year over year. Management attributed the improved implementation velocity to modernized products becoming easier to implement, increased use of AI tools, and higher staffing levels compared with a year earlier.
Agilysys raised its fiscal 2026 full-year revenue expectation to $318 million, the top end of the previously provided $315 million to $318 million range. The company reiterated its expectation for 29% year-over-year subscription revenue growth (excluding any significant contribution from the Marriott PMS project) and maintained its adjusted EBITDA guidance of 20% of revenue.
During Q&A, Wood said the implied deceleration in Q4 subscription growth is influenced by year-over-year comparisons tied to the Book4Time acquisition, while the core business remains around the mid-20% growth level based on his comments.
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.
