Earnings Call Insights: Agilysys (AGYS) Q4 2025
Management View
- President & CEO Ramesh Srinivasan described fiscal 2025 as “a record global sales year overall and a record year for practically every sales vertical other than managed food services.” He emphasized, “The January through March period, fourth quarter of fiscal 2025 was our best sales quarter ever.” Srinivasan stressed the performance of the company’s modernized and unified POS platform, noting, “With the newer modernized and unified POS platform performing well at more than 150 customer properties currently and growing rapidly, we have turned the corner and are now past the recent POS sales challenges.”
- Srinivasan highlighted international sales momentum, stating that “international sales are beginning to show positive signs of consistent growth, though they are still a bit too dependent on home run big wins.”
- Srinivasan explained the growing strength in add-on module sales and cross-sell activity: “Full fiscal year 2025 new product sales to current properties running at least one other Agilysys product was also a record high, more than 50% higher than the previous best year.”
- He gave an update on the sales pipeline: “The current global demo plus stage sales pipeline…is now at a record level…and was 18% higher as of March end compared to the same time the previous year.”
- Srinivasan announced fiscal 2026 guidance: “We expect full year fiscal 2026 revenue to be in the range of $308 million to $312 million, driven among other factors, by year-over-year subscription revenue growth of 25%. We also expect adjusted EBITDA to be 20% of revenue for the year.”
- CFO Dave Wood stated, “Fourth quarter fiscal 2025 revenue was a quarterly record of $74.3 million, a 19.4% increase from total net revenue of $62.2 million in the comparable prior year period.” He also reported, “Professional services increased 21.7% over the prior year quarter to a record $17.8 million.”
Outlook
- Srinivasan confirmed, “We expect only limited growth in the one-time product revenue line this year.”
- Fiscal 2026 revenue is projected to be between $308 million and $312 million, with subscription revenue growth of 25% and adjusted EBITDA targeted at 20% of revenue.
- Wood explained, “We expect product revenue to increase by 5% to 10% over fiscal year 2024. Professional services should grow in the range of 5% to 10% as well. Recurring revenue will continue to grow around 15% with subscription growth of 25%.”
- Guidance assumes “no material subscription revenue contribution” from the Marriott PMS project.
Financial Results
- Fiscal 2025 fourth quarter revenue was $74.3 million, up 19.4% year-over-year, marking the 13th consecutive record revenue quarter. Q4 subscription revenue reached $29.8 million, a 42.7% increase year-over-year and 64.4% of total recurring revenue.
- Services revenue for Q4 was $17.8 million, also a record, with the professional services backlog increasing to record levels.
- Full year revenue for fiscal 2025 was $275.6 million, up 16% over the previous year; recurring revenue was $170.1 million, 23.2% higher than the previous year.
- Gross profit for Q4 was $45.1 million with a gross profit margin of 60.7%. For the full year, gross margin was 62.4%.
- Operating income for Q4 was $5.3 million, net income $3.9 million, and earnings per diluted share $0.14. Adjusted EBITDA for Q4 was $14.8 million, and $53.8 million for the full year, representing 19.5% of revenue.
- Cash and marketable securities as of March 31, 2025, were $73 million. Free cash flow for the quarter was $26.5 million and $52.3 million for the full year.
Q&A
- Stephen Sheldon, William Blair: Asked about drivers behind improved POS bookings. Srinivasan responded, “The improvement is because…we’ve only been installing the newer version. Now the newer version is not only fully modernized…but is also completely unified…And we are about the only vendor, only major vendor in this industry that provides a unified platform.”
- Sheldon questioned the implementation mix between Agilysys teams and third parties. Srinivasan stated, “Most of our implementations are done by our teams because these are complex implementations.”
- Sam Salvas, Needham & Company: Inquired about add-on sales momentum and top products. Srinivasan noted, “Most of the PMS add-on modules are adding great value to our bookings.”
- Salvas also asked about fiscal 2026 revenue cadence. Wood replied, “Everything will be pretty similar to what you’ve seen in the past…recurring being the biggest driver, and one-time revenue will tick up and down on a quarterly basis.”
- Brian Schwartz, Oppenheimer: Questioned accelerating legacy POS migrations. Srinivasan explained, “All of them are now aware that this is a modernized unified platform. All of them are keen to move towards the new platform, but it will be in their timelines.”
- Schwartz asked about Marriott beta testing. Srinivasan replied, “The testing is going well…the feedback was remarkably good.”
- Nehal Chokshi, Northland Capital Markets: Queried about sales pipeline growth. Srinivasan answered, “Assuming a 20% steady growth in the pipeline is a good thing to assume, but I’m optimistic that it will improve.”
- George Sutton, Craig-Hallum: Asked about international opportunity. Srinivasan called international “a huge growth area for us” and noted, “the exponential curve has not yet taken off.”
Sentiment Analysis
- Analysts pressed for details on POS momentum, add-on modules, organic subscription growth, Marriott project, and international expansion, generally reflecting a neutral to slightly positive sentiment as management addressed concerns with confidence and specificity.
- Management maintained a confident tone, particularly in prepared remarks. Srinivasan used phrases such as “We have turned the corner,” and “It is tough not to be bullish about our future prospects,” indicating sustained optimism. During Q&A, the tone remained constructive and open, with explanations provided for operational strategy and guidance assumptions.
- Compared to the previous quarter, management’s tone was more upbeat, especially regarding POS and international progress, while analysts showed greater interest in growth drivers and project execution.
Quarter-over-Quarter Comparison
- Q4 saw record sales across nearly all verticals, a notable acceleration from the prior quarter, which was impacted by POS sales challenges.
- Management’s guidance for fiscal 2026 is more aggressive, projecting $308 million to $312 million in revenue with 25% subscription growth, compared to Q3’s lowered $273 million annual revenue guidance.
- Analysts’ focus shifted from concerns about POS weakness to questions about sustaining momentum and executing on new opportunities, especially in international markets and with major clients like Marriott.
- Management’s confidence and optimism improved over the previous quarter, with increased emphasis on the value of unified, modernized solutions and a belief that major transformation hurdles are now behind the company.
Risks and Concerns
- Management warned of “some caution for the second half of fiscal 2026” due to macroeconomic headlines, but cited strong momentum and a large addressable market as mitigating factors.
- Srinivasan indicated that international sales remain “a bit too dependent on home run big wins” and that product backlog from perpetual software licenses and hardware is “at only about 60% of previous peak levels.”
- The company continues to exclude material revenue from the Marriott PMS project in its guidance due to the unpredictable timing of rollout phases.
- Management stressed ongoing investment in product innovation, cyber security, and expanding sales and services teams to mitigate operational and competitive risks.
Final Takeaway
Agilysys management highlighted a record-setting fourth quarter and fiscal year, driven by strong momentum in subscription software, services, and a unified product ecosystem. With the transformation to modernized solutions now largely complete, the company projects continued growth into fiscal 2026, targeting $308 million to $312 million in revenue and 25% subscription revenue growth, while reiterating disciplined investment to support long-term expansion. Management expressed confidence that recent operational and sales gains position Agilysys for further success, even as guidance remains conservative regarding major projects such as the Marriott PMS rollout.