Earnings Call Insights: Agilysys (AGYS) Q2 2026
Management View
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CEO Ramesh Srinivasan highlighted, “Fiscal 2026 second quarter was our best ever July to September period of sales and the second best of any quarter so far. The first half of this fiscal year was the best first half sales start to a fiscal year in our history.” Srinivasan emphasized the impact of Agilysys’ modernized, cloud-native ecosystem, stating that innovation and integration have fueled “considerable competitive advantages.” He noted that, “All the years of diligent reengineering of the core products and the addition of 20-plus add-on software modules to create a comprehensive ecosystem… have created considerable competitive advantages for us.” He reported strong sales in gaming casinos, international regions, and foodservice management, with international sales up 36% and FSM sales more than doubling.
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Srinivasan drew attention to the accelerating adoption of AI: “The tailwinds of AI are helping us improve all areas of the business, especially the modernized software solutions… increasing our competitive advantages at an even faster rate.” He described a robust pipeline of new customers, with 18 added in Q2, all signed to subscription-based agreements, and average product counts per deal reaching new highs.
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CFO Dave Wood stated, “Second quarter fiscal 2026 revenue was a quarterly record of $79.3 million, a 16.1% increase from total net revenue of $68.3 million in the comparable prior year period.” He added, “Gross profit was $49 million compared to $43.2 million in the second quarter of fiscal 2025. Gross profit margin was 61.7% compared to 63.3%…” Wood also noted, “Operating income for the second quarter of $14.1 million, net income of $11.7 million and gain per diluted share of $0.41 were higher than the prior year’s second quarter income of $4.1 million, $1.4 million and gain of $0.05.”
Outlook
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The company raised full-year fiscal 2026 revenue guidance to a range of $315 million to $318 million and lifted subscription revenue growth expectations to 29%. Srinivasan specified, “We now expect the full year revenue range to be $315 million to $318 million… and full year subscription revenue growth to be 29%.” No change was made to the adjusted EBITDA target of 20% of revenue.
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Wood clarified that the guidance increase does not factor in any significant subscription revenue from the Marriott PMS project, and that the raised outlook is driven by broad-based sales momentum.
Financial Results
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Agilysys reported Q2 revenue of $79.3 million, marking the 15th consecutive record quarter. Recurring revenue grew 23% year-over-year to $51 million, driven by a 33.1% increase in subscription revenue. Subscription revenue now constitutes 65.5% of total recurring revenue. The company added 18 new subscription customers and 87 properties new to its product suite.
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Free cash flow reached $15 million for the quarter, up from $5.9 million in the prior year quarter. Cash and marketable securities stood at $59.3 million as of September 30, 2025. The company is now debt-free after paying down its credit revolver.
Q&A
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Mayank Tandon, Needham: Asked what is driving record sales momentum. Srinivasan responded that, “the main reason why things are truly moving forward for us is because the product ecosystem is getting better… the competitive advantages are also increasing.”
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Tandon, Needham: Inquired about the margin impact of the Marriott rollout. Wood answered, “for the most part, we think it will be margin accretive… most of the revenue contribution going forward will be subscription revenue, which is at a higher margin.”
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Matthew VanVliet, Cantor Fitzgerald: Questioned international strength and capacity. Srinivasan explained, “EMEA is working at record levels… APAC, we are now working through more big opportunities than we ever have.” On services capacity, he said, “The capacity improvements that we needed in services, we have completed this calendar year.”
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Brian Schwartz, Oppenheimer: Asked about efficiency gains. Srinivasan noted, “We are seeing efficiency improvements… partially due to AI and partially due to other reasons as well.”
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George Sutton, Craig-Hallum: Queried about attention from larger players. Srinivasan stated, “Yes, more conversations these days than we have ever had before, and that is encouraging to us.”
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Nehal Chokshi, Northland: Asked if any customer represented more than 10% of ACV. Wood responded, “No, Nehal, no customers over 10%. It was broad-based.”
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Stephen Sheldon, William Blair: Questioned the guidance raise and Marriott’s impact. Wood clarified, “no, Marriott did not play into it at all… the guidance raise was not Marriott related. It was just general sales momentum.”
Sentiment Analysis
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Analysts’ questions reflected positive sentiment, focusing on growth drivers, efficiency improvements, and international expansion, with little skepticism or negative tone.
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Management’s tone was confident throughout both prepared remarks and Q&A; Srinivasan and Wood regularly referenced record performance and competitive advantages. Statements like “it is tough not to feel bullish about our business” and “we are extremely pleased how our business has worked out” indicated high confidence.
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Compared to the previous quarter, both analysts and management maintained an upbeat and constructive tone, with management’s confidence further reinforced by consecutive record quarters and guidance increases.
Quarter-over-Quarter Comparison
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Guidance for full-year revenue was raised from $308 million–$312 million to $315 million–$318 million, and subscription revenue growth expectations increased from 27% to 29%.
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Product ecosystem and AI-driven innovation continued to be highlighted as key differentiators, with growing focus on international market penetration and large enterprise wins.
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The sales team’s capacity expansion leveled off this quarter, with a shift toward steady, incremental growth versus the bulk increases previously reported.
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Analysts’ focus shifted slightly toward the sustainability of sales momentum, international traction, and operational capacity to support growth.
Risks and Concerns
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Management cited ongoing challenges with customer-related implementation delays, noting, “We do continue to face delays here and there because of customer delays… there is only so much we can help.”
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The company acknowledged that brand awareness as “today’s Agilysys” remains a work in progress, though progress is being made.
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No single customer concentration risk was present, as sales were broad-based.
Final Takeaway
Agilysys delivered another record quarter, raising its fiscal 2026 revenue and subscription growth guidance on the back of robust sales momentum, expanding product ecosystem, and accelerating AI-driven innovation. Management emphasized broad-based strength across verticals and geographies, improved operational efficiency, and greater visibility into future growth, supported by a record backlog and a debt-free balance sheet. The company continues to focus on disciplined, profitable growth and strengthening its competitive position in the hospitality technology market.