AGYS Q1 Earnings Call: SaaS Momentum Drives Profit Beat Amid Revenue Miss

May 29, 2025 at 15:05 PM EDT

AGYS Cover Image

Hospitality industry software provider Agilysys (NASDAQ: AGYS) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 19.4% year on year to $74.27 million. Its non-GAAP EPS of $0.54 per share was 88.8% above analysts’ consensus estimates.

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Agilysys (AGYS) Q1 CY2025 Highlights:

Revenue: $74.27 million vs analyst estimates of $71.61 million (19.4% year-on-year growth, 3.7% beat)
Adjusted EPS: $0.54 vs analyst estimates of $0.29 (88.8% beat)
Adjusted EBITDA: $14.79 million vs analyst estimates of $11.29 million (19.9% margin, 31% beat)
Management’s revenue guidance for the upcoming financial year 2026 is $310 million at the midpoint, missing analyst estimates by 2.8% and implying 12.5% growth (vs 16% in FY2025)
Operating Margin: 7.1%, up from 5.6% in the same quarter last year
Free Cash Flow Margin: 35.6%, up from 28.4% in the previous quarter
Market Capitalization: $2.38 billion

StockStory’s Take

Agilysys’ first quarter results were shaped by continued momentum in its subscription software and services business, alongside a recovery in point-of-sale (POS) sales. Management highlighted the successful transition to its modernized, unified POS platform, now deployed at over 150 customer properties, which contributed to record sales in the quarter. CEO Ramesh Srinivasan cited strong demand for add-on modules—particularly in property management—and a growing ecosystem effect, with more customers choosing integrated solutions over piecemeal purchases. The company also achieved record levels in professional services revenue and backlog, reflecting higher implementation activity. Srinivasan acknowledged lingering operational challenges as Agilysys navigated a multi-year technology transformation, but emphasized that the company has now “turned the corner” on prior sales volatility.

Looking ahead, Agilysys expects subscription revenue growth to remain a central driver, supported by ongoing investments in product innovation, sales expansion, and cloud infrastructure. Management projects recurring revenue growth of approximately 15% and subscription growth of 25% for the upcoming year, with adjusted EBITDA targeted at 20% of revenue. Srinivasan noted that the guidance does not include any material contribution from the large-scale Marriott property management system rollout, which remains in pilot phase and is described as “transformational” but complex. CFO Dave Wood indicated operating expenses will rise to support future growth, but expects operating leverage in general and administrative costs, while R&D and sales and marketing investments continue. Srinivasan added, “We are not going to sacrifice any of our medium-term and long-term revenue growth possibilities for the sake of short-term profitability increases.”

Key Insights from Management’s Remarks

Management attributed the quarter’s profitability beat to strong subscription growth, improved POS sales execution, and increasing customer adoption of integrated product suites.

Unified POS platform adoption: Agilysys’ modernized and unified POS system is now deployed at more than 150 properties, which management credits for reinvigorating POS sales and simplifying implementations. Srinivasan stated this shift resolved prior sales challenges, positioning the company as a “premium POS provider.”
Ecosystem of add-on modules: The company experienced significant momentum in sales of add-on modules, particularly for property management. Management emphasized that customers value the ease and efficiency of sourcing multiple connected modules from a single provider, boosting both bookings and overall margins.
Expansion in professional services: Q1 saw record professional services revenue and backlog, attributed to higher implementation activity and improved hiring in services teams. Management noted that most complex implementations are handled in-house due to the technical demands of the software, minimizing reliance on third-party integrators.
International growth and sales pipeline: International sales are beginning to show consistent growth, though still reliant on large deals. The sales pipeline at the product demonstration stage is at a record high, bolstered by expanded sales teams and contributions from the recent Book4Time acquisition.
Book4Time integration progress: The integration of Book4Time, a spa and activity management software provider acquired in August, is described as successful. The Book4Time sales team is now selling the full suite of Agilysys products, and management expects cross-selling benefits to be more apparent in the coming year.

Drivers of Future Performance

Management’s outlook centers on sustained subscription growth, expanded product adoption, and the scaling of recent acquisitions, while maintaining disciplined investment.

Subscription and recurring revenue growth: Agilysys forecasts subscription revenue growth of 25% and recurring revenue growth of 15%, driven by continued adoption of its cloud-based platform and expansion of add-on modules. Management expects organic growth to remain above 20%, excluding Book4Time.
Operational investments and margin discipline: The company will increase spending on R&D, sales, and customer support to support growth initiatives, but expects general and administrative expenses to show operating leverage. Management emphasized a willingness to prioritize long-term revenue opportunities over near-term margin expansion.
Large project and international execution risks: While progress continues on the Marriott PMS rollout and international expansion, management notes these areas involve complex, multi-vendor projects and customer-driven timelines. The company excludes material upside from Marriott in its outlook, citing the unpredictability of mass rollout timing.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) whether subscription and add-on module sales can sustain current growth rates, (2) the pace and impact of customer migrations to the unified POS and PMS platforms, and (3) the progression of the Marriott PMS rollout from pilot to broader adoption. Execution of cross-selling initiatives stemming from the Book4Time acquisition and expansion into international markets will also be key areas to monitor.

Agilysys currently trades at a forward price-to-sales ratio of 9.7×. Should you double down or take your chips? Find out in our full research report (it’s free).

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