Agilysys (AGYS) Q2 2027 Earnings Call Transcript

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DATE

Monday, Oct. 26, 2026

CALL PARTICIPANTS

• Vice President of Operations and Investor Relations – Jessica Hennessy
• President and Chief Executive Officer – Ramesh Srinivasan
• Chief Financial Officer – Dave Wood

TAKEAWAYS

• Total Net Revenue — $93.4 million, representing 17.7% growth compared to the prior-year period and driven by a 19th consecutive record revenue quarter.
• Subscription Revenue — $44.2 million, increasing 32.6% year over year and surpassing 70% of total recurring revenue for the first time.
• Adjusted EBITDA — $24.1 million, resulting in a 25.9% margin compared to 20.6% in the prior-year period.
• Domestic HRC Sales — Growing 33% year over year, reaching an all-time high for the Hotels, Resorts, and Cruise ships vertical.
• APAC Sales — Increasing 47% year over year, following a record performance in the first quarter.
• FSM Sales — Rising 42% year over year, primarily driven by sales in the modernized point-of-sale platform.
• Total Recurring Revenue — $62.2 million, up 22% year over year and constituting 66.6% of total net revenue.
• Adjusted Diluted EPS — $0.67 per share, compared to $0.40 per share in the second quarter of the previous fiscal year.
• Product Revenue — $11.99 million, the highest level in nearly three years, attributed to hardware shipments from increased point-of-sale sales.
• New Customers — 24 additions during the quarter, with 14 being subscription-based agreements excluding the Book4Time acquisition.
• New Product Sales — 119 instances of existing customers purchasing additional software modules, involving 331 total new products.
• Product Attach Rate — 5.6 products per deal for new customers and 9.3 products per deal when a property management system is included.
• PMS Subscription Revenue — Increasing 53.8% year over year, while point-of-sale related subscription revenue rose 18.4%.
• Product Backlog — Increasing 90% year over year, providing visibility for product revenue in the second half of the fiscal year.
• Full-Year Revenue Guidance — Raised to a range of $374 million to $378 million, up from the previous range of $368 million to $373 million.
• Full-Year Subscription Growth Guidance — Increased to at least 34% year over year, compared to the previous expectation of at least 32%.
• Full-Year Adjusted EBITDA Guidance — Raised to 25% of revenue, an increase from the 24% previously guided at the end of the first quarter.
• Quarterly Margin Outlook — Anticipated to be approximately 22% in the third quarter due to the timing of professional fees before exiting the year at nearly 30% in the fourth quarter.
• Cash and Marketable Securities — $137.6 million as of Sept. 30, 2026, compared to $116.9 million at the end of fiscal 2026.
• First Half Free Cash Flow — $22.1 million, a significant increase from $10 million in the first half of the prior fiscal year.
• Professional Services Revenue — $19.2 million, growing 5.3% year over year with gross margins remaining above 30%.

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RISKS

• Srinivasan noted that “such big challenging technology projects cannot be expected to go completely smooth sailing every step of the way,” referring to the ongoing implementation of the Marriott property management system.
• Wood indicated that the third quarter adjusted EBITDA margin would likely decrease to slightly more than 22% due to the “unfavorable timing of certain costs, including professional fees.”

SUMMARY

Agilysys, Inc. (AGYS +2.29%) reported record second quarter revenue driven by a sustained acceleration in subscription growth and high demand in the Hotels, Resorts, and Cruise ships vertical. Management reported that the company’s product ecosystem competitive advantage is widening, supported by the completion of a common framework for artificial intelligence and the introduction of AI-native modules for central reservations and revenue management. The company raised its full-year guidance for revenue, subscription growth, and adjusted EBITDA based on strong sales momentum and faster-than-anticipated deployment of its record backlog. Management stated that the business remains focused exclusively on the hospitality industry, targeting a total addressable market estimated at 50 times its current size.

• The Marriott property management system project remains on schedule, with more than 2,000 properties now live and the implementation transition moving from select service to full-service hotels.
• Management completed the minor tuck-in acquisition of Gaming Hospitality Solutions to secure loyalty and offer management software for tribal casino customers and the Royal Caribbean Group.
• The company finished the development of an AI common framework that manages governance, security, and large language model selection across its product suite.
• CEO Srinivasan noted that the company is currently almost the only provider of modern hospitality solutions designed to work effectively in on-premises installations for customers who prefer that model over the cloud.
• Beta testing for new AI-native modules, including a Central Reservations System and a Total Revenue Management System, is scheduled to begin later this fiscal year.
• Management reported that product revenue strength stemmed from a surge in overall point-of-sale sales volume, which offset a lower per-unit hardware attach rate as more customers utilize third-party mobile devices.

INDUSTRY GLOSSARY

• PMS: Property Management System, the core software used by hotels to manage room inventory, guest check-ins, and daily operations.
• POS: Point of Sale, systems used to process transactions and manage payments in restaurants, bars, and retail outlets.
• ARR: Annual Recurring Revenue, the value of recurring revenue components from subscription contracts normalized to a single year.
• HRC: Hotels, Resorts, and Cruise ships, a primary sales vertical for the company’s hospitality software.
• FSM: Foodservice Management, a vertical involving the management of dining services in environments like corporate offices or university campuses.
• CRS: Central Reservations System, a platform that manages hotel room availability and rates across distribution channels.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, used to measure the operating profitability of a business.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen, and welcome to the Agilysys 2027 Second Quarter Conference Call. As a reminder, today’s conference may be recorded. I would now like to turn the conference over to Jessica Hennessy, Vice President of Operations and Investor Relations at Agilysys. You may begin.

Jessica Hennessy: Thank you, Latif, and good afternoon, everybody. Thank you for joining the Agilysys 2027 Second Quarter Conference Call. We

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