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01/10 16:48
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a positive outlook with strong financial performance, particularly in subscription revenue and free cash flow. The Q&A section highlights strong sales momentum, margin improvements, and international growth, with no major negative concerns raised. The guidance increase and positive sentiment from analysts further support a positive stock price movement. Given the company's market cap of $2.8 billion, a positive reaction of 2% to 8% is expected over the next two weeks.
Global Sales Up 17% year-over-year in the first half of fiscal 2026. Subscription sales were up 59%, Foodservice management (FSM) sales were up more than 2.5x, international sales were up 36%, gaming casino sales were up 15%, point-of-sale (POS) products including add-on modules were up 23%, property management systems (PMS) products including add-on modules were up 34%, and inventory procurement for food and beverage products more than doubled. Reasons include increased product ecosystem superiority and growing customer demand for unified solutions.
Revenue Fiscal 2026 Q2 revenue was $79.3 million, up 16.1% year-over-year. First half revenue was $156 million, up 18.4% year-over-year. Reasons include strong sales momentum and increased subscription revenue.
Recurring Revenue Fiscal 2026 Q2 recurring revenue grew 23% year-over-year to $51 million. Subscription revenue increased by 33.1%, now constituting 65.5% of total recurring revenue compared to 60.5% last year. Reasons include increased subscription sales and project implementations.
Product Revenue Fiscal 2026 Q2 product revenue was $10.1 million, with product backlog ending 49% higher than Q1 and 74% higher than previous record levels. Reasons include strong sales momentum and better visibility for the fiscal year.
Services Revenue Fiscal 2026 Q2 services revenue was $18.2 million, up 12% year-over-year. Reasons include reduced customer implementation delays and increased project implementations.
Gross Profit Fiscal 2026 Q2 gross profit was $49 million, with a gross profit margin of 61.7%, slightly down from 63.3% in the prior year. Reasons include ramping up newly hired professional services team members and a downward trend in on-premise perpetual license revenue.
Operating Income Fiscal 2026 Q2 operating income was $14.1 million, up significantly from $4.1 million in the prior year. Reasons include increased revenue and controlled operating expenses.
Net Income Fiscal 2026 Q2 net income was $11.7 million, up from $1.4 million in the prior year. Reasons include higher revenue and improved operational efficiency.
Adjusted EBITDA Fiscal 2026 Q2 adjusted EBITDA was $16.4 million, up from $12.2 million in the prior year. Reasons include strong subscription revenue growth and controlled expenses.
Free Cash Flow Fiscal 2026 Q2 free cash flow was $15 million, up from $5.9 million in the prior year. Reasons include improved working capital management and higher revenue.
Modernized Software Solutions: Agilysys has developed a comprehensive ecosystem of cloud-native, hospitality-focused software solutions, including 20+ add-on modules. These solutions are driving competitive advantages and sales momentum.
AI Integration: AI tools are being used to enhance product development, operational efficiencies, and customer experiences. New AI-driven features include dynamic pricing engines, revenue management capabilities, and intelligent guest profiles.
New Product Wins: Agilysys added 18 new customers in Q2, with an average of 7 products per deal. PMS customers averaged 14 products per deal. Notable wins include Rudding Park in England and Waco Surf Waterpark in Texas.
International Sales Growth: International sales grew by 36% in the first half of fiscal 2026, with strong adoption of the product ecosystem in global markets.
Gaming and Casino Sales: Sales in the gaming and casino vertical grew by 15% year-over-year, despite a strong prior year.
Foodservice Management (FSM) Sales: FSM sales doubled in Q2 compared to the prior year, driven by the modernized POS platform.
Revenue Growth: Q2 revenue reached $79.3 million, a 16.1% increase year-over-year. Recurring revenue grew 23%, driven by a 33.1% increase in subscription revenue.
Subscription Revenue: Subscription revenue now constitutes 65.5% of total recurring revenue, with a 50% increase in subscription ARR in the first half of fiscal 2026.
Operational Efficiencies: AI tools are improving product development, project implementation, and cybersecurity threat identification.
Market Positioning: Agilysys is focusing on expanding its presence in the hospitality market, leveraging its modernized ecosystem and AI capabilities to attract major hospitality corporations.
Guidance Increase: Full-year revenue guidance was raised to $315-$318 million, with subscription revenue growth expected at 29%.
Ability to achieve financial guidance levels: The company acknowledges risks and uncertainties that could cause results to differ materially from forward-looking statements, including the ability to meet financial guidance levels.
Sales momentum and backlog conversion: Challenges in maintaining sales momentum and converting backlog into revenue are highlighted as potential risks.
Customer implementation delays: The company faces challenges in reducing customer implementation delays, which could impact services revenue and project timelines.
Dependence on subscription revenue growth: The company's financial health is increasingly tied to subscription revenue growth, which may be impacted by market conditions or customer adoption rates.
Economic uncertainties: Broader economic uncertainties could impact customer spending and the company's financial performance.
Regulatory risks: The company is subject to risks outlined in its SEC filings, which may include regulatory hurdles.
Competitive pressures: The company operates in a competitive environment and must maintain its innovation and product superiority to sustain growth.
AI integration and cybersecurity: While AI provides competitive advantages, the company must manage cybersecurity threats and ensure effective AI integration.
Global market awareness: The company acknowledges the challenge of not being well-known in large parts of the hospitality market, which could limit growth opportunities.
Revenue Guidance: The company has raised its full-year revenue guidance range from $308 million to $312 million to $315 million to $318 million for fiscal year 2026.
Subscription Revenue Growth: Subscription revenue growth guidance has been increased from 27% to 29% for fiscal year 2026.
Adjusted EBITDA: The company maintains its adjusted EBITDA guidance at 20% of revenue for fiscal year 2026.
Professional Services Revenue: Professional services revenue is expected to decrease by more than 5% sequentially in Q3 due to fewer billable days around the holidays, but it is expected to return to normal levels in Q4.
AI Impact: AI is expected to continue enhancing product development efficiencies, competitive advantages, and operational areas such as cybersecurity and product implementations.
Sales Momentum: The company expects continued strong sales momentum, driven by increasing subscription sales and a growing product ecosystem.
The selected topic was not discussed during the call.
The earnings call summary presents a positive outlook with strong financial performance, particularly in subscription revenue and free cash flow. The Q&A section highlights strong sales momentum, margin improvements, and international growth, with no major negative concerns raised. The guidance increase and positive sentiment from analysts further support a positive stock price movement. Given the company's market cap of $2.8 billion, a positive reaction of 2% to 8% is expected over the next two weeks.
The earnings call highlights strong subscription revenue growth, a positive outlook for EBITDA, and successful sales across multiple verticals, despite a temporary free cash flow loss. The Q&A reveals ongoing improvements in sales capacity and product integration, with AI enhancing offerings. Although management was vague on some productivity details, the overall sentiment is positive, driven by strong subscription sales and optimistic guidance. The market cap suggests a moderate reaction, resulting in a 'Positive' sentiment prediction for stock price movement.
The earnings report shows strong financial performance with significant revenue growth and improved margins, despite minor declines in product revenue and gross profit margin. The Q&A reveals positive sentiment towards the company's strategic moves, such as the Book4Time acquisition and POS platform improvements. However, cautious guidance and uncertainties around the Marriott project and customer transitions slightly temper the outlook. Given the company's market cap, these factors suggest a moderate positive stock price movement, likely in the 2% to 8% range over the next two weeks.
The company's financial performance is strong, with significant revenue growth, particularly in subscription services, and improved profitability metrics. Despite some uncertainties with the Marriott PMS project, the overall sentiment remains positive due to strong organic growth, successful acquisitions, and international expansion potential. The lack of a shareholder return plan is a minor negative, but the market cap suggests a moderate reaction to positive news. Given these factors, a positive stock price movement of 2% to 8% is expected over the next two weeks.
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