Agilysys, Inc. ((AGYS)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Agilysys, Inc. recently held its earnings call, revealing a generally positive sentiment fueled by robust sales and revenue growth. The company highlighted substantial gains in subscription revenue and international sales, despite facing challenges in one-time product revenue and cash flow. Strategic investments in AI and increased sales capacity suggest a promising future trajectory.
Record Sales and Revenue Growth
Agilysys reported a remarkable 24% increase in sales for fiscal 2026 Q1 compared to the previous year, marking it as the second-best quarter on record. The company’s total revenue reached $76.7 million, a 21% rise from the prior year, underscoring a strong performance in the market.
Subscription Revenue Surge
The company experienced its best-ever quarter for subscription software sales, with a 79% increase from the prior year. Subscription revenue grew by 44.3% and now represents 65.6% of total recurring revenue, highlighting the company’s successful shift towards a subscription-based model.
Expansion in Sales Capacity
Agilysys expanded its sales capacity by 45% year-over-year, enhancing its territory coverage and opening new opportunities for growth. This strategic move is expected to further boost the company’s market presence and revenue streams.
International and Vertical Sales Success
International sales gained momentum, with notable achievements in the casino gaming and food service management verticals, both reaching record sales levels. This success underscores Agilysys’ effective global expansion strategy.
AI Integration into Products
The company is integrating AI into its products, introducing features like personalized upselling, AI-assisted concierge services, and AI-driven pricing decisions. These enhancements are expected to improve customer experience and operational efficiency.
Low One-Time Product Revenue
Despite the overall positive performance, one-time product revenue fell below expectations, marking the lowest quarter in about four years for perpetual software licenses. This area remains a challenge for the company.
Cash Flow and Profitability Challenges
Agilysys faced cash flow challenges, with a $5 million loss in free cash flow compared to an increase in the prior year. Adjusted EBITDA was also lower than expected due to one-time cost items, highlighting areas needing attention.
Forward-Looking Guidance
Agilysys provided optimistic forward-looking guidance, maintaining its annual revenue forecast of $308 million to $312 million and adjusted EBITDA at 20% of revenue for fiscal 2026. The company anticipates continued growth in subscription software sales and recurring fee bookings, with significant achievements expected across various sales verticals.
In summary, Agilysys, Inc.’s earnings call reflected a positive outlook with strong sales and revenue growth, particularly in subscription and international markets. Despite challenges in one-time product revenue and cash flow, strategic investments and AI integration position the company for future success. Investors can look forward to sustained growth as Agilysys continues to expand its market presence and enhance its product offerings.