Agilysys (NASDAQ:AGYS) reported record fiscal 2027 second-quarter revenue of $93.4 million, up 17.7% from the prior-year period, as subscription revenue, hospitality sales activity and profitability increased. The company raised its full-year revenue, subscription growth and adjusted EBITDA guidance.
Revenue for the July-through-September quarter marked Agilysys’ 19th consecutive record revenue quarter, according to President and CEO Ramesh Srinivasan. First-half revenue totaled $181 million, a 16.1% increase from the first half of the prior fiscal year.
“Sales levels during the quarter were good across the various sales verticals, especially in hotels and resorts,” Srinivasan said. He described the quarter as the company’s strongest July-to-September sales period on record, excluding subscription metrics associated with the Marriott property-management-system project from general business update figures.
Subscription revenue and profitability expand
Recurring revenue increased 22% year over year to a record $62.2 million, representing 66.6% of total revenue, compared with 64.3% a year earlier. Subscription revenue rose 32.6% year over year and 10% sequentially to $44.2 million. Subscription revenue accounted for 71% of recurring revenue, the first time it exceeded the 70% threshold, the company said.
Subscription revenue related to point-of-sale products and associated add-on modules grew 18.4% from a year earlier, while subscription revenue tied to property-management systems and related modules increased 53.8%.
Chief Financial Officer Dave Wood said subscription growth exceeded the company’s expectations during the quarter. In response to an analyst question, Wood said Agilysys expects sequential subscription revenue growth of roughly $3.5 million to $3.7 million in each of the remaining quarters of fiscal 2027, implying an exit growth rate of approximately 38% to 39%.
Gross profit rose to $60.3 million from $49 million in the prior-year quarter, while gross margin increased to 64.6% from 61.7%. Operating income was $15.2 million, net income was $13.2 million and diluted earnings per share were $0.46. Adjusted EBITDA rose to $24.1 million from $16.4 million a year earlier, reaching 25.9% of revenue.
Professional services revenue increased 5.3% to $19.2 million, and professional-services gross margin remained above 30% for a third consecutive quarter at 30.9%.
Sales momentum across hospitality markets
Srinivasan said domestic hotels, resorts and cruise-ship sales reached a record, aided by a large competitive replacement deal covering multiple resort properties. The agreement included property-management software, food-and-beverage inventory procurement and as many as 15 additional software modules.
- Domestic hotels, resorts and cruise-ship sales increased 33% year over year.
- Domestic food-service-management sales rose 42%.
- Asia-Pacific sales grew 47%.
- Property-management-system sales, including add-on modules, reached a record level excluding major ongoing PMS projects.
The company added 14 new customers excluding Book4Time Spa, or 24 including Book4Time, during the quarter. All of those new-customer agreements were subscription based. The 14 new-customer wins included an average of 5.6 products per deal, while deals including a PMS product averaged 9.3 products.
Agilysys also added 83 sites at existing customer organizations that had not previously used its products. Of 107 new properties added across new and existing customers, 104 were at least partially subscription based. The company recorded 119 instances of sales of additional products to properties already using at least one Agilysys product, involving 331 products in total.
Wood said sales performance reflected both increased sales capacity and improving productivity. The company had nearly doubled quota-carrying sales representatives in the hotels and resorts segment several years ago, and Wood said the team is now approaching full productivity. He added that Agilysys does not anticipate a major hiring wave to continue growing the business.
Marriott rollout, acquisitions and AI development
Management said the Marriott PMS project remains on plan. Srinivasan said more than 2,000 properties are live, with virtually all select-service property implementations completed. The project is now transitioning toward full-service properties, though management said it has not reached the halfway point when measured by properties, rooms or revenue.
Agilysys said it is also pursuing cross-selling opportunities at Marriott properties, including point-of-sale, golf, digital marketing and other modules, although Srinivasan declined to quantify the opportunity.
During the quarter, the company completed its acquisition of Gaming Hospitality Solutions, or GHS, a provider of loyalty and offer-management software primarily used by tribal casinos. The acquisition is expected to add only a few hundred thousand dollars of maintenance revenue in fiscal 2027, but Srinivasan said it is strategically important for supporting mutual customers, including about 40 tribal gaming casinos and Royal Caribbean.
Agilysys also discussed its artificial-intelligence initiatives. The company previously announced more than 30 AI-based features, with several now in pilot testing and others in production use. Srinivasan said Agilysys expects initial beta implementations of two AI-native modules—a central reservation system and a Total Revenue Management System—later in the fiscal year. The initial versions will operate within the company’s existing product ecosystem.
Management said it has completed an AI common framework intended to provide governance, privacy tokenization, security, model selection, monitoring and auditing capabilities. The company is not yet charging beta customers for its initial AI features, Srinivasan said, adding that future monetization could vary between product enhancements, SaaS pricing and usage-based approaches.
Guidance raised again
Agilysys increased its fiscal 2027 revenue outlook to a range of $374 million to $378 million, up from prior guidance of $368 million to $373 million. The company now expects subscription revenue growth of at least 34%, compared with its previous expectation of at least 32% growth.
The company also raised its adjusted EBITDA outlook to 25% of revenue from 24%. Management expects adjusted EBITDA margin to be slightly above 22% in the fiscal third quarter because of the timing of certain costs, including professional fees, before approaching 30% in the fourth quarter.
Cash and marketable securities totaled $137.6 million as of Sept. 30, 2026, up from $116.9 million at the end of March. First-half free cash flow rose to $22.1 million from $10 million in the comparable prior-year period.
About Agilysys (NASDAQ:AGYS)
Agilysys, Inc develops and provides hospitality technology for hotels, resorts, casinos, cruise lines and other guest-focused businesses. Its software and services are designed to help operators manage core property functions, improve guest experiences and streamline food, beverage and retail operations.
The company’s product portfolio includes property-management systems, point-of-sale solutions, inventory and procurement tools, payment services, guest-facing applications, mobile ordering and resort-management software.
