Agilysys, Inc. (AGYS) FY2026 Earnings: Revenue $319M (+15.9%)
AGYS — FY2026 Annual Financial Report Analysis
Full Year · Fiscal year 2026 · Published by Pham Hop
Agilysys grew fiscal 2026 revenue 15.9% to $319.3M on 30% subscription growth; GAAP EPS rose 67% to $1.37, helped by a $9.2M one-time payroll tax credit.
Revenue
$319M
+15.9% YoY
Net income
$39M
+67.0% YoY
Diluted EPS
$1.37
+67.1% YoY
Operating margin
13.5%
This period vs a year ago
Same period last year
This period
Revenue▲+15.9%
≈$275M
$319M
Net income▲+67.0%
≈$23M
$39M
Diluted EPS▲+67.1%
≈$0.82
$1.37
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Fiscal 2026: subscriptions carried a 15.9% revenue gain, but a one-time tax refund flatters the profit jump
Agilysys sells software that hotels, resorts, casinos, cruise lines and stadium or campus caterers use to run their front desks (property management systems, or PMS) and their tills (point-of-sale, or POS). Its fiscal year runs April to March, so "fiscal 2026" here is the year that ended March 31, 2026. Revenue rose 15.9% to $319.3 million and GAAP net income rose 67% to $38.8 million ($1.37 per diluted share, from $0.82). The revenue story is subscriptions: subscription revenue grew 30.2%, while one-off product sales were flat. The profit story is less clean: $9.2 million of the operating profit came from a COVID-era payroll tax refund, not from selling software.
At a glance
$319.3 million revenue, +15.9%. Roughly $10 million of the $43.7 million increase came from a full year of Book4Time, the spa-booking software company bought in August 2024. Without that, growth was about 12%.
64.5% of revenue is now recurring (subscription plus maintenance fees), up from 61.7%. That is the part customers pay every month or year, so it is the most predictable part of the business.
$9.2 million one-time gain from employee retention credits (a pandemic-era payroll tax refund the IRS finally processed). Take it out and operating margin was about 10.6%, not the reported 13.5%.
The numbers
Metric
FY2026 (to Mar 31, 2026)
FY2025
YoY Change
Total revenue
$319.3M
$275.6M
+15.9%
Subscription & maintenance (recurring) revenue
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$205.9M
$170.1M
+21.1%
Subscription revenue growth
—
—
+30.2%
Recurring share of revenue
64.5%
61.7%
+2.8 pts
Professional services revenue
$72.2M
$64.2M
+12.4%
Products revenue
$41.2M
$41.3M
-0.4%
Gross margin
62.6%
62.4%
+0.2 pts
Operating income
$43.0M
$22.6M
+90.4%
Operating margin
13.5%
8.2%
+5.3 pts
Net income
$38.8M
$23.2M
+67.0%
Diluted EPS
$1.37
$0.82
+67.1%
Adjusted diluted EPS (non-GAAP)
$1.79
$1.55
+15.5%
Adjusted EBITDA (non-GAAP)
$67.7M
$53.8M
+25.7%
Free cash flow (non-GAAP)
$68.1M
$52.3M
+30.2%
Operating margin is the share of revenue left after running the business, before interest and tax. Adjusted EBITDA is the company's own profit measure that leaves out stock-based pay, amortization, and one-off gains and charges.
Where the growth came from
Agilysys earns money three ways, and they moved very differently:
Subscription and maintenance: +$35.9 million (+21.1%). Subscription revenue, which the company says was 66.6% of recurring revenue, grew 30.2%. Book4Time contributed $21.3 million of subscription-based revenue in fiscal 2026 against $11.2 million in fiscal 2025 (when it was owned for only about seven months). Maintenance fees on older, customer-installed licences are the rest, and they grow slowly. The gross margin on this line rose from 78.0% to 79.4%, which the 10-K attributes to revenue growing faster than the variable costs of hosting and supporting it.
Professional services: +$8.0 million (+12.4%) — the installation and configuration work that comes with new customers. But this line got less profitable: its gross margin fell from 31.3% to 27.3%, which management attributes to "lower utilization rates due to continued hiring and training of new staff and timing of certain large projects." In other words, Agilysys hired installers ahead of the work.
Products: flat at $41.2 million. This is hardware and one-time software licences. The 10-K says customers increasingly prefer subscriptions "instead of perpetual software licenses," so a flat line here is the intended result of the shift, not a demand problem. Its gross margin dropped from 46.6% to 40.9%, which the 10-K puts down to the mix of hardware and proprietary software delivered.
The fourth quarter (January–March 2026) is the cleanest read on underlying growth because Book4Time was already in both years' numbers by then: revenue rose 11.7% to $82.9 million and subscription revenue rose 24.1%.
What the headline numbers hide
The profit jump is partly a one-off. The line "other (gains) charges, net" swung from a $4.6 million cost in fiscal 2025 (mostly Book4Time deal costs, $2.2 million) to a $7.7 million gain in fiscal 2026, driven by $9.2 million of employee retention credits including interest. The company says it expects no further claims. Leaving that line out of both years, operating income rose from $27.2 million to $35.3 million (+30%) and margin went from 9.9% to 11.1%. That is still real improvement, but only about 1.2 points of the 5.3-point headline margin gain.
Tax went the other way. The effective tax rate rose from 9.4% to 19.9%, because fiscal 2025 was helped by the release of valuation allowances on foreign tax losses (an accounting step that booked old losses as a future tax asset). So pre-tax income nearly doubled (+89%), but net income rose 67%.
Non-operating income also helped. "Other income (expense), net" was $3.9 million against $0.8 million, and interest income fell from $3.8 million to $2.0 million after cash was spent on Book4Time. These are small but they sit below operating profit and are not software sales.
Cash conversion is strong, with one caveat. Operating cash flow was $70.0 million, 1.8 times net income, and free cash flow (operating cash less equipment spending) was $68.1 million. A big reason cash exceeds profit is $21.8 million of stock-based pay (6.8% of revenue): it is a real cost to shareholders through dilution, but it uses no cash. Some of the credit gain also arrived in cash; $3.0 million was still receivable at year end.
Receivables grew faster than sales. Money owed by customers rose 36.6% to $43.1 million against 15.9% revenue growth, and absorbed $11.4 million of cash. The allowance for bad debts rose from $0.6 million to $1.1 million, and the 10-K cites "increased bad debt expense" in sales and marketing costs. Worth watching.
Deferred revenue grew in step. Contract liabilities (money billed in advance for service still to be delivered) rose 17.5% to $83.0 million, and remaining performance obligations on contracts longer than a year were about $152 million, 42% of which is expected to be recognized within 12 months.
No help from buybacks. Diluted shares rose 0.5% to 28.4 million. All of the EPS growth came from earnings, not a shrinking share count.
Balance sheet cleaned up. The $24 million drawn on the credit line for Book4Time was repaid in full, leaving no debt and $116.9 million of cash.
Takeaway: Agilysys is turning into a subscription business on schedule — subscription revenue up 30% and recurring revenue now 64.5% of sales — but the 67% jump in GAAP earnings overstates it. Excluding a $9.2 million pandemic tax refund and last year's deal costs, operating profit grew about 30% and margin rose 1.2 points, a solid but more modest improvement, with services margins actually getting worse while the company hires installers.
Outlook
In the May 18, 2026 earnings release management guided fiscal 2027 (April 2026–March 2027) revenue to $365–370 million (about +14% to +16%), subscription growth of at least 30% for a third straight year, and adjusted EBITDA of 24% of revenue, up from 21.2%. The CEO credited AI tools, "especially in R&D," with improving cost efficiency, and said subscription sales (new contracts signed, which turn into revenue later) grew 29% over the previous best year.
Update since this 10-K: with first-quarter results on July 27, 2026 (quarter ended June 30, 2026), Agilysys reported revenue of $87.7 million (+14.3%), subscription growth of 26.1% and net income of $9.0 million ($0.32 per share, from $0.17), and raised full-year guidance to $368–373 million with subscription growth of at least 32%. The 24% adjusted EBITDA target was kept.
Our read: the recurring base, prepaid contract balance and record bookings make the revenue guidance look reachable. The harder part is margin: hitting 24% adjusted EBITDA needs professional services utilization to recover from 27.3% gross margin and operating costs to keep growing slower than revenue (they grew 14.2% excluding one-offs, vs 15.9% revenue in fiscal 2026). Fiscal 2027 GAAP profit will also have no retention-credit gain to lean on, so year-over-year GAAP comparisons will look weaker than the underlying business. Watch receivables and the services margin in the next two quarters.