Agilysys, Inc. ((AGYS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent Agilysys, Inc. earnings call presented a mixed sentiment, reflecting both promising growth and notable challenges. While the company celebrated record revenues and a robust sales pipeline, it faced significant hurdles in point-of-sale (POS) sales and international markets. The overall tone was cautiously optimistic, as the strengths in property management systems (PMS) and subscription revenues were tempered by these setbacks.
Record Revenue and Growth in PMS Segment
Fiscal 2025 Q3 marked a milestone for Agilysys with record revenue of $69.6 million, marking the 12th consecutive quarter of record revenues and a 14.9% increase from the previous year. The PMS segment was a standout performer, with sales soaring 70% higher than the prior year quarter. Notably, fiscal 2025 is already the best year for PMS sales, exceeding the previous best full year by 33%.
Strong Recurring and Subscription Revenue
Agilysys reported strong growth in recurring revenues, which reached a record $44.4 million, up 26.4% year-over-year. Subscription revenue was particularly impressive, growing 45.1% year-over-year and comprising 63.8% of total recurring revenue, underscoring the company’s successful pivot towards a subscription-based model.
Increased New Customer Acquisitions
The company added 12 new customers in fiscal 2025 Q3, with 11 of these being fully subscription-based, and an average of 6 products purchased per customer—a record high. This growth in customer acquisition highlights the increasing market adoption of Agilysys’s offerings.
High Sales Pipeline
Agilysys’s sales pipeline reached a record level at the demonstration stage, 20% higher than the previous year. Opportunities in PMS and POS were up 37% and 22%, respectively, indicating a strong potential for future sales growth.
Challenges in POS Sales
Despite the overall positive growth, POS sales fell short of expectations, particularly in the Managed Food Services vertical. Product revenue was down 15.8% year-over-year, reflecting the challenges faced in this segment.
International Sales Performance
Sales in the APAC and EMEA regions remained lackluster, with the company continuing to rely on significant deals rather than a steady stream of smaller opportunities, posing a challenge to consistent international revenue growth.
Service Revenue Challenges
Service revenue did not meet expectations due to the completion of significant development projects and customer delays, particularly in December, which impacted the quarterly figures.
Forward-Looking Guidance
Looking ahead, Agilysys remains optimistic despite the challenges. The company expects POS sales to normalize in the coming quarters and maintains strong sales momentum. Fiscal 2025 is anticipated to be a record sales year for PMS, with revenue projected to reach $273 million. The focus will remain on profitability and growth in subscription revenues.
In summary, Agilysys, Inc.’s earnings call highlighted a mixed yet promising outlook. While the company achieved record revenues and growth in its PMS and subscription segments, challenges in POS and international sales dampened the overall sentiment. Moving forward, Agilysys aims to leverage its strong sales pipeline and address the current hurdles to sustain its growth trajectory.
