Recurring and Subscription Momentum
Revenue derived from recurring sources continued to expand. In the latest quarter, $52.0 million, or 64.7 percent of total revenue, came from recurring contracts. Subscription revenue rose 23.1 percent year over year to $34.9 million.
The company still expects subscription revenue to grow roughly 29 percent for the full fiscal year when excluding the impact of larger deployments at Marriott International. Subscription arrangements typically carry multi-year terms and are viewed by the company as an important driver of revenue visibility.
Sales Activity Hits Monthly High
Agilysys added 1,616 new customers during the quarter, most through subscription agreements. December was described by management as the best monthly sales performance in the company’s history, reflecting healthy demand in both domestic and international markets.
Implementation velocity improved as pilot installations of the company’s property-management system at Marriott hotels progressed into broader waves. As a result, Agilysys reported a decline in its services backlog by the end of the quarter.
Performance by Vertical Markets
The Hotels, Resorts and Cruise Ships (HRC) segment delivered its strongest third-quarter sales on record. New client wins included Bolt Farm Treehouse in Tennessee and Sands Resorts in North Myrtle Beach, South Carolina.
Management also highlighted instances of large hospitality brands switching from competing solutions to the Agilysys point-of-sale ecosystem, adding that such migrations underscore the competitiveness of the firm’s integrated product suite.
In the casino gaming vertical, sales slowed in October and November but rebounded in December. Executives noted that several delayed deals appeared postponed rather than cancelled, suggesting continued interest from gaming operators.
The Food Service Management (FSM) business maintained momentum. Aggregate FSM sales recorded during the first three quarters of fiscal 2026 have already exceeded the full-year totals achieved in each of the prior two fiscal years. Management indicated that the vertical is on track for a potential record year if current trends continue.
Profitability Targets Intact
Although the company did not release detailed profitability metrics in the headline results, it reiterated its target of delivering adjusted EBITDA equal to one-fifth of annual revenue. Achieving that level would represent progress toward the firm’s longer-term objective of scaling margins while continuing to invest in product development and customer support.
Agilysys measures its sales pipeline using annual contract value, a metric the company believes offers improved visibility into future recurring revenue. According to management, the October-to-December period represented Agilysys’ second-best fiscal third quarter on that basis.
Outlook
The updated full-year guidance of $318 million implies continued double-digit growth in the fourth quarter. Management did not modify its view on subscription growth, recurring revenue mix or margin objectives, suggesting confidence in implementation capacity and demand from core hospitality segments.
Agilysys’ latest results come as technology suppliers across the travel and leisure industry monitor spending trends following several years of pandemic recovery. Data from the U.S. Travel Association show that domestic leisure and business travel outlays have risen steadily since 2021, supporting capital-spending plans among hotels, resorts and entertainment venues that comprise much of Agilysys’ customer base.
Looking ahead, the company expects further contributions from large enterprise rollouts, expanded adoption of cloud-based property-management modules, and incremental sales of auxiliary applications such as mobile check-in and contactless payment solutions. Management emphasized that recent product enhancements aim to reduce go-live timelines, an initiative that could help convert backlog into revenue faster while lowering deployment costs.
Crédito da imagem: MarketBeat
