Agilysys (AGYS) Stock Forecast & Price Target

Agilysys Inc. has demonstrated a robust financial performance with management raising the full-year revenue guidance for FY26 to between $315 and $318 million, reflecting approximately 15% year-over-year growth at the midpoint. The company's subscription revenue has been a significant driver of this growth, comprising 65.5% of recurring revenue and increasing by 33.1% year-over-year, with expectations for continued acceleration in subscription revenue growth to 29%. Additionally, the company reported a notable increase in free cash flow to $15 million during the quarter, up from $5.9 million in the prior year, indicating strong operational efficiency and the potential for further margin expansion.

Agilysys Inc has experienced a decline in gross margins, which fell to 61.7%, representing a drop of 150 basis points year-over-year and falling short of estimates primarily due to increased costs associated with a larger professional services team. While the EBITDA margins improved, reaching 20.6%, this positive aspect does not offset significant risks posed by potential disruptions, geopolitical issues, or changes in customer agreements, all of which could heavily impact revenue and profitability. Additionally, the company's reliance on the hospitality sector makes it vulnerable to economic downturns and demand fluctuations, significantly heightening the risk of slowed revenue growth.