Agilysys (AGYS) Stock Forecast & Price Target

Agilysys Inc. has demonstrated robust financial performance, with a revenue forecast for FY26 of $315 to $318 million, indicating approximately 15% year-over-year growth at the midpoint, an increase from the previous outlook of 12%. Subscription revenue, which comprises a significant 65.5% of recurring revenue, has shown a remarkable year-over-year growth of 33.1%, leading management to raise growth expectations for subscription revenue to 29%. Additionally, the company's free cash flow increased to $15 million from $5.9 million, reflecting operational efficiency and strong demand for its software solutions across various sectors, including hospitality and healthcare.

Agilysys's gross margins have shown weakness, with figures of 62.5% and 61.7% falling below expectations and decreasing year-over-year due to increased costs associated with the professional services team. Despite a positive EBITDA margin of 20.6% exceeding estimates, the company's outlook appears negative, particularly with a projected slowdown in subscription growth at 20% year-over-year and declining sales trends in key sectors like gaming and international markets. Concerns regarding external disruptions, such as merger or acquisition activity, alongside the potential impact of an economic downturn on the hospitality industry's investment spending, could further pressure both revenue and profitability for Agilysys.