Hospitality industry software provider Agilysys (NASDAQ: AGYS) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 19.4% year on year to $74.27 million. On the other hand, the company’s full-year revenue guidance of $310 million at the midpoint came in 2.8% below analysts’ estimates. Its non-GAAP profit of $0.54 per share was 88.8% above analysts’ consensus estimates.
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Agilysys (AGYS) Q1 CY2025 Highlights:
- Revenue: $74.27 million vs analyst estimates of $71.61 million (19.4% year-on-year growth, 3.7% beat)
- Adjusted EPS: $0.54 vs analyst estimates of $0.29 (88.8% beat)
- Adjusted EBITDA: $14.79 million vs analyst estimates of $11.29 million (19.9% margin, 31% beat)
- Management’s revenue guidance for the upcoming financial year 2026 is $310 million at the midpoint, missing analyst estimates by 2.8% and implying 12.5% growth (vs 16% in FY2025)
- Operating Margin: 7.1%, up from 5.6% in the same quarter last year
- Free Cash Flow Margin: 35.6%, up from 28.4% in the previous quarter
- Market Capitalization: $2.38 billion
Ramesh Srinivasan, President and CEO of Agilysys, commented, “We are pleased with our fourth quarter results, which featured year-over-year subscription revenue growth of 42.7% including Book4Time and services revenue growth of 21.7%, producing the 13th consecutive record quarter for overall revenue. Annual fiscal year 2025 total revenue, subscription revenue and services revenue were also all records, led by subscription growth of 39.5% and services growth of 27.7% for the full year.
Company Overview
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ: AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Agilysys grew its sales at a 19.2% annual rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, Agilysys reported year-on-year revenue growth of 19.4%, and its $74.27 million of revenue exceeded Wall Street’s estimates by 3.7%.
Looking ahead, sell-side analysts expect revenue to grow 15.6% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is noteworthy and indicates the market sees success for its products and services.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Agilysys is extremely efficient at acquiring new customers, and its CAC payback period checked in at 20.2 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Agilysys’s Q1 Results
We were impressed by how significantly Agilysys blew past analysts’ EBITDA expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance missed and its revenue guidance for next year suggests growth will stall. Overall, this print was mixed but still had some key positives. The stock traded up 2.2% to $84.74 immediately after reporting.
Is Agilysys an attractive investment opportunity at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
