AGYS Q3 Deep Dive: Subscription Momentum and AI Drive Hospitality Software Growth

Hospitality software provider Agilysys (NASDAQ:AGYS) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 16.1% year on year to $79.3 million. The company’s full-year revenue guidance of $316.5 million at the midpoint came in 1.8% above analysts’ estimates. Its non-GAAP profit of $0.40 per share was 4.3% above analysts’ consensus estimates.

Is now the time to buy AGYS? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Agilysys delivered a strong third quarter, supported by a broad-based acceleration in subscription software sales and notable gains across its hospitality-focused product ecosystem. Management attributed the positive results to sustained improvements in its cloud-native solutions and efficiencies in project implementation, especially within key verticals like gaming casinos and foodservice management. CEO Ramesh Srinivasan emphasized that “the product ecosystem is getting better,” and highlighted significant contributions from newly modernized software modules and a more effective sales organization. The company also benefited from higher international sales and expanding customer adoption of its unified hospitality platform.

Looking forward, Agilysys anticipates continued momentum as it leverages artificial intelligence (AI) to enhance both its product offerings and operational efficiency. Management outlined plans for ongoing investment in AI-powered features, expanded reference customers, and increased marketing activities to raise awareness in underpenetrated markets. Srinivasan noted, “AI tools working in conjunction with the already modernized solutions are currently helping us increase the competitive advantage gap,” and the company expects these advances to drive further differentiation and growth, particularly as more major hospitality organizations consider its unified platform.

Key Insights from Management’s Remarks

Agilysys management pointed to broad-based demand, product modernization, and operational improvements as the main factors supporting third quarter performance and the company’s increased full-year outlook.

• Subscription growth acceleration: Management saw strong gains in subscription sales, with recurring revenue up 23% year-over-year and subscription revenue growth of 33%. The company noted this is the seventh consecutive quarter of 30%+ subscription growth, driven largely by new incremental projects rather than customers shifting from on-premises to cloud.
• AI adoption and product modernization: The company credited its recent product reengineering and expanded use of AI as key differentiators. AI-powered features were cited as improving implementation efficiency and enabling advanced use cases, such as dynamic pricing and guest personalization. The GetSense.ai technology platform now underpins several new offerings, including dynamic pricing for room upgrades and unified guest profiles.
• International expansion: Management highlighted international sales growth of over 35%, with particular strength in the UK and broader EMEA region. The addition of senior sales and marketing resources has contributed to increased traction in new global markets, and several large international resorts adopted Agilysys’ full ecosystem during the quarter.
• Service delivery efficiency: The company completed planned capacity increases in its professional services team earlier in the year, helping reduce the service backlog and speed up customer project delivery. AI tools were credited with automating complex implementations and improving overall service productivity.
• Diverse customer wins and product attach: New customer deals averaged seven products per sale, a new high, with property management system (PMS) deals attaching an average of 14 products. Management noted growing demand for multi-module solutions, with loyalty, booking engine, and spa modules among the most frequently added.

Drivers of Future Performance

Agilysys expects continued growth, led by AI-driven product enhancements, expanding international presence, and a growing base of multi-module subscription customers.

• AI-powered innovation: Management believes AI features will broaden the functionality and appeal of Agilysys’ solutions, citing ongoing development of capabilities like automated product implementation, cybersecurity threat detection, and personalization. These advances are expected to increase customer stickiness and support margin expansion.
• International and enterprise market penetration: The company is targeting further growth in international markets and among large hospitality organizations. Management views bigger wins, such as the Marriott project and other global chains, as catalysts for brand awareness and future sales, although they acknowledged Agilysys is still not well-known in some segments.
• Operational scale and backlog visibility: With professional services capacity investments completed, management expects improved execution and project delivery, supporting conversion of a record product backlog into revenue. However, customer-driven implementation delays remain a risk, particularly for large-scale multi-module deployments.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be tracking (1) the pace at which Agilysys converts its record backlog into subscription revenue, (2) the adoption and impact of new AI-powered features within its hospitality software ecosystem, and (3) expansion into international and large enterprise accounts, especially as more global hospitality chains evaluate the unified Agilysys platform. Progress in raising brand visibility and continued operational efficiency will also be key areas of focus.

Agilysys currently trades at $120.99, up from $114.96 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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