0001193125-26-022793
SEC filingAgilysys delivered a strong Q3 with 15.6% revenue growth to $80.4M and 58.3% operating income growth, driven by subscription and professional services expansion.
Agilysys reported strong third-quarter results for fiscal 2026. Total net revenue increased 15.6% year-over-year to $80.4 million, driven by a 17.2% increase in subscription and maintenance revenue ($52.0 million) and a 22.0% increase in professional services revenue ($17.7 million). Products revenue was essentially flat at $10.7 million as customer preference shifts toward subscription-based licenses continue. Gross profit rose 14.6% to $50.2 million, while gross margin slightly contracted from 63.0% to 62.5%, mainly due to a lower-margin product mix and higher professional services costs. Operating income surged 58.3% to $11.7 million, reflecting operating leverage as revenue growth outpaced operating expense increases (excluding other gains). Operating margin expanded 390 basis points to 14.6%. Net income more than doubled to $9.9 million ($0.35 per diluted share) from $3.8 million ($0.14 per diluted share) in the prior-year quarter, benefiting from higher operating income and reduced interest expense.
For the nine-month period, revenue grew 17.4% to $236.4 million, with subscription revenue up 22.4%. Gross margin declined to 62.0% from 63.0%, while operating margin improved from 8.6% to 12.9%. Net income increased to $26.5 million ($0.93 diluted) from $19.3 million ($0.68 diluted) a year ago.
As of December 31, 2025, Agilysys held $81.5 million in cash and cash equivalents, up from $73.0 million at March 31, 2025. Total assets were $475.2 million, up from $434.4 million, largely due to increases in accounts receivable ($63.7 million vs. $31.5 million) and goodwill ($135.8 million vs. $130.6 million). The company had no outstanding debt on its $75 million revolving credit facility, having repaid the remaining $24 million during the quarter. Total stockholders' equity improved to $313.1 million from $265.9 million, aided by net income and share-based compensation.
Cash flow from operations for the nine-month period was $34.2 million, up from $28.0 million in the prior year, driven by higher net income partially offset by working capital changes (a $21.7 million use). Capital expenditures were $1.4 million, resulting in free cash flow of $32.7 million. Financing activities included $24.0 million in debt repayments and $1.4 million for share repurchases to satisfy employee tax withholding. The company's liquidity remains strong with no debt and ample cash.
Management highlighted several key drivers: continued growth in subscription-based services, increased professional services activity, and strategic investments in product development and sales. The company benefited from employee retention credits ($9.1 million year-to-date) under the CARES Act and expects future cash tax savings from the One Big Beautiful Bill Act (OBBBA) signed in July 2025. Risks include macroeconomic and geopolitical uncertainties, tariff policies, and labor cost pressures. No specific forward guidance was provided.