Agilysys (AGYS) Stock Forecast & Price Target

Agilysys Inc. is projected to achieve full-year revenue of $315 to $318 million in FY26, representing approximately 15% year-over-year growth, bolstered by robust subscription and professional services revenue. Subscription revenue, which constituted 65.5% of recurring revenues, surged 33.1% year-over-year, prompting the company to revise its subscription growth expectations upward to 29% from a prior 27%. Additionally, the quarter marked a significant improvement in free cash flow, increasing to $15 million from $5.9 million in the same quarter of the previous year, supporting the positive outlook on the company's financial performance.

Agilysys Inc. has reported a decline in gross margins to 61.7%, which is 140 basis points lower than estimates and 150 basis points lower year-over-year, primarily attributed to the increased costs associated with its professional services team. The company faces potential revenue and profitability challenges due to risks from disruptions, merger or acquisition activities, and changes to agreements that could affect its ability to deliver products and services. Additionally, a prolonged economic downturn in the hospitality sector could significantly pressure Agilysys' revenue growth, compounded by ongoing challenges in the point-of-sale segment and exposure to the travel and leisure industries during adverse economic conditions.