Last Update 11 Dec 25

Fair value Increased 1.43%

AGYS: Subscription Momentum Will Drive Future Market Share Gains Despite Margin Constraints

Analysts have nudged our Agilysys fair value estimate up by approximately $2 to $142, reflecting higher Street price targets supported by accelerating organic subscription growth, sustained beat and raise execution, and confidence in the company’s competitive product platform and expanding market share.

Analyst Commentary

Street research remains broadly constructive on Agilysys, with multiple firms lifting price targets alongside Q2 estimate beats and stronger subscription metrics. The latest commentary highlights both the durability of current momentum and a few execution risks that could influence the trajectory of earnings and valuation from here.

Bullish Takeaways

Bullish analysts point to an impressive beat and raise in Q2, with upside on revenue and EBITDA that reinforces confidence in management’s ability to consistently out-execute expectations.
Accelerating organic subscription growth, with estimates edging up from about 26 percent to 27 percent year over year, is seen as a key driver of higher recurring revenue visibility and multiple expansion potential.
Strong subscription momentum across both POS and PMS, including notably faster growth in PMS, supports the view that Agilysys is gaining share and deepening its footprint within existing customers.
Ongoing investment in product, brand, and sales execution is framed as a competitive advantage that should sustain robust bookings, record backlog, and support higher long term revenue targets.

Bearish Takeaways

Bearish analysts remain cautious on margins, noting that gross margin is still in the low 60s percent range, pressured by lower utilization and mix as recent sales and services hires ramp.
The growing cost base tied to double digit headcount additions in sales and services introduces near term execution risk if bookings growth or attach rates were to slow.
Rising expectations embedded in higher price targets and raised long term revenue goals increase the risk of a sharper valuation reset if the company’s beat and raise cadence moderates.
While broad based bookings strength is a positive, the stock’s premium multiple leaves less room for error around sustaining current subscription growth and operating leverage improvements.

What's in the News

Streamsong Resort selected Agilysys Golf and the Agilysys Mobile Caddie App to optimize caddie scheduling, real-time coordination with golfers, and reduce manual work, with reported gains of more than 20 hours per week in scheduling efficiency (Client Announcement).
The Mobile Caddie App introduces instant synchronization with golf course tee sheets, multi-course availability calendars, flexible assignment workflows, and real-time push notifications. This differentiates it from rival golf technology solutions that rely on slower API or VPN transfers (Client Announcement).
Agilysys InfoGenesis, the company's cloud-native enterprise POS platform, has been approved for IHG Hotels & Resorts globally, making Agilysys a POS provider across all IHG hotel segments and select resort properties (Client Announcement).
The InfoGenesis ecosystem now supports unified guest and staff experiences across F&B, retail, and non-traditional service areas at IHG, with mobile ordering, self-service options, integrated payment solutions, and connectivity to IHG property management systems for streamlined operations and room charge capabilities (Client Announcement).
Agilysys raised its fiscal 2026 guidance, targeting total revenue of $315 million to $318 million and lifting subscription revenue growth expectations to 29 percent year over year (Corporate Guidance).

Valuation Changes

Fair Value Estimate has risen slightly, increasing by about $2 from $140 to $142 per share.
Discount Rate has risen slightly, moving from approximately 8.41 percent to about 8.48 percent and implying a modestly higher required return.
Revenue Growth assumption is effectively unchanged, remaining at roughly 14.25 percent.
Net Profit Margin assumption is effectively unchanged, holding near 13.94 percent.
Future P/E multiple has risen slightly, moving from about 80.1x to approximately 81.4x and reflecting a modest increase in implied valuation multiples.

Transition to a SaaS model and deep product integration are driving more predictable, higher-margin recurring revenue and improving customer retention.
Expanded sales capacity and advanced AI enhancements are fueling robust growth across multiple hospitality sectors and international markets.
Heavy reliance on the hospitality sector, intensifying competition, rising costs, and regulatory pressures threaten Agilysys' growth prospects and long-term margins.

Catalysts

About Agilysys

Operates as a developer and marketer of software-enabled solutions and services to the hospitality industry in North America, Europe, the Asia-Pacific, and India.What are the underlying business or industry changes driving this perspective?

Rapid adoption of cloud-native, subscription-based hospitality software and the company's shift toward a SaaS revenue model is creating significantly higher and more predictable recurring revenue streams, positioning Agilysys for ongoing improvements in earnings and margin expansion as legacy perpetual license sales decline.
Accelerated sales momentum across multiple verticals (hotels, casino gaming, food service management, international) and a record high backlog of implementations, combined with recently expanded sales capacity, indicate a strong pipeline that is expected to drive robust top-line revenue growth and sustained increases in subscription ARR.
Agilysys' deep investment in product modernization has resulted in a highly integrated hospitality technology ecosystem, enabling cross-selling of multiple products per customer and underpinning higher average revenue per user (ARPU) and customer retention, which should support long-term revenue growth and gross margin improvements.
The company's focused and increasingly differentiated AI-driven enhancements (such as personalized upselling, dynamic pricing, and AI-powered guest engagement tools) are expected to meaningfully elevate product value, drive upsell opportunities, and improve operational efficiency-positively impacting both revenue growth and net margins.
Growing international momentum and the ongoing wave of digitization in hospitality globally, especially in underpenetrated emerging markets, offer significant expansion opportunities which could increase Agilysys' total addressable market and drive outsized revenue growth in future periods.

Agilysys Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Agilysys's revenue will grow by 13.8% annually over the next 3 years.
Analysts assume that profit margins will increase from 4.9% today to 14.2% in 3 years time.
Analysts expect earnings to reach $60.4 million (and earnings per share of $1.7) by about September 2028, up from $14.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 77.1x on those 2028 earnings, down from 215.2x today. This future PE is greater than the current PE for the US Software industry at 36.2x.
Analysts expect the number of shares outstanding to grow by 1.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.42%, as per the Simply Wall St company report.

Agilysys Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Heavy exposure to the hospitality sector, particularly hotels, resorts, casinos, and food service management, leaves Agilysys vulnerable to cyclical downturns in travel and leisure, which could materially compress recurring revenue and future earnings during global economic or tourism slowdowns.
Despite recent international growth momentum, Agilysys' results remain concentrated in North America, potentially capping long-term revenue growth and leaving the company more exposed to domestic market saturation or slower regional technology adoption outside established territories.
Intensifying competition from larger, well-capitalized cloud providers and ongoing industry moves toward open-source and interoperable hospitality solutions may erode Agilysys' pricing power and market share, ultimately putting pressure on revenue growth and net margins.
Sustained investment in sales capacity, innovation (particularly AI-driven features), and expanded marketing to maintain product differentiation and customer acquisition is driving higher operating expenses, which could constrain margin improvement and dampen earnings if top-line growth moderates.
Increasing data privacy regulation and global compliance requirements could escalate operational complexity and costs for Agilysys, limiting flexibility in product innovation and potentially compressing net margins over the long run.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $130.4 for Agilysys based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $152.0, and the most bearish reporting a price target of just $120.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $425.1 million, earnings will come to $60.4 million, and it would be trading on a PE ratio of 77.1x, assuming you use a discount rate of 8.4%.
Given the current share price of $108.14, the analyst price target of $130.4 is 17.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Subscription Momentum And New Customer Wins Will Support Long-Term Ecosystem Expansion