Last Update 11 Jan 26

AGYS: Subscription Momentum And Record Backlog Will Support Future Share Gains

Analysts have modestly lifted their price targets on Agilysys, with recent Street research moving targets into a US$130 to US$155 range. They cite stronger subscription growth, Q2 revenue and EBITDA beats, and broader bookings momentum as key supports for the updated view.

Analyst Commentary

Recent research points to a broadly constructive stance on Agilysys, with analysts focusing on subscription growth, Q2 execution, and the mix of revenue across products and services when updating their valuation views.

Bullish Takeaways

Bullish analysts tie higher price targets in the US$130 to US$155 range to what they view as strong Q2 revenue and EBITDA performance, which they see as supportive of current valuation levels.
Organic subscription growth, estimated at 27% year over year, is a key pillar of the bullish case, as it points to recurring revenue that these analysts see as central to the company’s growth profile.
Upside in Q2, helped by subscription and professional services revenue and operating leverage, is cited as evidence that the company can execute against its revenue and margin ambitions.
Strong organic subscription revenue in both POS (up 18%) and PMS (up 55%), plus broad-based bookings strength and record backlog, are viewed as signs of healthy demand and support for the raised long term revenue targets.

Bearish Takeaways

Some cautious analysts highlight that gross margin remains in the low 60s%, reflecting lower utilization as sales and service headcount ramps, which they see as a constraint on near term margin expansion.
The double digit growth in sales and service hires is seen as necessary for future execution, but it also adds cost and may weigh on profitability if revenue growth does not keep pace.
Higher price targets assume that strong bookings, backlog, and subscription metrics continue, so any slowdown in these areas could challenge current valuation assumptions.
Raised long term total and subscription revenue targets set a higher execution bar, which could leave less room for error if customer metrics or product attachment rates soften.

What's in the News

Agilysys raised fiscal 2026 guidance, with total revenue now guided to a US$315 million to US$318 million range and subscription revenue growth expectations of 29% year over year (Key Developments).
IHG Hotels & Resorts approved Agilysys InfoGenesis, the cloud native omnichannel enterprise POS platform, for its global portfolio across Luxury & Lifestyle, Premium, Essentials, Suites and Partner brands, expanding Agilysys' role as a POS provider across hotel segments and select resort properties (Key Developments).
InfoGenesis is integrated with IHG property management systems, supporting room charges across outlets, real time access to guest transactions, and P2PE payment options such as Agilysys Pay and IG QuickPay for QR code payments (Key Developments).
Streamsong Resort selected Agilysys Golf and the Agilysys Mobile Caddie App to manage caddie scheduling and communication across hundreds of daily golf rounds, with the app targeting more than 20 hours per week in scheduling efficiency (Key Developments).
The Agilysys Mobile Caddie App synchronizes with golf course tee sheets and supports real time push notifications, along with broader use of Agilysys solutions at the resort such as InfoGenesis POS, IG Kiosk, IG Fly, IG OnDemand, Agilysys Book, Agilysys Reserve, Agilysys Digital Marketing, DataMagine, Agilysys Pay and QuickPay (Key Developments).

Valuation Changes

Fair Value: Model fair value remains unchanged at US$142.0 per share, indicating no shift in the central valuation anchor.
Discount Rate: The discount rate has edged slightly lower from 8.46% to 8.45%, reflecting a very small adjustment in the risk assumption used in the model.
Revenue Growth: The long term revenue growth assumption is steady at 14.16%, with no revision to the projected top line growth rate.
Net Profit Margin: The net profit margin assumption remains effectively unchanged at 13.97%, suggesting stable expectations for long term profitability.
Future P/E: The future P/E multiple is essentially flat, moving from 81.38x to 81.36x, so the valuation framework is still using a similar earnings multiple for out year estimates.

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