Financial Data and Key Metrics Changes - Fiscal 2026 Q3 revenue reached a record $80.4 million, a 15.6% increase from $69.6 million in the prior year [19][12] - Recurring revenue was $52 million, up 17.2% year-over-year, representing 64.7% of total revenue [13][22] - Subscription revenue was a record $34.9 million, 23.1% higher than the prior year [13][14] - Adjusted EBITDA for Q3 was $17.3 million, compared to $14.7 million in the previous year [24] Business Line Data and Key Metrics Changes - The Hotels, Resorts, and Cruise Ships (HRC) sales vertical had the best Q3 sales quarter on record, with significant new customer wins [6][7] - Food Service Management (FSM) sales for the first three quarters of fiscal 2026 are already higher than the full year sales of the previous two years [8] - Subscription SaaS sales are up 37% year-over-year, with cumulative sales nearing 95% of the previous best full year sales [9] Market Data and Key Metrics Changes - International sales were somewhat lackluster in Q3 but are expected to improve as the company establishes its reputation globally [9] - Cumulative international sales for the first three quarters are close to making fiscal 2026 the second-best international sales year [9] Company Strategy and Development Direction - The company is focused on modernizing its product ecosystem and leveraging AI tools to improve operational efficiencies and implementation services [16][27] - The management emphasized the importance of a solid foundation of a world-class product set and a unique ecosystem of hospitality software solutions [27][28] - The company is optimistic about future growth opportunities, particularly in the PMS segment, which is entirely software-based [28] Management's Comments on Operating Environment and Future Outlook - Management noted a temporary slowdown in casino gaming sales during October and November, but sales rebounded in December [8][36] - The company expects fiscal 2026 full-year revenue to reach $318 million, with subscription revenue growth guidance maintained at 29% [18][25] - Management expressed confidence in the business's ability to drive top-line growth while improving profitability levels [32] Other Important Information - The company has paid down its credit revolver by $24 million, leaving it debt-free [25] - The implementation of the Marriott PMS project is progressing well, with successful pilot property implementations completed [11][39] Q&A Session Summary Question: Insights on gaming and casino space slowdown - Management noted the slowdown was temporary and attributed it to various factors, but sales rebounded in December [36] Question: Marriott PMS rollout expectations - The pilot phase was successful, and implementation waves are expected to increase in size over the coming months [39] Question: International performance specifics - Management stated there are no sales capacity issues and emphasized the focus on larger deals internationally [45] Question: AI capabilities impact on competition - AI is being integrated across the platform, enhancing competitive advantages, but no significant competitive responses have been observed [54][56] Question: Subscription revenue growth guidance - The implied growth for Q4 is slightly above 20%, influenced by the Book4Time acquisition [58] Question: POS business improvement drivers - The modernization of the POS system has settled well, leading to improved win rates and competitive advantages [63][66] Question: Future demand in the gaming segment - Management indicated there is still catch-up demand in the gaming segment beyond December [68]

Financial Data and Key Metrics Changes - Fiscal 2026 Q3 revenue reached a record $80.4 million, a 15.6% increase from $69.6 million in the prior year quarter, marking the 16th consecutive record revenue quarter [11][18] - Recurring revenue was $52 million, up 17.2% year-over-year, representing 64.7% of total revenue for the quarter [12][20] - Subscription revenue hit a record $34.9 million, a 23.1% increase compared to the prior year quarter, with subscription bookings up 37% year-over-year [12][18] Business Line Data and Key Metrics Changes - The Hotels, Resorts, and Cruise Ships (HRC) sales vertical had its best Q3 sales quarter on record, driven by significant new customer wins [5] - Food Service Management (FSM) sales for the first three quarters of fiscal 2026 surpassed full-year sales from the previous two years, indicating strong growth potential [6] - Casino gaming experienced a sales slowdown in October and November but rebounded in December, marking the best December month in the company's history [6][11] Market Data and Key Metrics Changes - Cumulative international sales for the first three quarters are close to making fiscal 2026 the second-best international sales year, although Q3 international sales were described as lackluster [7] - Subscription SaaS sales for the first three quarters reached 95% of the previous best full-year sales, with a year-over-year increase of 37% [8] Company Strategy and Development Direction - The company is focused on leveraging AI tools to improve implementation efficiencies and reduce customer delays, which is expected to enhance sales and profitability [15][16] - The management emphasized the competitive advantage gained from a modernized cloud-native product ecosystem, which is difficult for competitors to replicate [26][27] - The company is optimistic about future growth opportunities, particularly in the PMS segment, which is entirely software-based [27][32] Management's Comments on Operating Environment and Future Outlook - Management noted that the total addressable market remains large relative to the company's size, with significant growth possibilities ahead, especially in the PMS business [27] - The company expects fiscal 2026 full-year revenue to reach $318 million, with subscription revenue growth guidance maintained at 29% [17][24] - Management expressed confidence in the business's ability to drive top-line growth while improving profitability levels, anticipating exciting growth in the next couple of fiscal years [32] Other Important Information - The company reported a free cash flow of $22.7 million for the quarter, compared to $19.7 million in the prior year quarter, indicating strong financial health [24] - The company has maintained a debt-free status after paying down its credit revolver by $24 million in the first half of the fiscal year [24] Q&A Session Summary Question: Insights on gaming and casino space weakness - Management noted the sales slowdown in October and November was temporary, with a strong recovery in December, and did not speculate on specific causes [34][35] Question: Marriott PMS rollout expectations - The pilot phase for the Marriott PMS project was successful, and implementation waves are expected to increase in size and scope in the coming months [36][38] Question: International performance and sales capacity - Management confirmed no sales capacity issues and highlighted ongoing efforts to secure larger deals internationally, despite some quarter-to-quarter fluctuations [44][46] Question: AI capabilities and competition - AI is being integrated across the platform, enhancing operational efficiency and competitive advantage, although no significant competitive responses have been observed [53][55] Question: Professional services gross margins - Margins were impacted by seasonal factors and lower utilization during the holiday period, with no reliance on third-party labor for implementations [87][88] Question: Product development spend and AI impact - While AI is improving product development speed, the demand for innovation remains high, and operational leverage may materialize in FY27 and beyond [90]

Revenue Growth - Total net revenue increased by $10.8 million, or 15.6%, during the third quarter of fiscal 2026 compared to the same period in fiscal 2025, reaching $80.39 million[107] - Total net revenue increased by $35.0 million, or 17.4%, during the first nine months of fiscal 2026 compared to the same period in fiscal 2025[123] - Subscription and maintenance revenue rose by $7.6 million, or 17.2%, driven by continued growth in subscription-based service revenue, totaling $52.01 million[107] - Subscription and maintenance revenue rose by $27.7 million, or 22.4%, driven by growth in subscription-based services, including a 32.6% increase in total subscription revenue[124] Profitability - Gross profit increased by $6.4 million, or 14.6%, totaling $50.24 million, while gross profit margin slightly decreased from 63.0% to 62.5%[109] - Gross profit increased by $19.6 million, or 15.4%, while the gross profit margin decreased from 63.0% to 62.0%[125] - Operating income rose by $4.3 million, or 58.3%, reaching $11.73 million, with an operating income percentage of 14.6%[107] - Operating income increased by $13.1 million, or 75.9%, with an operating income percentage of 12.9% compared to 8.6% in the prior year[123] Expenses - Product development expenses increased by $4.0 million, or 26.4%, due to hiring and increased compensation rates, totaling $18.93 million[110] - Product development expenses rose by $8.3 million, or 18.2%, due to increased hiring and compensation rates[126] - Sales and marketing expenses increased by $5.9 million, or 23.6%, attributed to higher compensation rates and increased marketing activities[127] Tax and Interest - The effective tax rate improved to 23.2% from 50.5%, with the income tax provision decreasing by $927, or 23.7%, totaling $2.99 million[118] - The effective tax rate for the nine months ended December 31, 2025, was 20.8%, significantly higher than 4.7% in the prior year[133] - Interest income increased by $69, or 16.6%, totaling $485, while interest expense decreased by $627, or 95.4%, totaling $(30)[115] - Interest income decreased by $2.0 million, or 61.2%, to $1.3 million for the nine months ended December 31, 2025[131] Cash Flow and Liquidity - As of December 31, 2025, cash and cash equivalents totaled $81.5 million, with 92% located in the United States[142] - Net cash provided by operating activities for the nine months ended December 31, 2025, was $34.2 million, an increase from $28.0 million in 2024[143] - Cash-based earnings were reported at $55.9 million, with net income of $26.5 million and $29.4 million in non-cash adjustments[143] - Cash flow used in investing activities amounted to $(1.4) million, primarily for property and equipment purchases[144] - Financing activities included $24.0 million in debt repayments during the nine months ended December 31, 2025[144] - The company believes that cash flow from operating activities and access to capital markets will meet its liquidity requirements[142] Acquisitions and Investments - The company acquired Book4Time for $145.8 million, partially funded by a credit agreement[99] - The company aims to improve shareholder value by investing in product enhancements and expanding customer reach both vertically and geographically[103] - The company completed no business combinations during the nine months ended December 31, 2025, after acquiring Book4Time for $145.8 million in the previous year[140] Accounting and Risk - There have been no material changes in significant accounting policies since March 31, 2025[147] - There have been no material changes in market risk exposures since March 31, 2025[149] - The company has not entered into any off-balance sheet arrangements that could affect its financial condition[146] - Forward-looking statements indicate management's expectations and are subject to risks and uncertainties that could cause actual results to differ[148]

Core Viewpoint - Agilysys Inc. reported its third quarter earnings, missing EPS estimates while achieving record revenue, indicating mixed performance in the financial results [1][2][3] Financial Performance - Quarterly earnings were reported at 42 cents per share, missing the consensus estimate of 46 cents [2] - Revenue for the quarter was $80.39 million, surpassing the analyst consensus estimate of $79.03 million and increasing from $69.56 million in the same period last year [2] - The company achieved a record revenue of $80.4 million for Q3 Fiscal 2026, marking the 16th consecutive quarter of record revenue, with a year-over-year growth of 15.6% driven by a 23.1% increase in subscription revenue [3] Revenue Composition - Recurring revenue, which includes subscription and maintenance charges, amounted to $52 million, representing 64.7% of total net revenue, compared to $44.4 million or 63.8% in the same period last year [3] - Subscription revenue accounted for 67% of total recurring revenue, reflecting a year-over-year increase of 23.1% [3] Profitability Metrics - Gross margin for the quarter was reported at 62.5%, slightly down from 63% in the comparable prior-year period [3]

Exhibit 99.1 AGILYSYS ANNOUNCES 16th CONSECUTIVE RECORD REVENUE QUARTER: $80.4M IN FISCAL 2026 Q3 Includes Subscription Revenue Growth of 23% Raises Full-Year Fiscal 2026 Total Revenue Guidance to $318M ALPHARETTA, GA – January 26, 2026 - Agilysys, Inc. (NASDAQ: AGYS), a leading global provider of hospitality software solutions and services, today reported results for its Fiscal 2026 third quarter ending December 31, 2025. Summary of Fiscal 2026 Third Quarter Financial Results Ramesh Srinivasan, President a ...

Core Insights - Agilysys, Inc. has been selected by YMCA of the Rockies to implement a variety of hospitality software solutions aimed at modernizing operations across its two campuses in Colorado [1] Group 1: Company Overview - Agilysys, Inc. is recognized as a leading global provider of hospitality software and services [1] Group 2: Client Engagement - YMCA of the Rockies operates two destination campuses, Estes Park Center and Snow Mountain Ranch, which can accommodate over 5,000 guests simultaneously, making it the largest property in YMCA's portfolio [1]

Fund Performance - Prosper Stars & Stripes achieved a net return of +9.8% in Q3 2025, outperforming its long/short equity hedge fund peer group, which reported a total return of +3.8% [1] - Year-to-date, the fund returned +8.6%, compared to +13.6% for the HFRI and +10.4% for the Russell 2000 Index [1] - The fund's long book performed strongly, while the short book detracted from overall performance in both Q3 and year-to-date 2025 [1] Company Highlight: Agilysys, Inc. - Agilysys, Inc. (NASDAQ:AGYS) is noted for its software solutions and services in the hospitality industry, with a market capitalization of $3.525 billion [2] - The stock experienced a one-month return of -3.03% and a 52-week decline of 6.11% [2] Competitive Position and Growth Potential of Agilysys - Agilysys is viewed as having a favorable competitive position with significant market opportunities, managing about 300,000 rooms in a market of over five million [3] - The company has achieved seven consecutive quarters of subscription revenue growth exceeding 30% [3] - Management raised FY26 subscription guidance from 27% to 29%, excluding a significant contract with Marriott expected to add over 400,000 rooms [3] - This deal could potentially contribute $130 million to subscription revenue, nearly doubling the current base, with margins expected to expand by approximately 1,500 basis points [3] - Projections indicate Agilysys could earn $4.75 per share in the coming years, with a price target of around $160 per share [3]

Core Viewpoint - The article highlights Agilysys (AGYS) as a promising growth stock, emphasizing its strong earnings and cash flow growth, as well as positive earnings estimate revisions, making it a solid choice for growth investors [2][10]. Earnings Growth - Agilysys has a historical EPS growth rate of 6.7%, but the projected EPS growth for this year is significantly higher at 58.3%, surpassing the industry average of 53.2% [4]. Cash Flow Growth - The year-over-year cash flow growth for Agilysys stands at 49.9%, which is notably higher than the industry average of 13.8% [5]. - Over the past 3-5 years, the annualized cash flow growth rate for Agilysys has been 33.9%, compared to the industry average of 11.6% [6]. Earnings Estimate Revisions - The current-year earnings estimates for Agilysys have increased, with the Zacks Consensus Estimate rising by 8.5% over the past month [8]. - This upward trend in earnings estimate revisions contributes to Agilysys earning a Zacks Rank of 2 (Buy) and a Growth Score of B [10].

Core Insights - Granite Investment Partners reduced its position in Agilysys by selling 89,611 shares, resulting in an estimated net value change of $11.9 million [1][6] - The total position in Agilysys is now 170,335 shares, valued at $17.9 million as of September 30, representing 1% of Granite's reportable assets under management (AUM) [2][6] - Agilysys shares have increased by 4% over the past year, underperforming the S&P 500's 14% gain during the same period [3] Company Overview - Agilysys, Inc. specializes in software and hardware solutions for the hospitality industry, focusing on operational efficiency and guest experiences [5] - The company reported a total revenue of $299.8 million and a net income of $24.4 million for the trailing twelve months (TTM) [4] - As of the latest market close, Agilysys shares were priced at $128.00, with a one-year price change of 4.2% [4] Recent Performance - Agilysys has reported its 15th consecutive quarter of record revenue, with sales increasing by 16% year over year to $79.3 million and subscription revenue climbing by 33% [8] - Despite solid fundamentals, the stock's future performance may depend on execution and consistency rather than just growth headlines [9]

Core Viewpoint - Agilysys (AGYS) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates can lead to significant price changes [4][6]. - Institutional investors play a role in this relationship, as they adjust their valuations based on earnings estimates, which can lead to buying or selling activity that impacts stock prices [4]. Agilysys Earnings Outlook - The upgrade for Agilysys reflects an improvement in the company's underlying business, with rising earnings estimates expected to drive the stock price higher [5]. - For the fiscal year ending March 2026, Agilysys is projected to earn $1.66 per share, with a 4.1% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Agilysys' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].