Executive Summary

Q3 FY2025 delivered record revenue of $69.6M (+14.9% y/y; +1.9% q/q), with recurring revenue at 63.8% of total; adjusted EBITDA of $14.7M equated to 21.2% margin, above plan, and adjusted diluted EPS was $0.38 .
Management revised FY2025 total revenue guidance down to ~$273M (from $280–$285M in Q2; Q1 was $275–$280M) while maintaining at least 38% subscription revenue growth and 18% adjusted EBITDA margin; main headwind is one-time product revenue tied to POS modernization and managed food services vertical softness .
Subscription revenue grew 45.1% y/y in Q3 (organic +23%) with record subscription sales and backlog; PMS bookings (ex-Book4Time) were up 70% y/y in the quarter; POS bookings remain below expectations but are improving versus Q1 trough and pipeline is up 22% y/y at the demo stage .
Key catalysts: guidance reset (near-term negative), strong subscription momentum and margin expansion (supportive), Marriott PMS project tracking to test properties and pilot sites in H2 CY2025 (medium-term positive signal) .

What Went Well and What Went Wrong

What Went Well

Record revenue and improving profitability: $69.6M total revenue, gross margin 63.0%, adjusted EBITDA $14.7M (21.2% of revenue), adjusted diluted EPS $0.38; CFO highlighted profitability “well ahead of the original FY ’25 plan” .
Subscription momentum and mix shift: Recurring revenue reached $44.4M (63.8% of total); subscription revenue up 45.1% y/y and now 63.8% of recurring revenue; CEO: “Subscription revenue continues to grow at a healthy pace” .
PMS sales strength and backlog: PMS and related modules bookings were 70% higher y/y in Q3; demo+ pipeline at record levels (+37% PMS; +22% POS y/y); services backlog at record levels .
Quote: “We are confident the overall structural strengths of the business… will continue to fuel strong growth, which will accelerate as we move past these short-term transition challenges” – Ramesh Srinivasan, CEO .

What Went Wrong

One-time product revenue and POS sales headwinds: Product revenue down 15.8% y/y; management cited modernization transition challenges in managed food services and lower hardware attach rates as POS supports iOS/Android .
International sales softness: APAC/EMEA remained disappointing, with reliance on a few “home runs” rather than a broad base of wins; near-term record quarter possible but pipeline still needs more “singles and doubles” .
Services revenue timing and hiring: Q3 services revenue grew 13.5% y/y but fell $1.8M q/q due to holiday timing, wind-down of development phase on a large project, and slower-than-planned hiring for implementation teams .
Analyst concern: Guidance reduced to $273M as product revenue is expected to be 15–20% down y/y; CFO: “hard to make up the one-time revenue” with one quarter left .

Financial Results

Consolidated Results vs Prior Periods and Estimates

Metric	Q3 FY2024	Q1 FY2025	Q2 FY2025	Q3 FY2025
Revenue ($M)	$60.6	$63.5	$68.3	$69.6
Gross Margin (%)	62.5%	62.8%	63.3%	63.0%
GAAP Diluted EPS ($)	$2.85	$0.50	$0.05	$0.14
Adjusted Diluted EPS ($)	$0.35	$0.30	$0.34	$0.38
Adjusted EBITDA ($M)	$11.8	$12.1	$12.2	$14.7
Adjusted EBITDA Margin (%)	N/A	19.0%	17.9%	21.2%
Wall St. Revenue Consensus ($M)	N/A (unavailable via S&P Global)	N/A (unavailable via S&P Global)	N/A (unavailable via S&P Global)	N/A (unavailable via S&P Global)
Wall St. EPS Consensus ($)	N/A (unavailable via S&P Global)	N/A (unavailable via S&P Global)	N/A (unavailable via S&P Global)	N/A (unavailable via S&P Global)

Note: Wall Street consensus data was unavailable from S&P Global at time of request.

Segment Revenue Breakdown

Segment ($M)	Q3 FY2024	Q1 FY2025	Q2 FY2025	Q3 FY2025
Products	$12.7	$9.9	$10.5	$10.7
Subscription & Maintenance	$35.1	$38.0	$41.4	$44.4
Professional Services	$12.8	$15.6	$16.3	$14.5
Total Net Revenue	$60.6	$63.5	$68.3	$69.6

KPIs

KPI	Q3 FY2024	Q1 FY2025	Q2 FY2025	Q3 FY2025
Recurring Revenue ($M)	$35.1	$38.0	$41.4	$44.4
Recurring % of Revenue	58.0%	59.9%	60.7%	63.8%
Subscription Revenue ($M)	N/A	N/A	N/A	$28.3
Subscription YoY Growth	32.0%	32.0%	36.6%	45.1%
Organic Subscription YoY Growth	N/A	N/A	N/A	23%
Free Cash Flow ($M)	$11.3	$0.23	$5.9	$19.7
Ending Cash ($M)	$116.2 (FY2024 Q3-end)	$144.1	$54.9	$60.8

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY2025	$280–$285M (Q2 guide)	~$273M (Q3 guide)	Lowered
Total Revenue	FY2025	$275–$280M (Q1 guide)	~$273M (Q3 guide)	Lowered vs Q1
Subscription Revenue Growth	FY2025	≥38% (Q2 guide)	≥38% (Q3 guide)	Maintained
Adjusted EBITDA Margin	FY2025	18% (Q2 guide; up from 16% in Q1)	18% (Q3 guide)	Maintained

Management rationale: one-time product revenue (including hardware) remains challenged given POS modernization and slower bookings earlier in the year; profitability above plan due to lower costs associated with reduced revenue expectations .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
POS Modernization & Sales	Product revenue challenged as customers prefer subscriptions over perpetual licenses (Q1) ; strong sales but POS bookings not highlighted as weak (Q2)	POS sales below expectations in managed food services due to final modernization transition; hardware attach rate lower as POS supports iOS/Android; pipeline up 22% y/y at demo stage; recovery expected next few quarters	Improving pipeline; near-term headwind persists
PMS Momentum	Strong services/subscription momentum (Q1) ; second-highest sales quarter, raised FY guide (Q2)	PMS bookings up 70% y/y; best PMS sales quarter ever; attach rate ~8 modules; demo+ pipeline +37% y/y	Accelerating
International	Not a focus (Q1/Q2)	APAC/EMEA flat; dependence on “home runs”; potential record Q4; need more “singles/doubles”	Mixed; cautious optimism
Marriott PMS Project	Not detailed (Q1/Q2)	Development phase substantially complete; test properties and pilot sites targeted H2 CY2025; high transparency across vendors	Progressing to deployment
Profitability & Margins	GM crossed 60%; Adjusted EBITDA guided up to 18% (Q2)	Adjusted EBITDA margin 21.2% in Q3; GM ~63% expected “north of 60%” for FY	Improving
TAM Expansion & Add-ons	Book4Time integration synergies (Q2)	ARR TAM expanded from ~$5B to ~$16B by including matured add-on modules; competing best-of-breed	Structural expansion

Management Commentary

“Subscription revenue continues to grow at a healthy pace and we are pleased with the integration progress of the Book4Time acquisition… we are revising fiscal 2025 annual total revenue guidance to $273 million.” – Ramesh Srinivasan, CEO .
“Onetime product revenue… will continue to be the biggest headwind… product revenue will be 15% to 20% down compared to the last fiscal year.” – Dave Wood, CFO .
“We underestimated the sales challenges on the point-of-sale POS side… There are no external headwinds… Our business fundamentals are stronger now than ever before.” – Ramesh Srinivasan, CEO .
“Adjusted EBITDA coming in at 21.2% of revenue… profitability levels being well ahead of the original FY ’25 plan.” – Dave Wood, CFO .
“Test properties… followed by pilot property installations expected in the second half of this calendar year [for Marriott PMS].” – Ramesh Srinivasan, CEO .

Q&A Highlights

POS trajectory and confidence: Pipeline at demo stage +22% y/y for POS; Q1 was the bottom, expected improvement in coming quarters; managed food services vertical was primary source of weakness .
International sales mix: Potential record Q4 driven by a few large deals; need broader base of wins (more “singles and doubles”) .
New customer acquisition and sales capacity: Focus on full territory coverage; existing team has capacity to grow; attach rates high (average of six products for new customers) .
PMS bookings strength and attach rate: PMS bookings ex-Book4Time +70% y/y; ~8–8.5 add-on modules per PMS deal; strong best-of-breed competitiveness .
Guidance methodology: Consistent approach; with limited time left in FY, one-time revenue shortfall unlikely to be fully recovered; subscription growth to maintain 25% trend for full year .
TAM expansion: ARR TAM expanded to ~$16B as add-on modules matured to best-of-breed standalone products competing across categories .

Estimates Context

Wall Street consensus (S&P Global) for Q3 FY2025 EPS and revenue was unavailable at time of request. As a result, we cannot assess beat/miss versus consensus for this quarter through SPGI. Management emphasized record revenue and strong subscription growth, while lowering full-year revenue guidance due to one-time product headwinds .

Key Takeaways for Investors

Mix shift to recurring/subscription is accelerating; subscription up 45.1% y/y and recurring at 63.8% of revenue supports durable margin expansion even as one-time product revenue is challenged .
Near-term overhang: guidance cut to ~$273M driven by POS transition and managed food services softness; expect product revenue to be down 15–20% y/y, limiting top-line upside in Q4 .
Execution tailwinds: Adjusted EBITDA margin at 21.2% in Q3 and gross margins ~63% indicate operating leverage from mix and disciplined cost control, likely supporting cash generation (Q3 FCF $19.7M) .
Strategic momentum: PMS bookings strength (+70% y/y) and high attach rates position AGYS for multi-product expansion; expanded TAM to ~$16B with matured add-on modules enhances growth runway .
Program milestone: Marriott PMS moving to test/pilot in H2 CY2025 is a medium-term catalyst; successful pilots could bolster brand and international traction .
Trading implications (short-term): The guidance reset is a negative surprise; however, margin beat and subscription resilience may temper downside. Watch Q4 color on POS bookings and services backlog conversion .
Thesis considerations (medium-term): As POS transition completes and international broadens beyond “home runs,” AGYS can sustain double-digit top-line growth with rising recurring mix and profitability; monitor attach rates, pipeline conversion, and Book4Time cross-sell synergies .

Additional Relevant Press Release in Q3

Customer win: Kiva Dunes resort implemented 13 Agilysys solutions across PMS, POS, Golf, Membership, and Residence Management, highlighting multi-solution adoption and cross-functional integration as a driver of revenue per guest and staff efficiency gains .

AGILYSYS INC (AGYS)·Q3 2025 Earnings Summary