AGILYSYS INC
For the period ended Jun 30, 2025. Filed Jul 24, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 24, 2025
AGYS$121.09+1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-01-21.
0000950170-25-007222
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-24.
0000950170-25-098379
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 78 current paragraphs.
56 unchanged; 21 reworded; 1 added; 12 removed; 14 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax. As the legislation became law after the close of our first quarter, the impacts are not included in our operating results for the three months ended June 30, 2025.
Removed paragraphs (12)
Previous report
For the three months ended December 31, 2024, income tax provision and the effective tax rate were primarily driven by the tax effects of share-based compensation, GILTI and the mix of earnings in the U.S. and India.
Previous report
For the three months ended December 31, 2023, income tax (benefit) and the effective tax rate were primarily driven by the release of valuation allowances recorded against deferred tax assets in the U.S. and Canada.
Previous report
Results of Operations
Previous report
First Nine Months of Fiscal 2025 Compared to First Nine Months of Fiscal 2024
Previous report
Net Revenue and Operating Income
Previous report
Operating Expenses
Previous report
Operating expenses, excluding other charges, net and legal settlements, increased $12.7 million, or 13.6%, during the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024.
Previous report
General and administrative. General and administrative increased $3.0 million, or 10.9%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to ongoing investments in our information security and information technology infrastructure, increased compensation rates across our administrative teams and, during the quarter ended June 30, 2024, payroll taxes associated with certain exercises of stock-settled appreciation rights.
Previous report
Depreciation of fixed assets. Depreciation of fixed assets decreased $0.3 million, or 10.0%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to the timing of assets reaching their useful life.
Previous report
Other income (expense)
Previous report
Income Taxes
Previous report
For the nine months ended December 31, 2023, income tax (benefit) and the effective tax rate were primarily driven by the release of valuation allowances recorded against deferred tax assets in the U.S. and Canada.
Reworded paragraphs (21)
Previous wording
During the three and nine months ended December 31, 2024, global macroeconomic and geopolitical conditions were, and continue to be, influenced by a number of factors, including, but not limited to, political unrest, armed conflicts, foreign currency fluctuations, labor shortages and natural disasters. We believe such conditions are impacting customer spending and provider pricing decisions resulting in decreased demand, increased costs, and reduced margins particularly in areas outside of the United States.
Current wording
During the three months ended June 30, 2025, global macroeconomic and geopolitical conditions were, and continue to be, influenced by a number of factors, including, but not limited to, changes in global tariff and other trade policies, new and existing domestic and foreign laws and regulations, armed conflicts, foreign currency fluctuations, labor shortages and natural disasters. We believe such conditions are impacting customer spending and provider pricing decisions resulting in decreased demand, increased costs, and reduced margins particularly in areas outside of the United States.
Previous wording
On August 20, 2024, we acquired Book4Time Parent, Inc. (“Book4Time”), the global leader in spa management SaaS software, as further described in Note 11, “Business Combination”, to our condensed consolidated financial statements included under Part I, Item 1 of this quarterly report. The cash consideration for the acquisition totaled $147.2 million of net cash, partially funded by a credit agreement (the “Credit Agreement”) we entered into on August 16, 2024 (the “Credit Agreement Closing Date”), with the lenders party thereto and Bank of America, N.A., as lender and administrative agent, as further described in Note 10, “Debt”, to our condensed consolidated financial statements included under Part I, Item 1 of this quarterly report.
Current wording
On August 20, 2024, we acquired Book4Time Parent, Inc. (“Book4Time”), the global leader in spa management SaaS software, as further described in Note 12, Business Combination, to our condensed consolidated financial statements included under Part I, Item 1 of this quarterly report. The cash consideration for the acquisition totaled $145.8 million of net cash, partially funded by a credit agreement (the “Credit Agreement”) we entered into on August 16, 2024 (the “Credit Agreement Closing Date”), with the lenders party thereto and Bank of America, N.A., as lender and administrative agent, as further described in Note 11, Debt, to our condensed consolidated financial statements included under Part I, Item 1 of this quarterly report.
Previous wording
Agilysys has been a leader in hospitality software for more than 45 years, delivering innovative cloud-native SaaS and on-premise solutions for hotels, resorts and cruise lines, casinos, corporate foodservice management, restaurants, universities, stadiums, and healthcare. The Company’s software solutions include point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications that manage and enhance the entire guest journey. Agilysys also is known for its world-class customer-centric service. Many of the top hospitality companies around the world use Agilysys solutions to improve guest loyalty, drive revenue growth, and increase operational efficiencies.
Current wording
Agilysys has been a leader in hospitality software for more than 45 years, delivering innovative cloud-native SaaS and on-premise solutions for hotels, resorts, cruise lines, casinos, corporate foodservice management, restaurants, universities, stadiums, and healthcare facilities. The Company’s software solutions include point-of-sale (POS), property management (PMS), inventory and procurement, payments, and related applications that manage and enhance the entire guest journey. Agilysys also is known for its world-class customer-centric service. Many of the top hospitality companies around the world use Agilysys solutions to improve guest loyalty, drive revenue growth, and increase operational efficiencies.
Previous wording
Third Fiscal Quarter 2025 Compared to Third Fiscal Quarter 2024
Current wording
First Fiscal Quarter 2026 Compared to First Fiscal Quarter 2025
Previous wording
Net revenue. Total net revenue increased $9.0 million, or 14.9%, during the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. Products revenue decreased $2.0 million, or 15.8%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses and to their decreasing need for hardware due to improvements we have made to our technology enabling more support for consumer grade devices our customers can source elsewhere. Subscription and maintenance revenue increased $9.3 million, or 26.4%, compared to the third quarter of fiscal 2024 driven by continued growth in subscription-based service revenue including service to Book4Time customers. Total subscription revenue increased 45.1% during the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. Professional services revenue increased $1.7 million, or 13.5%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Current wording
Net revenue. Total net revenue increased $13.2 million, or 20.7%, during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. Products revenue decreased $0.1 million, or 0.8%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses and to their decreasing need for hardware due to improvements we have made to our technology enabling more support for consumer grade devices our customers can source elsewhere. Subscription and maintenance revenue increased $10.6 million, or 27.8%, compared to the first quarter of fiscal 2025 driven by continued growth in subscription-based service revenue including service to Book4Time customers. Total subscription revenue increased 44.3% during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. Professional services revenue increased $2.5 million, or 16.1%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Previous wording
Gross profit and gross profit margin. Our total gross profit increased $21.0 million, or 19.8%, during the first nine months of fiscal 2025 and total gross profit margin increased from 60.5% to 63.0% compared to the first nine months of fiscal 2024 driven by changes in the composition of revenue by category. Products gross profit decreased $3.0 million, or 16.5%, and products gross profit margin increased from 47.4% to 48.6% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $18.7 million, or 23.8%, and gross profit margin increased from 77.5% to 78.6% as revenue increases outpaced variable costs as a result of certain cost control measures. Professional services gross profit increased $5.2 million, or 56.5% and gross profit margin increased from 25.9% to 31.1% reflecting improved utilization rates from efficiency gains on multi-solution implementations and revenue associated with a large development service contract.
Current wording
Gross profit and gross profit margin. Our total gross profit increased $7.4 million, or 18.6%, during the first quarter of fiscal 2026 and total gross profit margin decreased from 62.8% to 61.7% compared to the first quarter of fiscal 2025 driven by changes in the composition of revenue by category. Products gross profit decreased $0.9 million, or 19.2%, and products gross profit margin decreased from 47.1% to 37.7% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $8.7 million, or 29.1%, and gross profit margin increased from 78.7% to 79.5% as subscription revenue increases outpaced associated variable costs as a result of certain cost control measures. Professional services gross profit decreased $0.4 million, or 7.3%, and gross profit margin decreased from 33.9% to 27.1% reflecting lower utilization rates due to continued hiring and training of new staff to meet increasing project backlogs from ongoing sales activity and certain project delays.
Previous wording
Operating expenses, excluding other (gains) charges, net, and legal settlements, increased $5.1 million, or 16.5%, during the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024.
Current wording
Operating expenses, excluding other charges, net, and legal settlements, increased $9.1 million, or 27.3%, during the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025.
Previous wording
Product development. Product development increased $0.4 million, or 2.9%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Current wording
Product development. Product development increased $2.7 million, or 18.6%, in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Previous wording
Sales and marketing. Sales and marketing increased $2.9 million, or 46.9%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to hiring and increased compensation rates across our sales teams, sales team additions from the Book4Time acquisition, and higher volume of marketing event and trade show activity.
Current wording
Sales and marketing. Sales and marketing increased $4.8 million, or 68.1%, in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025 due to hiring and increased compensation rates across our sales teams, sales team additions from the Book4Time acquisition, and timing of marketing event and trade show activity.
Previous wording
General and administrative. General and administrative increased $0.5 million, or 5.3%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to ongoing investments in our information security and information technology infrastructure and increased compensation rates across our administrative teams.
Current wording
General and administrative. General and administrative increased $0.3 million, or 2.6%, in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025 due to increased compensation rates across our administrative teams.
Previous wording
Depreciation of fixed assets. Depreciation of fixed assets increased $0.1 million, or 8.4%, in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to the addition of fixed assets.
Current wording
Depreciation of fixed assets. Depreciation of fixed assets increased $0.1 million, or 12.6%, in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025 due to the addition of fixed assets.
Previous wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $1.3 million in the third quarter of fiscal 2025 compared with the third quarter of fiscal 2024 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Current wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $1.2 million in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Previous wording
Other (gains) charges, net. Other (gains) charges, net, consist of (gains) losses on asset disposals, severance costs, charitable contributions, employee retention credits, and acquisition costs related to business combinations.
Current wording
Other charges, net. Other charges, net, consist of losses on asset disposals, severance costs, charitable contributions, employee retention credits, and acquisition costs related to business combinations.
Previous wording
For the nine months ended December 31, 2024, income tax provision and the effective tax rate were primarily driven by the impact of discrete excess tax benefits associated with Share-Based Compensation.
Current wording
For the three months ended June 30, 2025 and 2024, income tax benefit was primarily driven by the impact of discrete excess tax benefits associated with share-based compensation.
Previous wording
The Credit Agreement provides for a revolving credit facility in the initial maximum aggregate principal amount of $75 million (the “Revolving Facility”). The Revolving Facility includes the ability for the Company to request an increase to the commitments under the Revolving Facility by an additional aggregate principal amount of up to $25 million. On the Credit Agreement Closing Date, we drew $50 million on the Revolving Facility, the proceeds of which we used to fund the Business Combination described below.
Current wording
The Credit Agreement provides for a revolving credit facility in the initial maximum aggregate principal amount of $75 million (the “Revolving Facility”). The Revolving Facility includes the ability for the Company to request an increase to the commitments under the Revolving Facility by an additional aggregate principal amount of up to $25 million. On the Credit Agreement Closing Date, we drew $50 million on the Revolving Facility, the proceeds of which we used to fund the Business Combination described below. We have repaid the entire principal balance as of July 2025.
Previous wording
We have expanded our business in part by investing in strategic growth through business acquisitions. We have used cash as consideration in our business acquisitions, including $144.9 million of net cash, partially funded by our Revolving Facility, during the nine months ended December 31, 2024, to complete the acquisition of Book4Time. We completed no business combinations during the nine months ended December 31, 2023.
Current wording
We have expanded our business in part by investing in strategic growth through business acquisitions. We have used cash as consideration in our business acquisitions, including $145.8 million of net cash, partially funded by our Revolving Facility, during the nine months ended March 31, 2025, to complete the acquisition of Book4Time. We completed no business combinations during the three months ended June 30, 2025 or June 30, 2024.
Previous wording
At December 31, 2024, 100% of our cash and cash equivalents, of which 87% were located in the United States, were deposited in bank accounts or invested in highly liquid investments including commercial paper and treasury bills with original maturity from the date of acquisition of three months or less and money market funds. We determine the fair value of commercial paper using significant other observable inputs based on pricing from independent sources that use quoted prices in active markets for identical assets or other observable inputs including benchmark yields and interest rates. We believe credit risk is limited with respect to our cash and cash equivalents.
Current wording
At June 30, 2025, 100% of our cash and cash equivalents, of which 80% were located in the United States, were deposited in bank accounts or invested in highly liquid investments including commercial paper and treasury bills with original maturity from the date of acquisition of three months or less and money market funds. We determine the fair value of commercial paper using significant other observable inputs based on pricing from independent sources that use quoted prices in active markets for identical assets or other observable inputs including benchmark yields and interest rates. We believe credit risk is limited with respect to our cash and cash equivalents.
Previous wording
We believe that cash flow from operating activities, cash on hand of $60.8 million as of December 31, 2024, and access to capital markets will provide adequate funds to meet our short- and long-term liquidity requirements.
Current wording
We believe that cash flow from operating activities, cash on hand of $55.6 million as of June 30, 2025, and access to capital markets will provide adequate funds to meet our short- and long-term liquidity requirements.
Previous wording
Cash flow provided by operating activities. Due to cash-based earnings of $36.5 million and a decrease of $8.5 million due to changes in net operating assets and liabilities. Cash-based earnings is net income of $19.3 million and $17.2 million of non-cash adjustments.
Current wording
Cash flow provided by operating activities. Due to cash-based earnings of $11.9 million and a decrease of $16.2 million due to changes in net operating assets and liabilities. Cash-based earnings is net income of $4.9 million and $7.0 million of non-cash adjustments.
Previous wording
Cash flow used in investing activities. Consists primarily of $144.9 million in cash paid for business combination, net of cash acquired, and property and equipment purchases, which decreased during the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023 due primarily to leasehold improvements and equipment purchases for our new office lease in Chennai, India during the nine months ended December 31, 2023.
Current wording
Cash flow used in investing activities. Consists of property and equipment purchases.
Previous wording
Cash flow provided by financing activities. Consists primarily of $49.6 million in debt proceeds, net of issuance costs, and debt repayments of $12.0 million during the nine months ended December 31, 2024, and a reduction from $5.7 million to $2.8 million in the repurchase of shares to satisfy employee tax withholding on share-based compensation and a reduction from $1.7 million to zero in preferred stock dividend payments during the respective periods.
Current wording
Cash flow provided by financing activities. Consists of $12.0 million in debt repayments during the three months ended June 30, 2025, and the repurchase of shares to satisfy employee tax withholding on share-based compensation.
Rearranged previous paragraphs (14)
Previous report — wording carried elsewhere
Gross profit and gross profit margin. Our total gross profit increased $6.0 million, or 15.9%, during the third quarter of fiscal 2025 and total gross profit margin increased from 62.5% to 63.0% compared to the third quarter of fiscal 2024 driven by changes in the composition of revenue by category. Products gross profit decreased $0.8 million, or 14.1%, and products gross profit margin increased from 47.1% to 48.0% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $7.1 million, or 25.6%, and gross profit margin decreased from 79.0% to 78.5% as variable costs increased ahead of related revenue. Professional services gross profit decreased $0.2 million, or 5.8%, and gross profit margin decreased from 32.2% to 26.7% reflecting lower utilization rates due to higher non-billable hours on new, more complex solution implementations over the comparable three-month periods and customer delays on certain projects.
Previous report — wording carried elsewhere
Other income, net. Other income, net, mainly consists of movement of foreign currencies against the U.S. dollar.
Previous report — wording carried elsewhere
The following table presents our consolidated revenue and operating results for the nine months ended December 31, 2024 and 2023:
Previous report — wording carried elsewhere
The following table presents the percentage relationship of our condensed consolidated statement of operations line items to our consolidated net revenues for the periods presented:
Previous report — wording carried elsewhere
Net revenue. Total net revenue increased $26.1 million, or 14.9%, during the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. Products revenue decreased $7.0 million, or 18.4%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses and to their decreasing need for hardware due to improvements we have made to our technology enabling more support for consumer grade devices our customers can source elsewhere. Subscription and maintenance revenue increased $22.4 million, or 22.0%, compared to the first nine months of fiscal 2024 driven by continued growth in subscription-based service revenue including service to Book4Time customers. Total subscription revenue increased 38.2% during the first nine months of fiscal 2025 compared to the first nine months of fiscal 2024. Professional services revenue increased $10.8 million, or 30.2%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Previous report — wording carried elsewhere
Product development. Product development increased $3.4 million, or 8.0%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Previous report — wording carried elsewhere
Sales and marketing. Sales and marketing increased $5.0 million, or 25.1%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to hiring and increased compensation rates across our sales teams, sales team additions from the Book4Time acquisition, and higher volume of marketing event and trade show activity.
Previous report — wording carried elsewhere
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $1.7 million, or 147.9%, in the first nine months of fiscal 2025 compared with the first nine months of fiscal 2024 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Previous report — wording carried elsewhere
Other (gains) charges, net. Other (gains) charges, net, consist of (gains) losses on asset disposals, severance costs, charitable contributions, employee retention credits, and acquisition costs related to business combinations.
Previous report — wording carried elsewhere
Legal settlements. Legal settlements consist of certain customer and employment settlements and other business-related matters.
Previous report — wording carried elsewhere
Interest income. Interest income consists of interest earned on cash equivalents including short-term investments in commercial paper, treasury bills and money market funds.
Previous report — wording carried elsewhere
Interest expense. Interest expense consists of interest charges under our Credit Agreement and amortization of related debt issuance costs.
Previous report — wording carried elsewhere
We are consistently subject to tax audits. Due to the nature of examinations in multiple jurisdictions, changes could occur in the amount of gross unrecognized tax benefits during the next 12 months that we cannot anticipate.
Previous report — wording carried elsewhere
We have recorded and maintain valuation allowances offsetting the Company’s deferred tax assets in certain U.S. States and foreign jurisdictions. The ultimate realization of deferred tax assets depends on various factors including the generation of future taxable income in the periods in which the underlying temporary differences are deductible. We maintain valuation allowances for deferred tax assets until we have sufficient evidence to support the reversal of all or some portion of the allowances.