AGILYSYS INC
For the period ended Sep 30, 2025. Filed Oct 27, 2025.
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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.
Sep 30, 2025 · Filed Oct 27, 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 2025-06-30; filed 2025-07-24.
0000950170-25-098379
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-10-27.
0001193125-25-251592
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 78 previous paragraphs and 105 current paragraphs.
57 unchanged; 20 reworded; 12 added; 1 removed; 0 previous and 16 current paragraphs rearranged.
Tables are not compared: 5 previous and 9 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 (12)
Current report
General and administrative. General and administrative remained consistent with the second quarter of fiscal 2025.
Current report
For the three months ended September 30, 2025 and 2024, income tax provision and the effective tax rate were primarily driven by activity in India and the U.S.
Current report
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a stimulus bill which was in response to economic consequences of the COVID-19 pandemic. The CARES Act provided an employee retention credit, which is a refundable tax credit against certain employment taxes. During the three months ended September 30, 2025, we recorded $5.9 million of employee retention credits including associated interest received in cash as other (gains) charges, net, in the condensed consolidated statements of operations.
Current report
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in the Company’s fiscal 2026, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of accelerated fixed asset depreciation and modifications to the international tax framework. We applied the relevant changes to the Company’s income tax provision for the period ended September 30, 2025, which did not materially impact the Company’s consolidated tax position. We expect future cash tax savings resulting from the full expensing of U.S. research and development expenses under the OBBBA.
Current report
Results of Operations
Current report
First Half Fiscal 2026 Compared to First Half Fiscal 2025
Current report
Net Revenue and Operating Income
Current report
Operating Expenses
Current report
Other income (expense)
Current report
Income Taxes
Current report
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a stimulus bill which was in response to economic consequences of the COVID-19 pandemic. The CARES Act provided an employee retention credit, which is a refundable tax credit against certain employment taxes. During the six months ended September 30, 2025, we recorded $6.1 million of employee retention credits including associated interest received in cash as other (gains) charges, net, in the condensed consolidated statements of operations.
Current report
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in the Company’s fiscal 2026, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of accelerated fixed asset depreciation and modifications to the international tax framework. We applied the relevant changes to the Company’s income tax provision for the period ended September 30, 2025, which did not materially impact the Company’s consolidated tax position. We expect future cash tax savings resulting from the full expensing of U.S. research and development expenses under the OBBBA.
Removed paragraphs (1)
Previous 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.
Reworded paragraphs (20)
Previous 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.
Current wording
During the three and six months ended September 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
The Company has just one reportable segment serving the global hospitality industry. Agilysys operates across North America, Europe, the Middle East, Asia-Pacific and India with headquarters located in Alpharetta, Georgia.
Current wording
The Company has one reportable segment serving the global hospitality industry. Agilysys operates across North America, Europe, the Middle East, Asia-Pacific and India with headquarters located in Alpharetta, Georgia.
Previous wording
First Fiscal Quarter 2026 Compared to First Fiscal Quarter 2025
Current wording
Second Fiscal Quarter 2026 Compared to Second Fiscal Quarter 2025
Previous 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.
Current wording
Net revenue. Total net revenue increased $11.0 million, or 16.1%, during the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. Products revenue decreased $0.4 million, or 4.1%, 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 $9.5 million, or 23.0%, compared to the second quarter of fiscal 2025 driven by continued growth in subscription-based service revenue including $5.3 million of Book4Time subscription-based service revenue. Total subscription revenue, including Book4Time subscription revenue, increased 33.1% during the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. Professional services revenue increased $1.9 million, or 11.8%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Previous 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.
Current wording
Operating expenses, excluding other charges, net, and legal settlements, increased $3.2 million, or 8.7%, during the second quarter of fiscal 2026 compared with the second quarter of fiscal 2025.
Previous 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.
Current wording
Product development. Product development increased $1.7 million, or 10.2%, in the second quarter of fiscal 2026 compared with the second quarter of fiscal 2025 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Previous 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.
Current wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $0.5 million in the second quarter of fiscal 2026 compared with the second quarter of fiscal 2025 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Previous 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.
Current wording
Other (gains) charges, net. Other (gains) charges, net, consist of losses on asset disposals, severance costs, charitable contributions, employee retention credits, and acquisition costs related to business combinations.
Previous wording
Other income (expense), net. Other income (expense), net, mainly consists of movement of foreign currencies against the U.S. dollar.
Current wording
Other income, net. Other income, net, mainly consists of movement of foreign currencies against the U.S. dollar.
Previous 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.
Current wording
Gross profit and gross profit margin. Our total gross profit increased $13.2 million, or 15.9%, during the first half of fiscal 2026 and total gross profit margin decreased from 63.0% to 61.7% compared to the first half of fiscal 2025 driven by changes in the composition of revenue by category. Products gross profit decreased $2.2 million, or 21.6%, and products gross profit margin decreased from 48.9% to 39.0% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $16.2 million, or 25.9%, and gross profit margin increased from 78.7% to 79.1% as revenue increases outpaced variable costs as a result of cost optimization discipline. Professional services gross profit decreased $0.9 million, or 8.3% and gross profit margin decreased from 33.1% to 26.7% reflecting lower utilization rates due to continued hiring and training of new staff and timing of certain large projects.
Previous 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.
Current wording
Sales and marketing. Sales and marketing increased $5.8 million, or 36.5%, in the first half of fiscal 2026 compared with the first half 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 $0.3 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.
Current wording
General and administrative. General and administrative increased $0.3 million, or 1.3%, in the first half of fiscal 2026 compared with the first half 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 12.6%, in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025 due to the addition of fixed assets.
Current wording
Depreciation of fixed assets. Depreciation of fixed assets increased $0.2 million, or 8.9%, in the first half of fiscal 2026 compared with the first half of fiscal 2025 due to the addition of fixed assets.
Previous 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.
Current wording
For the six months ended September 30, 2025 and 2024, income tax provision (benefit) and the effective tax rate were primarily driven by the impact of discrete excess tax benefits associated with Share-Based Compensation.
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 $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.
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 six months ended September 30, 2024, to complete the acquisition of Book4Time. We completed no business combinations during the six months ended September 30, 2025.
Previous 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.
Current wording
At September 30, 2025, 100% of our cash and cash equivalents, of which 88% 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 $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.
Current wording
We believe that cash flow from operating activities, cash on hand of $59.3 million as of September 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 $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.
Current wording
Cash flow provided by operating activities. Due to cash-based earnings of $35.0 million and a decrease of $24.1 million due to changes in net operating assets and liabilities. Cash-based earnings is net income of $16.6 million and $18.4 million of non-cash adjustments.
Previous 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.
Current wording
Cash flow (used in) provided by financing activities. Consists of $24.0 million in debt repayments during the six months ended September 30, 2025, proceeds from Employee Stock Purchase Plan purchases, and the repurchase of shares to satisfy employee tax withholding on share-based compensation.
Previous wording
This Quarterly Report and other publicly available documents, including the documents incorporated herein and therein by reference, contain, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions, or beliefs and are subject to a number of factors, assumptions, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in Item 1A in Part II of this Quarterly Report and Item IA of our Annual Report for the fiscal year ended March 31, 2025. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events, or otherwise.
Current wording
This Quarterly Report and other publicly available documents, including the documents incorporated herein and therein by reference, contain, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," “outlook,” “forecast,” “preliminary,” "estimate," "expect," "strategy," "future," "likely," "may," “would,” “could,” "should," "will" and similar references to future periods. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions, or beliefs and are subject to a number of factors, assumptions, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in Item 1A in Part II of this Quarterly Report and Item IA of our Annual Report for the fiscal year ended March 31, 2025. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events, or otherwise.
Rearranged current paragraphs (16)
Current report — wording carried from elsewhere
Gross profit and gross profit margin. Our total gross profit increased $5.8 million, or 13.3%, during the second quarter of fiscal 2026 and total gross profit margin decreased from 63.3% to 61.7% compared to the second quarter of fiscal 2025 driven by changes in the composition of revenue by category. Products gross profit decreased $1.3 million, or 23.7%, and products gross profit margin decreased from 50.5% to 40.2% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $7.5 million, or 23.0%, and gross profit margin stayed consistent at 78.7%. Professional services gross profit decreased $0.5 million, or 9.2%, and gross profit margin decreased from 32.4% to 26.3% reflecting lower utilization rates due to continued hiring and training of new staff and timing of certain large projects.
Current report — wording carried from elsewhere
Sales and marketing. Sales and marketing increased $1.0 million, or 11.2%, in the second quarter of fiscal 2026 compared with the second quarter of fiscal 2025 due to hiring and increased compensation rates across our sales teams.
Current report — wording carried from elsewhere
Depreciation of fixed assets. Depreciation of fixed assets remained consistent with the second quarter of fiscal 2025.
Current report — wording carried from elsewhere
The following table presents our consolidated revenue and operating results for the six months ended September 30, 2025 and 2024:
Current report — wording carried from 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:
Current report — wording carried from elsewhere
Net revenue. Total net revenue increased $24.2 million, or 18.4%, during the first half of fiscal 2026 compared to the first half of fiscal 2025. Products revenue decreased $0.4 million, or 1.7%, 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 $20.1 million, or 25.3%, compared to the first half of fiscal 2025 driven by continued growth in subscription-based service revenue including $10.4 million of Book4Time subscription-based service revenue. Total subscription revenue, including Book4Time subscription revenue, increased 38.3% during the first half of fiscal 2026 compared to the first half of fiscal 2025. Professional services revenue increased $4.4 million, or 13.9%, due to higher sales and service activity as our new and existing customers continue implementing technology to improve their operations.
Current report — wording carried from elsewhere
Operating expenses, excluding other charges, net and legal settlements, increased $12.3 million, or 17.5%, during the first half of fiscal 2026 compared with the first half of fiscal 2025.
Current report — wording carried from elsewhere
Product development. Product development increased $4.4 million, or 14.2%, in the first half of fiscal 2026 compared with the first half of fiscal 2025 due to hiring and increased salary, incentive and employee benefits rates across our development teams.
Current report — wording carried from elsewhere
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $1.7 million, or 150.2%, in the first half of fiscal 2026 compared with the first half of fiscal 2025 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Current report — wording carried from elsewhere
Other (gains) charges, net. Other (gains) charges, net consist of losses on asset disposals, severance costs, charitable contributions, employee retention credits, and acquisition costs related to business combinations.
Current report — wording carried from elsewhere
Legal settlements. Legal settlements consist of settlements of employment and other business-related matters.
Current report — wording carried from 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.
Current report — wording carried from elsewhere
Interest expense. Interest expense consists of interest charges under our Credit Agreement and amortization of related debt issuance costs.
Current report — wording carried from elsewhere
Other income, net. Other income, net, mainly consists of movement of foreign currencies against the U.S. dollar.
Current report — wording carried from 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.
Current report — wording carried from 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.