AGILYSYS INC
For the period ended Dec 31, 2025. Filed Jan 26, 2026.
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.
Dec 31, 2025 · Filed Jan 26, 2026
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 2025-09-30; filed 2025-10-27.
0001193125-25-251592
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-01-26.
0001193125-26-022793
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 105 previous paragraphs and 106 current paragraphs.
73 unchanged; 29 reworded; 3 added; 2 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 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 (3)
Current report
First Nine Months Fiscal 2026 Compared to First Nine Months Fiscal 2025
Current report
For the nine months ended December 31, 2025, 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.
Current report
During the nine months ended December 31, 2025 and 2024, we recorded $9.1 million and $0.5 million, respectively, of employee retention credits under the CARES Act including associated interest received or expected to be received in cash as other (gains) charges, net, in the condensed consolidated statements of operations. As of December 31, 2025, we recorded $3.0 million of employee retention credits receivable as other current assets on the condensed consolidated balance sheet.
Removed paragraphs (2)
Previous report
General and administrative. General and administrative remained consistent with the second quarter of fiscal 2025.
Previous report
First Half Fiscal 2026 Compared to First Half Fiscal 2025
Reworded paragraphs (29)
Previous 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.
Current wording
During the three and nine months ended December 31, 2025, global macroeconomic and geopolitical conditions were, and continue to be, shaped 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 factors are negatively influencing customer spending and provider pricing decisions resulting in decreased demand, increased costs, and reduced margins with varying impact across our markets.
Previous 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.
Current wording
The Company has one reportable segment serving the global hospitality industry. Agilysys operates across the Americas, Europe, the Middle East, Africa, Asia-Pacific, and India with headquarters located in Alpharetta, GA.
Previous wording
Second Fiscal Quarter 2026 Compared to Second Fiscal Quarter 2025
Current wording
Third Fiscal Quarter 2026 Compared to Third Fiscal Quarter 2025
Previous 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.
Current wording
Net revenue. Total net revenue increased $10.8 million, or 15.6%, during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. Products revenue remained flat. The recent trend of declining products revenue due to increasing customer preference for subscription-based versus perpetual software licenses, was offset during the quarter by higher fulfillment of perpetual software licenses compared to the previous three quarters. Subscription and maintenance revenue increased $7.6 million, or 17.2%, compared to the third quarter of fiscal 2025 driven by continued growth in subscription-based service revenue. Total subscription revenue increased 23.1% during the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. Professional services revenue increased $3.2 million, or 22.0%, due to higher 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 $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 wording
Gross profit and gross profit margin. Our total gross profit increased $6.4 million, or 14.6%, during the third quarter of fiscal 2026 and total gross profit margin decreased from 63.0% to 62.5% compared to the third quarter of fiscal 2025 driven by changes in the composition of revenue by category. Products gross profit decreased $0.4 million, or 7.6%, and products gross profit margin decreased from 48.0% to 44.3% due to the composition of hardware products delivered. Subscription and maintenance gross profit increased $6.3 million, or 17.9%, and gross profit margin increased from 78.5% to 79.0% as subscription revenue increases outpaced associated variable costs as a result of certain cost control measures. Professional services gross profit increased $0.5 million, or 13.6%, and gross profit margin decreased from 26.7% to 24.9% reflecting lower utilization rates due to continued hiring and training of new staff.
Previous 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.
Current wording
Operating expenses, excluding other (gains) charges, net, and legal settlements, net, increased $5.2 million, or 14.3%, during the third quarter of fiscal 2026 compared with the third quarter of fiscal 2025.
Previous 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.
Current wording
Product development. Product development increased $4.0 million, or 26.4%, in the third quarter of fiscal 2026 compared with the third 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 $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 wording
Sales and marketing. Sales and marketing increased $0.1 million, or 1.0%, in the third quarter of fiscal 2026 compared with the third quarter of fiscal 2025 due to hiring and increased compensation rates across our sales teams offset by timing of marketing event and trade show activity.
Previous wording
Depreciation of fixed assets. Depreciation of fixed assets remained consistent with the second quarter of fiscal 2025.
Current wording
Depreciation of fixed assets. Depreciation of fixed assets remained consistent with the third quarter of fiscal 2025.
Previous 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.
Current wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles decreased $0.2 million in the third quarter of fiscal 2026 compared with the third quarter of fiscal 2025 as a result of changes to the purchase price allocation during the measurement period impacting certain intangible assets resulting from the Book4Time acquisition.
Previous wording
Legal settlements. Legal settlements consist of certain customer and employment settlements and other business-related matters.
Current wording
Legal settlements, net. Legal settlements, net, consist of certain customer and employment settlements and other business-related matters net of any recoveries.
Previous wording
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 wording
For the three months ended December 31, 2025 and 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 wording
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 wording
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 December 31, 2025 and 2024, we recorded $3.0 million and $0.5 million, respectively, of employee retention credits under the CARES Act including associated interest received or expected to be received in cash as other (gains) charges, net, in the condensed consolidated statements of operations. As of December 31, 2025, we recorded $3.0 million of employee retention credits receivable as other current assets on the condensed consolidated balance sheet.
Previous wording
The following table presents our consolidated revenue and operating results for the six months ended September 30, 2025 and 2024:
Current wording
The following table presents our consolidated revenue and operating results for the nine months ended December 31, 2025 and 2024:
Previous wording
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 wording
Net revenue. Total net revenue increased $35.0 million, or 17.4%, during the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. Products revenue decreased $0.3 million, or 1.1%, due to increasing customer preference for subscription-based software licenses instead of perpetual software licenses. Subscription and maintenance revenue increased $27.7 million, or 22.4%, compared to the first nine months of fiscal 2025 driven by continued growth in subscription-based service revenue including $15.7 million and $6.6 million of Book4Time subscription-based service revenue during the nine months ended December 31, 2025 and 2024, respectively. Total subscription revenue, including Book4Time subscription revenue, increased 32.6% during the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. Professional services revenue increased $7.6 million, or 16.4%, 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 $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.
Current wording
Gross profit and gross profit margin. Our total gross profit increased $19.6 million, or 15.4%, during the first nine months of fiscal 2026 and total gross profit margin decreased from 63.0% to 62.0% compared to the first nine months of fiscal 2025 driven by changes in the composition of revenue by category. Products gross profit decreased $2.5 million, or 16.9%, and products gross profit margin decreased from 48.6% to 40.8% due to the composition of hardware and proprietary software products delivered. Subscription and maintenance gross profit increased $22.5 million, or 23.1%, and gross profit margin increased from 78.6% to 79.1% as revenue increases outpaced variable costs as a result of cost optimization discipline. Professional services gross profit decreased $0.3 million, or 2.4%, and gross profit margin decreased from 31.1% to 26.1% reflecting lower utilization rates due to continued hiring and training of new staff and timing of certain large projects.
Previous wording
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 wording
Operating expenses, excluding other charges, net and legal settlements, net, increased $17.5 million, or 16.4%, during the first nine months of fiscal 2026 compared with the first nine months of fiscal 2025.
Previous wording
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 wording
Product development. Product development increased $8.3 million, or 18.2%, in the first nine months of fiscal 2026 compared with the first nine months 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 $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.
Current wording
Sales and marketing. Sales and marketing increased $5.9 million, or 23.6%, in the first nine months of fiscal 2026 compared with the first nine months of fiscal 2025 due to hiring and increased compensation rates across our sales teams, sales team additions from the Book4Time acquisition, higher levels of marketing event and trade show activity, and increased bad debt expense.
Previous 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.
Current wording
General and administrative. General and administrative increased $1.6 million, or 5.2%, in the first nine months of fiscal 2026 compared with the first nine months of fiscal 2025 due to increased compensation rates across our administrative teams.
Previous 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.
Current wording
Depreciation of fixed assets. Depreciation of fixed assets increased $0.2 million, or 6.6%, in the first nine months of fiscal 2026 compared with the first nine months 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 $1.7 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 wording
Amortization of internal-use software and intangibles. Amortization of internal-use software and intangibles increased $1.5 million, or 55.1%, in the first nine months of fiscal 2026 compared with the first nine months of fiscal 2025 due to the addition of certain intangible assets resulting from the Book4Time acquisition.
Previous wording
Legal settlements. Legal settlements consist of settlements of employment and other business-related matters.
Current wording
Legal settlements, net. Legal settlements, net, consist of certain customer and employment settlements and other business-related matters net of any recoveries.
Previous 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.
Current 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.
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 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.
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 December 31, 2024, to complete the acquisition of Book4Time. We completed no business combinations during the nine months ended December 31, 2025.
Previous 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.
Current wording
At December 31, 2025, 100% of our cash and cash equivalents, of which 92% 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 $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.
Current wording
We believe that cash flow from operating activities, cash on hand of $81.5 million as of December 31, 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 $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.
Current wording
Cash flow provided by operating activities. Due to cash-based earnings of $55.9 million and a decrease of $21.7 million due to changes in net operating assets and liabilities. Cash-based earnings is net income of $26.5 million and $29.4 million of non-cash adjustments.
Previous 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.
Current wording
Cash flow (used in) provided by financing activities. Consists of $24.0 million in debt repayments during the nine months ended December 31, 2025, proceeds from Employee Stock Purchase Plan purchases, and the repurchase of shares to satisfy employee tax withholding on share-based compensation.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
General and administrative. General and administrative increased $1.3 million, or 13.6%, in the third quarter of fiscal 2026 compared with the third quarter of fiscal 2025 due to increased compensation rates across our administrative teams.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.