Agilysys (AGYS) Stock: A Strategic Buy Amid Mixed Guidance and Structural Growth

Agilysys (NASDAQ: AGYS), a leader in cloud-native hospitality software solutions, presents a compelling investment opportunity for long-term investors. Despite tempered 2026 revenue guidance, the company’s recurring revenue model, Boyd Gaming partnership, and margin resilience create a sturdy foundation for sustained growth. Let’s dissect the data to uncover why AGYS is primed to outperform over the next 3–5 years.

1. Recurring Revenue Dominance: The Engine of Predictable Growth

Agilysys’s transition to a subscription-driven business model is its most compelling asset. In fiscal 2025, recurring revenue (subscription and maintenance) surged to $170.1 million, or 61.7% of total revenue—a 39.5% year-over-year jump. This segment’s growth is fueled by its cloud-native solutions, such as the Book4Time acquisition, which expanded its SaaS offerings.

The gross margin expansion from 60.7% in 2024 to 62.4% in 2025 underscores the profitability of this shift. Subscription revenue, with its high margins and recurring nature, is the bedrock of Agilysys’s financial health. Even as net income dipped in 2025 due to tax headwinds, Adjusted EBITDA hit a record $53.8 million, a 45% increase year-over-year.

2. Boyd Gaming Partnership: A Strategic Catalyst

The $275 million Boyd Gaming deal (deploying InfoGenesis across 28 properties) is a landmark win. While the partnership’s exact financial contribution isn’t disclosed, its strategic value is clear:
- Scale and Diversification: Boyd Gaming’s properties represent a major U.S. hospitality footprint, boosting Agilysys’s market presence.
- Recurring Revenue Pipeline: The SaaS model ensures steady cash flow from maintenance and upgrades.
- Operational Synergy: The system unifies POS, loyalty programs, and analytics, creating a blueprint for future enterprise deals.

This partnership validates Agilysys’s ability to win large-scale contracts in a competitive sector. As hospitality giants prioritize tech-driven efficiency, Boyd’s adoption signals a broader trend favoring Agilysys’s omnichannel solutions.

3. Margin Resilience in a Challenging Environment

Despite facing headwinds like macroeconomic uncertainty and one-time costs (e.g., $145 million paid for acquisitions), Agilysys has maintained operating margin discipline.

• Operating Income Jumped 43%: From $15.8 million in 2024 to $22.6 million in 2025, while operating margin expanded from 6.6% to 8.2%.
• Free Cash Flow Soars: To $52.3 million in 2025, up 30% from $40.1 million in 2024, proving its ability to generate liquidity even during growth investments.

These metrics reveal a company optimizing costs and scaling efficiently. The 2026 guidance of 12% revenue growth (to $308–312 million) is conservative—excluding contributions from a large PMS project—suggesting upside potential if that project ramps up.

4. Tempered Guidance vs. Long-Term Potential

Analysts have flagged the FY2026 guidance as cautious, with Oppenheimer trimming its price target to $90. However, this guidance is a calculated hedge against risks like staffing bottlenecks and delayed PMS project timelines.

The market’s focus on short-term headwinds obscures the structural tailwinds Agilysys faces:
- Hospitality Tech Spend Growth: The global hospitality software market is projected to hit $18.3 billion by 2028, driven by SaaS adoption.
- Backlog Strength: Agilysys’s record backlog signals demand for its solutions, which could accelerate revenue once execution hurdles are cleared.

Conclusion: A Buy for Long-Term Gains

Agilysys’s recurring revenue model, Boyd Gaming partnership, and margin resilience position it to thrive despite near-term headwinds. At current prices—trading at just 13x forward EBITDA—the stock offers a compelling entry point. Investors should focus on the 2027–2028 timeframe, when the PMS project and Boyd contract are likely to deliver full impact.

Actionable Takeaway: Agilysys is a buy for investors with a 3+ year horizon. Monitor execution on the PMS project and Boyd integration, but don’t let short-term guidance distract from its long-term moat in hospitality tech.

The time to act is now—before the market catches up to Agilysys’s true value.