Agilysys Q2 Sales Beat Estimates, Stock Drops Despite Revenue Guidance Reconfirmation

Agilysys reported Q2 CY2025 revenue of $76.68 million, a 20.7% YoY increase, beating analyst estimates. The company reconfirmed its full-year revenue guidance of $310 million and saw a 16.3% operating margin. However, the non-GAAP profit of $0.33 per share was 8.8% below estimates. The stock dropped despite the better-than-expected revenue.

Agilysys (NASDAQ:AGYS), a hospitality industry software provider, announced its Q2 CY2025 financial results, revealing robust revenue growth but falling short of profit expectations. The company reported revenue of $76.68 million, a 20.7% year-on-year increase, beating analyst estimates of $74.39 million [1]. This strong performance comes on the heels of a 19.4% year-on-year growth in the previous quarter, indicating consistent revenue growth.

Agilysys reconfirmed its full-year revenue guidance of $310 million, suggesting the company remains on track to meet its financial targets. The company's operating margin stood at 16.3%, a slight improvement over the previous quarter's 10.6% margin. However, the non-GAAP profit of $0.33 per share was 8.8% below analyst expectations of $0.36 per share.

Despite the better-than-expected revenue, the stock dropped 7% to $109 immediately after the announcement. This drop can be attributed to the company's missed profit expectations and the overall market sentiment towards the hospitality sector. Agilysys has a history of beating revenue estimates but often falling short on profitability, which may be a concern for investors.

Looking ahead, sell-side analysts expect revenue to grow 11.3% over the next 12 months, a deceleration from the company's recent growth rates. This projection suggests the market is optimistic about Agilysys's newer products and services but remains cautious about its profitability.

References:
[1] https://finance.yahoo.com/news/agilysys-nasdaq-agys-q2-sales-202015458.html