Agilysys' SaaS Surge: Can This Hospitality Tech Leader Hit $312M in 2026?

The hospitality tech space is on fire, and Agilysys is riding the flames. With Q4 revenue soaring to $74.3 million—a 19.4% jump from last year—and recurring revenue now 61.7% of total sales, this company’s pivot to subscription-based software is paying off. But can it sustain this momentum to hit its $308M–$312M FY2026 revenue target? Let’s dive into the numbers—and the risks—before I tell you why this could be a once-in-a-decade buy.

The SaaS Engine: Why 25% Growth Isn’t Just a Dream

Agilysys isn’t just a software vendor—it’s a subscription machine. In Q4, its SaaS revenue (part of recurring revenue) exploded 42.7% year-over-year, accounting for ~40% of quarterly revenue. For the full fiscal year 2025, SaaS grew 39.5%, and its share of recurring revenue hit 61.9%. Here’s the kicker: recurring revenue now fuels 61.7% of total sales, up from 58.1% just a year ago.

This isn’t just growth—it’s a structural shift. With 25% subscription growth projected for FY2026 (excluding a massive PMS project still in progress), the math works. Even if that project gets delayed, the base SaaS business is on fire. The company’s cloud-native platforms like Book4Time and its property management systems (PMS) are cornerstones of this shift. And with adjusted EBITDA margins climbing to 20% of revenue (vs. 19.5% in FY2025), profitability is finally catching up to the top line.

The “Weak” Link: Managed Food Services (Or Is It?)

Critics will point to the managed food services segment—or rather, its absence in the financials. The term isn’t explicitly broken out, but Agilysys’ professional services revenue ($17.8M in Q4, up 21.7%) includes food-related implementation and support. The CEO called Q4’s services performance a “record high,” driven by hiring and backlog conversions.

But here’s the rub: professional services grew just 27.7% annually in FY2025, trailing SaaS’s 39.5%. Is this a red flag? Not yet. The company’s software solutions for food & beverage inventory, procurement, and POS systems are embedded in its SaaS ecosystem—meaning food services are part of the larger services flywheel. As more clients adopt cloud-based solutions, professional services revenue will naturally expand. This isn’t a drag; it’s a lagging indicator of SaaS adoption.

The Risks? Yes, They Exist—but They’re Manageable

• The PMS Project Black Hole: The FY2026 guidance excludes revenue from a large-scale PMS project still in progress. If it’s delayed, the top end of the $312M target could slip. But remember: this project wasn’t counted in the first place. The base case already assumes its exclusion.
• Product Revenue Slump: Hardware sales (the “product” segment) dipped slightly to $10.2M in Q4. But this is a marginal concern in a business where software and services now dominate.
• Execution on Backlog: The company boasts record backlog levels, but converting that into revenue requires flawless execution. CEO Ramesh Srinivasan has delivered 13 straight record quarters—so far, so good.

Why This Is a Buy for Growth Investors

Agilysys isn’t just a tech play—it’s a bet on the future of hospitality. Post-pandemic, hotels, restaurants, and resorts are racing to modernize their tech stacks. Agilysys’s cloud-native SaaS platforms are the go-to solutions for inventory, reservations, and payments. With 62.4% gross margins (up from 60.7% in FY2024), this isn’t a low-margin commodity business—it’s a high-margin SaaS juggernaut in the making.

The $308M–$312M target is ambitious, but achievable. Here’s why:
1. Recurring revenue’s flywheel effect: SaaS growth begets more SaaS growth. Retention rates are high, and upselling to existing clients is easier.
2. Services as a multiplier: Every new SaaS customer needs implementation and support—professional services will grow alongside the core product.
3. Sector tailwinds: Hospitality tech spending is exploding. Investors who bet on Workday or Slack in their early days know how this story ends.

Final Verdict: Buy Now—Before the Surge

This isn’t a “set it and forget it” investment. Agilysys needs to execute flawlessly on backlog, and the PMS project’s status will be a near-term wild card. But the subscription model’s scalability and the resilience of hospitality tech demand make this stock a must-own for growth investors.

If you’re in for the long game—and can stomach some volatility—the FY2026 target isn’t overreach—it’s a floor. This is a company primed to dominate its niche. Don’t wait—act now.

Disclaimer: This is not financial advice. Always consult a professional before making investment decisions.