Agilysys (AGYS) Q4 2025: Subscription Revenue Jumps 43% as Cloud Shift Drives Record Backlog
Agilysys extended its record streak with accelerating subscription revenue and a robust sales pipeline, as its cloud-first hospitality suite gains traction across both domestic and international markets. The company’s modernized POS and PMS platforms are now the preferred choice for new and existing customers, fueling high-margin recurring revenue and deepening competitive moats. Management’s guidance signals confidence in sustaining 25% subscription growth, even as the much-anticipated Marriott rollout remains excluded from FY26 projections.
Summary
- Cloud Ecosystem Lock-In: Unified hospitality suite and add-on modules are driving cross-sell and customer stickiness.
- Sales Pipeline Momentum: Demo-plus stage pipeline hit a record, up 18% YoY, supporting future growth visibility.
- Guidance Anchored in Recurring: FY26 outlook relies on recurring and subscription revenue, with major projects like Marriott providing optionality.
Performance Analysis
Agilysys delivered its thirteenth consecutive record revenue quarter, with total Q4 revenue up 19.4% year-over-year. The standout driver was subscription revenue, which soared 42.7% YoY and now represents nearly two-thirds of recurring revenue. This reflects the company’s successful transition away from one-time product sales—now just 15% of total revenue—toward a SaaS, software-as-a-service, model that prioritizes predictability and margin expansion.
Professional services revenue also set a new high, enabled by improved implementation execution and strategic hiring in services teams. Backlog growth of 26% YoY underscores robust demand and sets a strong baseline for future quarters. The POS, point-of-sale, business rebounded sharply, with Q4 sales up 23% YoY, indicating resolution of prior transformation-related volatility. Gross margin for the full year improved to 62.4%, reflecting the recurring mix shift, while operating expense leverage further supported profitability gains.
- Subscription Revenue Scale: Q4 subscription revenue was $29.8 million, now 64.4% of total recurring revenue, highlighting the SaaS pivot.
- Backlog Expansion: Total backlog reached record levels, with services backlog also hitting a new high despite record deployments.
- POS Turnaround: Modernized platform adoption drove best-ever POS sales quarter, up 27% sequentially, and 16% over the previous high.
Free cash flow remained strong even after the Book for Time acquisition, and adjusted EBITDA margin finished at 19.5%, ahead of plan. The company’s capital allocation continues to prioritize growth investments over short-term margin maximization.
Executive Commentary
"We have turned the corner and are now past the recent POS sales challenges... the newer, modernized, and unified POS platform performing well at more than 150 customer properties currently and growing rapidly."
Ramesh Srinivasan, President and CEO
"Subscription revenue grew 42.7% for the fourth quarter of fiscal 2025 and 39.5% for the full fiscal year. Organic subscription growth was 22.2% for the quarter and 25.3% for the full fiscal year. Subscription sales and backlog have us set up well for our FY26 plan."
Dave Wood, Chief Financial Officer
Strategic Positioning
1. Cloud-First Hospitality Platform
Agilysys has completed a multi-year pivot to a cloud-native, unified platform for property management systems (PMS) and point-of-sale (POS), enabling deep integration and rapid innovation. Add-on modules—especially on the PMS side—are fueling cross-sell and higher average deal sizes, with customers opting for multiple products and ecosystem connectivity. This approach differentiates Agilysys from point-solution competitors and provides a high switching cost for customers.
2. Recurring Revenue Mix and Margin Expansion
Recurring revenue now comprises over 61% of total revenue, up from 58% a year ago. The ongoing decline of perpetual license and hardware sales, now just above 10% of total revenue, confirms the SaaS transformation. This shift is structurally improving gross margins and providing better earnings visibility, while also reducing exposure to hardware-related supply chain risk and tariffs.
3. Sales Engine and International Opportunity
The demo-plus stage pipeline reached an all-time high, up 18% YoY, with international regions beginning to show more consistent growth. The sales organization has expanded, particularly in hotels and resorts, and is now leveraging the Book for Time acquisition for cross-sell. While international remains reliant on large wins, current customers are increasing wallet share, and reference accounts are multiplying, setting the stage for an eventual inflection.
4. POS and FSM Vertical Recovery
Managed food services (FSM) and POS verticals showed a sharp rebound, with second-half FSM sales nearly doubling the first half. The modernized, unified POS platform is now the default for new installs, and customer migrations are accelerating at their own pace, often incentivized by the promise of new features and reduced support for legacy systems. This is expected to drive ongoing upgrades and recurring revenue uplift.
5. Large-Scale Project Optionality
The transformational Marriott PMS rollout remains a significant, unmodeled upside, with beta testing progressing well and strong customer feedback. Management is excluding material revenue contribution from this project in FY26 guidance, reflecting prudent forecasting given the complexity and timing uncertainty of enterprise deployments.
Key Considerations
Agilysys enters FY26 with a record backlog, a modernized product suite, and a clear focus on recurring revenue growth. The company is investing to sustain its momentum and deepen its competitive moat in hospitality technology.
Key Considerations:
- Unified Product Ecosystem: Customers increasingly prefer Agilysys’ integrated suite over multi-vendor patchwork, boosting cross-sell and retention.
- Margin Leverage from SaaS Shift: Higher recurring revenue mix is structurally lifting gross margins and reducing volatility.
- Sales Pipeline Health: Demo-plus pipeline up 18% YoY, with improving win rates as customers see the value of the modern platform.
- International White Space: While still dependent on large deals, international growth is poised to accelerate as more reference customers come online.
- Disciplined Guidance: FY26 outlook excludes Marriott PMS upside, preserving credibility and offering potential for positive revisions.
Risks
Execution risk remains around large-scale deployments, especially for transformational projects like Marriott PMS, where timing and customer-driven migration pace are outside Agilysys’ direct control. International growth, while promising, is still uneven and reliant on home-run wins. The company’s ongoing investment in R&D and services, while necessary for long-term growth, could limit near-term operating leverage if sales conversion lags or if macro headwinds intensify.
Forward Outlook
For Q1 2026, Agilysys expects:
- Continued sequential growth in recurring and subscription revenue.
- Stable product and professional services revenue, with typical quarterly variability.
For full-year 2026, management maintained guidance:
- Revenue of $308 million to $312 million, driven by 25% subscription revenue growth.
- Adjusted EBITDA margin of 20%.
Management emphasized recurring revenue as the primary growth engine, with one-time product revenue expected to grow modestly. No material contribution from Marriott PMS is assumed, and ongoing investments in sales, R&D, and services are expected to position the company for sustained expansion.
- Subscription growth will remain above 20% organically, with Book for Time providing incremental uplift.
- Operating leverage in G&A expected, with sales and marketing spend rising slightly due to event timing.
Takeaways
Agilysys has emerged as a leading cloud hospitality platform provider, with momentum in subscription growth, backlog, and cross-sell that underpin a durable growth thesis.
- SaaS Transition Is Paying Off: The recurring revenue mix shift is driving higher margins, predictable cash flow, and a resilient business model.
- Execution on Modernization: POS and PMS modernization has unlocked new sales and improved implementation efficiency, supporting customer migrations and upsell.
- Optionality from Large Projects: The Marriott PMS rollout and international expansion represent significant upside not captured in current guidance, providing long-term growth catalysts.
Conclusion
Agilysys delivered another record quarter, demonstrating the power of its cloud-native hospitality platform and deepening customer relationships. With a robust pipeline, expanding backlog, and disciplined guidance, the company is well positioned to sustain high-teens to mid-twenties growth as it captures share in a large, underpenetrated market.
Industry Read-Through
The hospitality technology sector is undergoing a structural shift toward unified, cloud-based ecosystems that enable rapid innovation and operational efficiency. Agilysys’ strong results and accelerating subscription mix signal rising demand for integrated solutions, particularly among multi-property operators seeking to consolidate vendors and enhance guest experiences. Competitors reliant on legacy or point solutions face increasing pressure, while those able to deliver end-to-end platforms with robust add-on functionality are best placed to capture share. The sector’s transformation also highlights the growing importance of services and implementation capability as critical differentiators in enterprise software.