Key Takeaways:
- Subscription revenue has grown at least 23% year-over-year for 17 consecutive quarters.
- Price Projection: In our base case, AGYS stock could reach $141 by March 2028.
- Potential Gains: That target implies a total return of 75% from the current price of $80.19.
- Annual Return: Investors could see roughly 30% growth over the next 2.1 years.
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Agilysys (AGYS) delivered impressive third-quarter fiscal 2026 results with record revenue of $80.4 million, marking the 16th consecutive record revenue quarter.
CEO Ramesh Srinivasan highlighted accelerating momentum across multiple business segments.
- The company posted 15.6% growth versus the prior year and raised full-year revenue guidance range to $315 million- $318 million.
- Subscription revenue grew 23% year-over-year to $34.9 million, maintaining at least 23% growth for 17 consecutive quarters.
- This represents the company’s shift toward higher-margin recurring revenue, which now accounts for 67% of total revenue.
- Properties require increasingly sophisticated systems to manage guest experiences across multiple touchpoints.
- Agilysys benefits as hotels and casinos deploy integrated software ecosystems rather than managing multiple vendor relationships.
- The company signed 16 new fully subscription-based customers during the quarter, with an average of five products per deal. Nine included the property management system (PMS), demonstrating cross-selling strength.
- Additionally, 109 existing properties purchased 248 new products, showing the ecosystem’s stickiness.
- International sales reached nearly the second-best fiscal year performance through just three quarters.
- The Marriott PMS project progresses well, with pilot implementations completed successfully across U.S. and Canadian properties. Implementation waves are now ramping up.
Despite strong fundamentals and expanding competitive advantages, Agilysys trades at $80, offering upside for investors who recognize the company’s position in hospitality software infrastructure.
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What the Model Says for Agilysys Stock
We analyzed Agilysys through its transformation into a leading hospitality software provider with cloud-native solutions spanning property management, point-of-sale, and spa management.
The company benefits from multiple demand drivers. Hotels and resorts are consolidating vendor relationships, preferring integrated ecosystems over fragmented point solutions.
Agilysys now offers 20-25 modules around PMS and 5-6 products around POS.
The modernized product suite, now 2-4 years in the field, has matured considerably. Reference customers are increasingly willing to advocate for the platform, discussing real business results from automation and vendor consolidation.
Implementation times have shortened thanks to AI-powered configuration tools, accelerating the conversion of bookings into revenue.
Casino gaming is a particularly strong vertical, though it experienced temporary softness in October and November before recovering in December.
Food service management sales through three quarters already exceed the previous two full years, positioning fiscal 2026 as potentially the best FSM sales year ever.
Using a forecast of 14.6% annual revenue growth and 14.2% net income margins, our model projects the stock will rise to $141 within 2.1 years. This assumes a 30.0x price-to-earnings multiple at exit.
That represents compression from Agilysys’s historical averages of 59.5x (one year) and 69.9x (five years). The lower multiple acknowledges that while growth remains strong, the company trades at elevated valuations that will moderate as the business scales.
The real value lies in capturing long-term hospitality software market share while expanding margins through operational leverage and AI-driven efficiency gains.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for AGYS stock:
1. Revenue Growth: 14.6%
Agilysys’s growth centers on structural demand for integrated hospitality software. The company delivered 15.6% revenue growth in Q3, with subscription revenue accelerating 23%.
Management expects continued momentum as properties consolidate vendors and adopt cloud-native solutions.
Calendar 2025 marked the best sales year in the company’s history.
Year-to-date subscription sales jumped 37% versus the prior year, with fiscal 2026 already reaching 95% of last year’s full subscription sales performance.
The Marriott PMS project adds upside potential not reflected in current guidance. As implementation waves scale through 2026, this could meaningfully accelerate growth rates.
2. Operating margins: 14.2%
Agilysys has expanded adjusted EBITDA margins close to 20% of revenue through operational efficiency and the shift toward recurring revenue.
Subscription revenue now represents 67% of total recurring revenue, up from 64% last year.
As implementation efficiency improves with AI tools, service costs decline while revenue remains stable.
This operational leverage should drive continued margin expansion. Management indicated fiscal 2027 profitability will exceed the current 20% adjusted EBITDA target.
3. Exit P/E Multiple: 30x
The market currently values Agilysys at 38.5x earnings. We assume the P/E will compress to 30x over our forecast period as the company scales and growth moderates from current elevated levels.
Near-term valuation reflects strong execution and market share gains against entrenched competitors.
As the modernized product ecosystem matures and Agilysys demonstrates sustainable profitability expansion, the company should maintain a premium multiple to traditional software businesses.
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What Happens If Things Go Better or Worse?
Hospitality software companies face technology adoption cycles and competitive dynamics. Here’s how Agilysys stock might perform under different scenarios through March 2030:
- Low Case: If revenue growth slows to 11.8% and net income margins compress to 25.6%, investors still see a 117% total return (21% annually).
- Mid Case: With 13.1% growth and 29% margins, we expect a total return of 194% (30% annually).
- High Case: If hospitality technology acceleration drives 14.4% revenue growth while Agilysys maintains 32.2% margins, returns could hit 288% total (39% annually).
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The range reflects execution on market-share gains, successful navigation of the Marriott rollout, and the company’s ability to leverage AI to accelerate implementation and product innovation.
In the low case, competition intensifies or macro headwinds slow hospitality spending.
In the high case, the integrated ecosystem creates winner-take-most dynamics as switching costs rise and implementation efficiency improvements exceed expectations.
How Much Upside Does Agilysys Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
