Summary
Agilysys closed fiscal 2026 with a fourth quarter that paired double-digit top-line growth with much stronger profitability. Revenue for the quarter ended March 31, 2026 was $82.9 million, up 11.7%. Gross profit rose 18.6% to $53.4 million, pushing gross margin to 64.4%, up 3.7 percentage points. Operating income climbed 137.6% to $12.6 million, and operating margin reached 15.2%, up 8.1 percentage points. Net income came in at $12.3 million, up 213.2%. Earnings power improved far faster than sales did.
The full fiscal year tells a similar story. Revenue reached $319.3 million, up 15.9%. Gross profit was $199.9 million, up 16.2%, and full-year gross margin was 62.6%, up 0.2 percentage points from fiscal 2025. Operating income for the year was $43.0 million, up 90.4%, with operating margin of 13.5%, up 5.3 percentage points. Net income finished at $38.8 million, up 67.0%. Diluted earnings per share was $1.37, up $0.55. The distance between revenue growth and operating income growth is the story of the year: costs rose, but far more slowly than sales.
Management credits a mix shift. Subscription and maintenance revenue grew faster than the total, while products revenue declined slightly as customers keep moving away from perpetual software licenses. Professional services revenue rose on implementation work for new and existing customers. Book4Time, the spa management software business acquired in August 2024, contributed to subscription-based revenue in both fiscal 2026 and fiscal 2025. Operating expenses moved up across product development, sales and marketing, and general and administrative, driven by hiring, higher compensation rates, marketing events, and, in sales, added Book4Time staff and higher bad debt expense. A swing in other gains and charges, net, tied to employee retention credits in fiscal 2026 against acquisition costs a year earlier, also helped operating income.
Cash generation was solid. Operating cash flow was $35.8 million in the March quarter, up 32.0%, and $70.0 million for the fiscal year, up 27.0%. Capital expenditures were $0.4 million in the quarter, down 39.5%, and $1.8 million for the year, down 33.6%. Those are operating cash flow figures, not free cash flow. Deferred revenue was $83.0 million at March 31, 2026, up 17.5%, and remaining performance obligations totaled $152.0 million. Deferred revenue and RPO are the clearest signals of contracted work still to be recognized as revenue.
Risks in the filing are mostly macro. Management points to political unrest, armed conflicts, changes to tariffs and trade policies, labor shortages, and natural disasters as conditions that shaped fiscal 2026. Those forces weigh on customer spending and provider pricing decisions, which can mean weaker demand, higher costs, and thinner margins, especially outside the United States. The company also says it is consistently subject to tax audits and that unrecognized tax benefits could change over the next 12 months in ways it cannot anticipate. It carries valuation allowances against deferred tax assets and released some of them for its Singapore and Hong Kong businesses based on recent and anticipated earnings.
The setup into the next fiscal year is straightforward. Margin expansion came largely from revenue mix and from a favorable swing in other gains and charges, not from a dramatic cost reset. Product development and sales and marketing spending rose faster than general and administrative, and hiring continues. Watch whether subscription revenue keeps lifting gross margin, whether international demand holds up, and whether deferred revenue converts into recognized revenue on schedule.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2026 | Q3 FY2026 | QoQ | Q4 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $82.9M | $80.4M | +3.2% | $74.3M | +11.7% |
| Gross profit | $53.4M | $50.2M | +6.3% | $45.1M | +18.6% |
| Gross margin | 64.4% | 62.5% | +1.9 pp | 60.7% | +3.7 pp |
| Research & development | $18.5M | $18.9M | -2.0% | $16.5M | +12.0% |
| Sales & marketing | $9.1M | $9.1M | -0.1% | $8.3M | +9.3% |
| General & administrative | $10.5M | $10.8M | -3.4% | $10.7M | -1.8% |
| Total operating expenses | $40.8M | $38.5M | +6.0% | $149.4M | -72.7% |
| Operating income (loss) | $12.6M | $11.7M | +7.5% | $5.3M | +137.6% |
| Operating margin | 15.2% | 14.6% | +0.6 pp | 7.2% | +8.1 pp |
| Net income (loss) | $12.3M | $9.9M | +24.2% | $3.9M | +213.2% |
| Net margin | 14.8% | 12.3% | +2.5 pp | 5.3% | +9.5 pp |
| Diluted EPS | $1.37 | $0.35 | +$1.02 | $0.14 | +$1.23 |
Risks
Global macroeconomic conditions, including tariffs, trade policy changes, and political unrest, are impacting customer spending and provider pricing, resulting in decreased demand, increased costs, and reduced margins, particularly outside the United States. MD&A states these conditions continue to affect the business.
Rapid AI adoption may create an 'arms race' where competitors leverage AI to develop more efficient, lower-cost alternatives or bypass traditional application-layer workflows, potentially diminishing the value of the platform. The company must also adjust pricing to accommodate rising AI costs.
AI introduces new attack vectors like prompt injection and deepfake social engineering. Multi-tenant cloud architecture and third-party API/OAuth integrations create risk of unauthorized access or data exposure, potentially leading to legal liability and reputational harm.
Evolving AI regulations, such as the EU AI Act and various U.S. state laws, impose compliance burdens and legal uncertainty. The company may face enforcement actions or litigation for non-compliance, and significant resources may be required to implement compliant AI practices.
Business depends significantly on the hospitality industry; downturns, consolidation, or insolvencies among customers could disproportionately impact revenue. Recent consolidations in hotel and gaming sectors could lead to reduced purchases if merged entities use other providers.
Competitive labor market for software developers and changes in U.S. immigration policies, including visa and green card processing delays or denials, could disrupt key personnel and increase operational costs. MD&A notes increased compensation rates across development, sales, and administrative teams.
Software implementations involve significant resources and risks including resource constraints, customer-specific factors, and delays. MD&A notes professional services gross margin decreased to 27.3% in fiscal 2026 from 31.3% in fiscal 2025 due to lower utilization rates and timing of certain large projects.
The effective tax rate was 19.9% in fiscal 2026 compared to 9.4% in fiscal 2025. Future tax rates could be impacted by changes in earnings mix, tax laws, or valuation allowances. Significant deferred tax assets and net operating losses may be restricted or eliminated.
As of March 31, 2026, the company had $133.9 million of goodwill and $66.4 million of intangible assets, net. Deteriorating economic conditions or other negative factors could result in non-cash impairment charges.
Summary, forecast, risks and KPIs are extracted from AGILYSYS INC's SEC filings for Q4 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.