Hospitality industry software provider Agilysys (NASDAQ:AGYS) announced better-than-expected revenue in Q2 CY2025, with sales up 20.7% year on year to $76.68 million. The company expects the full year’s revenue to be around $310 million, close to analysts’ estimates. Its non-GAAP profit of $0.33 per share was 8.8% below analysts’ consensus estimates.
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Agilysys (AGYS) Q2 CY2025 Highlights:
- Revenue: $76.68 million vs analyst estimates of $74.39 million (20.7% year-on-year growth, 3.1% beat)
- Adjusted EPS: $0.33 vs analyst expectations of $0.36 (8.8% miss)
- Adjusted EBITDA: $12.49 million vs analyst estimates of $13.98 million (16.3% margin, 10.6% miss)
- The company reconfirmed its revenue guidance for the full year of $310 million at the midpoint
- Operating Margin: 5.9%, down from 9% in the same quarter last year
- Free Cash Flow was -$4.98 million, down from $26.45 million in the previous quarter
- Market Capitalization: $3.20 billion
Company Overview
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ:AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Agilysys grew its sales at a 19% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, Agilysys reported robust year-on-year revenue growth of 20.7%, and its $76.68 million of revenue topped Wall Street estimates by 3.1%.
Looking ahead, sell-side analysts expect revenue to grow 11.3% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is above average for the sector and indicates the market is baking in some success for its newer products and services.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Agilysys is extremely efficient at acquiring new customers, and its CAC payback period checked in at 16.5 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Agilysys’s Q2 Results
It was encouraging to see Agilysys beat analysts’ revenue expectations this quarter. On the other hand, its EBITDA and EPS missed as profitability came in much lower than in the same quarter last year. Overall, this was a disappointing quarter. The stock traded down 7% to $109 immediately after reporting.
The latest quarter from Agilysys’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.