Agilysys, Inc. (NASDAQ:AGYS) stock fell 9.58% (As on July 22, 11:27:00 AM UTC-4, Source: Google Finance) after the company reported first quarter fiscal 2026 earnings that fell short of analyst expectations. Recurring revenue, which includes subscription and maintenance charges, reached a record $48.6 million, representing 63.4% of total net revenue compared to 59.9% in the same period last year. Subscription revenue now accounts for 65.6% of total recurring revenue, up from 58.1% in the first quarter of fiscal 2025. The company’s gross margin decreased slightly to 61.7% from 62.8% in the comparable prior-year period. Free cash flow was -$5.0 million compared to $0.2 million in the first quarter of fiscal 2025. Net income in the fiscal 2026 first quarter was $4.9 million, or $0.17 per diluted share, compared to $14.1 million, or $0.50 per diluted share, in the comparable prior-year period. Adjusted EBITDA (non-GAAP) was $12.5 million compared to $12.1 million in the comparable prior-year period. Ending cash balance was $55.6 million compared to ending cash balance of $73.0 million as of fiscal 2025 year-end.

Meanwhile, fiscal 2026 first quarter, April to June, was the second highest selling success quarter, 24% higher than the comparable prior year period, measured in annual contract value terms. The company continues to enjoy excellent selling momentum with consistent, robust demand for the modernized state-of-the-art cloud-native ecosystem of hospitality focused software solutions.

AGYS in the first quarter of FY26 has reported the adjusted earnings per share of 33 cents, missing the analysts’ estimates for the adjusted earnings per share of 36 cents. The company had reported the adjusted revenue growth of 20.7 percent to $76.7 million in the first quarter of FY26, beating the analysts’ estimates for revenue of $74.35 million. This growth is driven by 44% growth in the subscription revenue including Book4Time and 16% growth in professional services revenue. Sales remained strong throughout the quarter, including with respect to point of sale products compared to the prior year.

Agilysys raised its subscription revenue growth guidance to 27% YoY from the previous 25%. The company maintained its full-year fiscal 2026 revenue guidance of $308-312 million, in line with the consensus estimate of $310 million. Adjusted EBITDA expectations remain at 20% of revenue for the full fiscal year. Subscription revenue growth expectations exclude any material revenue from the large scale PMS project currently in progress.