AI helped small-cap company Agilysys boost revenue. Shares soared

Quotes of Agilysys, a small-cap hospitality software provider, jumped more than 12% on Ma 19. The company reported record financial results for fiscal year 2026 and explained: AI-related changes helped it improve efficiency.

Shares of Agilysys, whose solutions among other things allow guests to search and book services and hospitality properties themselves to manage reservations and make payments, rose more than 12% to $78.9 on the Nasdaq on May 19. That's the highest since early March 2026. Investors were reacting to the company's fiscal year 2026 earnings report, which ended March 31. According to it, Agilysys net revenue rose 15.9% to a record $319.3 million, with 66% coming from revenue from subscriptions to the company's software and maintenance fees. Net income for the same period soared 67% to $38.8 million, or $1.37 per diluted share.

The efficiency gains are being helped by "massive AI-driven changes," explained Ramesh Srinivasan, the company's president and CEO (his words are quoted in the press release). Agilysys recently announced the launch of several new fully AI-driven software modules - a revenue analysis system and CRS, a centralized reservation system, he said.

The company also shared its fiscal 2027 revenue guidance of $365 million to $370 million, which would represent growth of about 14% to 16% over the end of the fiscal year. At the same time, the company is looking to generate "at least 30% more" from subscriptions than it did in 2026. Wall Street's consensus forecast for Agilysys revenue for fiscal 2027 is $363.59 million, Barron's writes.

The strong growth in subscription sales of Agilysys software contradicts the general market perception that AI will make the software obsolete, Barron's notes.

The publication points out that after the release of annual reports, Oppenheimer analyst Brian Schwartz raised the target price of Agilysys shares by 11% to $100, maintaining his recommendation to buy them. His target implies a potential upside of nearly 27% to the stock's May 19 price. The company began showing a "marked uptrend" in calendar year 2026, and that trend "should continue throughout" fiscal year 2027, Schwartz explained.

BTIG analysts Allan Werchowski and Nick Dannewitz believe the company's May 19 stock price performance is driven almost entirely by management's "impressive" fiscal 2027 guidance for subscription revenue growth.

"We still like the story, although we are looking for a better entry point," Barron's quoted their investment note as saying. BTIG analysts gave the stock a "hold" rating and did not provide a target price.

The company's securities have a total of six "buy" recommendations from Wall Street analysts and one "hold" recommendation. The average target price is $130.8, which is about 66% higher than the last closing price.

This article was AI-translated and verified by a human editor