Agilysys posted a record first quarter for fiscal 2027 on July 27, 2026, with total net revenue of $87.7 million, up 14.3 percent from $76.7 million in the year-earlier quarter, and raised full-year guidance for the third time in two years. The headline of the print, in our view, is not the topline growth but the mix shift toward subscription: subscription revenue grew 26.1 percent year over year, recurring revenue climbed to 65.9 percent of total revenue from 63.4 percent, and adjusted EBITDA, which is earnings before interest, tax, depreciation, amortization, and management's add-backs, expanded 46.3 percent to $18.3 million with the adjusted EBITDA margin reaching 20.8 percent. Free cash flow of $7.3 million, compared to a $5.0 million outflow a year ago, signals that the working-capital drag from contract liabilities unwinding has stopped overwhelming profitability.
The thesis we hold after this print is that Agilysys has moved from a niche on-premise hospitality software vendor to a credible cloud-software compounder, with annual recurring revenue compounding in the high-20s and a margin profile that should reach 24 percent adjusted EBITDA on revenue of roughly $370 million in fiscal 2027, up from 21.2 percent in fiscal 2026. The market, in our reading, is pricing a maturing SaaS business at a multiple that bakes in continued execution rather than further re-rating, with the stock trading at approximately 9.4 times trailing revenue and 33 times forward adjusted EBITDA against a 25 percent expected profit growth.
The single load-bearing risk is execution against the raised fiscal 2027 guidance, where the company has now guided to at least 32 percent subscription growth, up from at least 30 percent previously, and to $368 million to $373 million of total revenue, up from $365 million to $370 million. If subscription growth decelerates in the second half or if sales-cycle elongation from macroeconomic pressure on hotel capex, which is the capital expenditure budget hotel chains allocate to technology refresh cycles, produces a softer Q2 or Q3 print, the multiple compresses before the next earnings catalyst arrives. The next data point that tests this is the Q2 fiscal 2027 print expected in late October, where management's commentary on subscription gross retention and pipeline conversion serves as the load-bearing signal.