Agilysys reported third-quarter earnings of $0.42 per share, missing the consensus estimate of $0.46 and up from $0.38 in the year-ago period. Revenue for the quarter grew 7% year-over-year to $98.5 million, driven by strength in software licensing and cloud subscription services. Gross margin expanded by 120 basis points to 68.4%, reflecting ongoing cost control and higher SaaS mix.

During Q3, Agilysys converted $75 million of its $130 million backlog into revenue, representing a 12% increase in backlog year-over-year and a conversion rate improvement of 8 percentage points. Management highlighted gains in implementation efficiencies, reducing average deployment time by four days compared with the prior quarter. Professional services bookings rose 9%, reflecting increased demand for integration and upgrade projects.

Management reaffirmed full-year fiscal 2026 guidance, projecting revenue growth of 6% to 8% and non-GAAP EPS in the range of $1.60 to $1.70. The company noted potential risks to achieving these targets, including the pace of international deployments and currency fluctuations. Agilysys emphasized its commitment to converting the remaining backlog and leveraging cross-sell opportunities within its installed base.

Following the earnings release, Agilysys shares declined 5% in extended trading, reflecting investor disappointment over the EPS shortfall. Trading volume in the aftermarket session increased to three times the 30-day average. Analysts at two major brokerages lowered their near-term price targets, citing the miss and modest upside risks to the current guidance range.