What Happened:
Shares of hospitality industry software provider Agilysys (NASDAQ:AGYS) jumped 14.4% in the afternoon session after the company reported first-quarter results, with revenue slightly exceeding analysts' expectations while EPS beat by a more convincing margin. Agilysys's free cash flow generation also exceeded analysts' estimates. Notably, the topline benefited from growth in subscription and professional services, as demand for POS (point-of-sale) and POS-related modules remained strong. Looking ahead, its revenue forecast for next year was in line with expectations. On the other hand, its gross margin fell. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track.
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What is the market telling us:
Agilysys's shares are not very volatile than the market average and over the last year have had only 7 moves greater than 5%. Moves this big are very rare for Agilysys and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 12 months ago, when the stock dropped 6.2% on the news that the company reported fourth-quarter results that exceeded analysts' estimates for revenue, free cash flow, and earnings per share. However, gross margin declined and fell below expectations. In addition, revenue and adjusted EBITDA guidance for the full year were below Consensus. Overall, it was a weaker quarter for the company, and the provided guidance offers limited reasons for optimism.
Agilysys is up 10.5% since the beginning of the year, and at $90.74 per share it is trading close to its 52-week high of $91.40 from February 2024. Investors who bought $1,000 worth of Agilysys's shares 5 years ago would now be looking at an investment worth $4,544.
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