Private Securities Litigation Reform Act of 1995, including statements regarding our financial guidance. As is our usual practice in these calls, let me cover sales and selling success first before discussing revenue, profitability, guidance increase, and other business updates. On a year-to-date basis, Food Service Management (FSM) sales over the first three quarters of fiscal 2026 is already higher than full year sales during each of the previous two years. Cumulative subscription SaaS sales during the first three quarters of fiscal 2026 is already at 95% of previous best full year sales, which happened to be last fiscal year.
Our win-loss ratio in competitive deals remains impressively high and far ahead of normal established enterprise software norms. Before moving on to revenue details, a quick word on the Marriott PMS project. We continue to exclude the Marriott PMS project from all our sales and backlog numbers. Product revenue was $10.7 million, which was about the same as Q3 last fiscal year, slightly ahead of our expectations.
Fiscal 2026 Q3 October to December services revenue was $17.7 million, that is $17.7 million, 22% higher than the comparable prior year quarter and in line with our expectations for this quarter. This quarter was a record high for normal projects implementation services revenue. We continue to make good headway in improving software implementation efficiencies and finding ways to reduce customer implementation delays. Services revenue backlog at the end of Q3 was less than at the end of the previous quarter, which is a good indicator of improving implementation efficiencies.
| Metric | Period | Current guidance |
|---|---|---|
| Total revenue | FY2026 | $318M (raised) |
| Subscription revenue growth | FY2026 | 29% |
| Adjusted EBITDA margin | FY2026 | 20% (maintained) |
| Professional services revenue | Q4 FY2026 | ~$18M range |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +15.6% | Record $80.4M vs $69.6M, driven by strong subscription and services growth |
| Subscription revenue | +23.1% | Record $34.9M; 67% of recurring revenue, up from 63.8%; growth from new incremental projects, not maintenance cannibalization |
| Recurring revenue | +17.2% | Record $52M, 64.7% of total revenue |
| Professional services revenue | +22% | Record for normal implementation services; improved backlog deployment vs weak Q3 FY2025 |
| Product revenue | ~0% | $10.7M, about flat with prior year, slightly ahead of expectations |
| Adjusted EBITDA | +17.7% | $17.3M vs $14.7M; running at 19.5% of revenue YTD, trending toward 20% guidance |
| Net income | — | $9.9M vs $3.8M prior year; diluted EPS $0.35 vs $0.14 |
| Adjusted diluted EPS | — | $0.42 vs $0.38 prior year |
| Free cash flow | — | $22.7M vs $19.7M prior year quarter |
| Subscription ARR installed | +40% | Best quarter on record for ARR of subscription projects implemented |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Marriott PMS project | Pilot property implementations | Pilot completed successfully; entering implementation waves that scale up over coming months (excluded from sales/backlog) | — |
| POS business | Modernization drag, subscription growth in mid-to-high teens | Modernized product settled after ~2 years; subscription growth back to 20%, expanding into higher education and healthcare | — |
| Reference customers | Lacked references on newly modernized products | Base rebuilt and expanding fast; larger, more prestigious customers taking prospect reference calls | — |
| AI adoption | — | Permeating internal operations and products (NLP, voice recognition, image recognition, room upgrades); boosting implementation efficiency and competitive advantage | — |
| Implementation efficiency | Backlog low point in Q3 FY2025 | Improved management and AI tools speeding booking-to-revenue conversion; services backlog down QoQ | — |