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Several stocks are already standing out in this week’s much-anticipated earnings lineup, including UPS (UPS - Free Report) and PayPal (PYPL - Free Report), but Agilysys (AGYS - Free Report) and Wayfair (W - Free Report) have stolen the show so far after impressively exceeding their quarterly expectations and offering positive guidance.

As two of the top movers, Agilysys and Wayfair stock spiked over +20% on Tuesday, with both hitting new 52-week highs of over $100 a share.

The excitement for Agilysys stock comes as the provider of innovative IT solutions is seeing strong demand for its cloud-native hospitality software and services, which are used by hotels, resorts, and casinos.

Meanwhile, Wayfair has started to turn the corner in navigating a tough operating environment as a leading e-commerce provider of home goods products, including furniture and décor.
 

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Subscription Growth Fuels Agilysys’ Record Quarterly Results
 

Agilysys' subscription services revenue captivated investors, leading to record quarterly results for its core business operations. It’s also noteworthy that Agilysys’ AI-driven features have played a significant role in accelerating growth, improving customer personalization, and boosting upselling efficiency. 

Reporting results for its fiscal second quarter after-market hours on Monday, Agilisys’ Q2 sales were up 16% year over year to $79.3 million, and topped estimates of $76.74 million by 3%. This also marked Agilisys' highest quarterly revenue mark since divesting its technology solutions group and other discontinued divisions in 2010.

Subscription revenue spiked 33% YoY to a peak of $51 million, accounting for more than 60% of Agilysys’ total sales. Agilysys also hit quarterly peaks in adjusted EBITDA at $18.5 million (23.5% margins) and operating margins at 17.8%. On the bottom line, Agilysys hit a Q2 EPS peak of $0.40, which was up from $0.34 a share in the comparative quarter and topped expectations of $0.39.

Wayfair’s Strong Q3 Results Trigger a Short Squeeze
 

Much stronger-than-expected Q3 results caused a short squeeze in Wayfair’s stock, with 20% of its shares being sold short as of mid-October.

Forcing short sellers to buy and reigniting investors' confidence in the process, Wayfair’s Q3 sales rose 5% YoY to $3.27 billion and comfortably topped estimates of $3.13 billion by 4%. Even better, Q3 EPS soared 87% to $0.87 versus $0.47 a share in the prior year quarter. Plus, this crushed EPS expectations of $0.36 by 141%.
 

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Agilysys & Wayfair’s Positive Guidance
 

Raising its full-year subscription revenue growth rate from 25% to 29%, Agilysys also raised its full-year revenue forecast from a range of $305-$310 million to $315-$318 million. Furthermore, Agilysys now expects its adjusted EBITDA margin to be further above 20% and emphasized continued investment in cloud-native solutions and international expansion.

After previously declining to provide formal numerical guidance and emphasizing a cautious outlook, Wayfair shifted to a more confident stance, offering explicit guidance for the fourth quarter. Notably, Wayfair expects Q4 revenue to increase by mid-single digits, with the Zacks Consensus currently at $3.01 billion or 4% growth. Additionally, Wayfair anticipates an adjusted EBITDA margin of 5.5%-6.5%.

Bottom Line
 

Ironically, to what may have served as a warning to short sellers, Wayfair stock is currently sporting a Zacks Rank #2 (Buy) as the company was already benefiting from a positive trend of earnings estimate revisions (EPS) ahead of its Q3 report. As for Agilysys, AGYS currently lands a Zacks Rank #3 (Hold), but a buy rating could be on the way, considering EPS estimates are likely to rise after record quarterly results.

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