Q1 2022 Agilysys Inc Earnings Call
Ladies and gentlemen.
Today's conference call will begin in 2 minutes until that time your lines will again be placed on hold and thank you for your patience.
And ladies and gentlemen, and this is the operator today's conference call will begin in 2 minutes until that time your lines will again be placed on hold and.
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Thank you.
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Yeah.
Good day, ladies and gentlemen, and welcome and she will be at Joseph fiscal 'twenty.
<unk> first quarter conference call as a reminder, today's conference call May be recorded I would now like to turn the conference over to Jessica Hansen director of corporate strategy and Investor Relations at Joseph You May begin.
Thank you Terry and good afternoon, everybody. Thank you for joining.
<unk>, 20th photos fiscal 2020.2 first quarter conference call, we will get started and just a minute with management's comments, but before doing so let me read the safe Harbor language and some statements made on today's call will be predictive and are intended to be made as forward looking within the safe Harbor protections of the private Securities Litigation Reform Act of 19.
And the of July including statements regarding our financial guidance.
Although the company believes that its forward looking statements are based on reasonable assumptions such statements are subject to risks and uncertainties that could cause results to differ materially and.
Important factors that could cause actual results to vary materially from these and the forward.
And 90 statements include the continued effect of the COVID-19 pandemic on our business and the hospitality industry, the timing and extent of the recovery phase of the hospitality industry and the risks set forth and the Companys reports on form 10-K, and 10-Q and other reports filed with the Securities and Exchange Commission.
With.
Looking I'd now like to turn the call over to Mr. Ramesh Srinivasan, President and Chief Executive Officer of a Jealousness Ramesh. Please go ahead.
Thank you Jessica and good evening.
Welcome to our fiscal 2022 first quarter earnings call.
Joining Jessica and me on the call today.
And that that Atlanta office is Dave Wood, our CFO.
We hope all of you and your families are fully vaccinated doing well and staying safe and healthy.
We continue to treat the good health and happiness and wellbeing all thought idealess teammates.
And Mitch.
Customer and partner personnel as a top priority.
The productivity and quality of execution levels of our global workforce.
And at high levels.
Despite the personal and family challenges the virus has forced many of.
We are deeply grateful to all our employees for everything they continue to do for <unk>.
The challenging circumstances.
During negatives such as this earnings call for the remainder of this fiscal year.
And we'll do our best to offer competitive.
Patterson's to historical quarters.
1 with the comparable quarter from a year ago, and 1 with the comparable quarter from 2 years ago.
Fiscal 2021.
Period from calendar April 2020 to March 2021 what obviously.
And not a normal year.
Providing comparisons with both last year and the year before that when there were no pandemic related challenges should give you a better idea of our business progress.
From the standpoint of sales success.
From around the February and March timeframe of this calendar year.
And we've seen good recovery in the gaming and the soft market verticals in the U S.
And a partial recovery in the hotel and cruise ships verticals.
While managed food services and.
2 regions remained significantly affected by pandemic related closures.
Both the APAC and EMEA regions.
<unk> to be impacted heavily by lockdowns and other severe restrictions.
Despite the lack of recovery in multiple verticals.
And geography market areas.
This was our best Q1 April to June quarter, with respect to sales success and revenue level.
Slightly higher than Q1.2 years ago.
And then all our markets are operating normally with no pandemic related challenges.
Professional services and hardware sales bookings during Q1 fiscal 2022, we're close to even with Q1.2 years ago.
While software sales was ahead of pre pandemic levels.
This was a record subscription software sales quarters.
And sales agreements, 1 signed and closed.
Most of these SaaS projects won during the quarter, our yet to be implemented and will contribute to future subscription revenue growth.
Our product innovation and increased competitive advantage levels.
And have made up for the pandemic related market challenges and several verticals and regions. When we compare the current Q1 quarter results with Q1.4 years ago.
With respect to financial results for the quarter, which Dave will cover in a lot more detail.
Revenue for the quarter was $38.7 million at 33 zero, 30% increase over Q1 of last year.
And a slight 1% increase over the pre pandemic Q1 from 2 years ago.
Combined product and services revenue.
They improved by about 67% over Q1 of last year.
But remained 15, 1.515% below Q1 from 2 years ago.
Recurring revenue was a record $23.2 million.
13, 1.313% higher.
And Q1 last year, and nearly 16, 1.616% higher than Q1.2 years ago.
But the recurring revenue subscription revenue was also a record.
Crossing the $10 million quarterly Mark for the first time.
Subscription.
<unk> revenue now constitutes nearly 44% of overall recurring revenue.
And all time high.
The consistent growth in subscription revenue is a solid testament to our accelerating pace of product innovation.
And the increased availability of cloud based software.
And applications.
Operating net income of $1.5 million.
And GAAP EPS of 6 cents per solid improvements over both Q1 of last fiscal year.
And Q1.2 years ago.
And.
Adjusted EBITDA was $6.9 million about 18, 1.818% of revenue.
Revenue level this quarter was negatively impacted by implementation delays, which drove our combined backlog across product.
Services and recurring revenue to record levels.
The 2 major reasons for these delays were 1.
And by far the main reason lack of resources and many customer sites.
And 2 implementations of some of our recently developed and modernized software.
And where applications are taking a few more weeks and unusual to get all the technical implementation details sorted out.
Both these challenges are short term issues.
Which should get cleared up soon and enabling better backlog conversion to revenue during future quarters.
During Q1 April to June the signed sales agreements, which added 15, 1.515 new customers.
69, new properties, which did not have any of our products before but the parent company was already a customer.
And there were 100.
Synthesis of selling at least 1 additional product to sites, which already had at least 1 of our other products.
More than 99 zero 90 per cent of the 15, new customers and 69, new properties added during the quarter.
And Brilinta subscription license based.
This quarter was among our strongest with respect to cash collections.
Helping us H past, the 100 million cash balance Mark for the first time and many years.
Despite all the challenges which.
Wayne and large swaths of the hospitality industry and.
Cash collection trends has been encouraging and indicators of our customers seeing improvements and the revenue streams and also needing enhanced technology solutions.
We continue to remain disciplined with our expense levels and use.
And of cash.
Our modernized products are beginning to gain good traction and the fee.
We are now seriously competitive in the property management system Pms ecosystem marketplace with the cloud native stay Pms, leading the way.
The completely.
<unk> modernized visual 1 Tms product is on track to be released for customer deployments in a few weeks from now.
Giving us a second world class cloud native Tms option.
With several pms add on modules like Spa, and golf sales and catering book Express mobile.
Service and engage already implemented at various customer sites, we are now and a good position to execute on our vision of providing a complete modular and integrated open API architecture based modern technology cloud native set of applications.
Which will help our.
Customers manage the entire guest journey.
From a direct channel Commission free booking engine, which enables bookings not just for rooms, but across all and many of these offered by our resort in a single booking interaction.
All the way till the last guest touch point, and even beyond with promotions and other loyalty.
<unk> management tools.
This reduces the need for hospitality customers depend on too many different technology providers and carry the burden themselves of system integration challenges.
We've now reached the competitive positioning stage in the Pms software space.
Working diligently towards during the past few years.
We are now being included and are seriously competitive and Pms rfps.
Which would not have had our participation and a couple of years ago.
We've also made good progress with follow up releases of the.
I have been Blessed info Genesis P O S terminal, which we discussed with you before.
These follow up releases have included additional required payment gateway integration approvals and other third party system integrations to make modernized and for Genesis is available across multiple hospitals.
Modernity verticals.
All UI aspects have been re engineered in this modernized version.
Making it a lot easier to operate a food outlet and serve guests.
We've now given our sales capability of combining the advantages of many sleek all in 1 devices available today.
Total complexities of robust enterprise requirements.
Ben and customers need not sacrifice 1 need in search of the others.
They need not be tied down to the traditional heavy duty terminals and also not give up on all their crucial and extensive enterprise management requirements.
Additional.
With the software modules like the remote ordering tool on demand and the easy contactless pay option quick pay have been very successful during the past year across hundreds of food outlet profit centers and continue to drive demand for our solutions.
POS modernization of the inventory and procurement products E Tech and stat and water continued to make good progress we are seeing more sales success for those 2 products as well.
Q1 fiscal 2022.
It was our best quarter of inventory procurement sales and about 2 and a half years.
This is another growing business area, which all these years has been hampered by lack of modern technology. Despite these products, having robust and complete functionality and feature sets.
But the product fits reaching the stage, we have been building towards during the past few years.
Vietnam.
We are now beginning to steadily increase our investments and sales and marketing.
Our participation and trade shows is beginning to pick up pace again.
We have participated in person at a couple of them during recent weeks with reasonable success.
And foot traffic at the shows we're not back to pre pandemic levels, but were reasonable.
Created multiple new leads.
We are now looking forward to participating in person at the high Tech and G..2 issues during the coming months.
In addition, we have a virtual customer user conference and Nextgen hospitality event going on this week as we speak with hundreds of customers.
And with users attending.
B and exempted to have all these opportunities to relaunch agilis.
Company, which has always been known for cluster and solid hospitality software solutions and great customer service.
Now also having the most modern cloud technology available.
Cluster.
Adjusted solutions are now based on.
Our current marketing tagline trusted solutions modern technology summarizes it very well.
Getting started on this new agila stood out or journey is a great feeling.
We recently added just in general.
And it is a strong sales leaders and Australia to head business development efforts and the Australia, New Zealand regions, where we have had and for Genesis is implemented at several sites for many years, but it was only the percentage through resellers.
We ended that reseller relationship and Australia.
And in fact, another 1 and the UK as well.
And of calendar 2020 and.
And have started building direct relationships with all customers.
Justin has deep relationships within the hospitality industry in Australia, and New Zealand and will help us grow our business across all our product offerings, but just b O S.
In addition, we have added 3 quota carrying sales.
Personnel during recent months in the U S.
We will continue expanding our sales and marketing staffing levels as our revenue levels improve.
With that let me hand, the call over to Dave for further color on our business progress and a more detailed commentary on our financial results.
Sales, but.
Or do you there. Thank you Ramesh taking a look at our financial results beginning with the income statement first quarter of fiscal 2022 revenue was $38.7 million a 29, 9% increase from total net revenue of $29.8 million and the comparable prior year period.
The increase and topline revenue largely reflects a 68, 8% increase and product revenue and a 63, 9% increase and professional services revenue.
Recurring revenue increased by 13, 2% compared to the prior year period.
Q1, FY 'twenty 2 also.
This represented a $6.6.
<unk> increase over fiscal fourth quarter of 2021, with all 3 product lines, increasing sequentially over the prior quarter.
When comparing to the pre pandemic period of fiscal 2020, we are encouraged that the current quarter has returned to similar levels.
<unk> of revenue and sales as the comparative 2020 quarter.
While the total backlog is at record levels.
Total recurring revenue represented 59, 9% of total net revenues for the fiscal first quarter compared to 68, 8% of total net revenue and the comparable prior year.
Also.
Recurring revenue of $23.2 million is a record.
$2.7 million higher than the prior year and up 300000 and sequentially.
We're also pleased with our subscription revenue growth, which grew year over year of 33, 2% during the first quarter of fiscal 2022.
And your peers are $10.2 million.
This also represents a growth of 44, 7% over the first quarter of fiscal 2000 from it.
As a reminder, subscription revenue and Q1 fiscal 2021 was negatively impacted by several onetime items.
Subscription revenue comprised around.
A record 84% of.
Total recurring revenues compared to about 37% of total recurring revenues and the first quarter of fiscal 2021.
Add on software modules that build out our product ecosystem beyond the core point of sale property management and inventory procurement offerings.
And are adding scale quickly and are now contributing to 8% of total sales this quarter with less than 2 years ago. The add on modules were not a meaningful contributor to sales.
We have added over $1 million and <unk> <unk>, new products and each of the last 5 quarters.
Add on software module is made.
Round, 1.7% of our subscription revenue and our fiscal first quarter of 2022.
Moving down the income statement gross profit was $24.8 million compared to $18.6 million and the first quarter of fiscal 2021.
Gross profit margin increased to 64, 2%.
Compared to 62, 2 percentage and the prior year period.
This gross profit increase was primarily due to better revenue mix.
Recurring revenue continues at record levels, while product and professional services revenue and continued to increase but have not yet fully returned to pre pandemic levels.
Product.
Product and professional services revenue are up 15, 7% sequentially when compared to Q4 fiscal year 'twenty 1.
Moving to operating expenses operating expenses, excluding charges from legal settlements impairment and restructuring severance and other charges.
The first quarter.
And saw a substantial sequential decrease of 53% over Q4.2021, mostly due to the reduction and stock based compensation expenses.
Compared to the prior year operating expense saw a 27% increase to $22.6 million from $17.8 months.
Year over year increase and operate operating expense was due to temporary reductions which were in place last year and cost coming back into the business post COVID-19.
Product development sales and marketing and general and administrative expenses or <unk>, 56% of revenue for both this quarter and the first quarter.
Order of fiscal year 2021.
Compared to Q1 fiscal 2020.
And without the impact of stock based compensation, our normal operating expenses decreased by $1.9 million, despite the higher revenue levels and the current quarter.
Without the impact of increased stock based compensation.
Product development sales and marketing and general and administrative expenses were 46% of revenue this quarter.
Our net income of $1.5 million is a significant improvement to the prior year's fourth quarter loss of $24.7 million with earnings per share improving to 6 <unk>.
Compared.
Cost of 1 dollar and Fox and the fourth quarter of fiscal year 2020.
Adjusted net income and adjusted diluted earnings per share both show significant improvement over the prior year first quarter adjusted net income of $5.2 million compares.
<unk> to $1.9 million and the prior year first quarter.
To a and adjusted diluted earnings per share of <unk> 21 compares.
Compares favorably to <unk> and the prior year first quarter, when normalizing for certain noncash and nonrecurring charges.
For the fiscal 2022 first quarter, adjusted EBITDA was $6.9 million compared to $3.
$4 million and the year ago quarter.
The adjusted EBITDA improvement continues to represent the overall health of the business and operating leverage created by our internal investments as revenue continues to come back to pre pandemic levels.
Moving to the balance sheet and cash flow statement cash and marketable securities.
<unk> improved by $4.7 million and the first quarter of fiscal 2020 to cash and marketable securities as of June 32021.
$103.9 million compared to $99.2 million on March 31, 2020 day.
Free cash flow and the quarter was a pause.
<unk> $7.7 million compared to a loss of $5.2 million and the prior year quarter.
So in summary, our underlying business fundamentals are strong with the new products available to the market and profitability continues to be a focus and a strength of the company even as revenue growth starts to return.
With that I'd now like to turn the call back over to refresh.
Thank you Dave.
Overall, we are happy with the sales this quarter. Despite many pandemic related challenges remaining in the industry, especially in the managed services vertically and international regions.
We are excited.
And with our current competitive position and I am confident of a bright future.
Agile has stood at all.
And the process of being launched.
And we've started shifting our primary focus from RMB.
More towards sales and marketing along with growing professional services and simple.
We continue to expect fiscal 2022 to be our best revenue year since we converted our sales into a hospitality software solutions focused business 7 or 8 years ago.
We continue to expect fiscal 2022 revenue to be in the 160 million to 117.
<unk> million dollars range.
With adjusted EBITDA being slightly north of 15, 1.515% of revenue.
Despite expected increased spending levels in all customer facing areas.
And the hospitality sector should continue to recover as vaccination rates pick up all across the world.
We are well positioned to ride that as a company, we are and take out business to higher levels.
With that Shetty, let's open up the call for Q&A.
Yes.
Ladies and gentlemen, if you have a question at this time. Please press Star then the number 1 on your telephone keypad and sorry.
Question has been.
And answered or you wish to remove yourself from the queue. Please press the pound key.
Hold while we compile the Q&A roster.
Your first question comes from the line of Matt Vanvliet from <unk>. Your line is now open.
Yes, hi, Thanks for taking my question and great job and.
And the quarter I.
And I guess first on the product development side, and you've made a ton of progress over the last couple of years, especially as you've been pushing the SaaS products out there.
And <unk> you mentioned.
A couple new products that are sort of to be released very soon I guess on a more forward looking.
So as you know are there any other major product gaps that you're eyeing.
And that need either modernization of what you have and the in the portfolio already or that customers are now asking about that you expect to have over the next several months.
Hi, Matt.
For the question.
And there are no new products that we're planning.
Our focus during the next year is going to be to settle down.
All the new software modules that we've already created settle down and the field.
All the new products, we've already created and all the products that have been modernized. This modernization effort has been a big effort.
Net.
Takes a redoing major products that I've had a 10 year 'twenty or even 30 year history. So it's been a big effort. So we want to focus the next few quarters on making sure all of those modules and products all of those flow applications get settled down well and the field before we start thinking about.
And my water than new enhancements and modules, we need to expand our total addressable market I guess that time will come sometime in calendar 2022, but for the next few quarters, we have focused on settling down all of the work we have done and the fee.
Alright, and then you mentioned a few of the.
The deployments have have hit a little bit of a delay from time to time, but you expect those to be relatively short lived.
Maybe if you could just give us a little bit more color there hasnt been an issue of not having people on site is it customer related issues, just maybe not fully prepared.
For.
The delivery.
Or was there something more from a technical side on year and that you've now sort of straightened out.
Yes, So you somewhat you summarized the 2 reasons well, Matt but day.
Overwhelming reason the big majority of the reason why.
Our current combined backlog and product.
The services and recurring revenue is at a record level the price.
And many of these and for that GAAP between selling and implementing before it gets converted to revenue has been the lack of resources at customer sites now that all of US read in the newspaper as we know that many of the properties, we had working with that shortly.
<unk> sources and they have a whole lot of other priorities to work with as well. So that has been the overwhelming big reason for the implementation delays now along with that.
And the reason is also been that many of these products that we are implementing now.
Either new modules have been completed.
<unk> really modernized over the last.
2 years or so so as they get into the field that are technical issues that we have found during implementation that takes a few days to a couple of weeks to 3 weeks kind of thing to sort out that is also cost certain implementation delays and.
Complete and cases that 1 implementation delay.
Makes us put on hold the following implementation of the same product because we'd rather settle it well and the first few sites that are going live before we take on all the additional sites, but I would say that is a smaller secondary reason the big primary reason has been lack of resources.
This customer properties.
And then just a quick follow up to that.
You reiterated the guidance, despite coming in and sort of above at least our expectations for the quarter and talking about.
Sort of record levels of bookings and backlog here.
Is there just.
And in such a element of conservatism given the ongoing uncertainty or have some of these project delays and.
And the delays associated with recognizing revenue.
Not sort of giving you that extra confidence to raise the guidance range.
Yes, sure so Matt in terms of record levels.
<unk> bookings of 1 clarification and the suicide best Q.
Q1 quarter of sales, meaning this was the best April through June period.
And the previous record was 2 years ago Q1, and April through June of calendar, <unk> 19, and that was before the pandemic call and fiscal year 'twenty.
So this.
It is not our best ever quarter of sales, but it does that best Q1 quarter of sales. So that's flattish.
Classification to be understood that's number 1.
And number 2 yes, a big part of the revenue success. This year is going to depend on how quickly we cleared the backlog.
And the record levels of backlog, we have no and.
And that's not going to be easy because our properties are not going to get the resources just like that quickly and this phase of implementing all our new modules is going to cost a little bit of a delay going forward.
So fundamentally I mean, when we provide guidance we had as realistic as we.
As we can be not aggressive.
If not conservative that is always our objective.
Now the 1 thing I will give you Matt is that the second half of the fiscal year October through March we expect a pickup.
In all cases, all these products would have been well settled by now we expect the market to pick up <unk>.
And we expect the managed foodservice vertical to pick up.
As more people go back to offices, we expect international regions to pick up as.
As more of a as a vaccination rates continue to increase so we do expect a pickup between October and March which is the second half of the fiscal year. We just don't know how good that pickup is going to be as yet is it going to be delayed by.
Per months is it going to come ahead by a month or so in September. We just don't have a good enough feel for that we do expect the second half of the year to be better than the first half of this fiscal year.
Just don't have a good enough feel for how much ammo.
How much that increase is going to be so our current guidance is.
Is it realistic.
Stick reflection of where we think we'll end up with.
Alright, great. Thank you for taking all the questions and I appreciate it.
Thank you Matt.
Your next question comes from the line of haul truck share from Northland Capital. Your line is now open.
Great. Thank you Greg.
A couple of our amazing free cash flow looks.
It looks like that's been driven by Great day sales outstanding.
And so that's actually my first question is this DSO level sustainable.
And yes, the DSO levels are sustainable I mean, we obviously there was a lot of turmoil last year, but they've kind of settled.
And to the ranges they are now and like we've talked about the working capital adjustment on free cash flow really smoothed out over a 12 month period, but the dsos are and and the dps or right, where we'd like them to be and.
So yes, the free cash flows.
Stable.
Great.
And then how should we be thinking about free cash flow relative to the effectively the.
$25 million and Thats, our guidance for the year.
Yes over the year, it'll it'll smooth out and be near the same number I mean, you'll have some capex adjustments against that but the working capital smoothed out so.
So keep in mind Q3 is typically our is the bumpy this quarter with some large annual invoices that go out but over the year.
<unk> capital Smoothes itself out so it will be relatively close to the profitability guidance.
Okay, Great and then normalizing from a 1 time events and the year ago quarter.
How does subscription revenue per on a year over year basis, I know on assets basis was up 33% year over year and you may have said this from the transfer and I just didn't catch it.
Yes, so it was right around the 20% I mean, a lot of the quarters and and.
Fiscal year 2021. So there was there was the onetime credits, but there was also several other.
1 time kind of lumpiness in the quarters with cash Collectability and larger deferrals, but if you take out most of that noise. It was around the 20% growth you're used to see.
And how you should expect subscription revenue to be around the 20% Hyatt and previous yet and even.
Add up all the quarters for the year.
And.
You add up all the 4 quarters of the fiscal year and compare it to the previous fiscal year. It will end up around the 20% we think.
Okay, Great and my last question is is that.
I know that you've said backlog is at record levels across product service and then.
And subscription and maintenance and support but within the subscription and maintenance support does that include subscription backlog at record levels as well.
Yes, and how that so the subscription revenue is near record levels and the professional services is at record levels.
So the comp.
But the combination of all 3 is at a record level, but yes. The subscription revenue is at near record levels as well and as part of that recurring revenue number of image and yes, that's correct yep.
Yeah, absolutely okay, great. Thank you.
Thanks Nina.
Your next question comes.
From the line of George Sutton from Craig Hallum. Your line is now open.
Thank you.
Did hop on late it sounded like you were getting a lot of quantitative question. So Ramesh and I wanted to ask you some qualitative questions.
You are on your.
Message.
To your customers today and your conference mentioned, you're the most relaxed and happy you have ever been and just wondered if we can get a perspective of that along with the.
And the fact that you know.
You now have backward compatibility and software is no longer a constraint. It just seems like a pretty big message in terms.
Of where you've come from and where you are now and I just wanted to think of it from that angle.
Sure George.
I'm I'm not typically the kind of guy who has ever relaxed and happy but what I've met was relatively I am more relaxed and happy no. What I meant was and all of these user conferences since.
2017, George you always make future promises.
We are going to invest in R&D, we are going to modernize our products. We've always been known for trusted solutions, we've always been known for great customer service, but our products, having all and thats been the truth. So since 2017.
And promise that Youre going to do this you are going to.
And modernize it and you always feel happy when you delivered on that promise. So he had after and these user conferences, we don't need to talk about the future of that much. We can talk about the present and that's always a much better state than standing there and saying we're going to do this we are going to do that now we can say we have done it and we have kept our promises now you can depend on us.
For both cloud based applications and for on premise applications and both of them are based on World class technology. So we've reached that stage and that is what I meant by it is far easier to do these presentations now and we feel that and demo discharge when we do demos and we do Angeles as all of you with customers each 10.
And times easier now than it was 2 years ago. Because you are talking about the present and you are telling customers. All we need from you is a chance. Please take a look at the demos and that's all we need you don't need to depend on any future promises or anything so that's what I meant now as far as the backward compatibility that we talked about today George and.
In the event and the next generation, even though he had he is what we mean is the IAG Pos terminal modernization. We have done is a big deal because more of 1 code base. We support all the operating systems iOS Android and Windows of 1 code base. So we don't need a third party vendor dependency.
And then if you don't need all of that.
Along with that customers have the ability to upgrade.
2 of their devices, but leave the rest of it on an older version, that's not the kind of backward compatibility all our competitive vendors provide it is normally a heavy lift sometimes they even force them to change the.
Hardware, while whatever we do we make sure we protect past customer investments as much as we can so that too is a big deal so happy about that as well.
Gotcha, just looking forward to high Tech and <unk> in terms of what kind of presence you anticipate having as those events, obviously I don't believe other.
Either of those really happened last year.
And are those going to be live events and do you think youre going to get the.
Demo.
Numbers that you would hope to get.
I think so George we are definitely going to be there and full force and we're looking forward to and in person event and.
A couple of shows.
Those will be attended over the last few weeks the attendance has been down compared to pre pandemic levels, but we think high tech and <unk> are going to be very well attended all of the vendor partners and all our peers and competitors and everyone else and the gaming industry and in the hospitality industry around.
Eagerly looking forward to participating here.
And our feeling is unless there is some.
Bad news again of things going backward, we think there is going to be very good presence from the customer and and we are definitely going to be there and full force and ready to demo our entire range of products there won't be any trace of all technology shown there and order book.
So we are looking forward to that.
Got you great. Thank you thank.
Thank you John.
Yeah.
I don't know everyone. If you have questions at this time, you may press the bounty and.
And then if you have a question please press the.
And number 1 the star and the number 1 and your telephone keypad.
I am showing no further questions.
We have Allen Klee from Maxim Group Your line is net.
Yeah.
Yes, good afternoon question Hassan.
How youre thinking about your expenses in terms of how they're going to grow throughout the year and then somewhat related to that the uptick status of.
Your hiring and the India Development Center.
And and maybe a little color of just how and how things are and India. Thank you very much.
Yes, after the secondary and the high island. After the second wave got done things have stabilized well in India and in fact I was there.
For a couple of weeks a couple of weeks ago. So I spent a couple of weeks there.
As we and say things have settled down very well and India. We are still working at them out for the most part and our India Development Center, but things are coming back to normalcy, a lot faster than we thought during that second wave.
Now as far as expenses are concerned I'll give you a higher picture.
And Sorel and and.
And it over to a day or.
So starting from now engender and you should see our R&D product development level of expenses stabilizing around where we are today.
And it will could be some increases and incentive comp increases when we have better and better years and you always have the run rate you know we built it up to a certain.
And then I'll hand that run rate issue is there, but when you take this quarter's product development expenses, we should be stabilizing RMB.
And that area for the next foreseeable future right for the next.
As we take this company forward and revenue, we don't require any big increase in R&D expenses.
And you should.
And expect the sales and marketing expenses as a percentage of revenue to gradually increase over a period of time.
So the fact that we saved and R&D as a percentage of revenue by the Maryland, we are not reducing R&D, but we're not going to increase it any further.
We have a lot of operating leverage and R&D now part of that saving as a percentage of revenue.
Should it go towards sales and marketing and should go towards increasing our profitability levels.
The period of time now etcetera that India is concerned we are pretty much close to peak sites now and you're probably about 30 or 40 people short compared to be.
Capacity, we have and I think it will be stabilizing data for the foreseeable future no major at Hyatt and coming up.
Should we R&D and and our India Development Center and anytime in the near future and all of our attention is more on increasing sales and marketing spend.
Net.
No I agree Alan and I mean, I think last year was obviously a little bit lumpy. When you look at some of our opex as a percentage of revenue, but now kind of normalized.
The stock based compensation I think youll see us go back to <unk>.
The ranges you're more familiar with for example, G&A will probably remain and the 14% to 16% of revenue product development start coming down into the 28, 29% of revenue and sales and marketing are starting to come up.
<unk> and Paul.
And that revenue so we're.
We'll start working back toward the percentage as youre kind of used to with product development and coming down and like Ramesh said, adding a little bit more here and there to sales and marketing.
Thank you.
Thank you Ella.
And.
I am showing no further questions at this time I would now like to turn the conference back from Us.
Thank you Terry Thank you for all your continued interest and agile office.
On behalf of our board management team and close to 40, and 100 team members and great.
For your investments and analysis and for your attendance today. Please take good care and thank you.
Okay.
Yeah.
This concludes today's conference call. Thank you all for your participation you may all disconnect.
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