Q2 2024 Agilysys Inc Earnings Call

Okay.

Speaker 1: Good day, ladies and gentlemen, and welcome to the Agilisis fiscal 2024 second quarter conference call. As a reminder, today's conference may be recorded. I would now like to turn the conference over to Jessica Hennessey, senior director of corporate strategy and investor relations at Agilisis. You may begin.

Yeah.

Good day, ladies and gentlemen, and welcome to the Genesis fiscal 2024 second quarter Conference call. As a reminder, todays conference maybe recorded I would now like to.

I'll turn the conference over to Jessica Hennessy Senior director of corporate strategy and Investor Relations at Genesis you may begin.

Speaker 2: Thank you, Victor and good afternoon. Everybody Thank you for joining the fiscal 2022nd quarter conference call. We will get started in just a minute with management comments. But before doing so, let me read the State Harbor link.

Thank you Victor and good afternoon, everybody. Thank you for joining the of Joseph fiscal 'twenty 'twenty four second quarter Conference call. We will get started in just a minute with management's comments, but before doing so let me read the safe Harbor language.

Speaker 2: 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 1995, including statements regarding our

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 1995.

Including statements regarding our financial guidance.

Speaker 2: 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.

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.

Speaker 2: The important factors that could cause actual results to vary materially from these forward-looking statements include the effects of global economic factors on our business, the hospitality industry's need for technology solutions.

Important factors that could cause actual results to vary materially from these forward looking statements include the effects of global economic factors on our business the hospitality industry need for technology solutions, our ability to drive sale, our ability to increase profitability and our ability to improve services.

Speaker 2: our ability to drive sales, our ability to increase profitability, and our ability to improve services margins and manage increased cost investments. And the risk set forth in the company's reports on Form 10-K and 10-Q and other reports filed with the securities exchange.

Margins and manage increased cost investments and the rest of that forth in the company's reports on forms 10-K, and 10-Q and other reports filed with the Securities Exchange Commission.

Speaker 2: As a reminder, any references to record financial and business levels during this call refer only to the time period after Agilisis made the transformation to an entirely hospitality-focused software solutions company in fiscal year 2014.

As a reminder, any references to record financial and business level. During this call refer only to the time period. After Joseph made the transformation to an entirely hospitality focused software solutions company in fiscal year 2014.

Speaker 2: With that, I'd now like to turn the call over to Mr. Ramesh Srinivasan, President and CEO of Agilisis. Ramesh, please go ahead.

With that I'd now like to turn the call over to Mr. Ramesh Srinivasan, President and CEO of a Joseph Ramesh. Please go ahead.

Speaker 3: Thank you Jess. Good evening. Welcome to the fiscal 2024 second quarter earnings call.

Thank you Jess good evening welcome to the fiscal 2024 second quarter earnings call.

Speaker 3: Joining Jess and me on the call today at our Alfa Atlanta headquarters is Dave Wood, CFO .

Joining me on the call today, and I'll put it that Atlanta headquarters is Dave Ward CFO .

Speaker 3: as has become the regular practice in our earnings calls. Let me cover the selling success summary first before moving on to revenue and other details.

I was just becomes a regular practice in our earnings calls let me cover the selling success summary, first before moving on to revenue and other details.

Speaker 3: We measure sales of selling success in net annual contract value, ACV of sales agreements one and five.

The measure of sales of selling success in net annual contract value HCV.

Sales agreements, one and site.

Speaker 3: fiscal 2024 Q2 July to September was one of our best ever sale success squad.

Fiscal 2020 full Q2 July to September .

Was one of our best ever sales success quarters.

Speaker 3: Overall, fiscal 2024 April to September was our best first half of fiscal year sales.

Overall fiscal 2024 April to September .

It was our best first half of fiscal year sales.

Speaker 3: comfortably better than the first half last year.

Comfortably better than the first half last year.

Speaker 3: fiscal 2023 last year was of course our best ever full year of sale.

Fiscal 2023 last year was of course, our best ever full year of sales.

Speaker 3: and we are off to a significantly better start halfway through this year.

And we are off to a significantly better start halfway through this year.

Speaker 3: July to September was a good sales quarter for virtually all the sales verticals across gaming casinos, resorts, cruise ships, hotels, managed food service providers, and internationalism.

Do you like the September was a good sales quarter for virtually all of the sales verticals across gaming casinos resorts cruise ships.

Well.

Managed foodservice providers.

And international regions.

Speaker 3: Sales from non-gaming response, hotels and cruise ships were particularly stellar.

Sales from non gaming the sauce hotels and cruise ships.

We are particularly tailored and encouraging.

Speaker 3: Because our market share levels in these areas are still low with major growth possibilities ahead.

Because that market share levels in these areas are still low with major growth possibilities.

Yeah.

Speaker 3: April to September was also a best first half that far for international sales across Europe and APEC.

April to September It was also our best first half thus far for international sales across Europe and APAC.

Speaker 3: As at the end of September , year-to-date A-PAC sales.

As at the end of September year to date APAC sales.

Speaker 3: was already close to the full year sales level reached across all of last

What's already close to the full year sales level reached across all of last fiscal year.

Speaker 3: Our competitive positioning strength is increasing with every passing month. And N2N ecosystem of software solutions.

Our competitive positioning strengths are increasing with every passing month.

Into an ecosystem of software solutions.

The breadth and depth of feature sets offered.

Speaker 3: with more getting added at increasing weights. Now that most of the product engineering efforts are done and over with.

With more getting added at increasing rates now that most of the product reengineering efforts are done in all of it.

Speaker 3: all based on state-of-the-art cloud-native technology.

All based on state of the art cloud Native technology.

Speaker 3: which can also work well in on-premise installations, which several hospitality customers still prefer.

Which can also work well in on premise installations, but several hospitality customers still prefer.

Speaker 3: All that is becoming increasingly compelling value creators and unique selling propositions for us.

All of that is becoming increasingly compelling value creators and unique selling proposition for us.

Speaker 3: The significant pickup in selling success which started around the month of August , calendar 2022 has continued unabated through the recent July to September period 13 months later.

The significant pickup in selling success, which started around the month of August calendar 2022.

Continued unabated.

Through the recent July to September period, 13 months later.

Speaker 3: We've not seen any noticeable negative effects of macroeconomic challenge.

We've not seen any noticeable negative effects of macroeconomic challenges.

Speaker 3: The hospitality industry is global, huge, and have a high need for technology and innovation to help with growing needs to improve operational efficiency.

The hospitality industry is global huge and has a high need for technology and innovation.

The growing needs to improve operational efficiencies.

Speaker 3: enable ease of use for staff users and help create far better guest experiences than are possible today.

Enable ease of use for stop users and.

And help create a better guest experiences that are possible today.

Speaker 3: We cannot say the technology providers of this industry have done too well, keeping up with innovation needs, due to, among other reasons, a lack of focus on end-to-end hospitality needs. And far less than needed research and development in this...

We cannot say that technology providers of the industry have done too well keeping up with innovation meets due to among other reasons a lack of focus on end to end hospitality meat and far less than needed research and development investments.

Speaker 3: In the meanwhile, the digital transformation revolution around hospitality is accelerating, raising the expectations of property employees and guests.

In the Meanwhile, the digital transformation Revolution, I don't hospitality is accelerating raising the expectations of property employees and guests.

Speaker 3: We think we have done well, executing on our strategy to fill that gap and expect our escalating product and technology driven competitive advantages to continue to drive good business momentum in this huge total addressable market space.

We think we have done well executing on our strategy to fill that gap and expect.

Escalating product and technology, driven competitive advantages to continue to drive good business momentum in this huge total addressable market space.

Speaker 3: We think that momentum will have good staying power, even in a possible challenging macroeconomic environment.

We think that momentum will have good staying power even in a possible challenging macroeconomic environment.

Speaker 3: In line with that assessment thus far, we are not seeing any growth-prediting clouds in the sky.

In line with that assessment, thus far we have not seen any growth threatening clouds in the sky.

Speaker 3: Our sales, our sales win-loss ratios continue to be at impressive levels.

I'd say, it's a sales win loss ratios continue to be at impressive levels.

Speaker 3: One of the highlights of sales success during the first half of fiscal 2024 was the rapidly increasing sales productivity of quota-caring sales personnel hired during the past couple of years post-COVID.

One of the highlights the same success during the first half of fiscal 2024 was the rapidly increasing sales productivity.

Quota carrying sales personnel hired during the past couple of years post COVID-19.

Speaker 3: To please this in context, the average Agilist tenure of a quota-caring sales person is around 7.5 years now.

To place this in context, the average agile assist tenure of our quota carrying sales personnel is that.

Seven and a half years now.

Speaker 3: of them slightly less than half the personal have joined them after COVID.

Of them slightly less than half the personnel have joined us after COVID-19.

Speaker 3: And the average Agilex tenure of this group is only about a year.

And the average ideal of sustain Europe . This group is only about a year.

Speaker 3: During the first half of fiscal 2024, this group of sales personnel have already one sales measured in annual contract value, amounting to close to quite as much as they did all of last fiscal year.

During the first half of fiscal 2020 for this group of sales personnel have already won sales measured in annual contract value amounts.

Amounting to close to twice as much as they did all of last fiscal year.

Speaker 3: Why we continue to make prudent and appropriate decisions with respect to increasing sales force trends?

While we continue to make prudent and appropriate decisions with respect to increasing sales for strength.

Speaker 3: Current sales staff still have additional capacity to not only maintain momentum but also grow sales from current level.

Current sales staff still have additional capacity to not only maintain momentum, but also gross sales from current levels.

Speaker 3: In addition, the number of marketing generated sales accepted opportunities. Focus on new customers.

Sure.

Number of marketing generated sales excepted opportunities.

Focus on new customers and new properties.

Speaker 3: generated by innovative and effective marketing efforts. Continue to improve.

Generated by innovative and effective marketing efforts continues to improve.

Speaker 3: During recent months, this number has been twice as high as it was at the same time last-

During recent months. This number has been twice as high as it was at the same time last year.

Okay.

Speaker 3: While our competitive strength with point of sale POF solutions continues to improve by leaps and bounds and remains our mainstay.

While our competitive strength with point of sale.

<unk> continues to improve by leaps and bounds and remains our mainstay.

Speaker 3: Sales wins during the first half of fiscal 2024 have also included several significant property management systems, PMS wins.

Sales wins during the first half of fiscal 2024 have also included several significant <unk>.

Operating management system Pms wins.

Speaker 3: A notable win during Q2 was Black Rock Ocean Front Resort on the western coast of Vancouver Island in British Columbia, Canada.

A notable win during Q2 was Blackrock oceanfront resort on the Western Coast of Vancouver Island in British Columbia, Canada.

Speaker 3: This iconic property selected as a PMS and several experience enhancer add on software modules for the stunning multi-emunity ocean front-rise.

This iconic property selected annulus of BMS and several experience in handset add on software modules for this stunning multi amenity ocean front row suck.

Speaker 3: There are now close to 20 properties live on the modernized, ground up, re-engineered, visual 1PMS, rebranded as WERFER, and released for production deployment about 18 months.

There are now close to 20 properties live on the modernized ground up re engineered visual one pms rebranded as versa.

And released for production deployment about 18 months ago.

Speaker 3: We have seen early stages of establishing our state-of-the-art technology-based cloud-native PMS value proposition in the field.

We are still in the early stages of establishing a state of the art technology based cloud native pms value proposition in the field.

Speaker 3: There is a long runway of PMS and related modules growth ahead of.

There is a long runway of BMS and related modules growth ahead of us.

Yeah.

Speaker 3: During Q2, fiscal 2024, July to September , we added 17, 17 new customers.

Okay.

During Q2 fiscal 2024 July to September .

We added 17, one 717 new customers.

Speaker 3: of which 76% were fully subscription agreements.

Of which 76% were fully subscription agreements.

Speaker 3: 17 new customers is within the 15 to 20 new customers per quarter range.

17, new customers is within that 15 to 20, new customers per quarter range, which has been one of the drivers of our revenue growth in the recent past.

Speaker 3: which has been one of the drivers of our revenue growth in the recent past.

Speaker 3: new customer deal sizes remains at impressively high levels.

New customer deal sizes remains at impressively high levels.

Speaker 3: We also added 7070, 70 new properties.

We also added 77 zero 70, new properties, but.

Speaker 3: did not have any of our products before but the parent company was already Arca.

<unk> did not have any of our products before but the parent company was already our customers.

Speaker 3: The average deal size of new property deals this quarter was about 25% higher than the previous couple of quarters.

The average deal size of new property deals this quarter was about 25% higher than the previous couple of quarters.

Speaker 3: Of the 87 new properties added during the quarter across new customers and new properties of current part parent customers.

Of the 87, new properties added during the quarter across new customers and new properties of current spot pairing customers.

Speaker 3: More than 90, 90, 90% were either partially or fully subscription based.

More than 99 zero more than 90% were either partially or fully subscription base.

Speaker 3: In addition, there were 67 instances of selling at least one additional product to properties which already had one of our other products.

In addition, there were 67 instances of selling at least one additional product to properties, which already had one of our other products.

Speaker 3: B67 instances involve the total of 142 new products. Soul2 Current Customer Pro.

B 60, 70 census involved a total of 142, new products sold to current customer properties.

Speaker 3: The average deal size across the 67 instances of new product fails was about 40%, 40% higher than the sequentially preceding Q1 quarts.

The average deal size across the 60 70 instances of new product sales was about 44 zero, 40% higher than the sequentially preceding Q1 quarter.

Now onto revenue.

Speaker 3: fiscal 2024 Q2 revenue was a record, $58.6 million. The seventh consecutive record revenue quarter, close to 23% higher than the comparable prior year period.

Fiscal 2024, Q2 revenue was a record $58 $6 million.

The seventh consecutive record revenue quarter close to 23% higher than the comparable prior year period.

Speaker 3: The year over your quarter revenue increase of 10.9 million is the highest we've ever seen.

The year over year quarter revenue increase of 10.9 million is the highest we've ever seen.

Speaker 3: Overall revenue during the first half of fiscal 2024 was 20% higher than revenue during the first half of fiscal 2020.

Overall revenue during the first half of fiscal 2024 was 20% higher than revenue during the first half of fiscal 2023.

Speaker 3: fiscal 2024 Q2 recurring revenue grew 18% 1,8% 18% year over year and 6.6% sequentially quarter over quarter to a record 34.2 million dollars.

Fiscal 2024, Q2 recurring revenue grew 18%, one 818% year over year, and 6.6% sequentially quarter over quarter to a record $34 $2 million.

Speaker 3: driven by a 29% year-over your increase in subscription revenue.

Driven by a 29% year over year increase in subscription revenue.

Speaker 3: Subscription revenue constituted 53.6% of total recurring revenue compared to 48.9% Q2 of last.

Subscription revenue constituted 53, 6% of total recurring revenue compared to 48, 9% Q2 of last year.

Speaker 3: The Euro-Ear growth in quarter-substructions revenue compared to Q2 of last year was a record 4.1 million consisting of record-ear-ear-ear increases in both POS and PMS and related

But you know what are your growth in quarter of subscription revenue compared to Q2 of last year was a record $4 1 million consisting of record year over year increases in both.

Yes.

Im Pms and related modules.

Speaker 3: Quarterm over quarter sequential growth of subscription revenue of 1.6 million and overall recurring revenue of 2.1 million where both are best such sequentially.

Quarter over quarter sequential growth of subscription revenue of $1 6 million and overall recurring revenue of $2 1 million were bought.

Best such sequential increases.

Yeah.

Speaker 3: Subscription revenue generated from add-on experience enhances software modules, most of which were developed during the past few years, grew at a slightly better rate year over year than the overall subscription growth of 29%.

Subscription revenue generated from add on experience enhances software modules most of which were developed during the past few years grew at a slightly better rate year over year than the overall subscription growth of 29%.

Speaker 3: The value of these modules and the modules and the end-to-end ecosystem we have built over the past few years goes far beyond such numbers.

The value of these models and modules and the end to end ecosystem. We have built over the past few years goes far beyond such numbers.

Speaker 3: These add-on modules working in conjunction with each other and with the core POS and PMS products are helping customers make tangible, measurable improvements in their operations.

These add on modules working in conjunction with each other.

With the court.

Pms products are helping customers make tangible measurable improvements in their operations.

Speaker 3: We heard several such customer stories about positive measurable impact on the total operation.

We heard several such customer stories.

Positive measurable impact on hotel operations during the recent gaming Shaw and even customer Advisory Board meetings held in Las Vegas, and beef stories were shared with other leading customers.

Speaker 3: During the recent gaming show and in customer advisory board meetings held in Las Vegas these stories were shared with other attending customers.

Speaker 3: Each of these modules are competing on their own as best of breed solutions and bringing tremendous value when used, enhanced, and innovated together.

Each of these modules are competing on their own as best of breed solutions, and bringing tremendous value when used enhanced and innovated together.

Speaker 3: Services revenue was a record 11.7 million, 44% higher than the comparable prior year quarter.

Services revenue was a record $11 7 million, 44% higher than the comparable prior year quarter.

Speaker 3: The increasing pace of implementations being handled by service streams augurs well for upcoming recurring revenue growth.

The increasing pace of implementation is being handled by services teams augurs well for upcoming recurring revenue growth.

Speaker 3: We continue to make good progress with implementing relatively newer software products and modules at a quicker pace now, handling complex multi-product implementations and managing the balance between majority cloud and several on-premise engines.

We continue to make good progress with implementing relatively newer software products and modules at a quicker pace now.

Underling complex multi product implementations and managing the balance between majority Clos and several on premise installations.

Speaker 3: So this is margins improved to 23.6%. But still fairly short of our 25% expertise.

Services margins improved to 23, 6%, but still fell short of our 25% expectation.

Speaker 3: Improving services margins from current levels remains one of the few business objectives. We are falling short of current

Improving services margins from current levels remains one of the few business objectives, we are falling short of currently.

Speaker 3: We remain focused on taking all necessary steps to improve services margins without affecting customer satisfaction.

We remain focused on taking all necessary steps to improve services margins without affecting customer satisfaction levels.

Speaker 3: One time revenue consisting of product and services revenue added up to a record 24.4 million. About 30% and 30% higher than the comparable prior year cost.

One time revenue consisting of product and services revenue added up to a record $24 4 million about 30% three zero, 30% higher than the comparable prior year quarter.

Speaker 3: Revenue levels during the first half exceeded our initial expectations. And we are now happy to be in a position to raise full year fiscal year 2024 revenue guidance range to 235 million to 238 million dollars.

Revenue levels during the first half exceeded our initial expectations and we are not happy to be in a position to raise full year fiscal year 2020 for revenue guidance range to $2 35 million to $238 million.

Speaker 3: The rate of project implementations has picked up well and subscription revenue growth during the first half of the year was better than the anticipated.

The rate of project implementations has picked up of Ela and subscription revenue growth during the first half of the year was better than we anticipated.

Speaker 3: We think subscription revenue growth during full year 50 2024 will be 28 persons significantly better than the previous guidance of 25 persons.

We think subscription revenue growth during full year fiscal 2024 will be 28% significantly better than the previous guidance of 25%.

Speaker 3: Adjusted EBITDA for the quarter was 8.1 million and 1313.7% of revenue. A couple of percentage points better than the sequential prior Q1 quarter and ahead of our expectations going into the fiscal year.

Adjusted EBITDA for the quarter was $8 1 million.

13, one 313, 7% of revenue a.

A couple of percentage points better than the secret shelf prior Q1 quarter and ahead of our expectations going into the fiscal year.

Speaker 3: We've done well managing through a difficult period of increased cost investments which were required to drive medium-term revenue growth.

We've done well managing through a difficult period of increased cost investments, which we are required to drive medium term revenue growth.

Speaker 3: Increasing revenue and stabilizing cost levels should help us improve profitability consistently going forward.

Increasing revenue and stabilizing cost levels should help us improve profitability consistently going forward.

Speaker 3: We now expect EBITDA by revenue to be 1414, 14% for full year fiscal 2024. 1% is going higher than the 13% guidance provided at the beginning of the...

We now expect EBITDA by revenue to be 41, 414% for full year fiscal 2024.

One percentage point higher than the 13% guidance provided at the beginning of the year.

Speaker 3: With that, let me hand over the call to Dave for further color.

With that let me handle the call today for further color.

Speaker 4: Thank you, Remesh. Taking a look at our financial results, beginning with the income statement. Second quarter fiscal 2024 revenue was a quarterly record of 58.6 million, a 22.8% increase from total net revenue of 47.7 million in the comparable prior year period.

Thank you Ramesh taking a look at our financial results beginning with the income statement second.

Second quarter fiscal 2020 for revenue was a quarterly record of $58 6 million or <unk>.

22, 8% increase from total net revenue of $47 $7 million in the comparable prior year period.

Speaker 4: All three product lines increased compared to the prior year period with products revenue of 19.8% and professional services of 43.8%. Recurring revenues was also of 18% with subscription of 29.1% over the prior year period.

All three product lines increased compared to the prior year period with product revenue up 19, 8% and professional services up 43, 8% recurring revenue was also up 18% with subscription up 29, 1% over the prior year period.

Speaker 4: Sales momentum continued throughout Q2 with total exit backlog, remaining strong in near record levels, despite revenue being above our expectations.

Sales momentum continued throughout Q2 with total exit backlog remaining strong and near record levels. Despite revenue being above our expectations. We are also we also remain pleased to see our professional services backlog remain about the same for the second quarter in a row.

Speaker 4: We are also, we also remain pleased to see our professional services backlog remain about the same for the second quarter in a row, despite strong sales as implementation, efficiencies, and effectiveness of the services team have continued to improve.

Right strong sales as implementation efficiencies and effectiveness of the services team have continued to improve.

Speaker 4: Product revenue increased 19.8% over the prior fiscal year to 12.6 million.

Product revenue increased 19, 8% over the prior fiscal year to $12 6 million.

Speaker 4: Our point of sale business continues to perform better than expected, which is increasing our product revenue expectations for the year. We now expect product revenue to stay north of 12.5 million during the last two quarters of the-

Our point of sale business continues to perform better than expected, which is increasing our product revenue expectations for the year. We now expect product revenue to stay north of $12 5 million during the last two quarters of the fiscal year.

Speaker 4: Professional services increase 43.8% over the prior fiscal period to a record 11.7.

Professional services increased 43, 8% over the prior fiscal period to a record $11 7 million.

Speaker 4: As previously mentioned, we are pleased that implementations are keeping pace with sales velocity and backlog levels have begun to stabilize at near record

As previously mentioned, we are pleased that implementations are keeping pace with sales velocity and backlog levels have begun to stabilize at near record levels.

Speaker 4: We expect professional services to continue to increase sequentially throughout the year and should grow north of 30% for the full fifth week.

We expect professional services to continue to increase sequentially throughout the year and should grow north of 30% for the full fiscal year.

Speaker 4: Most of our professional service revenue is related to projects contributing to the acceleration of fiscal year 24 subscription revenue.

Most of our professional services revenue is related to projects contributing to the acceleration of fiscal year 'twenty for subscription revenue.

Operator: Good day, ladies and gentlemen, and welcome to the Agilisys Fiscal 2024 second quarter conference call. As a reminder, today's conference may be recorded.

Speaker 4: Development for large projects with the corresponding subscription revenue happening in future years has been less than 10% of

Development for large projects with a corresponding subscription revenue happening in future years has been less than 10% of revenue.

Jessica Hennessy: I want to turn the conference over to Jessica Hennessy, Senior Director of Corporate Strategy and Invest Relations at Agilisys. You may begin. Thank you, Victor, and good afternoon, everybody. Thank you for joining me, Agilisys Fiscal 2024 second quarter conference call. We will get started in just a minute with management comments, but before doing so, let me read the State Harbor language. Some statements made on today's call will be predicted and are intended to be made as forward-looking within the State Harbor protection of the Private Security's Litigation Reform Act of 1995, including statements regarding our financial guidance.

Speaker 4: Total recurring revenue represented 58.4% of total net revenue for the fiscal second quarter compared to 60.8% of total net revenue in the second quarter of fiscal 2020.

Total recurring revenue represented 58, 4% of total net revenue for the fiscal second quarter compared to 68% of total net revenue in the second quarter of fiscal 2023.

Speaker 4: Recurring revenue as a percentage of total revenue decreased slightly because of a 30.3% increase in one-time revenue consisting of products and professional service.

Recurring revenue as a percentage of total revenue decreased slightly because of a 33% increase in onetime revenue consisting of product and professional services.

Speaker 4: Subscription revenue grew at 29.1% for the second quarter of fiscal 2020.

Subscription revenue grew at 29, 1% for the second quarter of fiscal 2024.

Jessica Hennessy: 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 a result to differ materially. Important factors that could cause actual results to vary materially from these forward-looking statements include the effects of global economic factors on our business, the hospitality industry's need for technology solutions, our ability to drive sales, our ability to increase profitability, and our ability to improve services margins and manage increased cost inventions. And the risk that's forced in the company's reports on forms 10K and 10Q and other reports filed with the Security Exchange Commission.

Speaker 4: Subscription revenue now comprises higher than 50% of total recurring revenue at 53.6% Compared to 48.9% of total recurring revenue in the second quarter of fiscal 20

Subscription revenue now comprises higher than 50% of total recurring revenue at 53, 6% compared to 48, 9% of total recurring revenue in the second quarter of fiscal 2023.

Speaker 4: Subscription revenue increased sequentially 1.6 million and would better than the FYI 24 expectation for sequential revenue.

Subscription revenue increased sequentially $1 6 million and was better than the FY 'twenty for expectation for sequential revenue increases.

Speaker 4: The subscription backlog is very strong and we expect subscription revenue to continue to increase between 0.9 million and 1.2 million sequentially each quarter for the rest of the fiscal year.

The subscription backlog remains strong and we expect subscription revenue to continue to increase between 9 million and $1 2 million sequentially each quarter for the rest of the fiscal year.

Speaker 4: Q2 was higher than normal due to timing of completion of a couple large multi-product implementation.

Q2 was higher than normal due to timing of completion of a couple of large multi product implementation, which were in the backlog and where were being worked on during prior quarters.

Jessica Hennessy: As a reminder, any references to records, financial and business levels during this call refer only to the time period after Agilisys made the transformation to an entirely hospitality-focused software solutions company in fiscal year 2014.

Speaker 4: which were in the backlog and were being worked on during prior quarters.

Okay.

Moving down the income statement gross profit was $35 1 million compared to $29 4 million in the second quarter of fiscal 2023.

Speaker 4: Gross profit was 35.1 million compared to 29.4 million in the second quarter of fiscal 2020.

Ramesh Srinivasan: With that, I now like to turn the call over to Mr. Ramesh Renevathan, President and CEO of Ad Joseph. Ramesh, please go ahead. Thank you, Jess. Good evening.

Gross profit margin was 59, 9% compared to 61, 5% in the second quarter of fiscal 2023.

Ramesh Srinivasan: Welcome to the fiscal 2024 Second Quarter Learning School.

Speaker 4: As expected, Gross Margin was affected in the first half of the year as we continue to ramp up the service.

As expected gross margin was affected in the first half of the year as we continue to ramp up the services team second half gross margins should get back into the 60% range.

Ramesh Srinivasan: Joining Jess and me on the call today at our Alphirita Atlanta Headquarters is Dave Wood, CFO. As has become the regular practice in our earnings calls, let me cover the selling success summary first before moving on to revenue and other details. We measure sales of selling success in net annual contract value, ACV, of sales agreements one and sign. Fiscal 2024 Q2 July to September was one of our best ever sales success quarters.

Speaker 4: Second half gross margin should get back into the 60%.

Speaker 4: Combines the three main operating expense line items, product development, sales and marketing, and general and administrative expense.

Okay.

Combined the three main operating expense line items product development sales and marketing and general and administrative expenses, excluding stock based compensation or <unk> 46, 2% of revenue compared to 46, 1% of revenue in the prior year quarter.

Speaker 4: excluding stock-based compensation for 46.2% of revenue compared to 46.1% of revenue in the prior year course.

Speaker 4: Product development increased slightly to 22.8% due to previously discussed additional investments made to repair for large future deployments.

Product development increased slightly to 22, 8% due to previously discussed additional investments made to prepare for large future deployments.

Ramesh Srinivasan: Overall, fiscal 2024 April to September was our best first half of fiscal year sales, comfortably better than the first half last year. Fiscal 2023 last year was, of course, our best ever full year of sales and we are off to a significantly better start halfway through this year. July to September was a good sales quarter for virtually all the sales verticals across gaming casinos, resorts, cruise ships, hotels, managed food service providers and internationally.

Speaker 4: compared to 21.9% of revenue in the prior fiscal.

<unk> to 21, 9% of revenue in the prior fiscal year.

Speaker 4: General and administrative expenses decreased to 12.7% compared to 13.7% of revenue in the second quarter of fiscal 2020.

General and administrative expenses decreased to 12, 7% compared to 13, 7% of revenue in the second quarter of fiscal 2023.

Speaker 4: Sales and marketing increased slightly from 10.5% of revenue to 10.8% of revenue mostly due to timing

Sales and marketing increased slightly from 10, 5% of revenue to 10, 8% of revenue, mostly due to timing of expenses.

Speaker 4: Operating income for the second quarter of 3.6 million.

Operating income for the second quarter of $3 6 million net income of $4 1 million and gain per diluted share of <unk> 16.

Speaker 4: net income of 4.1 million and gain per diluted share of 16 cents all increased compared to the prior year's second quarter gain of 2.9 million, 3.1 million and 12.

All increased compared to the prior year's second quarter gain of $2 9 million $3 1 million and 12.

Ramesh Srinivasan: Sales from non-gaming results, hotels and cruise ships were particularly stellar and encouraging because our market share levels in these areas are still low with major growth possibilities ahead. April to September was also a best first half thus far for international sales across Europe and APEC. As at the end of September, year-to-date APEC sales was already close to the full-year sales level reached across all of last fiscal year. Our competitive positioning strength is increasing with every passing month and end-to-end ecosystem of software solutions.

Speaker 4: Adjusted net income, normalizing for certain non-cash and non-recurring charges of 6.6 million, was slightly higher than adjusted net income of 6.3 million in the prior year's second quarter, and adjusted deluded earnings per share of 25 cents was slightly more than 24 cents in the prior year.

Adjusted net income normalizing for certain noncash and nonrecurring charges of $6 6 million was slightly higher than adjusted net income of $6 3 million in the prior year second quarter and adjusted diluted earnings per share of <unk> 25.

With slightly more than 24 in the prior year period.

Speaker 4: For the 2024 second quarter, I just did even it with 8.1 million compared to 7.4 million in the year ago.

For the 2024 second quarter, adjusted EBITDA was $8 1 million compared to $7 4 million in the year ago quarter.

Speaker 4: adjusted EBITDA in Q2 FY24 was 13.7% of revenue.

Adjusted EBITDA in Q2, FY 'twenty four was 13, 7% of revenue.

Speaker 4: Profitability for the quarter was better than previous guidance of high single digits, largely due to higher than expected revenues.

Profitability for the quarter was better than previous guidance of high single digits, largely due to higher than expected revenue levels.

Speaker 4: Propobility levels remain comfortably ahead of our prior FY24 guidance of adjusted EBITDA as a percentage of revenue of 13%.

Ramesh Srinivasan: The breadth and depth of feature sets offered, with more getting added at increasing ways, now that most of the product re-engineering efforts are done and overwith, all based on state-of-the-art cloud-native technology, which can also work well in on-premise installations, which several hospitality customers still prefer. All that is becoming increasingly compelling value creators and unique selling propositions for us. The significant pickup in selling success which started around the month of August calendar 2022 has continued unabated through the recent July to September period 13 months later.

Profitability levels remained comfortably ahead of our prior FY 'twenty for guidance.

Adjusted EBITDA as a percentage of revenue of 13%.

Moving to the balance sheet and cash flow statement cash and marketable securities as of September 32023 was 107 4 million compared to $112 8 million on March 31 2023.

Speaker 4: Cash and marketable securities as of September 30th, 2023, was 107.4 million compared to 112.8 million on March 31st, 2023. We remain.

We remain comfortable with our current levels of cash.

Speaker 4: Free cash flow in the quarter was again a 2.5 million, slightly above 2.3 million in the prior year.

Free cash flow in the quarter was a gain of $2 5 million slightly above $2 3 million in the prior year quarter.

Speaker 4: For the year, we still believe that just a little less cat-ex will be a good proxy for free.

For the year, we still believe adjusted EBITDA less capex will be a good proxy for free cash flow.

Speaker 4: For our fifth year, 2024, we are raising our revenue guidance range to 235 to 238 million.

For our fiscal year 2024, we are raising our revenue guidance range to $2 $35 million to $238 million inclusive of an increased expectation of 28% subscription revenue growth.

Ramesh Srinivasan: We have not seen any noticeable negative effects of macroeconomic challenges. The hospitality industry is global, huge and has a high need for technology and innovation to help with growing needs to improve operational efficiencies, enable ease of use for staff users and help create far better guest experiences than are possible today. We cannot say the technology providers of this industry have done too well keeping up with innovation needs due to among other reasons, a lack of focus on end-to-end hospitality needs and far less than needed research and development investments.

Speaker 4: of an increased expectation of 28% subscription revenue.

Speaker 4: We are also raising our profitability guidance from 13% to 14% adjusted EBITDA as a percentage of revenue for the year. In closing, we are...

We are also raising our profitability guidance from 13% to 14% adjusted EBITDA as a percentage of revenue for the year.

In closing we are pleased with the sales momentum professional service improvements and revenue growth during the first half of the year.

Speaker 4: professional service improvements and revenue growth during the first half of the year. With that, I will now turn the call back over to Ramesh. Thank you, Dave.

With that I will now turn the call back over to Ramesh.

Thank you Dave.

In summary.

We do understand the macroeconomic headlines.

Ramesh Srinivasan: In the meanwhile, the digital transformation revolution around hospitality is accelerating raising the expectations of property employees and guests. We think we have done well executing on our strategy to fill that gap and expect our escalating product and technology driven competitive advantages to continue to drive good business momentum in this huge total addressable market space. We think that momentum will have good staying power even in a possible challenging macroeconomic environment. In line with that assessment thus far we are not seeing any growth threatening clouds in the sky.

Speaker 3: and the drum beat of predictions of possible expected headwinds.

And the drumbeat of predictions of possible expected headwinds.

Speaker 3: We do not want to sound tone deaf to what we are hearing each day when we listen to the news and read what the economy pundits are saying.

We do not want to some tone deaf.

What we are hearing each day, when we listen to the news and read what the economy pundits are saying.

Speaker 3: However, we can only report what our reality is.

However, we can only report what our reality is.

Speaker 3: We are not seeing any signs of slow down in business moment.

The truth is.

We are not seeing any signs of slowdown in business momentum.

Speaker 3: to use a crude example. We are a relatively small fisherman, now operating with state of the art modern equipment.

To use a crude example.

They are relatively small fisherman.

Now operating with state of the art modern equipment.

Speaker 3: with huge growth potential in a large total addressable market pond with a lot of fish around of all...

With huge growth potential in a large total addressable market bond.

With a lot of fish around of all possible sizes.

Speaker 3: It is possible that we may not feel any negative effects, even if there are any wipples or the level of the water shrinks a bit. Unless it becomes an enormous drop that overwhelms everything.

Ramesh Srinivasan: Our sales win-loss ratios continue to be at impressive levels. One of the highlights of sales success during the first half of fiscal 2024 was the rapidly increasing sales productivity of quota-caring sales personnel hired during the past couple of years To place this in context, the average Agilisys tenure of a quota-caring sales personnel is around seven and a half years now. Of them, slightly less than half the personnel have joined them after COVID, and the average Agilisys tenure of this group is only about a year.

It is possible that we may not feel any negative effects, even if they're not any of the booths.

The level of the water shrinks a bit unless it becomes an anonymous dropped that overwhelms everything.

Speaker 3: We have met and spent time with many customers during recent trade shows and other meetings and have not heard of or seen signs of any reluctance on their part to make the required appropriate technology investment.

We have met and spent time with many customers.

During recent trade shows and other meetings and have not heard of are seen signs of any reluctance on their part to make the required appropriate technology investments to meet their short term and long term business needs.

Speaker 3: to meet their short term and long term business needs.

Speaker 3: In addition, the massive levels of product innovation we have worked through during recent years, including the creation of around 25 high value creating additional experience enhancer modules.

In addition, the massive levels of product innovation, we have worked through during recent years, including the creation of around 25 high value, creating additional experience enhancing modules the.

Ramesh Srinivasan: During the first half of fiscal 2024, this group of sales personnel have already one sales measured in annual contract value, amounting to close to quite as much as they did all of last fiscal year. Why we continue to make prudent and appropriate decisions with respect to increasing sales for strength, current sales staff still have additional capacity to not only maintain momentum but also grow sales from current levels. In addition, the number of marketing generated sales accepted opportunities, focused on new customers and new properties generated by innovative and effective marketing efforts continues to improve.

Speaker 3: The real tangible value, the modular and integrated solutions are beginning to create for customers.

The real tangible value the modular and integrated solutions are beginning to create for customers all of them.

Speaker 3: All of that is also providing an additional blanket around us that should protect our growth prospects for the

That is also providing an additional blankets around us that should protect our growth prospects.

The foreseeable future.

Speaker 3: and we will ensure we remain disciplined, managing growth, never getting too far ahead of us.

And we will ensure that we remain disciplined managing growth never getting too far ahead of ourselves.

Speaker 3: Why are implementation services effectiveness and efficiencies have improved significantly? During the April to September 1st half period of this year.

Why not implementation services effectiveness and efficiencies have improved significantly during the April to September 1st half period of this year.

Speaker 3: The continuing sales success has kept aggregate recurring revenue, services and product backlog total at a near record level, giving us confidence in the raised revenue guidance provider.

The continuing sales success has kept aggregate recurring revenue services and product backlog totaled at a near record level, giving us confidence in the raised revenue guidance provided.

Ramesh Srinivasan: During recent months, this number has been twice as high as it was at the same time last year. While on competitive strength with point of sale, POF solutions continue to improve by leaps and bounds and remain our mainstay. Sales wins during the first half of fiscal 2024 have also included several significant property management systems, PMS wins. A notable win during Q2 was BlackRock Ocean Front Resort on the western coast of Vancouver Island in British Columbia, Canada.

Speaker 3: We will also continue to increase our sales and marketing investments as necessary to keep business momentum moving along.

We will also continue to increase our sales and marketing investments as necessary to keep business momentum moving along.

Speaker 3: To repeat what we said last quarter, our overall business remains in excellent shape and we are well positioned for all-round progress and growth.

To repeat what we said last quarter, our overall business remains in excellent shape, and we are well positioned for all blown progress and growth.

Speaker 3: With that, let's open the call up for questions. Victor.

With that let's open the call up for questions Victor.

Speaker 1: Thank you. Just a question, please press star one one on your telephone and wait for an aim to be announced. To withdraw your question, just press star one one again. Please stand by with the pilot of the Q&A roster. One moment for our first question.

Thank you ask a question. Please press star one one on your telephone and wait for a name to be announced to withdraw. Your question just press star. One again, please standby with part of the Q&A roster one moment for our first question.

Ramesh Srinivasan: This iconic property selected Agilis's PMS and several experience enhancer add on software modules for their stunning multi-emunity ocean front resort. There are now close to 20 properties live on the modernized, ground up, re-engineered, visual one PMS rebranded as Worcester and released for production deployment about 18 months ago. We have seen early stages of establishing our state-of-the-art technology-based cloud-native PMS value proposition in the field. There is a long runway of PMS and related modules growth ahead of us.

Speaker 1: And our first question will come from line of Mayak Tandon from Needham. He line is open.

And our first question will come from the line of <unk> Tandon from Needham Your line is open.

Speaker 5: Thank you, a good evening. Well, first congrats on the quarter. And great to hear about the record sales performance.

Thank you good evening, well first congrats on the quarter.

To hear about the record sales performance.

Thank you Mike.

Speaker 5: Great. Let me ask you more in just in terms of the growth rate. As you look ahead, how do you break that down between new logo wins, expansion with existing clients and our food expansion? Could you maybe just parse it out between the three components as you think about growth going forward?

Great well, let me ask you more and just in terms of the growth rate. As you look ahead, how do you break that down between new logo wins and expansion with existing clients and <unk> expansion could you maybe just parse it out between the three components as you think about growth going forward.

Ramesh Srinivasan: During Q2, fiscal 2024, July to September, we added 17, 17 new customers of which 76% were fully subscription agreements. 17 new customers is within the 15 to 20 new customers per quarter range, which has been one of the drivers of our revenue growth in the recent past. New customer deal sizes remains at impressively high levels. We also added 70, 70, 17 new properties, which did not have any of our products before but the parent company was already our customer.

Speaker 3: Yeah, so when we think about the first job, man.

Yeah. So when we think about the first half Mac.

Speaker 3: The sales from new customers, that is internally we refer to it as new logos, new customer sales.

The sales from new customers that is internally, we refer to it as new logos new customer sales.

Speaker 3: When you compare the first half of this year versus the first half of last year, this year's new customer sales success was far higher, was significantly higher than last year. So that remains a big driver of growth for us. More new customers signing up with us is definitely a significant driver of growth.

Compared to the first half of this year versus the first half of last year. This year's new customer sales success was fought highest.

Was significantly higher than last year, so that remains a big driver of growth for us more new customers signing up with US is definitely a significant driver of growth.

Speaker 3: The other driver of Goath is, whether it is new products, meaning current property signing up for new products.

The other driver of growth is whether it is new products, meaning current properties signing up for new products.

Ramesh Srinivasan: The average deal size of new property deals this quarter was about 25% higher than the previous couple of quarters. Of the 87 new properties added during the quarter across new customers and new properties of current parent customers, more than 90%, more than 90% were either partially or fully subscription based. In addition, there were 67 instances of selling at least one additional product to properties which already had one of our other products.

Speaker 3: or new customer signing up, are these sizes are giving us a big advantage.

Our new customer signing up our deal sizes have giving us a big advantage now.

Speaker 3: A typically customer sign up for multiple products compared to a few years ago, so these sizes, the fact that customers sign up for multiple products instead of just one, that remains a good growth driver.

Typically customers sign up for multiple products compared to a few years ago. So deal size is the fact that customers sign up for multiple products. Instead of just one that remains a good growth driver for us.

Speaker 3: The other growth driver that we expect to get better and better with every quarter is RPM at presence now, property management systems, where we still have market share is still very low. We are becoming an increasing presence in all major BMS RSPs and the products are also a lot more impressive.

The other growth driver that we expect to get better and better with every quarter because the rpms presence not property management systems, where we still our market share is still very low we are becoming an increasing presence in all major BMS rfps and the products are also a lot more impressive now that also is driving.

Ramesh Srinivasan: These 67 instances involved a total of 142 new products sold to current customer properties. The average deal size across the 67 instances of new product sales was about 40%, 40% higher than the sequentially preceding Q1 quarters.

Speaker 3: That also is driving our growth forward, while the point of fail, POS strength continues to remain and continues to drive forward.

Our growth forward, while the point of sale Pos strength continues to remain and continues to drive forward.

Speaker 3: Our current customers also continue to make a lot more investments in us, whether it is newsfripe.

Current customers also continued to make a lot more investments in us whether it is new sites are the existing products that customers signing up for services and other existing products positive expansions that is driving us as well.

Speaker 3: or existing customers finding up for services and other existing product purchase expansions, that is driving us as well. But above all, wind loss ratios, right? To have a bit...

Oh boy.

Dave Wood: Now on to revenue, fiscal 2024 Q2 revenue was a record 58.6 million dollars. The seventh consecutive record revenue quarter close to 23% higher than the comparable prior year period. The year-over-year quarter revenue increase of 10.9 million is the highest we've ever seen. Overall revenue during the first half of fiscal 2024 was 20% higher than revenue during the first half of fiscal 2023, fiscal 2024 Q2 recurring revenue grew 18% 1.8 18% year-over-year and 6.6% sequentially quarter over quarter to a record 34.2 million dollars driven by a 29% year-over-year increase in subscription revenue.

When loss ratios right with without increasing our sales efforts way too much and spending too much when we participate in an effort let's onto the winning is also much better now than what it used to be in the past. So I would say all of that together is driving.

Speaker 3: Without increasing our sales efforts way too much and spending too much when we participate in an effort, the chances of winning is also much better now than what it used to be in the past. So I would say all that together is driving our growth forward now. And it is all product and innovation driven for now. And our marketing efforts are also getting lot more opportunities to the door now. So I would say it's a combination of all those facts.

Our growth forward now.

It is all product and innovation driven for mall and our marketing efforts are also getting lot more opportunities to the door now so I would say, it's a combination of all those factors.

Speaker 5: That's a very helpful color. And as a quick follow up question, I wanted to focus on the margins for the out performance that you saw this quarter and then that you're guiding to for the remainder of the year. How does that break down between gross margin expansion and leverage on the operating cost line?

That's very helpful color and then as a quick follow up question I wanted to focus in on the margins for the outperformance that you saw this quarter and then that you're guiding to for the remainder of the year, how does that break down between gross margin expansion and leverage on the operating cost line.

Yes, so our gross margins were about one point ahead of expectations largely just like we talked about due to the higher revenue levels certainly the sequential subscription increase of $1 $6 million was was pretty accretive to the gross margin expansion. So think of it as kind of one.

Speaker 4: Gross margins were about one point ahead of expectations, largely just like we talked about due to the higher revenue levels.

Speaker 4: Certainly the sequential subscription increase of $1.6 million was...

Speaker 4: was pretty accreted to the gross margin expansion. So think of it as kind of one, you know, a point or two ahead on the gross margins. And then, you know, our cost was pretty much settled coming into Q2. I mean, most of our investments for the rest of the year would be in... And so, you know, our cost was pretty much settled. So, you know, our cost was pretty much settled. So, you know, our cost was pretty much settled.

Dave Wood: Subscription revenue constituted 53.6% of total recurring revenue compared to 48.9% Q2 of last year. The year-over-year growth in quarter subscription revenue compared to Q2 of last year was a record 4.1 million consisting of record year-over-year increases in both POS and PMS and related modules. Quarter over quarter sequential growth of subscription revenue of 1.6 million and overall recurring revenue of 2.1 million where both are best such sequential increases. Subscription revenue generated from add-on experience enhances software modules, most of which were developed during the past few years, grew at a slightly better rate year-over-year than the overall subscription growth of 29%.

A point or two ahead on the gross margins and then.

Our cost was pretty much settled coming into Q2, I mean, most of our investments for the rest of the year would be incremental so the higher revenue obviously.

Speaker 4: So the higher revenue obviously, we didn't incur additional affects.

We didn't incur additional opex costs. So most of it was the revenue over achievement and.

Speaker 4: So most of it was the revenue over achievement and the expansion of the subscription revenue.

The expansion of the subscription revenue.

Speaker 3: And, Mayank, what you should expect, like I mentioned in my comments, is margins, we typically measure our profitability at EBITDA by revenue, to improve consistently from here. We've gone through the tough phase when we had to make...

And Mike what you should expect like I mentioned in my comments is margins, we typically measure that profitability is EBITDA by revenue.

To improve consistently from here, we've gone through the tough phase when we had to make.

Speaker 3: significant cost investments in order to drive medium-term growth and You're aware of that so starting now you should see a consistent improvement in profitability during the second half of the year and into the next

Significant cost investments in order to drive medium term growth.

And you are aware of that so starting now you should see a consistent improvement in profitability during the second half of the year and into the next fiscal year as well.

Dave Wood: The value of these modules and the modules and the end-to-end ecosystem we have built over the past few years goes far beyond such numbers. These add-on modules working in conjunction with each other and with the core POS and PMS products are helping customers make tangible measurable improvements in their operation. We heard several such customer stories about positive measurable impact on total operations during the recent gaming show and in customer advisory board meetings held in Las Vegas and these stories were shared with other attending customers.

Speaker 5: That's great to hear again. Congrats on the quarter and thank you for taking my questions. Thank you, my ex. Thank you.

That's great to hear again, congrats on the quarter and thank you for taking my questions.

Thank you Mike Thank you.

Enrollment for next question.

Speaker 1: Our next question of conflina Matthew Van Viet from BTIG. Good line is open. Yeah, good afternoon.

Our next question comes from the line of Matthew <unk> from <unk>. Your line is open.

Yes. Good afternoon, thanks for taking my question.

Speaker 6: I guess when you made a couple comments around one, your win rates continued to be very strong. And then also the deals, especially in Europe and A-PAC, that you mentioned strength there. So I guess as you think about sort of the big drivers there, and I know you went through a couple on the last question, but curious on how much, if at all, it's been mentioned that the win of the Marriott contract is sort of...

And I guess when you made a couple of comments around one your win rates continue to be very strong.

And then also the deals, especially.

Dave Wood: Each of these modules are competing on their own as best of breed solutions and bringing tremendous value when used, enhanced and innovated together. Services revenue was a record 11.7 million, 44% higher than the comparable prior year quarter. The increasing pace of implementations being handled by service streams augers well for upcoming recurring revenue growth. We continue to make good progress with implementing relatively newer software products and modules at a quicker pace now handling complex multi-product implementations and managing the balance between majority cloud and several on-premise installations.

Especially in Europe and APAC.

Mentioned strength there so.

I guess as you think about sort of the big drivers there and I know you went through a couple of and the last question, but curious on how much if at all it's been mentioned that the win of the of the merit of our contract is sort of broader Joseph.

Speaker 6: Brought a Jilis, more top of mind for potential customers. How much that's helping versus the platform product.

More top of mind for potential customers, how much of that is helping versus the re platform product.

Speaker 6: And then the sales investments, especially in the international markets, driving that, anything sort of additional on the international side that you would highlight, that might be a little bit of a diverging or, I guess, at least different driver than in the US. Cheers.

And then the sales investments, especially in the international markets driving that.

Anything sort of additional on the international side that you would highlight.

There might be a little bit of a diverging or I guess always different driver than in the U S.

Yes so.

Speaker 3: Whether it is international or even domestic areas where our market share is a bit low, I mean actually very low.

Whether it's international or even domestic areas, where our market share is a bit low I mean actually very low.

Dave Wood: Services margins improved to 23.6%, but still fairly short of our 25% expectation. Improving services margins from current levels remains one of the few business objectives we are falling short of currently. We remain focused on taking all necessary steps to improve services margins without affecting customer satisfaction levels. One time revenue consisting of product and services revenue added up to a record 24.4 million, about 30%, 30%, 30% higher than the comparable prior year quarter.

Speaker 3: What is driving us to get the opportunities are superior marketing efforts compared to where we were one and two years ago? So those are the marketing efforts are definitely opening up opportunities for us.

What is driving us to get the opportunity.

Superior marketing efforts compared to where we've added one and two years ago. So those are the marketing efforts are definitely opening up opportunities for us.

Speaker 3: and the productivity of the, the impressiveness of the product demos is definitely keeping us in contention. Now what we need to do?

And the product for the impressiveness of the product demos is definitely keeping us in contention now what we need to do.

Speaker 3: is get more reference customers. There are many countries in the world where we have to establish ourselves more because apart from the product superiority and the ecosystem superiority, they also require customers who will give them the comfort field that yes, we went with these products and we are doing well. That's what we are building.

It gets more reference customers. There are many countries in the world, where we have to establish ourselves more because apart from the product superiority and the ecosystem superiority. They also required customers, who will give them. The comfort that yes. We went with these products and we are doing well that's why we are building now.

Dave Wood: Revenue levels during the first half exceeded our initial expectations and we are now happy to be in a position to raise full year fiscal year 2024 revenue guidance range to 235 million to 238 million dollars. The rate of project implementations has picked up well and subscription revenue growth during the first half of the year was better than the anticipated. We think subscription revenue growth during full year fiscal 2024 will be 28%, significantly better than the previous guidance of 25%.

Speaker 3: The product work is more or less done, Matt, and now it is the field work that is beginning in many international regions and even in some domestic areas. So now we are focused on establishing these products, establishing these integrations among within our ecosystem in the field and creating more reference customers, and then the ball will really start rolling. So.

The project work is more or less done mapped and now it is the field work that is beginning in many international regions and even in some domestic avs. So now we are focused on establishing these products, establishing these integrations amount within our ecosystem in the field and creating more reference customers and then.

The volume is really start rolling so.

Speaker 3: The BinLots ratios are very good when customers look at our product demos and nobody else is doing this kind of end-to-end ecosystem innovation. But what we are focused on now is generating more presence in the field, more customer saying great things about our products. That's what we are focused on.

The win loss ratios are very good when customers look at our product demos and nobody else is doing this kind of end to end ecosystem innovation, but what we are focused on now is generating more presence in the field more customers, saying great things about our products. That's what we are focused online.

Dave Wood: Adjusted EBITDA for the quarter was 8.1 million and 1313.7% of revenue. A couple of percentage points better than the sequential prior few on quarter and ahead of our expectations going into the fiscal year. We have done well managing through a difficult period of increased cost investments which were required to drive medium term revenue growth. Increasing revenue and stabilizing cost levels should help us improve profitability consistently going forward. We now expect EBITDA by revenue to be 1414, 14% for full year fiscal 2024, one percentage point higher than the 13 person guidance provided at the beginning of the year.

Speaker 6: Very helpful. And Dave, your comments seem to sort of imply that the majority of headcount additions for the full year have more or less been made here. So one wanted to just sort of confirm that's what your comments implied. But maybe more importantly, what would give you the confidence or the rationale to add additional headcount in the back half?

Very helpful.

Dave your comments seem to sort of imply that the majority of head count additions for the for the four year have more or less been made here. So one wanted to just sort of confirm that's what your comments implied.

But maybe more importantly, what would give you the confidence or the rationale to add additional head count in the back half, especially as we think about the continued success of new business wins do you need some additional capacity potentially on the services delivery team, especially.

Speaker 6: Especially as we think about the continued success of new business wins, do you need some additional capacity potentially on the services delivery team, especially as the Maryop Project ramps up? Or where do you stand in terms of total capacity on the delivery team in light of the better bookings performance?

As the Marriott project ramps up or where do you stand in terms of total capacity.

Dave Wood: With that, let me hand over the call to Thank you, Ramesh. Taking a look at our financial results, beginning with the income statement. Second quarter fiscal 2024 revenue was a quarterly record of 58.6 million, a 22.8% increase from total net revenue of 47.7 million in the comparable prior year period. All three product lines increased compared to the prior year period with products revenue of 19.8% and professional services of 43.8%. Recurring revenue was also of 18% with subscription of 29.1% over the prior year period.

On on the delivery team in light of the better bookings performance of late.

Speaker 4: Yeah, so starting with the services team, I mean, we still have ramp left on the services team. I mean, they've done a tremendous job with revenue through the first half of the year, but they're still ramp left on that team, which their gross margins should continue to increase. But...

Yes, so starting with the services team I mean, we still have ramp left on the services team they've done a tremendous job.

With revenue through the first half of the year, but theres still ramp left on that team, which their gross margins should could continue to increase but.

Speaker 4: Yeah, certainly, I think we're pretty settled and we're pretty from a head count where there's op-X or delivery, we're pretty settled on head count and certainly for the revenue guidance we've given. But that's not to say that we wouldn't make more incremental investments as we see fit, right? If other parts of the market start to open up or there's something, we wouldn't be foolish over that. But we feel pretty settled on where we sit where we sit from a head count perspective at the moment. All right, great, thank you.

Yes, certainly.

Think we're pretty settled and we're pretty from a head count whether it's opex or delivery, we're pretty settled on head count and certainly for for the revenue guidance, we've given but that's not to say that we wouldn't make more incremental investments as we see fit right. If other parts of the market start to open up or are there is something we will.

Dave Wood: Sales momentum continued throughout Q2 with total exit backlog remaining strong in near record levels despite revenue being above our expectations. We are also, we also remain pleased to see our professional services backlog remain about the same for the second quarter in a row despite strong sales as implementation efficiencies and effectiveness of the services team have continued to improve. Product revenue increased 19.8% over the prior fiscal year to 12.6 million. Our point of sale business continues to perform better than expected which is increasing our product revenue expectations for the year.

We wouldn't be bullish over that but we feel pretty we feel pretty settled on where we sit from a head count perspective at the moment.

Alright, great. Thank you.

Thank you one moment for our next question.

Speaker 1: And our next question of confidant of George Sutton from Craig Halehm. The line is open.

And our next question comes from the line of George Sutton from Craig Hallum. Your line is open.

Speaker 4: Thank you. Ramesh, I appreciate the fishing analogy in particular. So.

Thank you Ramesh I appreciate the fishing analogy in particular so.

Speaker 4: You and I have talked about increasingly you are playing offense versus playing defense, particularly when you're out at a large trade show. I just wondered if you could walk through what exactly you mean by that and help translate that to part of why you're seeing the sales success and the increased guidance.

You and I have talked about increasingly you are playing offense versus playing defense, particularly when you're out at a large trade show I just wondered if you could walk through.

Dave Wood: We now expect product revenue to stay north of 12.5 million during the last two quarters of the fiscal year. Professional services increased 43.8% over the prior fiscal period to a record 11.7 million. As previously mentioned, we are pleased that implementations are keeping pace with sales velocity and backlog levels have begun to stabilize at near record levels. We expect professional services to continue to increase sequentially throughout the year and should grow north of 30% for the full fiscal year.

What exactly you mean by that and helped translate that part of why you're seeing the sales success and the increased guidance.

Speaker 3: Yeah, so that comment about offense was a difference, like when you compare us to a few years ago, right, during my initial days here, and even a couple of years after we got here, as we started improving the products, whenever you meet customers in trade shows, the success of implementations tends to be measured.

Yeah.

Yeah, so that comment about offense versus defense like when you compare us to a few years ago right 12. During my initial days here and even a couple of years. After we got here as we started improving the products whenever you meet customers in trade shows the success of implementations.

Tends to be measured by the low number of pending issues pending technical issues or there are only 10 issue spending to be resolved. That's how they tend to be measured and we're constantly playing defense with customers, making sure. They stay with you. Despite the technical issues that our data and all of that in recent shows, especially.

Dave Wood: Most of our professional service revenue is related to projects contributing to the acceleration of fiscal year 24 subscription revenue. Development for large projects with the corresponding subscription revenue happening in future years has been less than 10% of revenue. Total recurring revenue represented 58.4% of total net revenue for the fiscal second quarter compared to 60.8% of total net revenue in the second quarter of fiscal 2023. Recurring revenue as a percentage of total revenue decreased slightly because of a 30.3% increase in one-time revenue consisting of products and professional services.

Speaker 3: the low number of pending issues, pending technical issues, or there are only 10 issues pending to be resolved. That's how they tend to be measured and you're constantly playing defense with customers, making sure they stay with you despite the technical issues that are there.

Speaker 3: In recent shows, especially this year, in the various shows we have attended, there were more and more stories, and some of these stories were shared publicly in publicly attended sessions, where they were talking about, we moved from a competing system to Agilistica.

This year.

In the various shows we have I think they've had more and more stories and some of these stories were shared publicly.

In publicly attended sessions, where they were talking about the mood from a competing system to atlas's.

Speaker 3: We implemented their core PMS product and these two or three additional modules.

We implemented their core pms product in these two or three additional modules.

Speaker 3: And these business parameters went up from this person to that.

And these business pattern meters went up from this percentage Tibet, So David actually happy to share those details with other customers. So that's what I mean by playing offense that we no longer going to trade shows expecting to play defense like many enterprise software companies do where customers are going to come and complain and youre going to defend with them now.

Speaker 3: So they were actually happy to share those details with other customers. So that's what I mean by playing offense that we no longer go into trade.

Dave Wood: Subscription revenue grew at 29.1% for the second quarter of fiscal 2024. Subscription revenue now comprises higher than 50% of total recurring revenue at 53.6% compared to 48.9% of total recurring revenue in the second quarter of fiscal 2023. Subscription revenue increased sequentially 1.6 million and would better than the FY24 expectation for sequential revenue increases. The subscription backlog remains strong and we expect subscription revenue to continue to increase between 0.9 million and 1.2 million sequentially each quarter for the rest of the fiscal year.

Speaker 3: expecting to play a difference like many enterprise software companies do where customers are going to come and complain And you're going to defend with them now. We are looking for the positive stories that can be shared with other customers So more and more we are we are switching to offense from the defense we used to be many years ago And the products are supporting that and our implementation services staff are supporting that our support is becoming better as we go along So there are more positive stories for customers to share with others that provide an incentive for other customers

We are looking for the positive stories that can be shared with other customers. So more and more we are switching to offense from the defense we used to be many years ago and the products are supporting that and our implementation services staff are supporting that our support is becoming better as we go along so there are more positive story for our customer.

Just to share with others that provides an incentive for other customers to buy the products as well that's what I meant jobs.

Speaker 7: That's what I meant.

Speaker 4: Great. So there were clearly some big, large operators, particularly in the gaming space that have had some cyber security issues. I know you've made a big investment in your capabilities on the cyber security side. Can you talk about any impacts that those have had to you and what happens when cyber security becomes part of a fail cycle, which I know is increasingly important. How are you doing in those situations?

Great.

There were clearly some big large operators, particularly in the gaming space they've had some cyber security issues I know you've made a big investment in your capabilities on the on the cyber security side can you talk about any impacts that those have had to you and what happens when cyber security becomes part of us.

Dave Wood: Q2 was higher than normal due to timing of completion of a couple large, multi-product implementations, which were in the backlog and were being worked on during prior quarters. Moving down the income statement, Gross Profit was 35.1 million compared to 29.4 million in the second quarter of fiscal 2023. Gross Profit margin was 59.9% compared to 61.5% in the second quarter of fiscal 2023. As expected, Gross margin was affected in the first half of the year as we continue to ramp up the services team.

Sales cycle, which I know is increasingly important.

How are you doing in those situations.

Speaker 3: So a number of questions that let me make sure I cover all of them. Number one, no impact directly. There's a couple of news that you've heard recently. No direct impact are knowledge of the incidents and are overall understanding of the incidents.

Yes, so the number of questions. There, let me make sure I cover all of them number one no impact directly with a couple of news that he overheard recently no direct impact to our knowledge of the incidence and our overall understanding of the incidents is nothing more than what has been reported publicly so not impact.

Dave Wood: Second half, Gross margin should get back into the 60% range. Combines the three main operating expense line items, product development, sales and marketing, and general and administrative expenses, excluding stock-based compensation, or 46.2% of revenue compared to 46.1% of revenue in the prior year quarter. Product development increased slightly to 22.8% due to previously discussed additional investments made to repair for large future deployments compared to 21.9% of revenue in the prior fiscal year.

Speaker 3: nothing more than what has been reported publicly. So not impacted directly and we are not directly involved in it, though we were there to help the customers with bringing up the various products back up again to the extent they asked us for help of course, we were absolutely always there to help.

It directly and we are not directly involved in Adobe went there to help the customers with bringing up the various products back up again to the extent they asked us what help of course it will be we are absolutely always there to help them. So a couple of things to keep in mind here George as you think through this number one.

Speaker 3: So a couple of things to keep in mind here, George, as you think through this. Number one, fiber security incidents are not...

Cyber security incidents are not new in hospitality.

Speaker 3: If you just go look up in the last say five years or so, there's quite a list of hospitality customers, our customers who have been affected by this because they tend to deal with a lot of guests, a lot of consumers, so hospitality tends to be like a magnet, it attacks the hackers and cyber security incidents, tend to happen. So number one, what happened a few months ago is not new. It has happened many times before. So that is one thing to keep in mind.

Can you just go look up in the last say five years or so it's quite a list of.

Hospitality customers are customers, who have been affected by this because they tend to deal with a lot of gaps lot of consumers. So hospitality tends to be like a magnet that backs the hackers and cyber security incidents tend to happen. So number one what happened a few months ago is not new it has happened many times.

Dave Wood: General and administrative expenses decreased to 12.7% compared to 13.7% of revenue in the second quarter of fiscal 2023. Sales and marketing increased slightly from 10.5% of revenue to 10.8% of revenue, mostly due to timing of expenses. Operating income for the second quarter of 3.6 million net income of 4.1 million and gain per deluded share of 16 cents all increased compared to the prior year's second quarter gain of 2.9 million, 3.1 million and 12 cents.

So that is one thing to keep in mind.

Speaker 3: The other thing to keep in mind is our revenue growth now is broad based. Our sales and revenue growth, sales growth revenue growth is broad based and not too dependent on one, two or three customers. Right? Right across the chain, only in enterprise software. So we are not in the SMB space. But in that enterprise software, the price doesn't matter. There's just a lot of fish in the pond to use that analogy.

The other thing to keep in mind as our revenue growth now with broad based out of sales and revenue growth sales growth revenue growth was broad based and not too dependent on one two or three customers right right across the chain when lean enterprise software. So we are not in the SMB space, but in that enterprise software the size doesn't matter.

They are just a lot of efficient upon to use that analogy.

Speaker 3: Some decisions do get postponed, but none of them get canceled. And those kinds of decisions being postponed because they are focused on getting themselves back or tightening cyber security around themselves. Does not too badly affect our sales or anything. The patients get postponed and then they tend to happen a few months later. So it's not any direct impact or something we are too worried about from a sales or revenue growth stance.

Some decisions do get postponed John's about none of them get canceled and those kinds of decisions being postponed because they are focused on.

Dave Wood: Adjusted net income, normalizing for certain non-cash and non-recurring charges of 6.6 million, was slightly higher than adjusted net income of 6.3 million in the prior year's second quarter, and adjusted deluded earnings per share of 25 cents was slightly more than 24 cents in the prior year period. For the 2024 second quarter, adjusted EBITDA was 8.1 million compared to 7.4 million in the year ago quarter. Adjusted EBITDA in Q2 FY24 was 13.7% of revenue.

Getting themselves backhaul tightening cyber security around themselves does not too badly effect or sales or anything the patients get postpone and then they tend to happen a few months later.

So it's not any direct impact or something we're too worried about from a sales a revenue growth standpoint, but once the Ottawa to you. The board is making sure. We are there to help the customers whenever required and we do help several customers. During the year. This is sort of a regular thing and reasonably frequent.

Speaker 3: But what we are worried about is making sure we are there to help the customers whenever required and we do help several customers during the year. This is sort of a regular thing and you know reasonably frequenting and we are always there to help customers. We have security specialists with us and all that. So we are always involved in helping, but I wouldn't be worried about these from a sales and revenue growth stand.

Dave Wood: Profitability for the quarter was better than previous guidance of high single digits largely due to higher than expected revenue levels. Profitability levels remained comfortably ahead of our prior FY24 guidance of adjusted EBITDA as a percentage of revenue of 13%. Moving to the balance sheet and cash flow statement, cash and marketable securities as of September 30th, 2023 was 107.4 million compared to 112.8 million on March 31st, 2023. We remain comfortable with our current levels of cash.

And we are always there to help customers, we have security specialist with us and all that so we're always involved in helping but I wouldn't be worried about these from a sales and revenue growth standpoint. So we have protected ourselves really well as best as we can there is no perfect Shannon cyber security multiple layers within the company very.

Speaker 3: So we have protected ourselves very well as best as we can. There is no perfection in cyber security, multiple layers within the company, very severe training of employees, very stringent training of employees.

Severe training of employees very stringent trading of employees protecting various layers of our business and even if a hacker gets through to one layer, making sure. They cannot reach much. So we have worked with several great rental partners to do increase.

Speaker 3: protecting various layers of our business and even if a hacker gets through to one layer making sure they cannot reach much else. So we have worked with several great rental partners to do our increasing investments to make sure that we are absolutely about as well protected as you can be.

Increasing investments to make sure that we are absolutely about as well protected as you can be.

Dave Wood: Free cash flow in the quarter was again of 2.5 million, slightly above 2.3 million in the prior Order. For the year, we still believe adjusted EBITDA, less Catholics, will be a good proxy for free cash flows.

Speaker 3: and also in applications design, in the applications we create

And also in application design and the applications we create.

Speaker 3: Information security personnel are always involved now. It's a joint exercise among IT, information security and product development to make sure that the products we are creating cannot be used as a weapon later on. Okay, there's no perfection there, but we are absolutely doing our best to both protect ourselves and...

Our information security personnel are always Inwall now, it's a giant exercise among ICD information security and product development to make sure that the products. We are creating cannot be used as a weapon later on okay theres not perfection, there, but we are absolutely doing our best to both protect ourselves and the customers.

Dave Wood: For our fiscal year 2024, we are raising our revenue guidance range to 235 to 238 million, inclusive of an increased expectation of 28% subscription revenue growth. We are also raising our profitability guidance from 13% to 14% adjusted EBITDA.

Speaker 4: Apologies, I'd love to just squeeze one more in. You haven't set a favorable thing necessarily about managed food service for a while, and this sounds like it was a pretty good quarter. Could you just give us a little bit more specificity in that specific area?

Apologies I'd love to just squeeze one more in you haven't set a.

Favorable thing necessarily bought managed foodservice for a while and this sounds like it was a pretty good quarter could you just give us a little bit more specificity in that specific area.

Dave Wood: In closing, we are pleased with the sales momentum, professional service improvements, and revenue growth during the first half of the year.

Speaker 3: So the FFIS and Business George continues to recover and progress well from COVID time.

Yes, so the FSA business jobs continues to recover.

Ramesh Srinivasan: With that, I will now turn the call back over to Ramesh. Thank you, Dave. In summary, we do understand the macroeconomic headlines and the drum beat of predictions of possible expected advance. We do not want to sound tone deaf to what we are hearing each day when we listen to the news and read what the economy pundits are saying. However, we can only report what our reality is. The truth is, we are not seeing any signs of slowdown in business momentum.

The progress well from Covid time.

Speaker 3: But if there is a star in this particular first half of sales and Q2 sales, it is definitely the source and cruise.

But if there is a stop in this particular first half of sales in Q2 sales. It is definitely the thoughts and crew ships.

Speaker 8: So what we refer to as HRC internally, hotels, research, cruise ships, was definitely the star performer compared to how much things have improved over the last couple of years. If this and I would say continues to show a steady improvement from the depth of the COVID days. Perfect, thank you.

So what we refer to as Hey, Chad C internally hotels resorts cruise ships was definitely the star performer compared to how much things have improved over the last couple of years for semi would say continues to show a steady improvement from the depth of the corporate base.

Perfect. Thank you.

Thank you.

For next question.

Ramesh Srinivasan: To use a crude example, we are a relatively small fisherman now operating with state of the art modern equipment with huge growth potential in a large total addressable market pond with a lot of fish around of all possible sizes. It is possible that we may not feel any negative effects, even if there are any wipples or the level of the water shrinks a bit, unless it becomes an enormous drop that overwhelms everything.

Once again, one moment for your next question.

Speaker 1: All right, inter-ex-questionable conflina, Brian Schwartz from Oppenheimer, your line is up.

Alright, and our next question will come from the line of Brian Schwartz from Oppenheimer. Your line is open.

Speaker 9: Hi, this is Ari Friedman sitting in for Brian Schwartz. Thanks for taking my question and congrats on the corner.

Hi, This is Ari Friedman sitting in for Brian Schwartz. Thanks for taking my question and congrats on the quarter.

Speaker 9: I remember speaking about management companies, mid-sized management companies, and the opportunity there.

<unk>.

I remember speaking about.

Management companies midsize management companies and like the opportunity there.

Speaker 9: And I was wondering what's like the usual product or module that they land with and how does this compare to you to say like your other customers you currently have and where do you see the opportunity ahead there?

Ramesh Srinivasan: We have met and spent time with many customers during recent trade shows and other meetings and have not heard of or seen signs of any reluctance on their part to make the required appropriate technology investments to meet their short term and long term business needs. In addition, the massive levels of product innovation we have worked through during recent years, including the creation of around 25 high value creating additional experience enhancer modules, the real tangible value, the modular and integrated solutions are beginning to create for customers.

And.

I was wondering what's like the usual product our module that they land and do it and how does this compare to you say like your other customers you currently have and where do you see the opportunity ahead there.

Speaker 3: Yes, hi, Ari. So as far as mid-sized management companies, that is one area we continue to make good progress. I would say a good majority of the sales deals we are involved in with such companies tends to be on the point of sales POS, right?

Yes, Hi Ali.

As far as mid sized management company that is one area, we continue to make good progress.

I would say a good majority of the sales deals we're involved in with such companies tends to be on the point of sale side.

Speaker 3: And they tend to use the PMS that is suggested or recommended by the various brand names who's brand name tends to be used in those properties. So the best way I would describe it is our progress with mid-sized management companies continues to improve. We are talking to more and more of them who are keen on looking at our latest product versions. It tends to be more on the POS side at the moment and the PMS side continues to be.

And they tend to use the pms that has suggested a recommended by the various brand names.

Who whose brand named tends to be used in those properties.

Ramesh Srinivasan: All of that is also providing an additional blanket around us that should protect our growth prospects for the foreseeable future. And we will ensure we remain disciplined, managing growth, never getting too far ahead of ourselves. While our implementation services effectiveness and efficiencies have improved significantly during the April to September first half period of this year, the continuing sales success has kept aggregate recurring revenue, services and product backlog total at a near record level, giving us confidence in the raised revenue guidance provider. We will also continue to increase our sales and marketing investments as necessary to keep business momentum moving along.

The best way I would describe it is our progress with mid sized management companies continues to improve we are talking to more and more of them who are.

We are keen on looking at our latest product versions it tends to be more on the Pos side at the moment and the Pms side continues to improve.

Speaker 9: Got it, thanks. And then I guess like one other question is, you guys talk about strength in POS as well, this quarter and last. I was wondering if you could like compare it to like maybe like a baseball analogy, what ending would you say we are in terms of like the growth and how much is left for POS?

Got it thanks.

And then I guess one other question is you guys talked about strength in PFS as well this quarter and last.

I was wondering if you could like compare to like maybe like a baseball analogy what inning would you say we are in terms of like the.

The growth and how much is left for pls.

Speaker 3: Oh yeah, I mean there's a lot of growth are elect for POS. We are doing well with POS, the competitive advantages of POS.

Oh, yes, I mean, theres a lot of growth left for us, we're doing well with the.

We are confident the advantages of <unk>.

Speaker 3: had been established with all the rewriting and re-engineering we have done. We seem to be, we seem to be ahead of the competitors.

Had been established with all the rewriting and reengineering, we have done we seems to be we seem to be ahead of the competitors as far as Pos is concerned because we've had a long track record with it well established product lot of good stories in the field. So it has been a strength of ours and it continues to improve but market.

Ramesh Srinivasan: To repeat what we said last quarter, our overall business remains in excellent shape and we are well positioned for all-round progress and growth.

Speaker 3: As far as POS is concerned, because we've had a long track record with it, well established product, lot of good stories in the field. So POS has been a strength of ours, and it continues to improve. But market share wise, our POS market share is still very low in many areas. So they're just a lot of growth ahead on the POS side. Though we are a bit more mature in how we compete in the market.

Operator: With that, let's open the call up for questions. Victor? Thank you.

<unk> market share is still very low in many area. So there's just a lot of growth ahead on the Pos side, though we had a bit more mature in how we compete in the market on the Pms side all the product re engineering work is done. We've also created like 20 additional modules that are adding a lot of value, but we still.

Operator: Just a question, please press star one on your telephone and wait for an aim to be announced. To withdraw a question, just press star one again. Please stand by with the pilot of the Q&A roster, one moment for our first question.

Speaker 3: On the PMX type, all the product re-engineering work is done. We've also created like 20 additional modules that are adding a lot of value, but we still have more field work to get.

Mayank Tandon: And our first question will come from Lyon of Mayank Tandon from Needham. The line is open. Thank you. Good evening.

Have more field work to get done the product work is done but as far as establishing the BMS products in the field, having more customers sing the praises of the products that I would say we had a very early in the baseball game, we had in the first or second inning, there and Thats still has to improve Prs were well established high competitive strength, but still low market.

Speaker 3: The product work is done, but as far as establishing the PMS products in the field, having more customers sing the praises of the products, that I would say we are very early in the baseball game, we are in the first or second inning there, and that still has to improve. POS were well established, high competitive strength, but still low market share in many areas, both geographical and failed verdicts.

Ramesh Srinivasan: Well, first congrats on the quarter and great to hear about your record sales performance. Ramesh, thank you. Great. Ramesh, let me ask you more in terms of the growth rate. As you look ahead, how do you break that down between new logo wins, expansion with existing clients and our full expansion? Could you maybe just parse it out between the three components as we think about growth going forward? Yeah. So, when we think about the first half, Mayank, the sales from new customers that is internally we refer to it as new logos, new customer sales.

Sure in many areas, both geographical and sales verticals BMS all the product work is done we are in the early stages of establishing ourselves in the fleet.

Speaker 3: PMS, all the product work is done where in the early stages of establishing ourselves in the field.

Awesome. Thank you so much.

Thank you Eddie.

One moment for our next question.

Ramesh Srinivasan: When you compare the first half of this year versus the first half of last year, this year's new customer sales success was far higher, was significantly higher than last year. So, that remains a big driver of growth for us. More new customers signing up with us is definitely a significant driver of growth. The other driver of growth is whether it is new products, meaning current property signing up for new products or new customer signing up, our deal sizes are giving us a big advantage now.

Okay.

Speaker 1: and our next question, we're confident on in? Yeah, We've

And our next question comes from the line of Knowhow Galaxy from Northland Capital markets. Your line is open.

Speaker 1: Thank you. And a great quarter, nice to see this big revenue and a bit of a guy in the uptick. And it sounds like this is being driven by an earlier and an extra turn on of some large implementations rather than better than expected ACV in the September quarter. Is that correct?

Thank you.

Great quarter.

Revenue in a bit.

<unk> It sounds like you know this is being driven by an earlier than expected to turn on some large implementations rather than better than expected ACB in the September quarter is that correct.

Speaker 3: No, they have I would not say that is correct the subscription revenue grow

No they have.

Would not say that is correct the subscription revenue growth.

Speaker 3: was driven by a couple of large projects that went live and our revenue recognition we only recognize the revenue after they go live. But that is what nothing to do with the sales progress we talked about. The sales progress has been broad-dage.

Was driven by a couple of large projects that went live in our revenue recognition, we only recognize the revenue after they go live but that has got nothing to do with the sales progress we talked about the sales progress has been broad based it has been particularly.

Ramesh Srinivasan: Typically, customer signing up for multiple products compared to a few years ago, so deal size is the fact that customer sign up for multiple products instead of just one. That remains a good growth driver for us. The other growth driver that we expect to get better and better with every quarter is the RPMS presence now, property management systems where we still are market share is still very low, we are becoming an increasing presence in all major PMS RFPs and the products are also a lot more impressive now.

Speaker 3: It has been particularly high in the rest of the cruise ships and hotels that space. But gaming casinos continues to do very well. FSM continues to improve and we had our best half of sales internationally ever before, than ever before. So sales is brought based across all our verticals. But subscription revenue growth, the sequential growth this quarter was driven by a couple of large...

High level thoughts and cruise ships and hotels that space, but gaming casinos continues to do very well FSM continues to improve and we had our best half of sales internationally ever before than ever before so sales is broad based across all our verticals, but subscription revenue growth. The sequential growth. This quarter was driven by a couple.

Large.

Speaker 3: Large implementations that went live that we have been working on for quite

Ramesh Srinivasan: That also is driving our growth forward while the point of sale, POS strength continues to remain and continues to drive forward. Our current customers also continue to make a lot more investments in us, whether it is new sites or existing customers signing up for services and other existing product purchase expansions, that is driving us as well. But above all, wind loss ratios, right, without increasing our sales efforts way too much and spending too much, when we participate in an effort, the chances of winning is also much better now than what it used to be in the past, so I would say all that together is driving our growth forward now and it is all product and innovation driven for now and our marketing efforts are also getting a lot more opportunities to the doer now, so I would say it is a combination of all those facts.

Large implementations that went live that we had been working on for quite some time.

Speaker 1: Okay, so to be clear, the main reason why you're raising guidance is because you did have a really strong...

Okay. So to be clear the main reason why you're raising guidance.

Did have a really strong ACD bookings quarter within the September quarter.

Speaker 4: Yeah, Neha, we have a strong sales quarter. And even despite the large revenue increase, I mean, keep in mind, our backlog is still at near record level. So I mean, it's for most of our product lines, but...

Yes, we had a strong sales quarter and either despite the large revenue increase I mean keep in mind, our backlog is still at near record levels.

For most of our product lines.

Speaker 4: within the, it's either number one, two, or three as far as record levels. So, to find the good revenue quarter, there wasn't a depletion in the backlog, which failed has gone really well.

Within its either number one two or three as far as record level. So despite the good revenue quarter, there wasn't a depletion in the backlog, which sales has gone really well as well.

Speaker 10: Okay. So maybe an additional factor is that the rate of implementation have improved better than expected and that's also a factor in the race guidance.

Okay.

So maybe an additional factor is that the rate of implementation have improved better than expected and Thats also a factor.

Mayank Tandon: That's a very helpful color.

<unk> raised guidance.

Speaker 3: In the revenue doing well, subscription revenue doing well, recurring revenue doing well, the fact that implementation efficiencies are increasing, Nehal, because we had a lot of new products to establish on the field. We are getting more fluent with implementing those new products. We are also getting more adept at dealing with multi-product complex implementation. So yes, all that is contributing to recurring revenue. But us increasing the guidance of revenue also has to do with our sales doing very well and winning new opportunities at the first.

Dave Wood: And as a quick follow up question, I wanted to focus on the margins for the out performance that you saw this quarter and then that you're guiding to for the remainder of the year. How does that breakdown between gross margin expansion and leverage on the operating cost line? Yes, so gross margins were about one point ahead of expectations largely just like we talked about due to the higher revenue levels. Certainly the sequential subscription increase of $1.6 million was was pretty accreted to the gross margin expansion.

Yes in the revenue doing well with subscription revenue doing well recurring revenue doing well. The fact that implementation efficiencies are increasingly because we had a lot of new products to establish on the fee. We are getting more fluent with implementing those new products were also getting more adept at dealing with multi product complex implementation.

So yes, all that is contributing to recurring revenue, but also increasing the guidance of revenue also has to do with our sales doing very well and winning new opportunities at a faster pace.

Speaker 10: Can you give you a little bit more color as far as how did ACB persons actually trend in this September quarter? More than just simply saying, you know, one of the best server quarters and for fiscal 1.5 best server, because when you're growing 20% plus year of year, it's kind of like an expectation that every quarter is going to become the best.

Okay. Okay.

Dave Wood: So think of it as kind of one, you know, a point or two ahead on the gross margins. And then, you know, our cost was was pretty much settled coming into Q2. I mean, most of our investments for the rest of the year would be incremental. So the higher revenue, obviously, we didn't incur additional off X cost. So most of it was the revenue over achievements and the expansion of the subscription revenue.

A little bit more color as far as how did ACB bookings actually trend in the September quarter more than just simply saying.

One of the best ever quarters and for fiscal one half best ever because when you are growing 20 plus percent year over year, it's kind of like an expectation that every quarter, it's going to be kind of a best ever.

Speaker 3: I mean revenue I understand what you're saying Nehal every quarter was Generally expected to be our best ever when we are a growing company and doing well As for the sales is concerned, you know when you finish a quarter every quarter you start from zero And you have to build it back again our sales continuing to do well has a lot to do with our product strength

Yes.

I mean revenue I understand what youre, saying they have every quarter is generally expected to be our best ever when we are a growing company and doing well. That's what it seems is concern when you finish a quarter every quarter you start from zero and you have to build it back again, our sales continuing to do well has a lot to do with our product strength and has a lot to do.

Dave Wood: And Mayank, what you should expect, like I mentioned in my comments, is margins, we typically measure our profitability at EBITDA by revenue to improve consistently from here. We've gone through the tough phase. When we had to make significant cost investments in order to drive medium term growth and you're aware of that.

Dave Wood: So starting now, you should see a consistent improvement in profitability during the second half of the year and into the next fiscal year as well.

Speaker 3: and has a lot to do with the fact we have a lot more products to sell. And in many geographic areas, our market share is low. So that's one of the reasons why sales should continue to do well. And some of the color we have given is this quarter was one of our best, but the first half of the year was our best first half of the year of any year. As far as sales is concerned.

With the fact, we have a lot more products to sell and in many geographies all areas of our market share is low. So that's one of the reasons why sales should continue to do well and some of the color. We have given is this quarter was one of our best but the first half of the year was our best first half of the year of any year as far as sales is concerned and comfortably.

Mayank Tandon: That's great to hear again. Congrats on the quarter and thank you for taking my questions. Thank you, Mayank. Thank you.

Operator: One moment for next question.

Speaker 3: and comfortably higher than last year. Now when you take a last full year fiscal 2023, it was a record sale year.

Higher than last year now when you take last full year of fiscal 2023. It was a record sales year for us. So this year. The first half we made a much better start to the year than even last year.

Speaker 3: For this year first half, we made a much better start to the year than even last.

Matthew VanVliet: Our next question of conflina Matthew van Viet from BTIG. Good on this open. Yeah, good afternoon. Thanks for taking the question. I guess when you made a couple comments around one, your win rates continued to be very strong. And then also the deals, especially in Europe and APEC that you mentioned strength there. So I guess as you think about sort of the big drivers there. And I know you went through a couple on the last question.

Okay, Alright finally.

Speaker 10: All right, finally, you know, made a comment last quarter, sharks and dolphins are in the pipeline. How was that pipeline? Look, how's the shark and dolphin pipeline look?

<unk> made.

You made a.

Comment last quarter Sharks in Dolphins are in the pipeline.

How is that pipe how's the startling dolphin pipeline looking.

Speaker 10: This quarter, September quarter, Rawls of the June quarter, has it continued to check that that are rapid rate? Did you have any graduation of those? Within the September quarter, and any detail on the strikes and balkans narrative.

This quarter September quarter relative to the June quarter has it.

Continued trajectory up at a rapid rate do you have any gratulation of those within the September quarter, any detailed or construction Boston scenario that would be great.

Matthew VanVliet: But curious on how much, if at all it's been mentioned that the win of the Marriott contract has sort of brought a jilis is more top of mind for potential customers. How much that's helping versus the re platform product and then the sales investments, especially in the international markets driving that anything sort of additional on the international side that you would highlight that might be a little bit of a diverging or I guess at least different driver than in the US.

Speaker 3: Yes, I mean, George will also like to the Nanasi Nehalsha. Sharks and dolphins continue to play a big part of our sale. So we do have the entire gamut of sales opportunities in terms of size of customers.

Yes.

George will also likely the analogy and al just shocks and those things continue to play a big part of our sales. So we do have the entire gamut of sales opportunities in terms of size of customers.

Speaker 3: But during the first half of the year, April through September , they were several sizable sales wins that we had, which were the resort or the cruise ship. They were sizable companies, and they also bought multiple products from us with good deal sizes. And that trend, I don't think there is going to be any slowdown of that.

But during the first half of the year April through September there were several sizable sales wins that we had which were the result of the cruise ship. There are sizable companies and they also bought multiple products from us with good deal sizes and that trend I don't think that is going to be any slowdown of that plan. When we look at our sales pipeline.

Speaker 3: When we look at our sales pipeline, there are quite a few doubles and triples that are possible in that sales pipeline. So yes, we do have sizable opportunities, whether you refer to them as doubles and triples or sharks and all, since they are there. They were there in April to September 1st, and they continue to be in our pipeline going forward.

Matthew VanVliet: Yeah, so whether it is international or even domestic areas where our market share is a bit low, I mean actually very low. What is driving us to get the opportunities are superior marketing efforts compared to where we were one and two years ago. So those are the marketing efforts are definitely opening up opportunities for us. And the product for the the impressiveness of the product demos is definitely keeping us in contention.

There are quite a few doubles and triples that are possible in that sales pipeline. So yes, we do have sizable opportunities whether you refer to them as doubles and triples, our shock loss claims. They are there. They were there in the April through September cluster and they continue to be in our pipeline going forward.

And Dave increasing amount in terms of numbers.

Speaker 3: More and more, yes. We are increasing significant opportunities, mostly because the opportunity sizes are bigger and they tend to buy multiple products from us. The deal sizes are higher.

I wanted to note yes.

Leasing significant opportunities, mostly because the opportunity sizes are bigger may have mostly because they tend to buy multiple products from us the deal sizes are higher.

Matthew VanVliet: Now what we need to do is get more reference customers. There are many countries in the world where we have to establish ourselves more because apart from the product superiority and the ecosystem superiority. They also require customers who will give them the comfort field that yes, we went with these products and we are doing well. That's what we are building now. The product work is more or less done, Matt and now it is the field work that is beginning in many international regions and even in some domestic areas.

Got it understood. Thank you. Thank you and congrats thanks, Thank you Matthew.

Speaker 1: Thank you. And with that, I want to add a conference back to Ramesh for Claremarchs.

Thank you.

And with that I would now like to turn the conference back to <unk> for closing remarks.

Speaker 3: Thank you Victor. Thank you all for your interest and participation. Enjoy the holiday season. We look forward to talking to you again in about three months when we will be reporting fiscal 2024 third quarter results. Thank you.

Thank you Victor Thank you all for your interest and participation enjoy the holiday season, we look forward to talking to you again in about three months when we will be reporting fiscal 2024 third quarter results. Thank you.

Matthew VanVliet: So now we are focused on establishing these products, establishing these integrations among within our ecosystem in the field and creating more reference customers and then you know the ball will really start rolling. The Vinloth's issues are very good when customers look at our product demos and nobody else is doing this kind of end-to-end ecosystem innovation. But what we are focused on now is generating more presence in the field, more customers saying great things about our products.

Speaker 1: And this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

And this concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

Okay.

[music].

Matthew VanVliet: That's what we are focused on. Very helpful. In Dave, your comments seem to sort of imply that the majority of head full year have more or less been made here. So, one wanted to just sort of confirm that's what your comments implied. But maybe more importantly, what would give you the confidence or the rationale to add additional headcount in the back half, especially as we think about the continued success of new business wins?

Okay.

Okay.

[music].

Matthew VanVliet: Do you need some additional capacity potentially on the services delivery team, especially as the Marriott Project ramps up? Or where do you stand in terms of total capacity on the delivery team in light of the better bookings performance of late? Yeah, so starting with the services team, I mean, we still have ramp left on the services team. I mean, they've done a tremendous job with revenue through the first half of the year, but there's still ramp left on that team, which their gross margins should continue to increase.

Matthew VanVliet: But certainly, I think we're pretty settled, and we're pretty from a headcount where there's OPEX or delivery. We're pretty settled on headcount and certainly for the revenue guidance we've given. But that's not to say that we wouldn't make more incremental investments as we see fit, right? If other parts of the market start to open up or there's something, we wouldn't be foolish over that. But we feel pretty settled on where we sit from a headcount perspective at the moment. All right, great. Thank you.

Yeah.

[music].

Okay.

[music].

Yes.

Okay.

George Sutton: One moment for an next question. And our next question of Comfort line of George Sutton from Craig Hayland. The line is open.

[music].

Ramesh Srinivasan: Thank you. Ramesh, I appreciate the fishing analogy in particular. So you and I have talked about increasingly you are playing offense versus playing defense particularly when you're out at a large trade show. I just wondered if you could walk through what exactly you mean by that, and help translate that to part of why you're seeing the sales success and the increased guidance. Yeah, so that comment about offense was a defense like when you compared us to a few years ago, right?

Ramesh Srinivasan: And during my initial days here, and even a couple of years after we got here, as we started improving the products, whenever you meet customers in trade shows, the success of implementations tends to be measured by the low number of pending issues, pending technical issues. So there are only 10 issues pending to be resolved. That's how they tend to be measured and you're constantly playing defense with customers making sure they stay with you despite the technical issues that are there and all that.

Ramesh Srinivasan: In recent shows, especially this year, in the various shows we have attended, there were more and more stories, and some of these stories were shared publicly in publicly attended sessions where they were talking about, we moved from a competing system to Agilist. We implemented their core PMS product and these two or three additional modules and these business parameters went up from this percentage to that. So they were actually happy to share those details with other customers.

Ramesh Srinivasan: So that's what I mean by playing offense. That we no longer go into trade shows expecting to play defense like many enterprise software companies do where customers are going to come and complain and you're going to defend with them. And now we are looking for the positive stories that can be shared with other customers. So more and more we are switching to offense from the defense we used to be many years ago.

Ramesh Srinivasan: And the products are supporting that and our implementation services staff are supporting that. Our support is becoming better as we go along. So there are more positive stories for customers to share with others that provide an incentive for other customers to buy the products as well. That's what I meant, Charles.

Ramesh Srinivasan: That's great. So there were clearly some big large operators particularly in the gaming space that have had some cyber security issues. I know you've made a big investment in your capabilities on the cyber security side. Can you talk about any impact that those have had to you and what happens when cyber security becomes part of a sales cycle which I know is increasingly important. How are you doing in those situations? Yeah.

Ramesh Srinivasan: So a number of questions that let me make sure I cover all of them. Number one, no impact directly. There are a couple of news that you've heard recently. No direct impact. Our knowledge of the incidents and our overall understanding of the incidents is nothing more than what has been reported publicly. So not impacted directly and we are not directly involved in it. Though we were there to help the customers with bringing up the various products back up again to the extent they asked us for help, of course, we were absolutely always there to help them.

Ramesh Srinivasan: So a couple of things to keep in mind here, George. As you think through this, number one, cyber security incidents are not new in hospitality. If you just go look up in the last say five years or so, there's quite a list of hospitality customers, our customers who have been affected by this because they tend to deal with a lot of gets, a lot of consumers. So hospitality tends to be like a magnet, right?

Ramesh Srinivasan: It attacks the hackers and cyber security incidents tend to happen. So number one, what happened a few months ago is not new. It has happened many times before. So that is one thing to keep in mind. The other thing to keep in mind is our revenue growth now is broad based. Our sales and revenue growth, sales growth revenue growth is broad based and not too dependent on one, two or three customers, right?

Ramesh Srinivasan: Right across the chain, only in enterprise software. So we are not in the SMB space, but in that enterprise software, the size doesn't matter. There's just a lot of fish in the pond to use the analogy. Some decisions do get postponed, George, but none of them get canceled and those kinds of decisions being postponed because they are focused on getting themselves back or tightening cyber security around themselves. Does not too badly affect our sales or anything, the patients get postponed and then they tend to happen a few months later.

Ramesh Srinivasan: So it's not any direct impact or something we are too worried about from a sales or revenue growth standpoint. But what we are worried about is making sure we are there to help the customers whenever we are required and we do help several customers during the year. This is sort of a regular thing and reasonably frequenting and we are always there to help customers. We have security specialists with us and all that.

Ramesh Srinivasan: So we are always involved in helping, but I wouldn't be worried about these from a sales and revenue growth standpoint. Point. So we have protected ourselves very well as best as we can, there is no perfection in cyber security, multiple layers within the company, very severe training of employees, very stringent training of employees, protecting various layers of our business, and even if a hacker gets through to one layer, making sure they cannot reach much else.

Ramesh Srinivasan: So we have worked with several great vendor partners to do our increasing investments to make sure that we are absolutely about as well protected as you can be. And also in applications design, in the applications we create, information security personnel are always involved, now it's a joint exercise among IT, information security and product development to make sure that the products we are creating cannot be used as a weapon later on. Again, there is no perfection there, but we are absolutely doing our best to both protect ourselves and the customers.

Ramesh Srinivasan: Apologies, I'd love to just squeeze one more in. You haven't said a favorable thing necessarily about managed food service for a while, and this sounds like it was a pretty good quarter. Could you just give us a little bit more specificity in that specific area? Yeah, so the efficient business jobs continues to recover and progress well from COVID time. But if there is a star in this particular first half of sales and Q2 sales, it is definitely restarts and cruise ships.

Ramesh Srinivasan: So what we refer to as HRC internally, hotels, restarts, cruise ships was definitely the star performer compared to how much things have improved over the last couple of years. The efficient I would say continues to show a steady improvement from the depth of the COVID days.

Operator: Perfect, thank you.

Operator: Thank you.

Operator: One moment for the next question.

Operator: Once again, one moment for the next question.

Ari Friedman: All right, the next question will come from Brian Schwartz from Oppenheimer. Your line is open.

Ramesh Srinivasan: Hi, this is Ari Friedman sitting in for Brian Schwartz. Thanks for taking my question and congrats on the quarter. I remember speaking about management companies, mid-sized management companies, and the opportunity there. And I was wondering what's like the usual product or module that they land with, and how does this compare to say like your other customers you currently have, and where do you see the opportunity I had there?

Ramesh Srinivasan: Yes, hi Ari. So as far as mid-sized management companies that is one area we continue to make good progress, I would say a good majority of the sales deals we are involved in with such companies tends to be on the point of sales POS right, and they tend to use the PMS that is suggested or recommended by the various brand names who are who's brand name tends to be used in those properties.

Ramesh Srinivasan: So the best way I would describe it is our progress with mid-sized management companies continues to improve. We are talking to more and more of them who are keen on looking at our latest product versions. It tends to be more on the POS side at the moment and the PMS side continues to improve. I'm going through.

Ramesh Srinivasan: Got it, thanks. And then I guess one other question is, you guys talk about strength in POS as well, this quarter and last. I was wondering if you could like compare it to like maybe like a baseball analogy, what inning would you say we are in terms of like the growth and how much is left for POS? Oh yeah, I mean there's a lot of growth that he left for POS. We are doing well with POS, the competitive advantages of POS have been established with all the rewriting and re-engineering we have done.

Ramesh Srinivasan: We seem to be we seem to be ahead of the competitors as far as POS is concerned because we've had a long track record with it, well established product, lot of good stories in the field. So POS has been a strength of ours and it continues to improve but market share wise our POS market share is still very low in many areas. So they just a lot of growth ahead on the POS side though we are a bit more mature in how we compete in the market.

Ramesh Srinivasan: On the PMS side, all the product re-engineering work is done. We also created like 20 additional modules that are adding a lot of value but we still have more field work to get done. The product work is done but as far as establishing the PMS products in the field, having more customers sing the praises of the products, that I would say we are very early in the baseball game, we are in the first or second inning there and that still has to improve.

Ramesh Srinivasan: POS were well established high competitive strength but still low market share in many areas both geographical and sales verticals. PMS, all the product work is done. We are in the early stages of establishing ourselves in the field.

Ramesh Srinivasan: Awesome.

Operator: Thank you so much. Thank you, Ari.

Operator: One moment for our next question.

Nehal Chokshi: And our next question. We have got a line of Nihala Talkshi from Northland Capra Markets. Your line is open. Thank you. And a great quarter. Nice to see this big revenue and a bit of a guidance uptake.

Nehal Chokshi: It sounds like, you know, this is being driven by an earlier and such a turn on some large implementations rather than better expected ACV in the September quarter, is that correct? No, Nihala. I would not say that is correct. The subscription revenue growth was driven by a couple of large projects that went live and our revenue recognition, we only recognize the revenue after they go live. But that is what nothing to do with the sales progress we talked about.

Nehal Chokshi: The sales progress has been broad based. It has been particularly high in the rest of us and cruise ships and hotels that space. But gaming casinos continues to do very well. FSM continues to improve and we had our best half of sales internationally ever before than ever before. So sales is broad based across all our verticals.

Dave Wood: But subscription revenue growth, the sequential growth this quarter was driven by a couple of large implementations that went live that we have been working on for quite some time. Okay, so to be clear, the main reason why you're raising guidance is because you did have a really strong ACV for whose quarter was in the September quarter. Yeah, Nihala. We have a strong sales quarter. And, you know, even despite the large revenue increase, I mean, keep in mind, our backlog is still at near record level.

Dave Wood: So I mean, it's for most of our product lines. It's, you know, within the, it's either number one, two, or three, as far as record levels. So, despite the good revenue quarter, you know, there wasn't a depletion in the backlog, which, you know, sales has gone really well as well.

Nehal Chokshi: Okay, so maybe an additional factor is that the rate of implementation has improved better than expected, and that's also a factor in the race guidance. Yeah, in the revenue doing well, subscription revenue doing well, recurring revenue doing well, the fact that implementation efficiencies are increasing Nehal, because we had a lot of new products to establish on the field. We are getting more fluent with implementing those new products. We are also getting more adept at dealing with multi-product complex implementation. So, yes, all that is contributing to recurring revenue, but us increasing the guidance of revenue also has to do with our sales doing very well and winning new opportunities in the foster base.

Nehal Chokshi: Okay, can you give you a little bit more color as far as how did ACB persons actually trend in the September quarter more than just simply saying, you know, one of the best ever quarters, and for fiscal one half, best ever, because when you're growing 20 plus percent year of year, it's kind of like an expectation that every quarter is going to be kind of the best ever. I mean, revenue I understand what you're saying, Nehal, every quarter is generally expected to be our best ever when we are a growing company and doing well.

Nehal Chokshi: As far as sales is concerned, you know, when you finish a quarter, every quarter, you start from zero, and you have to build it back again. Our sales continuing to do well has a lot to do with our product strength, and has a lot to do with the fact we have a lot more products to sell, and in many geographic areas, our market share is low. So that's one of the reasons why sales should continue to do well.

Nehal Chokshi: And some of the color we have given is this quarter was one of our best, but the first half of the year was our best first half of the year, of any year, as far as sales is concerned, and comfortably higher than last year. Now, when you take last full year fiscal 2023, it was a record sales year for us. For this year, the first half, we made a much better start to the year than even last year.

Nehal Chokshi: Okay. All right.

Nehal Chokshi: Finally, you know, made a comment last quarter, sharks and dolphins are in the pipeline. How is that pipeline? How is the shark and dolphin pipeline looking? This quarter, September quarter, we're all supposed to June quarter. Has it continued to just after a rapid rate? Did you have any graduation of those within the September quarter? Any data on the sharks and dolphins nurture to be great? Yes. I mean, with George, we'll also like to the analogy in health.

Nehal Chokshi: Sharks and dolphins continue to play a big part of our sales. So we do have the entire gamut of sales opportunities in terms of size of customers. But during the first half of the year, April through September, they were several sizeable sales wins that we had, which were the resort or the cruise ship. They were sizeable companies and they also bought multiple products from us with good deal sizes. And that trend, I don't think there is going to be any slowdown of that trend.

Nehal Chokshi: When we look at our sales pipeline, there are quite a few, you know, doubles and triples that are possible in that sales pipeline. So yes, we do have sizeable opportunities, whether you refer to them as doubles and triples or sharks and dolphins. They are there. They were there in April through September 1st, and they continue to be in our pipeline going, and they've increased in amount in terms of numbers. More and more, yes, we are increasing significant opportunities mostly because the opportunity sizes are bigger, Nehal, mostly because they tend to buy multiple products from us. The deep sizes are higher, I understand.

Nehal Chokshi: Thank you, thank you and congrats. Thank you, Nehal.

Operator: Thank you, and with that, I want to thank you all for your interest and participation. Enjoy the holiday season. We look forward to talking to you again in about three months when we will be reporting fiscal 2024-3rd quarter of the france.

Operator: Thank you.

Operator: And this concludes today's conference call. Thank you for participating. You're in now, disconnect.

Operator: Everyone, have a great day.