Q4 2024 Agilysys Inc Earnings Call

[music].

Operator: Good morning, ladies and gentlemen, and welcome to Agilysys 2020 for the fourth quarter and full fiscal year conference call. As a reminder, today's conference may be recorded. I would now like to turn the conference over to Jessica Hennessy, Senior Director of Corporate Strategy and Investor Relations at Agilysys. You may begin.

Good day, ladies and gentlemen, and welcome to 2020 for fourth quarter.

Conference call.

Under today's conference maybe recorded I would now like to turn the conference over to Jessica Hennessy Senior director of corporate strategy and Investor Relations at <unk>.

Jessica Hennessy: Thank you, Michelle, and good afternoon, everybody. Thank you for joining us on the Agilysys 2024 fourth quarter and full fiscal year conference call. We will get started in just a moment with management's comments, but before I do so, let me read the Safe Harbor language. 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.

Jessica Hennessy: You may begin.

Jessica Hennessy: Thank you Michelle and good afternoon, everybody. Thank you for joining via jealous of 'twenty 'twenty four fourth quarter and full fiscal year conference call. We will get started in just them all out with management's comments, but before doing so let me read the safe Harbor language.

Jessica Hennessy: All 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. Although the company believes that its forward looking statements are based on reasonable assumptions such.

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 results to differ materially. Important factors that could cause actual results to vary materially from these forward-looking statements include our ability to meet the software needs of the hospitality industry, our ability to drive sales and increase market share, our ability to maintain profitability levels, and the risks set forth in the company's reports on Form 10-K and 10-Q and other reports filed with the Securities and Exchange Commission.

Jessica Hennessy: The statements are subject to risks and uncertainties that could cause results to differ materially.

Jessica Hennessy: Important factors that could cause actual results to vary materially from these forward looking statements include our ability to meet the software needs of the hospitality industry, our ability to drive sales and increase market share our ability to maintain profitability level and the rest that forth in the company's reports on Form 10-K, and 10-Q and other.

Jessica Hennessy: Our reports filed with the Securities and Exchange Commission.

Jessica Hennessy: As a friendly reminder, any references to record financial and business levels during this call refer only to the time period after Agilysys made the transformation to an entirely hospitality-focused software solutions company in fiscal year 2014. With that, I'd now like to turn the call over to Mr. Ramesh Srinivasan, President and CEO of Agilysys. Ramesh, please go ahead.

Jessica Hennessy: Friendly reminder, any references to record financial business levels. During this call refer only to the time period. After adult that's made the transformation to an entirely hospitality focused software solutions company in fiscal year 2014.

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

Ramesh Srinivasan: Thank you, Jess. Good evening.

Ramesh Srinivasan: Thank you Jess good evening and welcome to the fiscal 'twenty 'twenty, four fourth quarter and full year earnings call.

Ramesh Srinivasan: Welcome to the Cisco 2024 fourth quarter and full year earnings call. Joining Jess and me on the call today at our Atlanta headquarters is Dave Wood, our CFO. We are pleased to report our ninth consecutive Record Revenue Quarter and another successful fiscal year with record revenue and profitability levels. We have now started not only a new fiscal year but a new era in our organization's history. We are happy to have completed the long and arduous period of re-engineering and modernizing all our core products, converting each of them into a state-of-the-art cloud-native software solution, while simultaneously also creating an ecosystem of cloud-native software modules around the core product, making our offerings as complete and end-to-end solution sets as there is in the hospitality industry.

Ramesh Srinivasan: Joining Jeff and me on the call today at our Atlanta headquarters is Dave <unk> our CFO.

We are pleased to report our ninth consecutive record revenue quarter.

Ramesh Srinivasan: And another successful fiscal year with record revenue and profitability levels.

Ramesh Srinivasan: We've now started not only a new fiscal year, but a new era.

Ramesh Srinivasan: In our organization's history.

Dave: We are happy to have completed the long and arduous period of reengineering and modernizing all of our core products.

Dave: Converting each of them into a state of the art cloud.

Dave: Cloud native software solution.

Dave: While simultaneously also creating an ecosystem of cloud native software modules around the core products.

Dave: Making our offerings as complete an end to end solution set.

Dave: In the hospitality industry today.

Ramesh Srinivasan: We are now focused externally on creating high value for customers with implementations involving these modern solutions. Customer requirements are now being fulfilled at a fast pace, and many hospitality properties are benefiting from the kind of integrated modern solutions this industry has been eagerly waiting for.

Dave: BMO focus externally on creating higher value for our customers with implementations involving these modern solution sets.

Dave: Customer requirements are now being fulfilled at a fast pace and many hospitality properties are benefiting from the kind of integrated modern solutions. This industry has been eagerly waiting for.

Ramesh Srinivasan: Let me cover sales first before moving to revenue and other details. Please note that all sales and selling success-related numbers are measured in annual contract value terms. Please also note that the Marriott Point of Sale POS agreement announced recently is not included in any of the sales and backlog numbers discussed here.

Dave: Let me cover sales first before moving to revenue and other details.

Dave: Please note that all our sales and selling success related numbers.

Dave: Measured in annual contract value of those.

Dave: Please also note that the Marriott point of sale P. O S agreement announced recently.

Not included in any of the sales and backlog numbers discussed here.

Ramesh Srinivasan: This agreement will be reflected in sales and backlog numbers as individual properties select and sign up for our POS solution. Fiscal 2023, the year ending March 2023, was a record sales year, and Fiscal 2024, the year ending March 2024, was at about the same level, despite a 12% decrease in product bookings. With respect to sales verticals, fiscal 2024 was a record year for the Americas Hotels and Resorts vertical, which is a crucial future growth area for us, growing by 16%, 1-6, growing by 16% over fiscal 2023.

Dave: This agreement will be reflected in sales and backlog numbers as individual properties select and sign up for our solution.

Ramesh Srinivasan: Sales to gaming casinos in the US remained the number one sales vertical during fiscal 2024, and APAC Asia-Pacific sales were about 45 percent higher than the previous year, though still not back to record high levels yet. With respect to sales categories, Fiscal 2024 was a record sales year for subscription software and services; both subscription software and services sales levels during fiscal 2024 were about 10% higher than during fiscal 2023, which was the previous best year on record, and about 30% higher than fiscal 2022, a couple of years ago.

Dave: Okay.

Dave: Fiscal 'twenty to 'twenty three the year ending March 2023 was a record sales here.

Dave: In fiscal 2020 for the year ending March 2024 was at about the same level.

Dave: Despite a 12% decrease in product bookings.

Dave: With respect to sales verticals fiscal 2024 was a record year for the Americas hotels and resorts vertical.

Which is a crucial future growth area for us growing by 16% one six growing by 16%.

Dave: For fiscal 2023 levels.

Dave: Sales for gaming casinos in the U S remained the number one sales verticals during fiscal 2024.

Dave: In APAC Asia Pacific sales was about 45% higher than the previous year, though still not back to record high levels yet.

Dave: With respect to sales categories fiscal 2024 was a record sales year for subscription software and services.

Dave: Both subscription software and services sales levels during fiscal 2024, we're about 10% higher than during fiscal 2023, which was the previous best year on record.

Dave: And about 30% three zero, 30% higher than fiscal 2022, a couple of years ago.

Ramesh Srinivasan: The services work we continue to perform for the Marriott Property Management System, PMS project, which is progressing according to plan, is reflected in our services revenue levels but is not counted in services sales. Point of sale POS terminal hardware sales during fiscal 2024 declined compared to fiscal 2023. Due to each unit of POS software sales during recent quarters drawing in about 15 to 20 percent less terminal hardware sales than before. Our recent modernized versions of POS terminal software now support all major operating systems, Windows, iOS, and Android, thereby giving customers more generic POS terminal hardware options, including iPads, iPad Minis, other consumer grade tablets and devices which can be bought off the shelf and sleek all-in-one handheld devices which can be purchased from payment gateway

Dave: The services work, we continue to perform for the Marriott property management system BMS project, which is progressing. According to plan is reflected in our services revenue levels.

Dave: But it's not counted in services sales.

Dave: Point of sale terminal hardware sales during fiscal 2024 declined compared to fiscal 2023 due to each unit of pure software sales during recent quarters, drawing in about 15% to 20% less dominant in hardware sales.

Speaker Change: Then before.

Speaker Change: Our recent modernized versions of P. O S terminal software now support all the major operating systems Windows, iOS, and Android, thereby giving customers more generic P. O S terminal hardware options, including iPad iPad minis, other consumer grade tablets and devices.

Speaker Change: <unk>, which can be bought off the shelf.

Speaker Change: Sleek all in one handheld devices, which can be purchased from payment gateway vendors.

Speaker Change: Customers like subtypes.

Ramesh Srinivasan: Customers like Sutton. POS Windows terminals, which we continue to resell, are still required for most of the POS work that enterprise food outlets need to perform, but to a lesser extent than a year or two ago. This is a good trend and gives our POS products and modules a clear competitive edge, enabling more subscription software sales, but is expected to put pressure on one-time product revenue, a majority of which is made up of hardware revenue.

Speaker Change: P O S windows terminals, which we continue to resell are still required for most of the work that enterprise food outlets need to perform but to a lesser extent than a year or two ago.

Speaker Change: This is a good trend and gives our prs products and modules a clear competitive edge, enabling more subscription software sales, but is expected to put pressure on one time product revenue.

Speaker Change: Majority of which is made up of hardware revenue.

Ramesh Srinivasan: We are now one of the approved POS vendors for all Marriott properties in the US and Canada, although this is a hunting license. And we currently don't have an estimate of how many of these thousands of properties have a need to change out their POS solution.

Speaker Change: Yeah.

Speaker Change: Vietnam is one of the approved vendors for all Marriott properties in the U S and Canada.

Speaker Change: While this is a hunting license and we currently don't have an estimate of how many of the thousands of properties have a need to change out their <unk> solution.

Ramesh Srinivasan: How many of such properties will we be able to win and over what time period? Well, all that is difficult to estimate at this stage. The agreement does open up another significant POS sales growth avenue for us. With respect to signed sales agreements during January to March Q4, we added 12 new customers, and all 12 agreements were either partially or fully subscription-based. Though the number of new customers added this quarter was lower than our recent range of 15 to 20 per quarter, the total value of new customer sales agreements signed this quarter was close to twice as high as Q4 last fiscal year, when 15 new customers were added.

Speaker Change: How many of such properties, we will be able to win and over what time period, while all that is difficult to estimate at this stage. The agreement does open up another significant.

Speaker Change: Sales growth Avenue for us.

Speaker Change: With respect to find sales that remains during January to March Q4 B.

We added 12, new customers in all 12 agreements, where either partially or fully subscription based.

Speaker Change: Though the number of new customers added this quarter was lower than our recent range of 15 to 20 per quarter. The total value of new customer sales agreement signed this quarter.

Speaker Change: It's close to twice at highest Q4 last fiscal year. When 15, one 515, new customers were added.

Ramesh Srinivasan: Each POS agreement signed with new customers this quarter included an average of 2.3 products, while each PMS customer agreement included as many as 10 products and software modules. This was our best quarter ever, with respect to new customers, average, annual contract value, and deal size, about 25% higher than the previous record high quarter and about 2.5 times as high as Q4 last year. We also added 70 new properties during the quarter that did not have any of our products before, but the parent company was already our customer.

Speaker Change: Each P O S agreement signed with new customers. This quarter included an average of two three products wider each pms customer agreement included as many as 10 products and software modules.

Speaker Change: This was our best quarter ever with respect to new customer average annual contract value deal size.

Speaker Change: 25% higher than the previous record highest quarter and about two and a half times as highest Q4 of last year.

Speaker Change: We also added 77 zero 70, new properties during the quarter, which did not have any of our products before but the parent company was already our customers.

Ramesh Srinivasan: Of the 82 new properties added during the quarter across new and current customers, more than 90% were either partially or fully subscription software licensed. There were also 65 instances of selling at least one additional product to customers who already had one of our other products. These 65 instances involved sales of a total of 158 products.

Speaker Change: Of the 82, new properties added during the quarter across new and current customers more than 90% nine zero more than 90%, but either partially or fully subscription software license based.

Speaker Change: Yeah.

Speaker Change: They have been also 65 instances of selling at least one additional product to properties, which already had one of our other products.

Speaker Change: 65 instances in mall sales or a total of 158 products.

Ramesh Srinivasan: Full fiscal year 2024 was our best year thus far with respect to total annual contract value of sales wins involving new customers and was about 40%, that's 4-0, 40% higher than the previous fiscal year. Fiscal 2024 was also our best year with respect to average deal size of agreements with new customers. Again, about 40% higher than the previous year. Before moving on to revenue-related details, A couple of quick comments on the Inspire User Conference held during the last week of March at Red Rock Casino in Las Vegas. It clearly was our best one yet.

Speaker Change: Full fiscal year 2024.

Speaker Change: It was our best year, thus far with respect to total annual contract value of sales wins involving new customers.

Speaker Change: And what about 40%, that's four zero, 40% highest.

Speaker Change: Then the previous fiscal years.

Speaker Change: Fiscal 2024 was also our best year ever with respect to average deal size of agreements with new customers again about 40% four zero, 40% higher than the previous year.

Yes.

Speaker Change: Before moving on to revenue related details.

Ramesh Srinivasan: There were a record number of customer attendees and the overall show was of an entirely higher standard than before, thanks to the excellent work done by our marketing team in taking the main stage and other presentations to world-class levels. Also, of course, we had a lot more product progress to talk about. If we had to pick out a couple of highlights... One would be our decision this year to include for the first time leading hospitality industry consultants who are involved in many RFPs and other system selection processes for customers.

Speaker Change: Couple of quick comments on the inspire user conference held during the last week of March at Red Rock Casino Las Vegas.

Speaker Change: It clearly was our best one yet.

Speaker Change: With a record number of customer attendees and the overall shore waterfront entirely higher class than before.

Speaker Change: The excellent work done by our marketing team in taking the main stage and other presentations to world class levels.

Speaker Change: Also of course, we had a lot more product progress to talk about.

Speaker Change: If we had to pick out a couple of highlights.

Speaker Change: One would be our decision. This year to include for the first time, leading hospitality industry consultants, who are involved in many rfps and other system selection processes for our customers.

Ramesh Srinivasan: The second, and the biggest highlight was the eight different sessions during the conference that were conducted by industry leader customers across the gaming casinos, resorts, hotels, and cruise ships vertically. Four of the eight sessions involved recent success stories related to the property management system PMS family of products. Two of the eight presentations were led by international customers.

Speaker Change: The second.

Speaker Change: And the biggest highlight.

Speaker Change: The eight different sessions during the confidence.

Speaker Change: We have conducted by industry leader customers.

Speaker Change: Across the gaming casinos resorts hotels and cruise ships verticals.

Four of the eight sessions.

Speaker Change: Involved recent success stories related to the property management systems Pms family of products.

Speaker Change: Two of the eight presentations were led by international customers.

Ramesh Srinivasan: This is the highest number of customer-led sessions we have had at our annual user conference thus far. Customers getting on stage to explain the extraordinary additional value their employees and guests are getting after moving to the Agilysys ecosystem of products was powerful. Now on to revenue. Fiscal 2024 fourth quarter revenue was a record $62.2 million, 17.6%, that is 1-7, 17.6% higher than the comparable prior year quarter.

Speaker Change: This is the highest number of customer led sessions, we have had in our annual user conference thus far.

Speaker Change: Customers getting on stage to explain the extraordinary additional value their employees and guests that are getting after moving to the agility of ecosystem of products was thoughtful.

Ramesh Srinivasan: Q4 Subscription and Services Revenue were both records, and grew by 31.6% and 43.9% respectively from the comparable prior year quarter. Q4 subscription revenue was a record, 57% of total revenue, in absolute terms. Q4 subscription revenue grew by 5 million year over year, which is the highest level of quarterly year over year growth we have seen until now. Recurring revenue has now increased sequentially for 15, 1-5, 15 consecutive quarters. Full fiscal year 2024 revenue was a record $237.5 million.

Speaker Change: Now on to revenue.

Speaker Change: Fiscal 2024 fourth quarter revenue was a record $62 $2 million.

Speaker Change: 17, 6% that is one 717, 6% higher than the comparable prior year quarter.

Q4 subscription and services revenue were both records.

Speaker Change: And grew by 31, 6% and 43, 9% respectively from the comparable prior year quarter.

Speaker Change: Q4 subscription revenue was a record 57% of total recurring revenue in.

Speaker Change: In absolute number times Q4 subscription revenue grew by 5 million year over year, which is the highest level of quarterly year over year growth, we have seen until now.

Speaker Change: The recurring revenue has now increased sequentially for 15, one 515 consecutive quarters.

Full fiscal year 2020 for revenue was a record 237 $5 million.

Ramesh Srinivasan: 19.9 percent, that is one line 19.9 percent higher than the previous year. This revenue included $138.1 million dollars in recurring revenue, 16.7%, that is 16.7% higher than the previous year. Full year 2024 subscription and services revenue were both records, and grew by 29.6% and 39.2% respectively from the previous year. Continued growth in services revenue is a good indicator of the extent of implementations we are currently involved in, which should drive future recurring revenue growth, especially future subscription revenue growth, since an overwhelming majority of them are cloud SaaS installations.

Speaker Change: <unk> 19, 9% that is one $919, 9% higher than the previous years.

Speaker Change: This revenue included.

Speaker Change: $138 $1 million in recurring revenue 16, 7% that is one $616, 7% higher than the previous year.

Speaker Change: Yeah.

Speaker Change: Full year 2020 for subscription and services revenue were both records and grew by 29, 6% and 39, 2% respectively from the previous year.

Speaker Change: Continued growth in services revenue is a good indicators of the extent of implemented implementations. We are currently involved in which should drive future recurring revenue growth, especially future subscription revenue growth since an overwhelming majority of them are cloud SaaS installations.

Ramesh Srinivasan: Each of the fiscal 2024 quarters Q1, Q2, Q3 and Q4 were record quarters at the time with respect to the combined ARR value of subscription projects implemented in the field. Fiscal 2024 Q4 was our best quarter thus far, with respect to services margins at 34.5%. As our products continue to improve, become more desired in the hospitality industry, and also become easier to implement and support, we should be able to continue to do well with service revenue and margin levels.

Speaker Change: Yeah.

Speaker Change: Each of the fiscal 2024 quarters, Q1, Q2, Q3, and Q4 were record quarters at the time with respect to the combined eight out of value of subscription projects implemented in the field.

Speaker Change: Yeah.

Speaker Change: Fiscal 2020 for Q4 was our best quarter, thus far with respect to services margins at 34, 5%.

Speaker Change: As our products continue to improve become more desired in the hospitality industry and also become easier to implement and support we should be able to continue to do well with services revenue and margin levels.

Ramesh Srinivasan: Multiproduct implementations, which are more the norm now, are more consultative by nature as customers turn to us to lead and implement property-wide system transformation initiatives, replacing several competitive vendors with multiple solutions from our ecosystem. With respect to the international region, fiscal 2024 Q4 was our best quarter thus far, and full fiscal year 2024 was the best year on record for international revenue. Still relatively smaller numbers, and international regions continue to represent big potential growth areas for us.

Speaker Change: Multi product implementations, which is more of the norm now automotive consolidated by nature as customers turn to us to lead and implement property wide system transformation initiatives replace.

Speaker Change: Briefly I think several competitive vendors with multiple solutions from hot ecosystem.

Speaker Change: With respect to international regions fiscal 2020 for Q4 was our best quarter, thus far and full fiscal year 'twenty 'twenty four was the best year on record for international revenue.

Speaker Change: Still relatively smaller numbers and international regions continue to represent big potential growth areas for us.

Ramesh Srinivasan: Focusing a bit on the full fiscal 2024, $75.5 million of subscription revenue, which has grown by close to $30 million, 3-0, by close to $30 million during the past couple of years. Slightly more than half of that growth has come from POS and POS-related modules. Subscription revenue from PMS and PMS-related modules has increased by more than 90% during these two years, and about one-fourth of the overall subscription revenue growth has come from the PMS side of the equation.

Speaker Change: Yes.

Speaker Change: Focusing a bit on the full fiscal 2024 $75 $5 million of subscription revenue.

Speaker Change: Which has grown by close to 30 million three zero by close to $30 million during the past couple of years.

Speaker Change: Slightly more than half of that growth has come from P. O S and P O S related modules.

Speaker Change: Subscription revenue from BMS and Pms related modules.

Speaker Change: It has increased by more than 90% nine zero percent.

Speaker Change: During these two years.

Speaker Change: And about one fourth of the overall subscription revenue growth has come from the Pms side of the equation.

Ramesh Srinivasan: The remaining one-fourth of subscription revenue growth during these two years has come from other products, including software modules pertaining to inventory and procurement for food and beverage and payment. Subscription revenue from the 20-plus state-of-the-art, add-on, experience-enhancer software modules was 18.2 percent, that is one-eighth of 18.2 percent of total subscription revenue in fiscal 2024. Customers continue to appreciate the high value they get from these add-on modules, which make it exponentially easier for them to manage various complex integration points, and many more.

Speaker Change: The remaining one fourth of subscription revenue growth. During these two years has come from other products, including software modules pertaining to inventory and procurement for food and beverage and payments.

Subscription revenue from the 20 plus state of the art add an expedient enhance of software modules, but 18, 2% that was one 818, 2% of total subscription revenue in fiscal 2024.

Speaker Change: Customers continue to appreciate the high value they get from these add on modules, which make it exponentially easier for them to manage various complex integration points.

Speaker Change: And greatly benefit from the significantly higher pace of innovation and higher the ability to meet their business needs. When most of the required core products and additional modules are managed by one technology provider with one unified product roadmap.

Ramesh Srinivasan: When most of the required core products and additional modules are managed by one technology provider with one unified product roadmap, shifting the focus to fiscal 2025. We've entered this new fiscal year with a record services backlog level and a subscription revenue backlog level that is at about 85% of the level we entered fiscal 2024. Product implementation services efficiencies have increased, which has helped us convert much of the previously pending backlog to revenue. However, the third element of the backlog is the product backlog. Entering fiscal 2025, it is far short of the levels we saw last year. Despite this lower starting product backlog level,

Speaker Change: Shifting the focus to fiscal 2025.

Speaker Change: We invented this new fiscal year with a record services backlog level.

Speaker Change: And our subscription revenue backlog level that is at about 85% of the level, we entered fiscal 2024 with.

Speaker Change: Product implementation services efficiencies have increased which has helped us convert much of the previously pending backlog to revenue.

Speaker Change: However, the third element of the backlog product backlog.

Speaker Change: Entering fiscal 2025, it's far short of the levels, we saw last year.

Speaker Change: Despite this lower starting product backlog level.

William David Wood: Increasing sales levels and several recent significant sales successes, which have not been converted into backlog yet, should ensure another good revenue growth year, with an expanding shift towards subscription and services revenue. We expect fiscal 2025 revenue to grow between 16% and 18%, 16 and 18, between 16% and 18% and be in the range of $275 million to $280 million, driven, among other factors, by year-over-year subscription revenue growth of at least 27%.

Speaker Change: Increasing sales levels at several recent significant sales successes, which have not been converted into backlog yet should ensure another good revenue growth years, with an expanding shift towards subscription and services revenue.

Speaker Change: We expect fiscal 2025 revenue to grow between 16% and 18% one six and one eight between 16% and 18% and be in the range of 275 million to $218 million.

Speaker Change: Driven among other factors by year over year subscription revenue growth of at least 27%.

William David Wood: Fiscal 2024 profitability levels worked out to be higher than our original expectations at the beginning of the year. Q4 adjusted EBITDA was 17.6%, 1-7, 17.6%, and full fiscal year 2024 adjusted EBITDA was 15.6%, 1-5, 15.6%. We expect profitability levels to remain consistent throughout fiscal 2025, as we continue to make the required investment, to execute well on projects pertaining to revenue growth beyond fiscal 2025, and to make the required expansion across various business areas, including sales and marketing, services, support, information security, and cloud infrastructure. We expect fiscal 2025 adjusted EBITDA levels to be at 16.16, which is 16% of revenue. With that, I'll hand the call over to Dave for further color on our financial and operational performance.

Speaker Change: Fiscal 2020 for profitability levels worked out to be higher than our original expectations at the beginning of the year.

Speaker Change: Q4, adjusted EBITDA was $17, 6%, one 717, 6% and full fiscal year 2024, adjusted EBITDA was $15, 6%, one 515, 6%.

Speaker Change: We expect profitability levels to remain consistent throughout fiscal 2025, as we continue to make the required investments to execute well on projects pertaining to revenue growth beyond fiscal 2025.

Speaker Change: And on making the required expansion across various business areas, including sales and marketing services support information security and cloud infrastructure.

Speaker Change: We expect fiscal 2025, adjusted EBITDA levels to be at 16, one six to be at 16% of revenue.

Speaker Change: With that let me hand, the call over to Dave for further color on our financial and operational results.

William David Wood: Taking a look at our financial results, beginning with the income statement, fourth quarter fiscal 2024 revenue was a quarterly record of $62.2 million, a 17.6% increase from total net revenue of $52.9 million in the comparable prior year period. One-time revenue consisting of product and professional services was up 19.1% over the prior year quarter, while recurring revenue was up 16.6% over the prior year quarter. As a result of the continued momentum in our business, we are pleased to see 19.9% total revenue growth year over year, with all three product lines increasing over the prior fiscal year.

Dave: Thank you Ramesh checking.

Taking a look at our financial results beginning with the income statement fourth quarter fiscal 2020 for revenue was a quarterly record of $62 2 million.

Dave: $17, 6% increase from total net revenue of $52 $9 million in the comparable prior year period.

Dave: One time revenue consisting of product and professional services was up 19, 1% over the prior year quarter, while recurring revenue was up 16, 6% over the prior year quarter.

Dave: As a result of the continued momentum in our business. We are pleased to see 19, 9% total revenue growth year over year with all three product lines, increasing over the prior fiscal year during.

William David Wood: During fiscal 2024, compared to the previous year, product revenue increased 12.5%, professional services increased by 39.2%, and recurring revenue increased 16.7%. Now that subscription revenue is well over 50% of our total recurring revenue, we are pleased that subscription revenue growth of 29.6% is driving continued overall recurring revenue growth. We remain extremely pleased with our professional services and subscription sales, which were both at record levels in Q4. At the end of fiscal year 2024, each customer property installed had an average of 2.2 products compared to 2.0 products per customer property at the end of FY23. We remain confident as we enter the execution phase of the business with so many products remaining to be sold to existing and new customers.

Dave: During fiscal 2024 compared to the previous year product revenue increased 12, 5% professional services increased by 39, 2% and recurring revenue increased 16, 7%.

Now that subscription revenue is well over 50% of our total recurring revenue. We are pleased subscription revenue growth of 29, 6% is driving continued overall recurring revenue growth.

We remain extremely pleased with our professional services and subscription sales, which were both at record levels in Q4.

Dave: At the end of fiscal year 2020 for each customer property install had an average of two two products compared to 2.0 products per customer property at the end of FY2023.

Dave: We remain confident as we enter the execution phase of the business business with so many products remaining to be sold to existing and new customers.

William David Wood: Professional services increased 43.9% over the prior year quarter to a record $14.7 million. Professional services backlog increased slightly back to record levels despite record revenue. Most of our professional services revenue is related to current period projects contributing to the acceleration of subscription revenue. Development associated with larger projects, with the corresponding subscription revenue happening in future years, was less than 10% for the year but 11% in Q4 due to the timing and number of enhancements delivered in the course.

Dave: Professional services increased 43, 9% over the prior year quarter to a record $14 7 million.

Dave: Professional services backlog increased slightly back to record levels. Despite record professional services revenue.

Dave: Most of our professional services revenue is related to current period projects contributing to the acceleration of subscription revenue.

Dave: Development associated with larger projects with a corresponding subscription revenue happening in future years was less than 10% for the year.

Dave: But was 11% in Q4 due to timing a number of enhancements delivered in the quarter.

William David Wood: Total recurring revenue represented 58.8% of total net revenues for the fiscal fourth quarter and 58.1% for the full year, compared to 59.3% and 59.7% of total net revenue in the fourth quarter and full year of fiscal 2023. Recurring revenue, as a percentage of total revenue, remained around the same level as FY23 despite a 24.6% increase in one-time revenue, mainly due to growth in professional services

Dave: Total recurring revenue represented 58, 8% of total net revenues for the fiscal fourth quarter and 58, 1% for the full year <unk>.

Dave: Compared to $59, three and 59, 7% of total net revenue in the fourth quarter and full year fiscal 2023.

Dave: Recurring revenue as a percentage of total revenue remained around the same level as FY2023 despite a 24, 6% increase in one time revenue mainly due to growth in professional services revenue.

William David Wood: Subscription revenue grew at 31.6% for the fourth quarter of fiscal 2024 and 29.6% for the full fiscal year. Subscription revenue comprised over 57% of total recurring revenue compared to 50.6% of total recurring revenue in the fourth quarter of fiscal 2020. Subscription revenue increased sequentially $1.4 million from the third quarter of fiscal 2024, which was slightly above our quarter-to-quarter growth expectation. Q4 subscription revenue growth contributed to subscription revenue for the full fiscal year being slightly above our expectations for 2021.

Dave: Subscription revenue grew at 31, 6% for the fourth quarter of fiscal 2024, and 29, 6% for the full fiscal year <unk>.

Dave: Subscription revenue comprised over 57% of total recurring revenue compared to 56% of total recurring revenue in the fourth quarter of fiscal 'twenty Frederic.

Dave: Subscription revenue increased sequentially $1 4 million from the third quarter of fiscal 2024, which was slightly above our quarter to quarter growth expectations Q.

Dave: Q4 subscription revenue growth contributed to subscription revenue for the full fiscal year being slightly above our expectations for 2024.

William David Wood: Moving down the income statement, gross profit was $38.3 million compared to $32.2 million in the fourth quarter of fiscal 2023. Gross profit margin was 61.5% compared to 60.8% in the fourth quarter of fiscal 2020. For the fiscal year, gross margin was 60.7% compared to 61% in the prior year period.

Dave: Moving down the income statement gross profit was $38 3 million compared to $32 2 million in the fourth quarter of fiscal 2023.

Dave: Gross profit margin was 61, 5% compared to 68% in the fourth quarter of fiscal 2023.

Dave: For the fiscal year gross margin was 67% compared to 61% in the prior year period.

William David Wood: The full-year decrease in gross margin is mostly due to professional services revenue being higher than expected in fiscal year 2024 and the associated ramp-up of the professional services team in the first half of the fiscal year. Combined, the three main operating expense line items, product development, sales, and marketing, and general and administrative expenses, when excluding stock-based compensation, were 43.9% of revenue in the fiscal 2024 fourth quarter, compared to 45.6% of revenue in the prior year quarter, and in line with our FY24 plan. Excluding stock-based compensation, for the full fiscal year 2024, product development decreased to 18.7% compared to 21.7% of revenue in the prior fiscal year.

Dave: The full year decrease in gross margin is mostly due to professional services revenue being higher than expected in fiscal year 2024, and the associated ramp of the professional services team and the first half of the fiscal year.

Dave: Combined the three main operating expense line items product development sales and marketing and general and administrative expenses when excluding stock based compensation were 43, 9% of revenue in the fiscal 2020 for fourth quarter compared to 45, 6% of revenue in the prior year quarter.

Dave: <unk> and in line with our FY 'twenty four plan.

Dave: Excluding stock based compensation for the full fiscal year 2020 for product development decreased to 18, 7% compared to 21, 7% of revenue in the prior fiscal year.

William David Wood: General and administrative expenses decreased from 12.7% to 11.9% of revenue, while sales and marketing increased from 11.1% of revenue to 13.3% of revenue as we continue to expand our sales and marketing capacity. Combined, the three main operating expense line items, product development, sales and marketing, and general and administrative expenses, excluding stock-based compensation, were 45.2% of revenue this fiscal year, compared to 45.8% of revenue in FY23. Operating income for the fourth quarter of $3.5 million, net income of $3 million, and gain per diluted share of $0.11 are slightly less than the prior year fourth quarter gain of $3.4 million, $3.6 million, and $0.14.

Dave: General and administrative expenses reduced from $12 seven to 11, 9% of revenue while sales and marketing increased from 11, 1% of revenue to 13, 3% of revenue as we continue to expand our sales and marketing capacity.

Combined the three main operating expense line items product development sales and marketing and general and administrative expenses, excluding stock based compensation were 45, 2% of revenue this fiscal year compared to 45, 8% of revenue in FY2023.

Dave: Operating income for the fourth quarter of $3 5 million net income of $3 million and gain per diluted share of <unk> 11.

Dave: Or slightly less than the prior year fourth quarter gain of $3 4 million $3 6 million and 14th.

William David Wood: Adjusted net income, normalizing for certain non-cash and non-recurring charges of $9 million, compares favorably to adjusted net income of $6.9 million in the prior year fourth quarter, and adjusted diluted earnings per share of $0.32 compares favorably to $0.26. For the 2024 fourth quarter, adjusted EBITDA was $11 million compared to $8.1 million in the year-ago quarter. And for the full year, fiscal 2024, just to leave it out, it was $37.1 million compared to $30.3 million.

Dave: Adjusted net income normalizing for certain noncash and nonrecurring charges of $9 million compares favorably to adjusted net income of $6 9 million in the prior year fourth quarter and adjusted diluted earnings per share of <unk> 32 compares favorably to 26.

Dave: For the 2020 for fourth quarter, adjusted EBITDA was $11 million compared to $8 1 million in the year ago quarter.

Dave: And for the full year fiscal 2024, adjusted EBITDA was $37 1 million compared to $30 3 million.

William David Wood: We are pleased to see our profitability levels end up well ahead of our original FY24 plan, with adjusted EBITDA coming in at 15.6% growth. Moving to the balance sheet and cash flow statement, Cash and marketable securities as of March 31st, 2024 was $144.9 million compared to $112.8 million on March 31st, 2020. We remain comfortable with our current levels of cash. As it relates to free cash flow, we are pleased to see an increase for the full fiscal year.

Dave: We are pleased to see our profitability levels and up well ahead of our original FY 'twenty four plan with adjusted EBITDA coming in at 15, 6% of revenue.

Dave: Moving to the balance sheet and cash flow statements cash.

Dave: Cash and marketable securities as of March 31, 2024 was $144 9 million compared to $112 8 million on March 31 2023.

Dave: We remain comfortable with our current levels of cash.

William David Wood: Free cash flow in the quarter was $29.3 million compared to $13.1 million in the prior year quarter, and $40.1 million for the full fiscal year compared to $27.2 million in the prior year. As we've said in the past, adjusted EBITDA and free cash flow, after normalizing the impact of CapEx, continue to be good proxies for the health of the business. Full fiscal year 2024 free cash flow was higher than adjusted EBITDA due to the timing of some working capital adjustments.

Dave: As it relates to free cash flow, we are pleased to see an increase for the full fiscal year free.

Dave: Free cash flow in the quarter was $29 3 million compared to $13 1 million in the prior year quarter and.

Dave: And $40 1 million for the full fiscal year compared to $27 2 million in the prior year.

Dave: As we said in the past adjusted EBITDA and free cash flow after normalizing the impact of Capex continue to be good proxies for health of the business.

Dave: For fiscal year 2020 for cat free cash flow was higher than adjusted EBITDA due to timing of some working capital adjustments.

William David Wood: For fiscal year 2025, we expect revenue to be in the $275 to $280 million range. We expect product revenue to come down 5-10% as customers continue to purchase consumer-grade hardware for the new modern solution. Professional services remains the best leading indicator of the business and should grow north of 30%. Recurring revenue will continue to grow at similar growth rates as FY24, inclusive of subscription growth rates of at least 27%. One-time and recurring revenue mix is expected to stay consistent through fiscal 2025 despite a shift from product to professional services.

Dave: For our fiscal year 2025, we expect revenue to be in the $275 million to $280 million range, we expect product revenue to come down 5% to 10% as customers continue to purchase consumer grade hardware for the new modern solutions.

Dave: Professional services remains the best leading indicator of the business and should grow north of 30%.

Dave: Recurring revenue will continue to grow with similar growth rates as FY 'twenty four inclusive inclusive of subscription growth rate of at least 27%.

Dave: Onetime and recurring revenue mix is expected to stay consistent through fiscal 2025, despite a shift from product to professional services revenue.

William David Wood: Adjusted EBITDA will increase moderately to 16% of revenue as we continue to invest in large customers and other growth initiatives. In closing, we are pleased with our 2024 financial results and the solid business fundamentals for future revenue growth. With that, I will now turn the call back over to Ramesh.

Dave: Adjusted EBITDA will increase moderately to 16% of revenue as we continue to invest in large customer and other growth initiatives.

Dave: In closing we are pleased with our 2024 financial results and the solid business fundamentals for future revenue growth.

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

Ramesh Srinivasan: In summary, we are pleased with the progress our business is making, especially with respect to subscription and services revenue. The balance sheet remains clean and is getting stronger.

Ramesh Srinivasan: Thank you Dave.

Ramesh Srinivasan: In summary, we are pleased with the progress of our business is making especially with respect to subscription and services revenue.

Ramesh Srinivasan: The balance sheet remains clean and is getting stronger.

Ramesh Srinivasan: With virtually all the product re-engineering and modernization work now completed, we are in an excellent competitive position with a strong ecosystem of state-of-the-art, cloud-native, hospitality-focused software solutions. We are off to a good sales start in fiscal 2025, with the highest level of sales success measured in annual contract value terms during the first six weeks of any fiscal year so far, with new opportunities recently signed, opening additional paths for sales growth during the rest of the year.

Ramesh Srinivasan: With virtually all the product reengineering and modernization work now completed.

Ramesh Srinivasan: We are at an excellent competitive position with a strong ecosystem of state of the art cloud native hospitality focused software solutions.

Ramesh Srinivasan: We are off to a good sales start in fiscal 2025.

Ramesh Srinivasan: But the highest level of sales success measured in annual contract value tons. During the first six weeks of any fiscal year. So fast.

Ramesh Srinivasan: With new opportunities recently signed opening additional parts for sales growth during the rest of the year.

Ramesh Srinivasan: While we have provided guidance only for fiscal 2025, we also have a fair degree of visibility for revenue growth beyond the current fiscal year, related to the sales success we've already had and the continuing investments we are making toward projects which involve implementations and subscription revenue generation in future years. The turnaround phase of Agilysys is now over and fully behind us. We are happy to get our next growth phase started. There are not too many world-class technology providers serving this industry now with the kind of product breadth and depth we are bringing to the market and with our pace of innovation and steadfast focus on customer service. We have a good, clean, profitable growth runway ahead of us. With that, Michelle, let's open up the call to questions. Thank you.

Ramesh Srinivasan: While we have provided guidance only for fiscal 2025, we also have a fair degree of visibility for revenue growth beyond.

Ramesh Srinivasan: Yes.

Ramesh Srinivasan: Related to the sales success, we've already had and the continuing investments we are making towards projects, which involve implementations and subscription revenue generation in future years.

Ramesh Srinivasan: The total debt on the face of Agilis is now over and fully behind us.

Ramesh Srinivasan: We are happy to get our next growth phase startup.

Ramesh Srinivasan: There are not too many world class technology providers, serving this industry now with the kind of product breadth and depth, we are bringing to the market.

Ramesh Srinivasan: With our pace of innovation and steadfast focus on customer service.

Ramesh Srinivasan: We have a good clean profitable growth runway ahead of us.

Ramesh Srinivasan: With that Michelle let's open up the call for questions.

Operator: Thank you. To ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Michelle: Thank you to ask a question at this time. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile our Q&A roster.

Operator: One moment while we compile our Q&A roster. Our first question is going to come from the line of Mayank Tandon. Mayank Tandon, with Needham & Company. Your line is open. Please go ahead.

Our first question is going to come from the line of.

Speaker Change: I am.

Speaker Change: Camden with Needham <unk> Company. Your line is open. Please go ahead.

Mayank Tandon: Hey guys, this is actually Sam on for Mayank today. Thanks for taking the questions here and good to see another nice quarter. I have a quick question on the outlook. Could you guys talk about how we should think about the margin trajectory throughout the coming year? And maybe just give us a quick reminder on where we are in terms of the ramp down for implementation related to the Marriott deal.

Speaker Change: Hey, guys. This is actually Sam on for Mike today, Thanks for taking the questions here good to see another nice quarter.

Sam: I had a quick question on the outlook could you guys talk about how we should think about the margin trajectory throughout the coming year and maybe just give US a quick reminder, on where we are in terms of the ramp down or implementation related to the Marriott deal.

William David Wood: Yeah, I think, hey, Sam, I think the margin outlook will look pretty similar in FY25 as it did in FY24. I mean, we expect margin, you know; we ended the year just under 61%. Margin will probably tick up a little bit but be in the same range for next year as we continue to provide some more professional services in FY25 before we get the benefit of the subscription revenue, which will start in subsequent years. So, largely, the gross margin profile will look similar to this year.

Speaker Change: Yeah, I think hey, Sam I think the margin outlook outlook pretty similar in FY 'twenty five as it does in FY 'twenty four I mean, we expect margin.

Sam: We ended the year, just under 61% margin will probably tick up a little bit but be in the same range for next year as we continue to provide.

Sam: Yes, some more professional services in FY 'twenty five.

Four weekends.

The benefit of the subscription revenue, which will start in subsequent years, so largely the margin the gross margin profile.

Sam: Look similar to this year.

William David Wood: Got it. Okay. And then in terms of even the margins, would that still be, like the second half loaded similar to this year, or would that be smoother?

Speaker Change: Got it Okay, and then in terms of EBIT margins for that there'll be.

Speaker Change: Like second half loaded similar to this year or would that be smoother.

William David Wood: It'll be smoother than last year, but in our business, there's just always more costs than in Q1 and Q2. We just have audit fees and other professional fees that hit in the first half of the year. There are more trade shows in the summertime than in the wintertime, so it'll be less dramatic than last year, but there's always a little bit more cost in the first half of the year than in the second half of the year.

Speaker Change: It'll be smoother than last year, but in our business Theres always more cost than in Q1 and Q2.

Speaker Change: We just have audit fees and other professional fees that hit in the first half of the year. We have just theres more tradeshows in the summer time than in the winter time. So it's always it'll be less dramatic than last year, but there is always a little bit more cost in the first half of the year than the second half of the year.

Mayank Tandon: Got it. All right. Awesome. Thanks, guys. Appreciate it.

Speaker Change: Got it alright awesome. Thanks, guys appreciate it.

Operator: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of Matt VanVliet with BTIG. Your line is open. Please go ahead.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of Matt Van Vliet with <unk>. Your line is open. Please go ahead.

Matthew David VanVliet: Good afternoon. Thanks for taking the question. I guess when you look at the investments you've made, both in APAC, which you called out as having a very strong year, still recovering, as well as in Europe, where are you in terms of ongoing investments there and sort of hitting full stride to where you feel like you're at the run rate that you're going to achieve?

Speaker Change: Hey, good afternoon, Thanks for taking my question.

Speaker Change: I guess when you look at the investments we've made both in APAC, which you called out the hub and a very strong year still recovering as well as Europe.

Speaker Change: Where are you in terms of ongoing investments, there and sort of hitting full stride.

Speaker Change: Where you feel like you're at the run rate that youre going to achieve ultimately.

Ramesh Srinivasan: Yeah, hi Matt. It's not so much a matter of investment. Our sales team is fully grown there. We have everything we need in that business, which, of course, will continue to grow. Like in certain other areas of our business, the main challenge is to establish ourselves as a modern provider now. We have not had that great a reputation in APAC before, and we also have a couple of formidable competitors who also tend to do very low-priced selling as well. So it's a matter of establishing ourselves, building enough reference customers, and that is growing. We came a long way in FY24 compared to FY23.

Speaker Change: Yeah, Hi, Matt.

Speaker Change: Not so much a matter of investments.

Speaker Change: Sales team is fully <unk>.

Speaker Change: David we have everything we need in that business, which of course will continue to grow.

Speaker Change: In certain other areas of our business. The main challenge is to establish.

Speaker Change: Our cells as a modern provider or not we have not had that greater reputation in APAC before and also we have a couple of formidable competitors, who also tend to do very low price selling as well. So it's a matter of establishing ourselves building enough reference customers and that is growing it came a long way in a fight.

Speaker Change: Poor compared to FY2023 we have a couple of marquee implementations that have gone well and we have a couple more coming up so it's a matter of establishing a reputation but establishing a thrust has a modern provider because many of our new versions are quite young and they need a little bit of time to establish.

Ramesh Srinivasan: We have a couple of marquee implementations there that have gone well, and we have a couple more coming up. So it's a matter of establishing our reputation, establishing our trust as a modern provider because many of our new versions are quite young, and they need a little bit of time to establish themselves in the field, especially in APAC and EMEA, where we have not had a great presence. So growth in international regions is a matter of having more of those implementations, creating more reference customers, having a reputation, having the trust flow, and then that business will continue to flow. The required investments, and the products are all in a pretty good place, Matt. We'll continue adding to the sales team as well.

Speaker Change: Stem cells in the field, especially in APAC and EMEA, where we have not had a great presence in before.

Speaker Change: Growth in international regions as a matter of having more of those implementations are creating more reference customers, having a reputation having the trust flow and then that business will continue to flow the required investment in the products are all in pretty good place Mack will continue adding to the sales team as required.

Matthew David VanVliet: Okay, very helpful. And when you look at the opportunity, whether it's in the gaming space in the U.S. or just longer term across the U.S. hotel and resort space, how much, I guess, near-term pipeline do you have for the property management side? How much of the performance this quarter of an average of 10 modules there do you feel like is sort of a normal deal size that you can push on the go-forward basis, or is there something unique about some of the deals this quarter that maybe we shouldn't think about replicating in terms of the breadth of the platform today?

Speaker Change: Okay very helpful and when you look at.

Speaker Change: The opportunity.

Speaker Change: Whether it's in the gaming space in the U S.

Speaker Change: Or just longer term.

Speaker Change: Across the U S fulfilling report space.

Speaker Change: How much I.

Speaker Change: I guess near term pipeline, we have for the property management side, how much of the performance. This quarter of an average of 10 modules. There do you feel like you sort of a normal deal size.

Speaker Change: Push on a go forward basis or was there something unique about.

Speaker Change: Some of the deals this quarter than maybe we should think about replicating in terms of the breadth of the platform today.

Ramesh Srinivasan: So Matt, the breadth of the platform is in place now; there is no significant development investment we need to do apart from continuing our R&D efforts. So to just extend the answer a bit, Matt.

Speaker Change: So Matt the breadth of the platform is in place now that has no significant development investment we need to do apart from continuing our R&D efforts.

Speaker Change: To just expand the answer a bit Matt.

Ramesh Srinivasan: There are avenues for growth; there are pathways for growth across every vertical we have, including with respect to gaming casinos where we have a pretty decent market share. The average number of products used for property, as Dave told you, is only 2.2, while we could multiply that by four or five current customers. The new customers are buying six to ten modules from us when they buy, which is why our deal size has expanded dramatically. So, the main challenge ahead of us is that these modern products are young, they're establishing themselves in the field, and they create great value for customers.

Speaker Change: Did have avenues for growth or a pathway for growth across every vertical we have.

Speaker Change: Including with respect to gaming casinos, where we have a pretty decent market share. The average number of products used for property like Dave told you is only 2.2.

Speaker Change: While we could multiply that by four or five current customers. The new customers are buying six to 10 modules from us when they buy which is why our deal size has expanded dramatically.

Speaker Change: So the main challenge ahead of US is these modern products are young we are establishing themselves in the field. They are creating great value for our customers veeva means that each of those customers came to our user confidence to describe the kind of value we have created for themselves.

Ramesh Srinivasan: We were amazed that eight of those customers came to our user conference to describe the kind of value they have created for themselves. Other than in gaming casinos, our market share is quite low, whether it is hotels, resorts, chains, cruise ships, or managed food service providers.

Speaker Change: Other than in gaming casino that market share is quite low relative to the hotels resorts chains cruise ships.

Ramesh Srinivasan: We have a low market share, so there are a lot of avenues of growth. Internationally, there's big avenues of growth. And PMS, we are only scratching the surface now. But every PMS deal we sign now involves a multitude, multiple modules, because they're all ready to go. And they are all... One by one, best of breed, they are the best products in the industry today.

Speaker Change: Managed foodservice providers, we have low market share. So there's a lot of avenues of growth internationally, there's big avenues for growth and BMS. We are only scratching the surface now, but every pms deal. We signed now is involving a multitude multiple modules because they are all ready to go.

Speaker Change: And they are all.

Speaker Change: One by one best of breed they have the best products in the industry. Today. It is just a matter of establishing more marquee implementations and gaining more reference customers and also increasing deal sizes is also another avenue for growth for us the deal sizes are increasing and that also really helps the sales numbers so multiple avenues of growth.

Ramesh Srinivasan: It is just a matter of establishing more marquee implementations and gaining more reference customers. And also, increasing deal sizes is another avenue for growth for us. The deal sizes are increasing, and that also really helps us. So there are multiple avenues of growth, and I have not even mentioned inorganic opportunities to you so far. We remain opportunistic. Here and there, we look at those opportunities, but organic growth itself has multiple different avenues in which

Speaker Change: And I'm not even mentioned inorganic opportunities to you. So far we remain opportunistic here and there we look at those opportunities, but organic growth itself, we have multiple different avenues in which we can grow.

Matthew David VanVliet: And then one quick follow-up, are you still realizing 20 to 50% uplift on the add-on modules, or how is pricing ultimately shaken out on some of those as you get the ultimate? 6, 7, 8 of those we added on. Absolutely.

Speaker Change: And then one just quick follow up are you still realizing 40%, 50% uplift on the add on modules or how its pricing ultimately shaking out on some of those that you get deals with.

Speaker Change: 678 of those without at all.

Ramesh Srinivasan: Absolutely. The kind of uplift that we have had before continues to have. Only thing is, these add-on modules are now better established in the field, so it is becoming easier for us to sell them. But the kind of financial uplift we get is along the lines that you mentioned, 20 to 50 percent.

Speaker Change: Absolutely.

Speaker Change: The kind of uplift that we ever had before and we continue to have only thing. These add on modules have now better established in the field. So it is becoming easier for us to sell them, but the kind of financial uplift. We get is along the lines that you mentioned, 20% to 50% is correct.

Alright wonderful thank you.

Operator: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of Brian Schwartz with Oppenheimer and Company. Your line is open. Please go ahead.

Speaker Change: Thank you Matt.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of Brian Schwartz with Oppenheimer <unk> Company. Your line is open. Please go ahead.

Brian Jeffrey Schwartz: Great, thank you for taking my questions this afternoon. Ramesh, I was hoping to drill down into the business performance with the record ACV in the quarter. You know, was that anchored at all by one or a couple just huge deals or was it broadly distributed? And then can you also comment on maybe the big bookings mix, which is having a bigger impact, whether it's landing larger or the expansion activities?

Brian Jeffrey Schwartz: Great. Thank you for taking my questions. This afternoon, Ramesh and I was hoping to drill down into the business performance with a record ACD in the quarter was that anchored at all by one or a couple of this huge deals or was it broadly distribute that and then can you also comment on maybe the.

Brian Jeffrey Schwartz: Bookings mix, which is having a bigger impact whether it's landing larger or the expansion activity.

Ramesh Srinivasan: So to answer your questions, it's a broader base. The last couple of quarters have been good for us sales-wise. We've had two consecutive pretty good sales quarters, and they've all been more broad-based. They haven't been dependent on any one big customer.

Speaker Change: So to answer your question, it's a broader base of the last couple of quarters have been good for that sales wise, we've had two consecutive pretty good sales quarters and they've all been more broad based there have not been dependent on any one big customers.

Ramesh Srinivasan: You know, classic singles and doubles, which have been very effective, and now and then, we do hit the whales as well. I'm sorry for mixing metaphors there, but lots of singles and doubles, and now and then, like you've seen in the recent announcement, big whales as well. So the sales successes continue to be broad-based, and we are building towards more PMS successes. So in terms of these product categories, we are building towards more PMS successes.

Speaker Change: Classic singles and doubles, which had been very effective in now and then we do hit the waves as well I'm sorry for mixing metaphors there but.

Speaker Change: It's a singles and doubles there now and then like you've seen the recent announcement big waves as well. So the sales successes continued to be broad based and we are building towards more BMS axis is so in terms of the product categories. We are building towards more pms accesses. So when the pms successes happen they tend to be big.

Ramesh Srinivasan: So when the PMS successes happen, they tend to be big. Customers tend to buy a lot of modules, very large deal sizes. The same is true for POS as well, but in PMS, it is a lot more. So the answer to your question, the sales successes are broad-based, and each deal tends to be much bigger than it used to be a year or two ago.

Speaker Change: Customers tend to buy a lot of modules very high deep face. The same is true of our peers as well, but in Pms. It has a lot more so the answer to your question. The sales successes are broad based and each deal tends to be much bigger than what it used to be a year or two ago.

Brian Jeffrey Schwartz: Great. And then, you know, the other comment you made about having record ACV, you gave us a little look into how the business is performing in the new fiscal year. And I was wondering if that record ACV in the first six weeks was also at a higher level than what the business generated in the last, in the second half of fiscal 4Q?

Speaker Change: Great and then you know the other comment you made about having record acyclovir you gave us a little look into how the business is performing in the new fiscal year and I was wondering if that record HCV in the first six weeks would that also at a higher level than what the business generated in the last in the second half.

Speaker Change: Our fiscal for Q.

Ramesh Srinivasan: So what I meant to say was, at the start of the fiscal year, we have never had a better start than we are having now. And if you compare it quarter by quarter, it is among the best starts we've ever had for a quarter. But typically, fiscal years don't start this well for us because the sales team tends to maximize sales towards the end of a fiscal year, like all sales teams do, and the new fiscal year tends to be off to a slow start all the time.

Speaker Change: Yeah. So so what I meant to say was at the start of the fiscal year. We have never had a better start than we are having now and if you compare it quarter by quarter and it is among the best stocks, we've ever had for quarters, but typically fiscal years don't stop this well for us because.

Speaker Change: The sales team tends to maximize sales towards the end of a fiscal year like all sales teams do and the new fiscal year tends to be off to a slow start all the time that is not the case. This time. The first six weeks that this fiscal year that started is among them is the best start that we have ever had and it compares very favorably to Amy.

Ramesh Srinivasan: That is not the case this time. The first six weeks that this fiscal year has started is the best start that we have ever had, and it compares very favorably to any quarter start we ever had for the first year. And also, to your previous question, it's broad-based. It is not based on any one particular big win. It is quite broad-based, and the Marriott POS agreement that we just announced now is not counted in that because there we have to sell to individual properties before they get counted.

Speaker Change: The quarter started we ever had for the first six weeks and also to your previous question. It's broad based it is not based on any one particular big win and it is quite broad based.

Speaker Change: And the Marriott agreement that we just announced now is not counted in that because they have to be have to sell to individual properties before they get counted in sales.

Brian Jeffrey Schwartz: The last question I had was in regards to service margins. You know, we've seen two quarters in a row now where the service margin has been in the low to mid-30s. And, you know, that's quite a bit higher than kind of the high 20 percent margin expectation, at least that I had in my model. So my question is about the sustainability of that. Do you think that that's the right level that we should be thinking about for the business as we model it moving forward?

Speaker Change: The last question I had was in regards to service margins you know we've seen two quarters in a row now where the service margin has been in the low to mid thirties and.

Speaker Change: That's quite a bit higher than kind of a high 20%.

Speaker Change: Margin expectation at least that I had in my model. So my questions on the sustainability of that do you think that that's a right level that we should be thinking about for.

Speaker Change: For the business as we model it moving forward.

William David Wood: Hey Brian, I think the high 20s is still the way to think about the business. I mean, certainly, if we're at a steady state, like you've seen the last six months, we could get into the 30% margin. But as the business continues to grow and we have periods of reinvesting in our professional services team, you'll see us go back down into the mid to high 20s. So we still think of it as a high 20s type margin profile, but we're certainly happy with the last six months on the steady state.

Hey, Brian.

Brian Jeffrey Schwartz: I think high Twenty's is still the way to think about the business I mean, certainly if we're at a steady state we like you've seen in the last six months, we could get into the 30% margin, but as the business continues to grow and we have periods of reinvesting in our professional services team Youll see us go back down into the mid to high.

Brian Jeffrey Schwartz: <unk>, so we still think of it as a as a.

Brian Jeffrey Schwartz: High Twenty's type margin profile, but we're certainly happy with the last six months on a steady state and also one other comment on that Brian.

William David Wood: And also one other comment on that, Brian. Services margins always tend to improve in businesses like ours as the products improve. As the products become easier to implement, as we do more multi-product implementations which are more consultative by nature, as the product quality continues to improve, the need for non-billable work continues to decrease, and margins tend to do better. So, High 20s is a good expectation for now, and it should continue improving.

Brian Jeffrey Schwartz: Services margins always in businesses like ours tends to improve the product simple.

Brian Jeffrey Schwartz: As our products become easier to implement as we do more multi product implementations, which have more consolidated by nature as the product quality continues to improve the need for non billable work continues to decrease and margins tend to do better. So high <unk> is a good expectation for now and it should continue improving from there.

Brian Jeffrey Schwartz: Thank you for taking my questions.

Thank you for taking my questions.

Operator: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of George Sutton with Craig Hallam. Your line is open. Please go ahead.

Speaker Change: Thank you Brian.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of George Sutton with Craig Hallum. Your line is open. Please go ahead.

George Frederick Sutton: Thank you. Congratulations on the Marriott point of sale hunting license. I just wanted to have you walk through, Ramesh, if you would, when you have the PMS side of the equation, and now you're given, and that is more of a mandate, you've got a point-of-sale hunting license. What is the benefit, and certainly you operate within an ecosystem, of adding you as a point-of-sale vendor versus a third party?

George Frederick Sutton: Thank you and congratulations on the myriad point of sale hunting license I just wanted to.

George Frederick Sutton: Have you walked through were mesh if you would when you have the pms side of the equation and now you're giving and then that is more of a mandate.

George Frederick Sutton: Point of sale hunting license what is the.

George Frederick Sutton: And it fit and certainly you operate within an ecosystem, where does the benefit of adding new as a point of sale vendor versus a third party.

Ramesh Srinivasan: Yeah, hi George. You should think of it, George, as two independent things. We are very happy that we are now an approved vendor, and an approved brand standard for both Hilton and Marriott, right? There's a lot of pride in that, and we are very happy about that.

Speaker Change: Yeah, Hi, George you should think of it George as two independent picks.

Speaker Change: We are very happy that we have now an approved vendor approved brand standard for both Hilton and Marriott Tonight. There is a lot of bright in that and we are very happy about that but I would at this stage George think of them as two independent things. The Pms is a mandate for a certain number of properties not.

Ramesh Srinivasan: But I would, at this stage, George, think of them as two independent entities. The PMS is a mandate for a certain number of properties, not for all the properties, but a certain number of properties, and the POS agreement is a hunting license for all the U.S.-Canada properties where food and beverage is relevant, which is thousands of properties. So there are two independent things. So I wouldn't think of it as a property is going to buy one because it has the other.

Speaker Change: For all of the properties, but a certain number of properties and magic and the Paris agreement as a hunting license for all of the U S, Canada properties, where food and beverage is relevant which is thousands of properties. So there are two independent picks. So I wouldn't think of it as a property is going to buy one because it has the other each bring independent value.

Ramesh Srinivasan: Each brings independent value. But what we are building towards in the long-term, George, that not just Marriott but a lot of customers are thinking about is the benefit that the overall ecosystem brings. When you have an ecosystem of products from one vendor, it has its own benefits, and our R&D, in full force now, is creating and maximizing those benefits. That is what the future is. For now, I would think of them as two entirely separate agreements.

Speaker Change: But what we are building towards in the long term jobs that not just marriot, but a lot of customers are thinking about is the benefit that the overall ecosystem brings menu have an ecosystem of products from one way and then it has its own benefits and that R&D in full force now is creating and maximizing those benefits that is in the future.

Speaker Change: For now I would think of them as two entirely independent agreements charge.

George Frederick Sutton: Okay, and then one other question. When we were doing demos of your then new product a couple years ago, it was yet to really go GA. You had said that the real impact would come when we had reference customers for these newer products. So it's encouraging to hear that at the Inspire event, you had customers that would effectively be reference customers. Can you just update us on how far you are with the reference customer side on these newer products?

Speaker Change: Okay and then one other question.

Speaker Change: When we were doing demos of yore, when new product a couple of years back it was yet to really go G E.

Speaker Change: Said that the real impact will come when we have reference customers for these newer products. So it's encouraging to hear that.

Speaker Change: The inspire.

Speaker Change: Event, you had customers that effectively would be reference customers can you just update us on how far you are with the reference customer side on these newer.

Ramesh Srinivasan: Making great progress, George, but we still have a long way to go would be the way I would summarize that. For each of the cores, all the products are now state of the art. They're all based on modern technology. They're all cloud native and can also work on premises and all that good stuff.

Speaker Change: Products.

Speaker Change: Making great progress jobs, but we still have a long way to go would be the way I would summarize that for each of the core all of the products that Mt State of the art. They are all based on modern technology. They are all cloud native and can also work on premise and all that good stuff. So all the products are established now and then.

Ramesh Srinivasan: So all the products are established now, and there are tens, and in some cases, hundreds of properties already live. And so the number of customers is getting better by the week, by the month, but we still have a long way to go. You need a wide range of reference customers who use them in various different ways in order to push further sales ahead. So from the time you saw the demos, George, we have come a very long way with each and every one of these products.

Speaker Change: Tens and in some cases hundreds of properties already live and so the number of customers is getting better by the week by the month, but we still have a long way to go you need a wide range of reference customers will use it in various different ways in order to push further saves ahead. So from the time you saw the demos jobs, we have come a very.

Speaker Change: A long way with each and every one of these products and the number of reference customers are increasing by the week by the month and we are very keen on adding to a lot more of them.

Ramesh Srinivasan: The number of reference customers is increasing by the week, by the month, and we are very keen on adding to a lot more of them because we are competing, George, against products that don't compare in terms of technology or feature sets with us but have been running for many years now, 5, 10, 15 years. So when you're competing with those kinds of products, you can never have enough reference customers. And that process is making very good programs.

Speaker Change: Of course, we are competing judged against products that don't compare in terms of technology are feature sets with us but have been running for many years now 510 15 years. So when you are competing with those kinds of products you can never have enough reference customers and that process is making very good progress for us.

George Frederick Sutton: All right, I appreciate the thoughts. Thank you.

Speaker Change: Alright, I appreciate the thoughts thank you.

Operator: Thank you, and one moment as we move on to our next question. And again, if you have a question at this time, please press star 11 on your telephone. And our next question comes from the line of Nehal Chokshi with Northland Capital Markets. Your line is open. Please go ahead.

Speaker Change: Thank you Josh.

Speaker Change: Thank you and one moment as we move on to our next question and again if you have a question at this time. Please press star one on your telephone.

Speaker Change: And our next question comes from the line of Niihau Joshi with Northland Capital markets. Your line is open. Please go ahead.

Nehal Sushil Chokshi: Yeah, thank you, and congrats on the strong set of results here. Dave, in your color on the fiscal year 25 guide, why are you guiding professional services to grow faster than subscription revenue?

Niihau Joshi: Oh, yes, thank you and congrats on the strong set of results here.

Niihau Joshi: Dave.

Niihau Joshi: On your color on the fiscal year 'twenty guide.

Niihau Joshi: Why are you guiding professional services to grow faster than subscription revenue.

William David Wood: Well, we're still in a period of where we're doing development for large customers with subscriptions in subsequent fiscal years, so you still see a bit of an outsized growth in services than subscriptions. And obviously, we expect that to flip back the other way starting in our fiscal year 2020.

Niihau Joshi: While we're still in a period of where we're doing development for large customers with subscription and subsequent fiscal years. So you still see a bit of an outsized growth in services than subscription and obviously, we expect that.

Niihau Joshi: Flip back the other way starting in our fiscal year 2006.

Nehal Sushil Chokshi: Okay, so that implies that you will still be pulling from backlog as you exit fiscal year 25.

Niihau Joshi: Okay. So that implies that you will still be pulling from backlog as you exit fiscal year 'twenty five.

William David Wood: Sales in Q4 were at record levels, so backlog actually increased going into the fiscal year, and most of it is just the momentum of our current sales and our current pipeline. Certainly, we have good visibility into the annual numbers with our backlog, but sales momentum is the main reason for the growth.

Niihau Joshi: No I mean sales sales in Q4 were at record levels of backlog actually increased going into this fiscal year end.

Niihau Joshi: Most of it is just the momentum of our current sales and our current pipeline I mean, certainly we have good visibility into the annual number with our backlog, but sales momentum is the main reason for the growth.

Nehal Sushil Chokshi: Okay, all right. And then, given guidance of at least 27%, what sort of a subscription revenue growth rate do you expect to deliver for fiscal year 25? Essentially, what I'm asking is that are we, are you expecting a linear step down in subscription revenue growth rate as we go through the quarter?

Speaker Change: Okay Alright.

Speaker Change: And then what sort of our subscription revenue growth rate do you expect to deliver exiting fiscal year 'twenty five given guidance of at least 27% essentially what I'm asking is that already or are you expecting a linear step down and subscription revenue growth rate as we go through the quarters.

William David Wood: No. I mean, we look at subscription revenue the same as we have in the past. I mean, it's 27% for the year. And certainly, I mean, we look at the business needs to do about 1.1 to 1.4 million in sequential quarter-over-quarter growth. And certainly some quarters could be higher than others, but we feel like we'll be north of 27% for the year.

Speaker Change: No I mean, we look at subscription revenue the same as we have in the past I mean, it's 27% for the year.

Speaker Change: And certainly I mean, we look at the business needs to do about $1, one to $1 4 million in sequential quarter over quarter go lives.

Speaker Change: And certainly some some quarters could be higher than others, but we feel like we'll be north of 27% for the year.

Nehal Sushil Chokshi: And then, Ramesh, it's been about two years since you did the Resort Suite acquisition, and given that there's evidence that multiples of acquisition targets are starting to come down in the technology space, at least, can you give us an indication of what type of RLIC you saw with the Resort Suite acquisition? Just, you know, sort of give us a sense as far as, like, has there been good success with the one acquisition that you've made during your tenure? Yes, Nehal, excellent.

Speaker Change: Got it and then Ramesh.

Ramesh Srinivasan: It's been about two years since you did the resort Street acquisition.

Ramesh Srinivasan: And given that there is.

Ramesh Srinivasan: Evidence that multiples of our acquisition targets are starting to come down in the technology space at least.

Ramesh Srinivasan: Can you give us an indication of what type of ROIC that you see with the resort suite acquisition.

Ramesh Srinivasan: Just sort of give us a sense as far as like.

Ramesh Srinivasan: Has there been good success with the <unk>.

Ramesh Srinivasan: One acquisition that you made during your tenure.

Ramesh Srinivasan: Yes, Nehal, excellent success. We are very happy that we did the Resort Suite acquisition. And apart from all the numbers, Nehal, just the great people that we got from that acquisition, Frank Pitsikalas, who is in our management team now and who handles all the PMS side of product strategy, and they are part of the corporate strategy team as well. Frank and all the great people that he brought in, right?

Speaker Change: Yes, <unk> had excellent success, we are very happy with the results at acquisition and apart from all the numbers.

Speaker Change: Just the great people that we got from that acquisition flank <unk> management team now and who handles all the pms side of product strategy and they are part of the corporate strategy team as well flankers and all the great people that he brought to them right. So that's the biggest gain from the results. We had acquisition and it has turned out to be an excellent acquisition.

Ramesh Srinivasan: So that's the biggest gain from the Resort Suite acquisition. And it has turned out to be an excellent acquisition for us because, number one, we have retained and grown the recurring revenue quite well despite the fact that we are not selling the Resort Suite products anymore in favor of Versa, Spa, Golf, and all the other products that we have developed over the years that are cloud native. And many of their marquee customers have switched over or are in the process of switching over to Versa for sales and catering and all the other products that we have. So we've gained a lot of great customers. We've gained a lot of great people.

Speaker Change: For us is because number one we have retained and grown the recurring revenue quite well. Despite the fact that we are not selling the resort suite products anymore in favor of versa Spa golf and all the other products that we have developed over the years that are cloud native and many of their marquee customers.

Speaker Change: <unk> switched or are in the process of switching over towards Syn.

Sales and catering and all the other products that we have so we've gained a lot of great customers. We have gained a lot of great people. We have retained the recurring revenue and grown it a little bit as well. So it's all in all it has worked out to be a great acquisition for us and given the chance.

Ramesh Srinivasan: We have retained the recurring revenue and grown it a little bit as well. So, all in all, it has worked out to be a great acquisition for us. And given a chance, given such an opportunity, we would do it all over again, no question about it.

Speaker Change: Given such an opportunity we will do it all over again no question about it now as far as where that is leading us into other acquisitions, we had still being careful about that.

Nehal Sushil Chokshi: Now, as far as where that is leading us into other acquisitions, we are still being careful with it, Nehal. Our organic growth is looking so good for us. It has done so well, and we are focused on many large opportunities that have already been signed that we'll be converting to subscription revenue. So there is no need for us to use inorganic growth as a crutch. Organic growth is doing well. But we are opportunistically looking at opportunities that are coming our way, Nehal. We are being very careful with it. We are evaluating it correctly. And if another Resort Suite comes along, we will not hesitate.

Speaker Change: Our organic growth is looking so good for us it has done so well and we are focused on many large opportunities that have already been signed that will be converting to subscription revenue. So there is no use no need for us to use inorganic growth as a crutch organic growth is doing well, but we are opportunistically looking at opportunities.

Speaker Change: Coming out of <unk>, we are being very careful with it we're evaluating it correctly.

Speaker Change: If another results when it comes along we will not hesitate and picking it up.

Speaker Change: Excellent. Thank you.

Operator: Thank you, Nehal. Thank you, and I would like to hand the conference back over to Ramesh for any further closing remarks.

Speaker Change: Thank you.

Thank you and I would like to hand, the conference back over to <unk> for any further closing remarks.

Ramesh Srinivasan: Thank you. Thank you, Michelle. Thank you for participating and for your interest and support. We look forward to talking to you again in a couple of months from now, towards the end of July, when we will be reporting on Q1, Cisco 2025. Good evening, and thank you.

Speaker Change: Thank you thank you Michelle.

Speaker Change: Sure.

Thank you for participating and for your interest and support.

Speaker Change: Look forward to talking to you again in a couple of months from now towards the end of July.

Speaker Change: And when we will be reporting on Q1 fiscal 2025%.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: Good evening and thank you.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].