AGYS - Earnings call transcript Q3 2020

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Operator

Good day, ladies and gentlemen, and welcome to the Agilysys Fiscal 2020 Third Quarter Conference Call.

As a reminder today's conference may be recorded. I would now like to turn the conference over to Mr. Dave Wood, Vice President of Corporate Strategy and Investor Relations at Agilysys.

You may begin.

Dave Wood

good and Sheri, you, afternoon everybody. Thank for conference call. you joining the quarter third XXXX fiscal Agilysys' Thank

We started read But before language. will management's doing with get so, in just let me the harbor minute safe a comments.

financial statements momentum. Act intended be half of statements are provision XXXX Some predictive the Private the our forward-looking to on including will made today's be guidance made Securities business and within of as and second continued call Litigation regarding Reform

results are statements that based reasonable the to Company in other and forward-looking Securities Commission. filed and Although, to could these the with uncertainties reports its statements such set and differ that subject Exchange Company's to could on reports are XX-K materially actual forth and factors are believes on from assumptions, results cause XX-Q, the the materially. forward-looking differ form risks Important statements cause and

Mr. and Ramesh, that, now over like to turn ahead. of Agilysys. call the Officer President Ramesh to please Executive With Srinivasan, go I'd Chief

Ramesh Srinivasan

Thank XXXX third you, call. to our earnings afternoon fiscal good Dave, quarter Welcome everyone. and

Tony Joining is the me our CFO. on call today Dave and Pritchett,

consecutive with three revenue, We're over of by of quarterly revenue record XX% quarter. $XX seventh With consecutive a revenue, product yet double-digit report increase we revenue, received sixth all record lines, year revenue revenue. revenue revenue increase strong overall recurring sequential and and respect revenue quarter, this increase, of professional million, services last ninth is the year-over-year across that pleased another to consecutive highlighted QX completed

led in a year-over-year revenue. was growth million, $XX XX% a revenue Recurring by subscription

to continue levels improve. customer's Our satisfaction

our of of the decline and especially of improving in development, our services customer percentage continues years. significantly to support. improvement aspects case as product the As year-over-year a customer churn couple of recurring all revenue across result, continues organizational validate business metric professional That past to being as a

professional quarter consecutive revenue XXXX This for services. was fiscal second record revenue $X.X our services record was in million. Professional QX a

As good software call, busy professional especially services good increasing and implementations of last a with we various strength revenue. all mentioned an implementations new indicative the a is overall how future globe of leading are therefore measure customer number across in our preferences, Due our we growth subscription recurring of changing to our revenue arrangements. customer software of of involve the business, is

Our course selling mean word in being revenue. the product places, arrangements interchangeably, with recognized and success services one sale global Please QX our while ever. momentum to bookings for things other revenue to continues tend In and the best means word be many strong with new selling fiscal sales while is XXXX of and us. used selling we revenue of to note, customers, different our used sales, it be

towards and contribute For building this quarter effect recurring partially and quarter product us, sales revenue revenue services the also revenue current backlog. future revenue, will

increasingly more With in a our has which deals. XXXX the our significant five predictable. been consistent selling This of exception one making The revenue contained fiscal our helped revenue five significantly, couple quarter, have last way growth ever. backlog build best quarters quarters back and of

In addition, continued our sixth well have revenue this QX quarter subscription the best subscription year of growth. quarters offers for record, last through fiscal six which on been booking our

customers added to XXXX, QX During fiscal we new XX our family.

our led APAC momentum sales overall quarter region sales this and current To international best a growth revenue us Kiosk. being extent, POS solutions, our point-of-sale, international was a QX leading for Buy Our still by to record second InfoGenesis continues sales was is year quarter. our fiscal and market grow. large and the ‎rGuest in

place handle Buy build guest staff functionality facing multiple, facing cafeterias with and U.S. across systems most campuses growing prestigious being the workplace the of employee solutions, software continues increasing performer star in which in to Kiosk instances other kiosks requirements large our market and part replaced for Alongside, the for the POS rGuest InfoGenesis all competitive demand which momentum handles in

While and forward XXXX software at included our of to a management QX significant improve are by add POS to foreseeable a we PMS logo during for good pace systems, well. wins our products. drive and core modules the POS and the solutions conjunction to PMS past future, PMS further Several as which solutions level themselves which had of software We've continue work couple products, ancillary the set enough our building profitability new success of our emerging in revenue also are years, property with strength fiscal offerings. during good

mobile and kiosk operations, and systems, service check in, out, management, other loyalty manage PMS need the golf is equation, world based out, on web which check spa, various integrated core channel check direct guest the solutions check of of better bring software. to with PMS booking guest for there modules Especially industry side a can activities like optimization management well hospitality tasks in, together major and

efficiency, several have products such by improvements as customers guest sites core PMS integrated implemented in with and provided experience significant satisfaction. We in guest operational modules the also resulting us, already

in integrated While today, are ancillary are module providers. trying a create providers fewer the of PMS of there to even a And many are model actually far major who is fully fewer. completing marketplace there number POS vendors PMS

which and software as such solutions integrated are to a and few to increasingly direction. favorable to strategy vendors trend use that's as our get is Customers inclined from possible product

containing product them huge of of We modules have to the about with a close these XXX past half six one months. just deals in emerging coming now sold

focused competitive end to delivering a than increasing and competing Thanks are engagement to and ecosystem. evolving crucial additional vendors that as guests and products, technology in the providing full to integrated of software these as hospitality their end software no platform size our increasing deal we intensely comparable solutions average our breadth fully operators serve with advantage is is more

located innovation. on industry U.S. to rewarding during to Bay domestic for for depend leading execution & South the gaming starved XXXX a PMS can the With in the purchased in POS Dancer day being have of the day the QX Resort rGuest in respect our while both Casino Sky recently our are to River Stay run lodging they markets progress Fortune Casino vertical, located steadily couple with rate invested in models, Resort such and in Minnesota, along Resort & for other Customers fiscal PMS and solutions, and industry solution software operations. us and Casino partner Dakota Grand their both

In customers one addition, quarter. significantly our expanded largest gaming POS with during business we partnership of the our

good in areas managed of managed last also the higher food to strength education into focus addition traditional the In and gaming, service our couple breakthroughs verticals, service, renewed resorts in food during quarters, cruises, we've made and historical and hotel healthcare. of

and fiscal Company another for care the wins new while us. we by we XXXX, now, QX facility University, with stable wonderful about Longwood all who a and before all customer are During a including team been have Texas. management segment huge Backed have with potential of players us the health them had team senior who in in the executives, Virginia, passionate

We couple good make initiatives continue we three a with to progress started all ago. business years the on

to year, increased growth revenue it with guidance during last XX%, now this XX%. call fiscal which prior to the over XX% year increasing million then we are $XXX We annual level of our started

revenue this XX%. of expect to to growth accompanied significant be continue year-over-year strong a by also adjusted profitability growth We EBITDA

is to close EBITDA $X.X million, record was for which fiscal QX adjusted Our levels. XXXX

we of of resource past widening a R&D our home without revenue. increase successes strength percentage Encouraged drive increase costs in any by the competitive our couple to to during our years, continue advantage significant as R&D

strong compared XXX personnel R&D are calendar teams of beginning the to about currently Our XXX at about XXXX.

strengthen which to helping competition while modernize us This the our growth also innovation in much ability less well more strategies. focus increase additional has models, software marketplace, quicker integrated, afforded value and and core high face bottom-line and it's levels, long-term, on top-line products and our the us creating increasing effectively,

operationally stride In for and growing vision software big is and summary, the they to we in growth. currently with of necessary nuances innovate enhance. discipline high We the company the well. a and revenue on small integrated and realities of a kind industry, understand realistic create we are demand solutions, profitable intensely well as operational are execute a There the focused hitting to resources consistently our and hospitality continue

year. beginning competition be solid good positioned innovation. to having team of all to to great the again a from to in four fiscal the reporting quarter in is you which the with well significantly XXXX of about outperform we in We place, are will months results fiscal talking when We fourth see and look forward now, our

our me future let call Tony? over for more have that, to results on and our Tony CFO, financial colors the With outlook. Pritchett

Tony Pritchett

of this obtaining the out XXXX plan Ramesh. the happy third a momentum strong sixth on up The our business Thanks was that company that. evidence respect this stride quarter. into double-digit growth year-over-year into is consistently with continued it set adjusted was of with to years revenue back quarter fiscal that three company. We're quarter top-line profitable ago, hitting our EBITDA solid our growth We're fact to consecutive

We to are our are that supporting customers and ever products our needs, and focused the confident changing delivering continue most success. on customers will reliable to best we business drive this our

a higher our million, period. quarter or prior Looking in million than XXXX revenue results, was $XX fiscal of net record the $XX XX% at financial total third year revenue

product we're of. increase revenue the made three $XX in increase The to all to million, proud recurring increase professional quarter's revenue revenue increase million, statement top-line revenue in income revenue revenue services is categories and XX.X% This in up in in in and an $XX.X record by driven our of that million. our million XX.X% to of a was fact understandably X.X% $XX $X.X

third fiscal compared of growth recurring of for fiscal approximately net the net for highlight revenue represented XX.X% Subscription revenue the X.X% in total the third XX% the compared quarter to to of revenue, I recurring recurring quarter. total of XX% includes total want growth revenue in revenue fiscal quarter revenue quarter, that second of to Total subscription recurring the comprised revenue revenue XX% of XXXX. of XXXX. XX.X% total

of important is is is selling recurring percent in business keep our and that of not success. as mind This fact to It for revenue business. a this negative strong momentum representation a revenue in total a dropped

subscription Our strong, well a as remains consistently revenue recurring is services of And and sequentially, indicator increasing leading as year-over-year. revenue. growth product growing our revenue future total for professional

XX%. currently build With on an over year. to XX-month We approximately respectively, QX and basis rates is remain endpoints, rooms growth revenue XX,XXX just rate of the XXX,XXX subscription endpoints, annual X% above point-of-sale of The XX%. service regard increase continue XX% trailing we last and will approximately to growth compared an reflecting to

of quarter profit Moving line down our items. compare of increase the $XX.X in the fiscal results Gross The was million, XX.X% in the XXXX. income across XXXX. the statement, revenue total from to gross three representing increase million was $XX.X in profit a third fiscal of XX% XX.X% gross is third profit quarter growth margin

is Total contracts margin in gross momentum, the year profit compared professional revenue near-term. the which mentioned due down in acceleration converting of selling product results to as last services to slightly earlier, and to

line indicated by a from than our to little revenue top As guidance XX%, expected increased XX% is this year. better total

is This systems that growth our revenue and revenue first professional acceleration recurring revenue is the product is after starts Product as begins. and is Professional flow the deliver, services revenue revenue recognized of of services shortly implement contract we revenue now with then deals. next, signature. we with

and be As consolidated revenue with revenue product margins expected, going lower our had results. profit faster revenue since to services our than selling than margins plans less continues and momentum our growing then are gross professional

fiscal slightly that announced of we gross less fiscal such, to be margins than those As for XXXX XXXX. profit

increase Moving third with that expenses, revenue. prior quarter increase million our expenses at plan charges, and in on was slower than to pace in the settlements costs year charges operating operating legal and operating to X.X% excluding is the to million increase a we compares increase $XX.X This other severance restructuring a in-line period. $XX.X for

marketing and combined Combined expense revenue compared only revenue general QX expense was line while product expenses increased of XX% XX%. X% increase administrative to operating to in and of items, the expenses, three lines were our sales same during The of XX% operating this this development fiscal quarter, revenue main and expenses, XXXX.

done be grow. to many There's opportunities to still work more and much

revenue such, operations, SaaS services of R&D, to focus will As increase business support, and growth. an to our in including pace we continue well the costs invest below while customer maintaining the

share, the Operating million of favorably loss for third the loss for is was quarter million fiscal diluted loss $X.X third for million Net loss an of $X quarter third $X.X or XXXX. $X.XX of quarter to million operating or a compared quarter the of fiscal share of per diluted to $X.X XXXX. for an the third $X.XX improvement comparing per

and non-GAAP and is and an of earnings our have EPS shareholders in common diluted adjusted measures, You earnings We will note representation non-cash feel basic considering measure basis. this the ongoing before on adjusted that these included to non-recurring earnings charges net we income release income per that a meaningful results share available in quarter. that an

to fiscal year fiscal is remain will amortization current our expense, and which half than important starts our of XX% after fiscal Less in our is XXXX significant XXXX to run will It than less rate XXXX, off remain of in starting taper that then remember now, fiscal amortization in next.

to Moving marketable sheet, to XXXX compared million million, December XXXX compared the of balance $XX.X XX, and $XX XX, December and at $XX.X as million cash XXXX. XX, securities at to March was

$X.X provided QX a during improvement. cash third flow, to we quarter, net relates the million million of net during operating $X.X cash reported cash it our to fiscal by of $X.X As provided XXXX, compared million activities of

ended Our year. flow our free These better we over the comparable $X.X cash is track XX, that million free the December months results cash improved significantly cash are for flow XXXX expectations nine prior of flow year last. than this on indicate for

we've within current assets current and During of and XXXX long-term an used is the recorded first fiscal right split liability, lease balance liabilities. asset a which our between on sheet operating quarter,

depreciation ASC These this accounting new us XXX, requires became the off-balance impact us. rent of which in expense first assets and of balances accounting fiscal standard income This that the of liabilities, associated result or quarter sheet classification balance the year. record are new for for the implementation to were our effective obligations of the There previously companies is expense statement the sheet. standard no lease to onto

ago fiscal of was compared adjusted EBITDA quarter, year quarter. adjusted the $X.X For to third XXXX $X.X million in EBITDA million the

well for $XXX that of to foreign our valuation carry-forwards with liable minimal enable million certain in jurisdictions, books taxes to full remain state us will only continue the approximately taxes as as We allowance foreseeable NOL carry a for on future.

expiration and subject NOLs to expire between XXXX Our fiscal years are that XXXX.

XXXX given As our $XXX we it our million. XXXX fiscal guidance, fiscal in our confident revenue of from across growth XX%, year-over-year to relates year raising business, continued improvements the to revenue to compared for are XX% full approximately guidance

EBITDA XXXX improvement adjusted in expect fiscal continue approximate We an $XX XXXX, XX% of EBITDA to million. in fiscal adjusted compared about to

have we our customer R&D, and we XXXX. are reason EBITDA $X.X which business EBITDA that, of in of continued currently enjoying, mind again made adjusted and guidance raising in did had some The not increased are adjusted investments not the services Please momentum is of million given accelerating XXXX support we the that keep strength. benefit $XX.X fiscal fiscal million about costs, capitalized software professional occur

EBITDA of carefully work growth. XX%, XX% profitable operating That investments growth revenue continue on reflects to equivalent XXXX expense-related improvement fiscal by is we XX%, from year. the revenue to manage significant future support as $X.X to EBITDA growing adjusted the between the the prior actually and by remove fiscal leverage, capitalization adjusted million we we XX% of Growing XXXX benefit continue if with,

industry. they're confirm vendor repeatedly We're holds us confirms provide what world-class a can to of future progress innovate they suite with hungry equally continue for and how for fully-integrated hospitality the they and to we that a the towards Customers about challenge. are that and Agilysys excited solutions, impressed that

plans, this the ago We are our set materially out same to strategic a remains day. executing against years was and plan three well that

the future. trends is feel importantly, longer we up have more but are we strong set the reported and quarter, this strong were for business results financial Our term well financial the

want. hard our We focus, customers deliver and to will the and products continue work services

to like to With operator over the that, I now the turn questions. call would for

Operator

with first Our from George comes [Operator Sutton Craig-Hallum. Instructions] question

George Sutton

find you you we potential certain customers, talk is saw that and curious a due that. is are that's the competitor I'm that of to replaced fair when to appeal made? a types be quarter, process; existing being this foreign there do diligence I'm slow fairly we mentioned systems and or functionality change and what causing curious, a is actually

Ramesh Srinivasan

what call. noticing the too systems The the don't George. system you for five or much been for trend I picked replacing that competitive of thank we've replacements Major for really we've now. up, the at a would major and few picking quarters keep quarters, quite time last George, up rate Hi, track four competitive because which they joining that has replacing. take competitive been is we necessarily say

us a they There has have been cases have contacted where product and customer of live with months our gone later. a couple like

for the whom on Now there side. That some system refreshers competitor refresh, don't of for on things be coming that one. be a a they could we kind up, of that the money is start look go trigger while that And you're that a thinking spending could why POS system. hardware

that done quickly. created an the often that business and to happens is engineering the them with thing other to not want be up. to often don't and just a get another their interface breadth they and system They changes have many lot very keep event And that help a those competing for of enhancements other compelling very vendors vendors just certain they change expand do The wherewithal becomes which want may done system. that could those will business to able bought their vendor for the don't have

happen to decision. there doing compelling do are support, probably they with sample not so these customer especially and than or a things But like take lot I but they much kinds are our time. based they're faster But could for marginally happy sizes think experience. system, cases that these what George, many a their there let's competing might quite But of show. decisions They are a many, tend wait your have great vendors where, really don't with like would make before time, events say, current on year to too when they're another take there really system. system, that

George Sutton

strength which professional product continue to expect start your been your to a services to consistent side for on, to us that that thing we is something a for of you really subscription the time? of Are can see us And start going give should and to has that that we period see, it strength sense a show benefit?

Ramesh Srinivasan

Yes, services subscription recurring to seeing strength the and revenue lead that and you're strength. revenue will product

his prepared first product comes how So is Tony described what revenue. like in remarks,

that's revenue of of nature a part of amount the with certain thing the POS with comes first sale it, as certain business, that a happens. services given of hardware comes So, it, our amount the

and us, the as wants good picks the revenue then services lot from go more the And now. we of a doing And we implementations activities indicator customer a of implement up. that's are fact

We are lot and a companies who systems, already of replacing we lot taking -- of installs doing other and we're new products. product a are of customers have

So, as revenue. to up, six leads activity in months, that last the as picks a services recurring seen we've

We happens customers our that live those you just it subscription-based up, based So, and and are centric customers us will be the want We happens don't arrangements. that. to just more more in try software do. the go pick arrangements. expect preferring so based revenue them what force recurring want should to solutions and of customers do customer into more and the wants and customer and to It more so subscription we cloud

is good as doing is the So product see, our you indicator well. a revenue business that

happens. selling in SaaS lead in the portion A lot happened turn We and a a recurring implementations just implementations good out. we're future. Services is revenue of to good indicator the that that will of be subscription of And lot so we sales, it revenue basis. are to doing doing are doing a

George Sutton

client travel understand business. the but you PMS had be could, because it sure what model, people I impact reduced? if few on the your the might virus Tony, understand few if Obviously, days may I impact I've see, questions were potential I'm limited Lastly, not most a last helpful on

Tony Pritchett

Yes.

in but employees So, limited George, business our impact before we the and Kong on Shenzhen that Hong do have area.

because So, a all and comes about our about number employees we one employee care lot. for are this global being very we concerned us, well

and employees very a we Hong are concerned Kong, certain And our a we to of there. So, as well. employees Singapore number Shenzhen in have about extent and Malaysia,

far So, their very affected. well concerned we so so not been good, about have being, are they and

close affected nowhere are We region. to the

closely and So, monitoring is safe that. as on keeping concerned. travel are decisions and we far a it tab everything as taking we very And are

now. So, that's which part the answer, one the is number concern our employee of

as which are using properties X,XXX currently we moment. at XX far sites, the is a than more business are of system As in all concerned, the who have property only over China world

China Our is us now. for initial business an

have have a traditionally of growth had We major historically there. presence lot a potential but we not there,

new many So, or we chains we properties live are there. there them other only we two belong hotel to And one properties have of working working XX are that opportunities are on, XX about with. big that

those that possible other due travel get deals and is postponed for it So, restrictions.

think watching us. carefully. in moment, be So, and major QX may possible at process. not revenue is It but is part our fiscal this when impact business on $XXX,XXX it for you significant we possible year about It a impact a are the of not revenue is

Operator

comes next Securities. Instructions] from Our Tyler with [Operator question Wood Northland

Tyler Wood

into your First, going Ramesh, increasing the selling that? a modules into you've are for driving seeing, see Maybe having modules most And what can there? being growth? you about you specific then down for bit drill most you What more important on impact do modules the forward, customers. success existing little talked

Ramesh Srinivasan

joining to you for good talk call. Thank so, to Tyler. you, the Yes,

So, PMS POS and the separately. modules, up let's into break them

kiosk, up flagship is is guests of two where where from more lot far cafeterias. things staffing as which kiosk, it speeds solutions; cues other a can Kiosk, our So, a help rGuest in the have products the more and directly that POS food guest InfoGenesis, we and and can concerned, facing as sell employee which order is just main they Express items

you which on-demand, Now, from we food order additional either helps have desktop. called an your the there product

in can well, can in your phone order desktop XXth you're to as getting building you from order you your and and of from lunch, you're ready imagine it floor a XX:XX its morning, or the smartphone. it So order the your from

And depending you can sitting in minutes kitchen. the you the in it many give can of phone. hotel order there exactly even food, details items food from will kind sell is the on you're they you how the what pressures of room, So,

margin on-demand have module, is that already purchased. few a module is of are considering customers which us, many good for that product So of a our them an POS additional software and

side are of on them the business, the of On booking products number good there a Like are PMS system, the management a the one that already business, hotel direct property system. side web is of management the traction in industry. of system channel getting

customers differentiate versus So, have because there aware. a that most that aware is silver from and can systems web a PMS you system PMS are involve booking that wanted that always player. web always being player wanted a not platinum are out they booking Customers are commissions

five That is about that So or already. customers module. with gone already has six one live

Then one mobile is the check-out. check-in, other

as to facilities. a counter, of walk reception also your check-out queue, and or if you do check-in, don't you you in to can room, can can to stand going get from to a you can Instead kiosk. need digital walk go key a counter, reception right other to smartphone, So your you directly

So a customers big couple gone live of of customers, with already have them. a couple

Service, basically the all and Then tasks a called the we rGuest optimizes product operations introduced hotel. in which

hotel, people. react escalated if you if lot in a there a things So including are And should housekeeping a that to doesn't tasks somebody assigned you a happening various to running tasks get are of automatically quickly, lot it hotel, of the are supervisor.

with and well PMS products POS. automats and it that So completely that integrates all

PMS. module, much to like we do a our with it very our is point will and products. number strength, go that modules to third-party often And R&D now a advantages you company will do it's they all us POS software quite better are ourselves can for adding there's strength creating that to we core because of vendors, and when that that that competing So, of also the our integrated you

Tyler Wood

And back displacements question. to competitive I the guess going

feature, You've of mentioned Is a pay would that to table refresh those? the horizon, that, on sort I there could of like or could kind it new be spur developments get POS a people people switches, a into any you see of factors something that kind having refresh.

Ramesh Srinivasan

Yes.

and So, support biggest can't create magic right, our I these including bullet give scale you recently of which gaming is suddenly pay-at-table, now. went Tyler, additional module thing, a like customers you one All over. picks and an that modules, the additional one live with one

all adding keep modules. these You

modernizing your product. keep You core

keep You adding product. functionality core more to your

And the in scale the line, along somewhere tilts favor. your

scale customer, different take each that have does that doesn't competitive I one to with can't keep now weight tilt magic We for trends. adding how varies. And everybody much It happen module that way. to more give tilting a no you there R&D different for doing create at it our that these to And scale it. or work, advantage tilting times, different we happens right, go of magic work. as that Like we it customers, the is keeps this reasons. keep that's and one more But module innovation going to towards all phase. has

Operator

with Faruk Ishfaque comes next Our Sidoti. question from

Ishfaque Faruk

on of of solutions? Can around Ramesh, you from you those got results. A guys couple new many XX give customers said how questions that for you had a sense PMS quarter. great the Gone guys me. added this

Ramesh Srinivasan

I'll PMS that if I'm logos, we I number college not is Dave customers Once four, think out of you, but think I four. Tony confirm the I think park, will this won, mistaken. we is finish -- the new the number XX for new number and

Ishfaque Faruk

And basis? on seeing Can maybe in much competition. year-over-year deal your your would said a give of deal you've how growing maybe like size churn size relatively more of you is terms also average seen a you average that reduce increasing Ramesh, you're sense

Ramesh Srinivasan

in sell much many how customer which you an the at than now deal can our we And picks don't now continue, we deal up. you the that and size of many It's value average separate three And sell think Ishfaque, per exactly that selling XXk when the you than I that often That's of modules deals track XXk product there to about have a things our very but has measure -- deals we don't these per are are do that. average how on Ishfaque, size, less No, exact three increased. record XXk deals my give -- mentioned, fact do of go of we we can't deal it with same other deal, number now keep more levels. but per. the the number

customers Customers forward. is see we is a right. stay the churn entirely we that matter them better. that And we of you mentioned support the regaining now service when and because products have. with they moving customers is That matter, you the And customer different innovating you better, an normally

world new class more and our levels our And matter an talked course going we is more customer, down. then customer is this is entirely retention So is already about. now, different of that churn customer

Ishfaque Faruk

last I And expect you to up some one a Do think higher? flatten point? as your move you me. Tony, XXX, went much that believe. that a Or guys to as expect you group out that R&D to at I Okay. mentioned little from

Tony Pritchett

revenue Ishfaque, the we on financial to do is basis. to range. team an from though, year. number that forward continue as R&D for the the year fiscal think reasonable XXX expect will The revenue of pretty R&D a of percentage a number that, to an basis It's absolute perspective the expect mentioned. The to be R&D a That's R&D in team close near-term. headcount you on growing modeling this should from annual expand XX%, about continue pretty for XX% we last way going

And do the revenue the as smartly seeing that from out Looking to a as year, we like into headcount is revenue. of any in number expand again, where again, yes, business continue shifts But we as In as as perspective. focus a percentage far goes. of and that to we'll revenue the team next percentage increases support need. revenue. really next expect that past major year, of start tick as we percentage But years, down you'd that don't

Operator

Klee Our National with Allen from next question comes Securities.

Allen Klee

that the growth think My just do has PMS change how now what questions the relatively on to a you I'm you. has to would there side, modest about that? for accelerate to to Thank take of it been double and timing the get while to understand digits? And trying what

Ramesh Srinivasan

side. less to modest of Yes, Allen. the Good Hey, is, talk Alan. to good Yes. PMS is actually question, it you. than side

the products elephant improving products, is room biggest in getting are that So, those for the that And the is the us. core better. we worry are

Tony see count in you gives what the after you implementation. is room Now that

the or implemented we They have this gone signed not yet not So have we for four live. quarter, example, customers them. so have yet

room count next the sole room give room is count. count you count room quarter, but will in act not they a the the we So, to an implemented

while still expanding Ishfaque's continue keeping So product do that will the your will or work of there we at levels R&D below it improve expanding, right, fact answer same over as more question foreseeable is But a time. the to in be to our we are about to revenue are percentage future so for done, R&D question, today. where

in modules, our big PMS where very, the POS the side, we currently with gets the But more in we these have product put finish have we competitive the in POS PMS the have some is that as kind we product the also which on work adding will a advantage before competitive done spot to as still In of core software meanwhile, very additional of side good advantage work today. it are all when business. also be will us

shareholder levels, growing quarters. the taking lot PMS will contributing So, of side and in next are our PMS has revenue a in And of business that to all Allen. great terms of our the value now and start few focus

Allen Klee

what higher mentioned guidance, give some reinvesting would reinvested you're in? your that's EBITDA keeping guidance that mentioned the maybe and And was of then Could it that you revenue. to some of due that's you being details in the

Tony Pritchett

Yes.

So, well, we our we with of this of a is implementations, growth on. last as quarter obviously to a seen it's some consistent Allen seen message this opportunity our SaaS have a We've mean, new invest lot and in where year lot coming quarter SaaS infrastructure. as mentioned, and we've I products

So, as there's some the infrastructure done that decent amount talked SaaS R&D as about team already. investments well as the we've we've

customers added services then, as and And personnel support our we as there's some headcount been with as support -- can. personnel, support just facing to well continue customer there additional to well,

invested are their that growing, built. can investment our happening. and all fiscal post go-live team this comes we talked we've most the So, that that that services of about implementation address can the the see, services you help And But any admission professional revenue we've that's where as of from that all issues, and support we've is year.

Ramesh Srinivasan

Tony EBITDA we're last is Allen, also million that And by as saying growing XX this prepared mentioned was in it even adjusted from though, XX% remarks, also year his year.

the advantage software FY you had, If 'XX million capitalization X.X increase in remove EBITDA it's XX% a actually XX.

we So as We want that the to by guiding why growing growing you EBITDA to grow that make focuses XX% revenue don't is sure to on overdo top-line quite want we leverage. because by operating are that XX% well. significant now,

that can. balancing as have we out as best So, about we

Allen Klee

which how on And an takes takes more fast. timing very with it think services, question to you of Or that for us you help uncomfortable has how, and you you Thank area into? you like win then paid understand there long it Can that business, have much. implement? are win is you to an paid? is that get that? that up And the it been resources some if last growing professional issue put you front very Or

Tony Pritchett

So, the just items as in as far a general one-time services, goes all a rule, as for that professional payment our are of contract. Allen,

a well. standard we rule, and That's pretty experience the upfront. generally, that collect usually industry what As XX% as of that's general we in

But there's course, speaking, certain our include Of that, that generally cetera. are services. one-time there exceptions and XX% made upfront customers of items that for et professional

usually we to contract. is the usually -- far done, getting generalization, way about installations again, but timing and that goes is sign as can broad this of a Now, as think a the

recurring after would this revenue a and quarter come quarter, that, come professional the then a services coming would start after revenue that. product the in in quarter quarter, the This in would

contract time If it's a you're speaking, -- looking from at month about signature three implementation. to lead generally

a get balance happy And customers pretty that. got pretty We're we've this the with to that. It's if ability at point. need they good faster, implemented

that. customers Some longer push implementations out than

a we've from We're with So, perspective. happy that the level got balance pretty good that now. it's

grows the But reasonable feel range like revenue team. is of we grows, size the mid-to-high-XXs, Now, to as forward. to revenue have services the services at certainly increase as going we're today, going expect professional high-XXs, in profession they're services to margins

So, don't because come expect add down we to those we to margins people. have

Allen Klee

question? be more going having may kind the And Actually, important to I that something one conference sneak next what I you just of wondering, of your can was you're be is that week. is new think know you focus there kind there? or user in I think to happen

Tony Pritchett

thing no one-time expecting there's Yes, any major there's -- of terms Allen, you or anything special announcement like that. are in

an that So that all of the product in the happened XX mostly in together is conference give customers getting update future improvements the months. months the them in have XX the to our past are all user coming all next roadmap, improvements product and the

of important a is us that offer. they two of maybe use our customers lot products our products why use that have and lot products, a we to and now only Now is either one or of for more our modules

understand So to and for example, the have the customer there vice if know important, a modules POS area PMS is much in it advancements offer. other they all should already they we customer, And the made we versa. how is that PMS

out who of those on who will is be can investment modules. actually advantages, them kind are return of there, the another getting they customer that there module and the And use tell

among customers us. challenge the sorted very they they of there's terms out. has those lot one of some other knowledge each to normally can as of a customers of in that got works that also for out for well with share have, And the So challenges shared the how

of So that's it. a part major

also in-depth have more breakout we customers to programs, training want where sessions products. on training get we do And the where

well. we as do that So,

So, there of them and all those us it's is relationships resources a of them is our with users. company hundreds gathering And helps customer update improve excellent it give with both and them, share an growing, also details.

for is part base planning are a brings anything us. we no But year even or event routine of do It's a customer year particular, So, business that a once once together, that at growth and announcement that big for no a us it's there is us. our our a fairly very major for that powerful we time.

Operator

any showing remarks. this I'm Ramesh you. turn no the Thank I questions call time. will further over back now further at for to

Ramesh Srinivasan

continues a us terrific support. Thank and interest call well Agilysys positioned continued you, Thank opportunity. shareholder increase creation is today you your for This Sheri. on be joining all for value to the to and value.

We and to make are our determined employees, on shareholders. customers for good

our to us who thanks I than customers you. also opportunity team members investments plus every globe, trust want X,XXX ever day are who to class Thank take before. the company our to very world more across Agilysys a to with a to give now make this hard special working their and

Operator

participation. Ladies this Thank your and conference concludes gentlemen, you call. for today's

may You now disconnect.

Agilysys (AGYS) 28 Jan 202020 Q3 Earnings call transcript