Good day, ladies and gentlemen and welcome to the Agilysys Fiscal 2017 Fourth Quarter Conference Call. At this time all participants are in a listen only mode. Later we'll conduct the question-and-answer session and instructions will be given at that time. I would now like to hand the floor over to Norberto Aja, Investor Relations. Please go ahead sir.

Good afternoon everyone and thank you for joining the Agilysys fiscal 2017 fourth quarter conference call. We will get to management presentation and comments momentarily, as well as your questions and answers, but first I will review the Safe Harbor language. Today’s conference contains forward-looking statement within the meaning of the Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statement can be identified by words such as anticipate, intent, planned, goal, believe, estimate, expect, future, likely, may, should, will, and similar references to future periods. Examples of forward-looking statements include among others, statements we make regarding guidance relating to revenue and adjusted earnings from operations, expected operating results, such as revenue growth and profitability, market demand, cost efficiencies and strategy for growth, product development, customer service, market position and financial results. Forward-looking statements are neither historical facts nor assurance of future performance instead they are based only on our current belief, expectations and assumptions, regarding the future of our business. Future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include among others, our ability to achieve operational efficiencies in new customer demand for products and solutions and the risk described in today’s news announcement and in the company’s filling with the SEC, including the company’s reports on Form 10-K and Form 10-Q. Any forward-looking statement made by us in today’s conference call is based only on information currently available to us and speaks only as of the date on which it is made, June 1, 2017. We undertake no obligation to publicly update any forward-looking statement that maybe made from time-to-time whether as a result of new information, future developments or otherwise. Today’s call and webcast will also include non-GAAP financial measures within the meaning of the SEC Regulation G. When required a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and present in accordance with GAAP can be found in today’s press release as well as the company’s website. With that, I now like to turn the call over to Mr. Ramesh Srinivasan, President and CEO of Agilysys. Please go ahead, sir.

Thank you, Norberto and good afternoon everyone. We appreciate you joining us on the call today to review our fiscal 2017 fourth quarter and full year results. Joining me on the call today is our Interim Chief Financial Officer, Tony Pritchett. Before I get started, a quick note of apology. Please pardon my hoarse voice and possible intermittent coughing, I caught a flu bug a few days ago while travelling, I am currently working my way through it. Let me begin with a quick overview of the fourth quarter and full year results, before providing an update on our various strategic initiatives and opportunities for growth. Compared to the previous comparable period, total net revenue for fiscal fourth quarter decreased 4.1% to $30.6 million. While full year net revenue increased by 6.1% to $127.7 million. Adjusted EBITDA in the fiscal fourth quarter was a loss of $0.2 million compared to a gain of $1 million during the same period last year. Adjusted EBITDA for the full year FY ‘17, increased slightly compared to FY ‘16. The GAAP net loss for the fourth quarter and for the full year were $5.3 million and $11.7 million respectively, compared to $1.5 million and $3.8 million for the comparable prior year periods. Tony will provide a more extensive view of our financial results, including the income statement and balance sheet and more details on our future outlook. Going forward, we will be providing and periodically updating guidance based on two broad measures. One, a range of annual revenue; and two, our non-GAAP adjusted earnings from operations metric, which will be a comprehensive measure of all aspects of our operating business, including all cost pertaining to operations, regardless of what portions of them on capitalized for accounting or other reasons. We are also tracking our…

Thank you, Ramesh and good afternoon, everyone. Our fourth quarter fiscal year 2017 revenue was $30.6 million, a 4.1% decrease from total net revenue of $31.9 million in the comparable prior year period. Revenue for the full year grew 6.1% over fiscal 2016 to $127.7 million. Our top-line performance benefitted from a significant improvement in recurring revenue including our subscription based SaaS recurring revenue. The SaaS recurring revenue continues to grow at a faster pace than our overall recurring revenue growth rate. Our installed point of sale endpoints rose 12% year-over-year and the number of rooms managed by our lodging solutions increased 4% year-over-year. This positive traction was offset by a challenging transition period in the middle quarters of fiscal 2017 as well as a decline in lower margin iSeries hardware sales over the second half of fiscal year 2017. Looking at revenue in greater detail, products revenues fell 24.9% to $8.9 million or 26.4% of total revenue during the quarter. Due to the difficult comps on the back of several large hardware refresh projects that took place in the fourth quarter of fiscal 2016 and did not repeat in the current period. On a full year basis, product revenue decreased 7.5% to $38.3 million versus $41.4 million in fiscal 2016, largely due to the drop that took place in the fourth quarter. Total revenue related to our rGuest platform comprised approximately 6% of total fiscal 2017 revenue. Support, maintenance and subscription revenue or recurring revenue increased 3.7% to $16.3 million or 53% of total net revenues compared to $15.6 million or 49% of total net revenue in the fourth quarter of fiscal 2016. And by 5.3% to $63.3 million or 50% of total net revenues on a full year basis. Driving that growth was a 49% increase in SaaS…

Thank you. [Operator Instructions] And our first question comes from the line of Allen Klee with Sidoti.

Good afternoon. Can you talk a little more on product revenue of -- the decline there of what was behind that? And then what are the factors in the next fiscal year that are going to get that to accelerate to get you to your 7% to 10% guidance? Thank you.

Yes hi Allen, good afternoon. With respect to product revenue, I would say that was also affected by the transition period that we went through at the end of FY '17. So we did see reduced product revenue for a couple of quarters. But we are beginning to see reasonably healthy trends as far as this quarter is concerned our June quarter. And also last year the comparative year compared to comparative year we had lower than usual hardware deals. The large hardware refresh deals that happened in the previous year did not happen in the last two quarters. But now when you look ahead as far as the June quarter is concerned, I would say it seems fairly likely that both with respect to product revenue and overall revenue you will see both sequential growth and year-over-year growth.

Okay. And in terms of the India center, can you just remind me in terms of where that stands in terms of when you are expecting to get fully ramped up that and the productivity from it?

Yes, so as far as the India center is concerned, we incorporated it a few months ago and started hiring and also leased out a 17,000 square foot facility that can accommodate about 160 people. We have made about 80 offers so far and about little more than 10 people have already joined us, they are working out of a temporary facility now as we build out our own facility. So we should moving to our building before the end of June about three, four weeks from now. And when we move in there we will move in with about 25 people. And thereafter month-after-month that number should increase dramatically and we expect to fill up that center of 160 people by end of the fiscal year. And in terms of productivity, we expect them to start making an impact in our product delivery velocity in about a couple of months from now.

Okay. Can you give us any color on your sales force in terms of kind of if you had thoughts of where the number of people are now maybe where they were and if there are any plans are on changing that?

No major plans on that Allen, I think our sales force is doing well and is generating a number of good opportunities for us. So I don’t foresee any major changes in our sales force, other than the fact that we are looking at efficiencies and we are looking at effectiveness of our entire employee base not just with respect to sales force. So no major changes expected in the sales force other than expansion in Asia and EMEA. We expect to get a lot stronger in terms of business development and sales in our international regions. But other than that, I think our sales force is well established here. And as our product delivery velocity and our customer service improves, I think the current sales force is good to carry us further into higher revenue brackets.

Okay, thank you. And then how should we think about CapEx and capitalized software levels for the coming year compared to where they have been?

Hey Allen, this is Tony. For the coming year, we should see the level of capitalization about equivalent to what it was in fiscal 2017 on dollar terms. So…

By capitalization you mean CapEx plus capitalized software.

That’s correct, yes. So no major changes in dollar terms which -- that leads us to lower cost as a percentage of revenue for that area. So we are continuing to invest in the software products and opening the India development center adding over 100 employees there this year, those employees are going to be contributing to the software platforms that we have. And so some of the costs will be capitalized, but again not an increase in cost there just basically remaining flat.

Okay. And if I was to look at your business by the major verticals of casinos and hotel related resorts, food service, how should I think about or how do you guys think about the growth rate potentials of the different areas?

Yes, so in terms of future growth, when you think of Agilysys, as a much bigger company than we are today, a little more than half of the growth about 50% to 60% of the growth I think will come from the hotels, resorts and cruise that the HRC part of our business. And I think the remaining half or little bit less than half, 40% to 50% would come from growth in international regions like APAC, EMEA and little bit in Latin America as well and from our not traditionally strong verticals like gaming. And part of that growth that 40% to 50% growth will also come from selling more to our current customer base who are already there. So the short answer to your question would be more than half about 50% to 60% would come from hotel, resorts and the cruise segment of our market and a little less than half 40% to 50% will come from international regions, gaming our current customers and a couple of other smaller verticals.

Thank you. And can you just give a comment on the competitive environment now of how it compares to some period in the past or if you’ve noticed any changes?

Haven't noticed any major changes, Allen. I don’t want to comment too much on our competitors, we always have the greatest respect for our competitors and I know that we have to get better. But I’ll tell you this much that it does feel like based on my conversations with current customers and prospective customers. It does really feel like we control our fate. If we get better, if we improve our product delivery velocity, if we improve our customer service standards and become more efficient as a company, I think there is a lot of business to be had. Looks like customers are eager to do more business with us. So it is just a matter of continuing to get better and I don’t think the competitive space is -- while we have a lot of respect for our competitors, I think there is enough room for us to grow.

Okay. And then maybe last for you on, for your newer rGuest products if I look at Buy and Stay, I guess with Buy how the kiosk are doing and with Stay just you’ve touched on it, if anything else related to kind of the roadmap to kind or get the larger hotel chains. And maybe what you said about [Hi] would that means as a potential opportunity? Thank you.

You mean Hilton, Allen?

Hilton, I apologies, Hilton yes.

No problem Allen. So with respect to Buy, I would say that the early part of this calendar year for the first two three months of this calendar year, we had a couple of challenging installs. We were going through a couple of pilot implements of Buy and we have passed all those technical challenges now and we are really beginning to see Buy picking momentum we add more functional features to it. Now as far as Stay is concerned, the technology platform is very stable, it’s doing well and there is one particular customer who is actually taking more and more properties live with very little help from us. So the technology platform is doing very well there. And there the challenges for us to add a lot more functional features as quickly as we can. So that it becomes a real competitive solution in the marketplace. So, I think Buy will gain momentum quick then Stay, but we are in the process of increasing the number of functional features on Stay. And your question on Hilton, yes we've signed our master services agreement with them and we are now one of their register providers. And big customers like Hilton and there are a couple of other such hotel deals we’re are working on as well should provide us -- should be a major part of our immediate one to two year growth.

That's great. Thank you so much.

Thank you, Allen.

Thank you. [Operator Instructions] Our next question comes from the line of Phil Bernard with Eilers, Krejcik Gaming LLC.

Hi guys, thanks for taking my call. Couple of quick questions, I know you guys have given some great color so far. First one, I believe at the beginning of this fiscal year you began the implementation of a large rGuest Stay rollout with the Drury hospitality group? Wondering if you could give an update on that, maybe what type of progress you guys are making and how that implementation is going and how the customers receiving the product?

Yes, hey, Phil, this is Tony. That was the customers that Ramesh just mentioned. So that rollout is actually going very well and the way that that particular implementation worked is on the frontend we had some pretty heavy involvement with them to try to teach them how to do installations on their own. And then after they did a handful of hotels with us then they took over and they started doing it themselves. So that rollout is actually going really well there receiving the product very well and they're able to implement it themselves with a very little help from us, which is a true benefit of the product. And that's why we think that the technology platform is sound and is stable and is proving itself with that customer, with Drury.

Okay, great. And maybe an estimate on when you think those units will be fully deployed?

The full rollout for Drury probably takes another year. So, it's a pretty long rollout cycle for them.

Okay. So, another potential or not potential another sequential growth driver in that SaaS line through fiscal year '18?

Yes.

And you guys gave us some figures on POS terminals installed PMS rooms. Do you have any updated figures for how many rGuest Pay installs you guys have through this quarter?

rGuest Pay, we don’t -- I don’t have that number right in front of me Phil. We can get that information but…

Got it, no worries, and I’ll keep it short. That's it for me. Thank you.

Thanks, Phil.

Thank you. And that conclude our question-and-answer session. I would like to turn the conference back our management for any further comments.

Thank you, Karen. And thank you all for your interest in Agilysys. We have great opportunities in front of us and we are committed to taking them with both hands. On behalf of our Board, our management team, I'm very thankful to our talented and dedicated team, to our valued customers who continue to trust us with their mission critical applications and to our investors, without whom we would not be here. We appreciate all your support. Thank you very much.

Ladies and gentlemen thank you for your participation in today’s conference. This does conclude the program. And you may now disconnect. Everyone have a great day.