Good day and welcome to the eGain Fiscal 2016 First Quarter Financial Results Conference Call. Today's call is being recorded. At this time, I'd like to turn things over to Charles Messman, Vice President and Finance of Corporate Development. Please go ahead.

Good afternoon and thank you for joining us today for eGain's conference call to discuss results for fiscal 2016 first quarter ended September 30, 2015. Please note this call is being recorded and will be available for replay from the Investor Relations section of our Web site at www.egain.com for seven days following the call. Before I begin, I'd like to remind all listeners that this conference call contains forward-looking statements within the meanings of the Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. This conference call contains forward-looking statements that involve risk and uncertainties. These forward-looking statements include, among other matters, statements referring to organizational changes in the business mix to achieve in our success of matters covered by such forward-looking statement involve risk uncertainties and assumptions. If any such risk or uncertainties materialize, or if any the assumptions prove incorrect, the company's results could differ materially from the results expressed or implied by the forward-looking statements we make. The risk and uncertainties referred to include but are not limited to, our ability to capitalize on customer engagement, the success organizational changes, risks that our hybrid revenue model and lengthy sales cycles may negatively affect our operating results; risk related to our reliance on a relatively small number of customers for a substantial portion of our revenue and ability to compete successfully and manage growth. Our ability to develop and expand strategic and third-party distribution channels; risks associated with new product releases; risk related to our international operations; our ability to invest resources to improve our products and continue to innovate; and other risks detailed from time-to-time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on September 11, 2015 and quarterly reports on Form 10-Q,…

Thank you, Charlie, and good afternoon, every one. On our last conference call, we shared our plan and early progress toward becoming a cloud business. We talked about how we enhanced our product and simplified our implementation model in the fiscal 2015 timeframe. So now moving ahead as promised we are building on that foundation in the first quarter of fiscal 2016 with our new land and expand sales strategy fronted by our Try+Buy proposition and supported by a best practice led agile implementation model. As we mentioned before Q1 is historically the slowest quarter for us. Last year, our first quarter results were unusually strong because of a very large on-premise expansion deal with an existing client. We did not catch any such wealth this quarter. This year 44% of our new bookings in the quarter are in the cloud, compared to 6% in the same quarter last year and this is inline with our expectation as we execute our cloud strategy. Now a few significant deals from Q1 that I would like to share with you. One was a seven figure cloud contract with a large BPO in the U.S. a new logo where our Try+Buy approach significantly accelerated the client's time to value and now we are actively engaged in discussing expansion opportunities beyond this deal across that operation. The next was a Phase 1 win with a large U.S. federal agency another new logo where we partnered with Cisco and AT&T to become the preferred platform provider for the agency's digital customer communications. This deal happens to be on premise. As we have discussed before when we are partnering with Cisco, the move to the cloud is going to be a little slower. Third, a leading private bank lined up to move their on-premise eGain implementation…

Thank you, Ashu and thanks for joining us today. Before I begin my prepared remarks I'd like to note that the numbers I'll be sharing are non-GAAP unless otherwise noted. I'll start by reviewing our ACV and booking metrics for the quarter, then go into details of our financial results and close with an update on our guidance for fiscal 2016. Our cloud ACV at the end of the quarter was $23.2 million compared to $22.1 million at the end of the first quarter last year and $23.2 million at the end of the fourth quarter of fiscal 2015. Excluding an unfavorable foreign exchange impact the cloud ACV was $23.5 million. In the quarter, we had one significant reduction in contract renewal with the health insurance clients; two years ago they successfully deployed our platform to assist with new customer acquisition during the launch of ObamaCare. Moving forward the client anticipates decreased use during their annual enrollment cycles. As Q1 is historically our slowest quarter and based upon the cloud momentum in our pipeline, we are still targeting a 25% increase in our cloud ACV in fiscal 2016. Our total subscription and support revenue ACV at the end of the first quarter was $43 million compared to $42.4 million at the end of the first quarter last year and $43.2 million at the end of the fourth quarter of fiscal 2015. Excluding an unfavorable foreign exchange impact of approximately $810,000 the total subscription in support revenue ACV was $43.8 million. Gross bookings or revenue plus change in deferred for the first quarter was $13.9 million compared to $26.6 million in the first quarter last year, excluding an unfavorable foreign exchange impact of approximately $700,000 total gross bookings were $14.6 million. Last year's bookings included a $10 million plus multi-year cloud…

Thank you. [Operator Instructions] We'll take our fist question from Mike Latimore with Northland Capital Markets.

Hey, guys, this is Jim Fitzgerald pitching in for Mike Latimore. So first question, here you guys mentioned cloud agreement with Cisco, I think you said you agreed on that in October, so when would we start to see revenue from that, is that something we see still this year or is that going to be a 2016 revenue event?

So this will be -- there will be some lag time with this, so the expectations will start to see some revenue in the back half of 2016 but ramping up in 2017.

You mean fiscal 2016?

Fiscal 2016 right.

Okay, got it great. And then moving to Exony quick, is the United States still the geographic focus there and how have maintenance renewal rate has been trending?

So yes, this -- the question -- the first part of the question, yes, it is still -- bulk of the business is still in the U.S., but we are seeing some good growth in EMEA now a days particularly with some of the HCCs providers in the Cisco ecosystem, the hosted contact center provides, so that's kind of an interesting area of growth in the EMEA business around the core Exony products on the voice side. And then the question about -- the second question was around renewals?

Renewals, yes. And haven't seen any significant drop on the Exony customers.

Okay, got you. And then I think historically you guys have had price reductions for recent renewals related to the push to the cloud, is that something that's still occurring?

I mean, there is the usual renewal pressures on like-for-like renewals and that's not anything unusual in the context of the cloud renewals. We mentioned the one unusual one that we saw which was a significant reduction that had to do with the fact that their business needs had changed materially over the last couple of years.

Okay, great. Thank you. I appreciate it.

[Operator Instructions] We'll hear next from Jon Hickman with Ladenburg Thalmann.

Hi. First question, can you tell me like you closed these two new deals in October the seven figure deals, what's the normal timeframe for implementation to when you can start recognizing revenues from them?

Well, certainly -- well, the one where we talked about with Cisco, the lag is going to be longer than typical. So that's when we wouldn't expect to see any significant revenue for certainly a couple of quarters. I think for standard new cloud deals, we typically look to 30 to 45 days would be the expectation that we start to see revenue from those start to kick in.

Okay. And Eric, can you tell me the total deferred revenue number again?

Sure. About $39.7 million was the total number.

With 13.1 being…

13.1 on the balance sheet.

Okay, okay. And then so can you -- can we talk a little bit about professional services, so the fact that the gross margins were negative was due to timing of when you did the work versus when you can actually bill for the work?

When you could recognize, that's great. So the work was performed that we weren't able to recognize the revenue associated with the work that has been completed.

But going forward do you think that, it will move back into a positive gross margin situation?

That's correct.

Okay.

That's one element and the other element, which we didn't mention, but always in Q1 is the holiday schedule in parts of our business also kick-in particularly around EMEA, so some of the available utilization drops in Q1 a little bit.

Okay. Because what -- because of summer in internationally, is that what you're talking about?

Yes. Just people making more time off in the non-U.S. markets. And our team included.

Yes, okay. And then, I just want to make sure I understand Try+Buy, so Try+Buy means that you let them use it for a certain period of time for free. And then after a month or so whatever the timeframe then they have to decide either pay for it, or you install it, is that what happened?

That's correct, that's correct. With the added bet in front and that is, it's not just a sandbox kind of environment where they are actually using it in production and we put in their data and their configuration a subset of their used cases into the solution in the cloud.

So there, it's live. It's for real that it's just free for a specific timeframe.

Yes. It's about four to six weeks, yes, exactly.

Okay. Thanks. That's it for me.

Sure.

[Operator Instructions] And at this time, I'm showing no further questions. I'd like to turn the call back over to management for closing comments.

Well, I thank everyone for joining us today. Should you have any further questions please feel free to give us a call here in the office and we look forward to talking to you on our next quarter conference call. Thanks. Have a great day.

That does conclude our conference for today. We thank you for your participation.