Agilysys Inc Q3 FY2020 Earnings Call

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.

Thank you, Sheri, and good afternoon everybody. Thank you for joining the Agilysys' fiscal 2020 third quarter conference call. We will get started in just a minute with management's comments. But before doing so, let me read the safe harbor language. Some statements made on today's call will be predictive and are intended to be made as forward-looking within the second half provision of the Private Securities Litigation Reform Act of 1995 including statements regarding our financial guidance and continued business momentum. Although, the Company believes 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 differ materially from these and the forward-looking statements are set forth in the Company's reports on form 10-K and 10-Q, and other reports filed with the Securities and Exchange Commission. With that, I'd now like to turn the call over to Mr. Ramesh Srinivasan, President and Chief Executive Officer of Agilysys. Ramesh, please go ahead.

Thank you, Dave, and good afternoon everyone. Welcome to our fiscal 2020 third quarter earnings call. Joining Dave and me on the call today is Tony Pritchett, our CFO. We're pleased to report that we completed yet another strong quarter, highlighted by revenue of $42 million, a 17% increase over Q3 of last year with record revenue across all three revenue lines: recurring revenue, product revenue, and professional services revenue. With respect to overall quarterly revenue, this is the ninth consecutive sequential revenue increase, seventh consecutive record revenue, and sixth consecutive double-digit year-over-year revenue increase quarter. Recurring revenue was $21 million, led by a 28% year-over-year growth in subscription revenue. Our customer satisfaction levels continue to improve. As a result, customer churn as a percentage of recurring revenue continues to decline significantly year-over-year, as has been the case for the past couple of years. That improving metric continues to validate our organizational improvement across all aspects of our business, especially in product development, professional services, and customer support. Professional services revenue for Q3 fiscal 2020 was a record $8.9 million. This was our second consecutive record revenue quarter in professional services. As we mentioned in our last call, professional services is a good measure of how busy we are with various software implementations all across the globe and is therefore a good leading indicator of the overall strength of our business, especially our future growth of recurring revenue. Due to changing customer preferences, an increasing number of new customer software implementations involve subscription revenue arrangements. Our selling momentum continues to be strong with our global selling success in Q3 fiscal 2020 being one of our best ever. Please note, we used the word sales, selling, and bookings to mean new product and services sale arrangements with customers, while revenue is, of course, recognized revenue. In many other places, the word sales and revenue tend to be used interchangeably, while it means different things for us. For us, sales this quarter will partially affect the current quarter revenue and also contribute towards building future recurring revenue, product revenue, and services revenue backlog. With the exception of one quarter, way back in fiscal 2016, which contained a couple of significant deals, the last five quarters have been our five best selling quarters ever. This has helped build our revenue backlog significantly, making our revenue growth increasingly more consistent and predictable. In addition, the last six quarters through Q3 of this fiscal year have been our six best subscription booking quarters on record, which bodes well for our continued subscription revenue growth. During Q3 fiscal 2020, we added 18 new customers to our family. Our international momentum continues to grow. Q3 this fiscal year was a record sales quarter for us in the APAC region and was our second best overall international sales quarter. To a large extent, our current sales and revenue growth is still being led by our market-leading point-of-sale, POS solutions, InfoGenesis and rGuest Buy Kiosk. Alongside our star performer InfoGenesis, which for the most part handles POS staff-facing software solutions, rGuest Buy Kiosk, which handles the growing demand for guest-facing kiosks and other functionality requirements, continues to build momentum in the marketplace with increasing instances of competitive systems being replaced in employee cafeterias in multiple large and prestigious workplace campuses all across the U.S. While our POS solutions by themselves are good enough to drive our revenue and profitability level further forward at a significant pace for the foreseeable future, we continue to improve our property management systems, PMS offerings. Several of our new logo wins during Q3 fiscal 2020 included PMS software solutions as well. We've also had good success during the past couple of years, building a set of emerging products, which are ancillary software modules that work in conjunction with and add strength to the core POS and PMS products. Especially on the PMS side of the equation, there is a major industry need for well-integrated solutions that can bring together the world of core PMS with modules like direct channel web-based booking systems, mobile check-in, check-out, kiosk check-in, check-out, guest loyalty management, service optimization to better manage various hospitality tasks and operations, and spa, golf, and other guest activities management software. We have several customer sites that have already implemented such modules integrated with the core PMS products also provided by us, resulting in significant improvements in operational efficiency, guest experience, and guest satisfaction. While there are many competing POS vendors in the marketplace today, there are far fewer major PMS providers. And a number of providers who are actually trying to create a fully integrated model of PMS ancillary modules is even fewer. Customers are increasingly inclined to use as few vendors as possible to get such integrated software solutions from, and that's a trend which is favorable to our product and strategy direction. We have now sold close to 100 deals containing a host of these emerging product modules, with about half of them coming just in the past six months. Thanks to these additional software products, our average deal size is increasing, and more crucially, our competitive advantage is increasing with no comparable competing vendors as intensely focused as we are in providing end-to-end software solutions and delivering a fully integrated technology platform to serve the full breadth of hospitality operators and their evolving guests engagement ecosystem. Customers in the industry have starved for such progress and are steadily rewarding us for being the partner they can depend on for both day-to-day rate execution and industry-leading innovation. With respect to U.S. domestic markets during Q3 fiscal 2020 in the gaming vertical, Fortune Bay Resort Casino located in Minnesota, and the Grand River Casino & Resort located in South Dakota invested in both our PMS and POS solutions, along with a couple of other software modules, while the Sky Dancer Casino & Resort recently purchased our rGuest Stay PMS solution to run their lodging operations. In addition, we significantly expanded our POS business partnership with one of our largest gaming customers during the quarter. In addition to our historical strength in the gaming, hotel resorts, and cruises, and traditional managed food service verticals, during the last couple of quarters, we've also made good breakthroughs into renewed areas of focus in managed food service, higher education, and healthcare. During Q3 fiscal 2020, we had new customer wins in the segment including Longwood University, Virginia, and another health care facility in Texas. Backed by a stable management team with senior executives, who have all been with us for a while now, all of them wonderful team players who are passionate about the Company and the huge potential we have before us. We continue to make good progress with all the business initiatives we started on a couple of three years ago. We started this fiscal year with annual revenue guidance of 11% growth over the prior year, at the $141 million level, then increased it during our last call to 14%, which we now are increasing to 16%. We continue to expect this significant revenue growth to also be accompanied by strong adjusted EBITDA profitability year-over-year growth of 25%. Our adjusted EBITDA for Q3 fiscal 2020 was $3.2 million, which is close to record levels. Encouraged by our successes during the past couple of years, we continue to increase our R&D resource strength to drive home our widening competitive advantage without any significant increase in R&D costs as a percentage of revenue. Our R&D teams are currently about 730 personnel strong compared to about 230 at the beginning of calendar 2017. This increase has afforded us the ability to strengthen and modernize our core products quicker and more effectively, while also increasing innovation levels, creating well-integrated additional high-value software modules, which face much less competition in the marketplace, and it's helping us focus on our long-term, top-line, and bottom-line growth strategies. In summary, we are hitting our stride operationally as a small company with a big realistic vision and the resources necessary to execute and innovate consistently well. We understand well the nuances and operational realities of disciplined profitable revenue growth. There is a high demand in the growing hospitality industry that we are currently and intensely focused on for the kind of integrated software solutions we continue to create and enhance. We are beginning to see the results of having a solid good team in place, which is well positioned to significantly outperform the competition with great innovation. We look forward to talking to all of you again in about four months from now, when we will be reporting our fiscal 2020 fourth quarter and in the fiscal year. With that, let me hand over the call to our CFO, Tony Pritchett for more details on our financial results and future outlook. Tony?

Thanks Ramesh. We're happy that our business momentum continued into the fiscal 2020 third quarter. We're hitting our stride with respect to the plans we set out three years ago, obtaining this company into a consistently profitable top-line growth company. The fact that this quarter was our sixth consecutive quarter of double-digit year-over-year revenue growth with strong adjusted EBITDA to back it up is solid evidence of that. We are focused on delivering the best, most reliable products to our customers and supporting our customers' ever-changing business needs, and we are confident that this will continue to drive our success. Looking at our financial results, third quarter fiscal 2020 revenue was a record $42 million, or 17% higher than total net revenue of $36 million in the prior year period. This quarter's $42 million in revenue is made up of record revenue in all three revenue categories of our income statement—the fact that we're understandably proud of. The increase in our top-line was driven by an 18.5% increase in product revenue to $12.1 million, an 8.4% increase in recurring revenue to $21 million, and a 38.2% increase in professional services revenue to $8.9 million. I want to highlight that the 8.4% recurring revenue growth includes subscription revenue growth of 28% for the quarter. Subscription revenue comprised approximately 38% of total recurring revenue, compared to 32% of total recurring revenue in the second quarter of fiscal 2019. Total recurring revenue represented 49.9% of total net revenue for the fiscal third quarter, compared to 53.7% of total net revenue in the third quarter of fiscal 2019. It is important to keep in mind that this drop in recurring revenue as a percent of total revenue is not a negative fact for our business. This is a reflection of strong business momentum and selling success. Our product revenue remains consistently strong, growing sequentially, as well as year-over-year. And increasing professional services revenue is a leading indicator of future growth for our total recurring and subscription revenue. We continue to build the subscription revenue growth rates on an annual basis and expect them will remain above 20%. The trailing 12-month growth rate is just over 22%. With regard to endpoints, we currently service approximately 274,000 rooms and approximately 61,000 point-of-sale endpoints, reflecting an increase of 1% and 15% respectively, compared to Q3 of last year. Moving down the income statement, total gross profit was $21.1 million, representing a 13% increase from $18.6 million in the third quarter of fiscal 2019. The increase in gross profit is the result of growth across our three revenue line items. Gross profit margin was 50.2% compared to 51.8% in the third quarter of fiscal 2019. Total gross profit margin is down slightly compared to last year due to the acceleration of selling momentum, as mentioned earlier, which results in converting product and professional services contracts to revenue in the near-term. As indicated by our increased top line guidance from 14% to 16%, total revenue is looking a little better than expected this year. This acceleration of revenue growth starts with product and professional services revenue, as that is the flow of revenue with our deals. Product revenue is recognized first shortly after contract signature. Professional services revenue is next, as we implement the systems we now deliver, and then recurring revenue begins. As our selling momentum continues and with revenue growing faster than expected, our gross profit margins are going to be less than planned since product revenue and professional services revenue have lower margins than our consolidated results. As such, we announced that gross profit margins for fiscal 2020 are expected to be slightly less than those of fiscal 2019. Moving on operating expenses, excluding charges for legal settlements and restructuring, severance, and other charges, the third quarter saw a 5.7% increase in operating expenses to $23.7 million, compared to $22.5 million in the prior year period. This increase is in line with our operating plan to increase costs at a slower pace than we increase revenue. Combined, our three main operating expense line items, product development expenses, sales and marketing expenses, and general and administrative expenses, were 53% of revenue this quarter, compared to 59% of revenue during Q3 of this fiscal 2019. The increase in the same operating expense lines combined was only 5% while revenue increased by 17%. There's still much work to be done and many more opportunities to grow. As such, we will continue to invest in the business, including in R&D, SaaS operations, customer services, and support, while maintaining our focus on increasing costs well below the pace of revenue growth. The operating loss of $2.7 million for the third quarter is an improvement compared to an operating loss of $3.9 million for the third quarter of fiscal 2019. The net loss for the third quarter was $2.6 million or $0.11 per diluted share, favorably comparing to a loss of $4 million or $0.18 per diluted share for the third quarter of fiscal 2019. You will note that we have included the non-GAAP measures, adjusted net income and adjusted basic and diluted earnings per share in our earnings release this quarter. We feel that considering income before these non-cash and non-recurring charges results in an EPS measure that is a meaningful representation of earnings available to common shareholders on an ongoing basis. It is important to remember that our amortization expense, which is significant now, starts to taper off starting in fiscal 2022, our fiscal year after next. Less than half of our current run rate of amortization will remain in fiscal 2022, and then less than 10% will remain in fiscal 2024. Moving to the balance sheet, cash and marketable securities as of December 31, 2019, were $41.9 million, compared to $40.8 million at March 31, 2019, and compared to $37 million at December 31, 2018. As it relates to our cash flow, we reported net cash provided by operating activities of $5.3 million during the third quarter, compared to $1.7 million of net cash provided during Q3 of fiscal 2019, a $3.6 million improvement. Our free cash flow for the nine months ended December 31, 2019, is $4.3 million better than the comparable prior year. These cash flow results indicate that we are on track for our expectations of significantly improved free cash flow this year over last. During the fiscal 2020 first quarter, we've recorded a right-of-use asset on our balance sheet within current assets and an operating lease liability, which is split between current and long-term liabilities. These balances are the result of our implementation of ASC 842, the new lease accounting standard that became effective for us in the first quarter of this fiscal year. This new accounting standard requires companies to record liabilities that were previously off-balance sheet obligations and the associated assets onto the balance sheet. There is no impact on the income statement classification of rent expense or depreciation expense for us. For the fiscal 2020 third quarter, adjusted EBITDA was $3.2 million compared to adjusted EBITDA of $2.1 million in the year-ago quarter. We continue to carry approximately $220 million of NOL carry-forwards with a full valuation allowance on our books that will enable us to remain liable for taxes only in certain foreign jurisdictions, as well as minimal state taxes for the foreseeable future. Our NOLs that are subject to expiration expire between fiscal years 2031 and 2030. As it relates to our guidance, given the continued improvements across our business, we are confident in raising our guidance for fiscal 2020 year-over-year revenue growth from 14% to 16%, compared to full year fiscal 2019 revenue of approximately $141 million. We continue to expect an approximate 25% improvement in adjusted EBITDA in fiscal 2020, compared to fiscal 2019 adjusted EBITDA of about $10 million. The reason we are again not raising adjusted EBITDA guidance is that, given the increased business momentum we are currently enjoying, we have made some continued investments in accelerating our R&D, professional services, and customer support strength. Please keep in mind that fiscal 2019 adjusted EBITDA of $10.3 million had the benefit of about $2.2 million of capitalized software costs, which did not occur in fiscal 2020. Growing adjusted EBITDA by 25% between fiscal 2019 and fiscal 2020 is actually the equivalent of growing adjusted EBITDA by 60% if we remove the $2.2 million capitalization benefit from the prior year. That 60% improvement on revenue growth of 16% reflects the significant operating leverage we continue to work with, as we manage expense-related investments carefully to continue to support future profitable revenue growth. We're excited about what the future holds for Agilysys and the hospitality industry. Customers repeatedly confirm to us that they're hungry for a world-class vendor that can provide a fully integrated suite of solutions, and they equally confirm they are impressed with how we continue to innovate and progress towards that challenge. We are executing well against our strategic plans, a plan that was set out three years ago and remains materially the same to this day. Our financial results were strong this quarter, but more importantly, the longer-term financial trends we have reported are strong, and we feel the business is set up well for the future. We will continue to focus, work hard, and deliver the products and services our customers want. With that, I would now like to turn the call over to the operator for questions.

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

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

Hi, George, thank you for joining the call. The competitive replacements are picking up; we've been noticing that trend for quite a few quarters now. I would say for the last four or five quarters, the rate at which we've been replacing major competitive systems has really picked up, and they don't necessarily take too much time. There have been cases where a customer has contacted us and they have gone live with our product within a couple of months. Some of the things that trigger that include hardware refreshes coming up on the POS side. While they're spending that kind of money on that refresh, they start thinking, why don't we go look for a system? Another thing that very often happens is they want certain enhancements done to help their business, and many vendors just don't have the engineering breadth and wherewithal to get those changes done quickly. They might want an interface created with another system that they have bought, and many competing vendors just don't provide that, which becomes a compelling event for them to change the system. Their business could expand, and the other vendor may not be able to keep up. I don't think these decisions take too much time based on our experience. But there are cases where they are marginally satisfied with another system, but they are quite happy with their current system, yet they would really like to have a competing system; that could take time—they might wait a year or so before they really make that decision. But when there are compelling events, and there are many, especially with many vendors not excelling in customer support, these kinds of things do tend to happen much faster than probably what your sample sizes suggest.

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

Yes, the product and services strength that you're seeing will lead to recurring revenue and subscription revenue strength. So like how Tony described in his prepared remarks, what comes first is product revenue. In our POS business, a certain amount of hardware comes with it, and a certain amount of services revenue comes with it; that’s the first thing that happens. Then as we implement and the customer wants more activities from us, the services revenue picks up. That's a good indicator of the fact we are doing a lot of implementations now. We're replacing a lot of companies and systems, and we’re doing a lot of new product installs of customers who already have other products. So, as services activity picks up, as we've seen in the last six months, that leads to recurring revenue. Those customers go live and the recurring revenue should pick up. A good portion of the implementations we're doing happens to be on a SaaS subscription basis. We don’t force our customers into that; we want to be customer-centric.

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

Yes, so, limited impact on our business. But before that, George, we do have employees in the Shenzhen and Hong Kong area. So, we are very concerned about this because employee well-being comes first for us; we care about all our global employees a lot. We are very concerned about our employees in Shenzhen, Hong Kong, Singapore, and Malaysia; we have a number of employees there. So, we are monitoring it closely and are making careful decisions regarding travel and safety. As for the business, we have more than 4,000 properties all over the world currently using our system, of which only 20 are in China. China is an initial market for us now, and we have a lot of growth potential there, but historically, we haven’t had a major presence there. So, it is possible that those deals get postponed due to travel and other restrictions. In terms of possible revenue impact, maybe a $500,000 impact in Q4 and on this fiscal year is possible for us. It is not significant at the moment, but we are watching it carefully. It is not a major part of our business at present.

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

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

Yes, good to talk to you, Tyler. Thank you for joining the call. So, the modules, let's break them up into POS and PMS separately. So, as far as POS is concerned, the two main flagship products we have are InfoGenesis, which is more staffing solutions, and rGuest Express Kiosk, which is more guest-facing, where the guests can order food items directly from a kiosk, speeding up lines in employee cafeterias. We also have an additional product called on-demand, which helps customers order food from their desktop or smartphone, with real-time updates on wait times. On the PMS side of the business, there are several products gaining traction, for example, a direct channel web booking system that is PMS aware. Many web booking systems involve commissions and are not PMS aware. Therefore, our system is one that differentiates customers, adding substantial value. We've also got mobile check-in, check-out capabilities that have also been implemented by a few major customers. Additionally, we introduced rGuest Service, which automates task management in hotels, aiding housekeeping tasks.

Going back to the competitive displacements question, you mentioned factors that could initiate such switches, like POS refresh. Are there any developments on the horizon, be it pay-at-table or something similar, that could spur people into making those changes?

Yes. So, Tyler, I can't give you one magic bullet that drives everyone to switch. We continually add new modules like pay-at-table, which one of our largest gaming customers went live with recently. We’re consistently modernizing our core product and functionalities, and this gradual improvement tilts the scale in our favor. The tipping point varies by customer. It's not solely about one module; it's about continual R&D and feature enhancement that cumulatively makes a difference in attracting customers to transition to our offerings.

Our next question comes from Ishfaque Faruk with Sidoti.

Congrats on the great results. A couple of questions from me. Ramesh, you said you guys got around 18 new customers this quarter. Can you give a sense of how many of those had added PMS solutions?

I think out of the 18 new logos, new customers we won, I believe the PMS number is four, if I'm not mistaken. Once we finish this call, I'll have Tony and Dave confirm that number for you, but I think the number is four.

Ramesh, you also mentioned that you're seeing your average deal size increasing, coupled with a reduction in churn due to more competition. Can you provide a sense of how much your average deal size is growing on a year-over-year basis?

No, Ishfaque, I don't think we have a precise measure on average deal size. However, we track how many deals exceed $50,000. The value of these deals has increased significantly, and we're achieving record levels in that category. Regarding customer churn, that's a different matter; that relates to enhancing customer service and better support. We’ve been seeing excellent customer retention, and our customer churn is at world-class levels now.

Okay. And last one from me. Tony, I think you mentioned that your R&D group has grown to around 738. Do you expect that to flatten out at some point or do you foresee it moving higher?

Ishfaque, we do expect the R&D team to continue growing in absolute numbers. The R&D team will expand beyond the 730 number we mentioned. From a financial modeling perspective, you should expect R&D spending this fiscal year to be close to last year’s percentage of revenue, around 27%-28%. In the near term, we don't expect any major shifts in that metric. In the coming years, we would like to see that number decrease as a percent of revenue but still anticipate absolute headcount expansion as our revenue increases.

Our next question comes from Allen Klee with National Securities.

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

Yes, Allen. Good question. The PMS side is actually less than modest; it is the biggest area of focus for us. We are improving the products, and those products are getting better. The room count reported by Tony is after implementation. For instance, four of the new customers signed this quarter have not yet gone live. So, they will factor into the room count in the next quarter. The current room count we provide represents implemented rooms. However, to answer your question, there’s still more product work to be done. In fact, Ishfaque's question about R&D expansion affirms our commitment; we are focused on R&D to finalize our PMS competitive edge. We are adding additional software modules, which when the core product work is finalized will position us very favorably. Growing our PMS business continues to be a primary focus.

And then in the guidance, it was mentioned that you're maintaining your EBITDA guidance. Could you share details regarding the reinvestments attributed to that?

Certainly. Allen, we've seen opportunity this year to invest in our SaaS infrastructure. We have witnessed growth in our SaaS implementations, and we have new products in development. Therefore, we have made investments in our SaaS infrastructure. Additionally, we've expanded our customer support personnel to adequately address all customer concerns post-implementation. As you can see, our professional services revenue reflects the contributions from our services team, which is where most of our investment has gone.

Moreover, as Tony mentioned in his prepared remarks, although we're stating that adjusted EBITDA is growing by 25% this year from $10 million in fiscal 2019, if we exclude the $2.2 million software capitalization advantage from FY '19, it equates to a 60% increase in EBITDA, which is significant. While we are guiding revenue growth to 16%, achieving this 60% increase in EBITDA indicates robust operating leverage. We don’t want to overextend; our emphasis is on managing revenue growth responsibly.

Lastly, on professional services, which has been growing rapidly, can you help us understand the timing of the implementation process? Are you comfortable with the current timeframes, and do you foresee needing to dedicate more resources to this area? Thank you very much.

Generally, for professional services, we collect around 60% of our one-time charges upfront as a standard industry practice. Regarding implementation timing, we typically see a three-month window from contract signing to implementation completion. We are satisfied with this timeline. In the event a customer requires expedited implementation, we have the capacity to accommodate that. That said, if professional services revenue continues to rise, we will indeed need to grow our services team. Currently, we maintain solid margins in professional services, and we expect to keep them within the high-40s to mid-20s range in the foreseeable future.

I hope I can sneak in one more question. I know you will be having your user conference next week. I was wondering what you think the focus will be, and if there may be something important to announce there?

There is no special announcement or major information planned for the conference. Our users will gather for updates on product improvements made over the past year and insights into future product roadmaps. This event is important as many of our customers utilize only one or two of our products, and it’s vital they understand recent advancements we've made across all solutions. For instance, a POS customer should be aware of advancements in PMS and vice versa, helping to establish a synergy and potential cross-selling opportunities. Our objective is to facilitate knowledge sharing among customers regarding experiences and solutions, ensuring they are aware of our growing suite of products. This event is a significant opportunity for customer engagement and relationship strengthening.

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

Thank you, Sheri. Thank you all for joining us on the call today and for your continued interest and support. Agilysys continues to be well positioned to increase shareholder value. This is a terrific value creation opportunity. We are determined to make good on this for our employees, customers, and shareholders. I want to also take this opportunity to give a very special thanks to our 1,200 plus team members across the globe, who are working hard every day to make Agilysys a world-class company and to our customers who trust us with their investments now more than ever before. Thank you.

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