Agilysys Inc. (NASDAQ:AGYS) Q3 2015 Earnings Conference Call - Final Transcript

Feb 04, 2015 • 09:00 am ET

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Agilysys Inc. (NASDAQ:AGYS) Q3 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good morning, ladies and gentlemen, welcome to the Agilysys Fiscal 2015 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. (Forward Looking Cautionary Statements) I'd now like to turn the call over to your host Mr. Jim Dennedy, President and CEO.

Executive
Jim Dennedy

We appreciate you joining us on the call today to review our fiscal 2015 third quarter results. Joining me today is our Chief Financial Officer, Janine Seebeck. Before we get started, just a quick reminder that on the call today we'll be discussing some non-GAAP metrics, primarily adjusted operating income from continuing operations and adjusted income from continuing operations, which eliminates the effect of restructuring and other items that are either non-cash or non-recurring.

Reconciliations to GAAP metrics are provided in the financial section of the press release issued earlier today. Total net revenue for the third quarter was $24.7 million compared to total net revenue of $25 million in the third quarter of fiscal 2014. It is important to highlight that recurring revenues which comprises of support maintenance and subscription services were $13.9 million for the quarter, an increase of 5% and also rose as a percentage of our total sales representing 56% of third quarter net revenue.

As a part of those recurring revenues our subscription services revenues improved 16% year-over-year which is encouraging as increasing the subscription services component of our revenue mix is one of our top business objectives. Gross margin was 57% in the -- in fiscal 2015 third quarter, compared to 61% in the prior-year period. Adjusted loss from continuing operations of $1.3 million or a loss of $0.06 per diluted share compares to a gain of $700,000 and $0.03 per diluted share in the same period last year. This led to a net loss from continuing operations of $2.7 million, or a loss of $0.12 per diluted share, compared to a net loss from continuing

Executive
Jim Dennedy

operations of $1.7 million, or a loss of $0.08 per diluted share, in the prior-year period. Our third fiscal quarter results underperformed our plan for fiscal 2015. In our fiscal 2015 business plan we made specific changes in our go-to-market strategy to emphasize new logo and subscription business in the markets we serve. In our plan we expected the run rate business we do with our installed base to grow at a modest rate throughout the year.

Our run rate business primarily includes customer product data (inaudible) and hardware replenishment. The run rate business is down year-over-year both in terms of the volume of deals and the value of those deals. We believe the run rate business in our installed base remains available, however we need to apply more resources to that line of business in order to secure it and deliver it.

Secondly, our emphasis on the proceed of new logo and subscription business while successful has led to longer