Agilysys, Inc.

Good day, ladies and gentlemen, and welcome to the Agilis' 2025 fourth quarter and full fiscal year conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1-1 again. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Jessica Hennessy, Senior Director of Corporate Strategy and Investor Relations at Agilisys. You may begin.

Thank you, Carmen, and good afternoon, everybody. Thank you for joining the Agilisys 2025 fourth quarter and full fiscal year 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 safe harbor protections of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our financial guidance. Although the company believes that 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 vary materially from these forward-looking statements include the impact macroeconomic factors may have on the overall business environment, our ability to achieve the provided guidance levels, maintaining sales momentum, the company's ability to convert the backlog into revenue, and the risk set forth in the company's reports on Form 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. As a reminder, any references to record financial or business levels during this call refer only to the time period after Agilisys made the transformation to an entirely hospitality-focused software solutions company in fiscal year 2014. With that, I'd now like to turn the call over to Mr. Ramesh Srinivasan, President and CEO of Agilisys. Ramesh, please go ahead.

Thank you, Jess. Good evening. Welcome to the fiscal 2025 fourth quarter. and full year earnings call. Joining Jess and me on the call today at our Alpharetta Atlanta headquarters is Dave Wood, our CFO. Let me cover sales first before moving to revenue and other details. Please note that all our sales and selling success related values are measured in annual contract value terms. Please also note that all the sales values reported in this narrative including subscription and services sales, do not include anything from the Marriott Property Management System PMS project that we continue to make good progress with and remains on the planned trajectory. Further, all the fiscal year 2026 guidance and other future projection numbers and narratives assume no material subscription revenue from this project. Fiscal 2025, the year that ended March 2025, was a record global sales year overall and a record year for practically every sales vertical other than managed food services. It was a record sales year for international regions, gaming casinos, hotels and resorts, and overall North America domestic sales. Across product categories, it was a record sales year by a significant distance for subscription SaaS software and services. Full fiscal year 2025 was also a record sales year for PMS and PMS-related add-on modules, excluding book for time sales, 58% higher than the previous best year. We continue to make great progress on the PMS side of our business. Overall, the January through March period fourth quarter of fiscal 2025 was our best sales quarter ever. With respect to point of sale POS sales, fiscal 2025 Q4 was the best quarter of the fiscal year, 27% higher than the sequentially preceding Q3 and 16% higher than the previous highest Q2 quarter. Q4 was also the best sales quarter of the year for sales in the managed food services, FSM vertical. FSM sales during the second half of fiscal 2025, that is Q3 plus Q4, was close to twice as high as the first half, Q1 plus Q2. With the newer, modernized, and unified POS platform performing well at more than 150 customer properties currently and growing rapidly, we have turned the corner and are now past the recent POS sales challenges. Implementations of the new POS platform in the field during the past several months are progressing exponentially better than when we were working through the old to new transformation phase previously, when we had to work with combinations of modules spanning across a couple of generations of technologies. This quarter would have been a record overall sales quarter by a good distance, even excluding sales from Book for Time. Sales during the second, third, and fourth quarters of fiscal 2025 where, respectively, the third, fourth, and best sales quarters on record. Fiscal 2025 fourth quarter was the all-time best sales quarter for both North America domestic and international sales in terms of regions, and with respect to product sales categories for subscription software and services sales. Our current selling success momentum is excellent any way one looks at it, especially with respect to subscription software and services. International sales are beginning to show positive signs of consistent growth, though they are still a bit too dependent on home run big wins. With respect to signed sales agreements during January to March Q4, all not including book for time sales, We added 16 new customers. All these 16 sales agreements were subscription-based and averaged six products each, which equals the previous quarter record high. POS sales agreements featured an average of four products each and PMS an average of 11 products. We also added 50, that is 5-0. We also added 50 new properties during the quarter, which did not have any of our products before, but the parent company was already our customer. Of the 66 new properties added during the quarter across new and current customers, 63 were subscription software license-based. There were also 126 instances of selling at least one additional product to properties already running at least one of our other products. These 126 instances involved sales of a total of 287 products. Both these numbers and the total value of new product sales to current properties were all-time best quarter levels. Full fiscal year 2025 new product sales to current properties running at least one other edgeless product was also a record high. More than 50%, that is 5-0, more than 50% higher than the previous best year. The current global demo plus stage sales pipeline measured at the annual contract value sum of all sales opportunities we are currently working on which have reached at least the product demonstration stage is now at a record level since we started tracking this value a couple of years ago and was 18%, one eight, 18% higher as of March end compared to the same time the previous year. As of March end, this demo plus sales pipeline was 16%, one six, 16% and 32% higher for POS and PMS opportunities, respectively, compared to the same time one year ago. As more customers get to this demo plus stage and get a better understanding of the product ecosystem, the groundbreaking innovations being delivered now, including intelligent guest profile, single itinerary across multiple amenities for guests, artificial intelligence-based revenue upsell, and conversational ordering tools, and the unique benefits the combined software modules can bring through operational efficiency and guest experience improvements. As more customers reach this product demonstration stage, the better our win ratios seem to get. Such sales opportunities are understandably considerably higher with customers who are already using at least one of our other products, who know us reasonably well, have a close view of our recent advancements, and trust us more. One quick comment on our Inspire user conference held a couple of weeks ago at Hilton Austin, Texas. It did seem like it was our best one yet, with the main highlight being eight different customer-led sessions on main stage, including some of the biggest operator names in hospitality, and covering the gamut of software solutions we offer, explaining the benefits they have gained recently from our accelerating product innovation. Now, on to revenue and profitability. Fiscal 2025 fourth quarter revenue was a record $74.3 million, 19.4% higher than the comparable prior year quarter. This was our 13th consecutive record revenue quarter. Q4 subscription revenue of 29.8 million was a record and grew by 42.7% from the comparable prior year quarter. Q4 subscription revenue was also a record 64.4% of total recurring revenue. In absolute number terms, Q4 subscription revenue grew by $8.9 million year over year which is the highest level of year-over-year growth we have seen until now. In addition, services revenue of $17.8 million, that is one seven, $17.8 million was also a record. Fiscal 2025 Q4 was an excellent quarter of implementation execution by the professional services teams. Apart from being a record quarter for services revenue, It was also a record quarter for the combined annual recurring revenue value of subscription revenue-based projects implemented in the field. We also made excellent progress with hiring for the professional services teams during the quarter, achieving our hiring goals and making up for the lack of progress during previous Q2 and Q3. We have now set ourselves up well for continued good progress with project deployments. Despite all that breadth and depth of implementation success during the quarter, the sum of product services and recurring revenue backlog again grew to record levels because it was an even better sales success quarter. Product backlog consisting of perpetual license software and hardware resold but yet to be shipped improved greatly during the quarter but was still at only about 60% of previous peak levels as of March end. The decreasing sales trend for perpetual software licenses and hardware, keeping product backlog at reduced levels, is not entirely unexpected and serves as a confirmation of the continuing transformation of this business into a cloud and subscription-based enterprise software entity. Full fiscal 2025 revenue was a record $275.6 million. 16%, that is one six, 16% higher than the previous year. Despite a 16%, one six again, 16% decline in one-time product revenue consisting of perpetual software licenses and hardware results. Fiscal 2025 revenue included $170.1 million in recurring revenue, 23.2% higher than the previous year. Full fiscal year 2025 subscription and services revenue were both records, and 39.5% and 27.7% respectively higher than the previous year. Fiscal 2025 was the fourth consecutive year with year-over-year overall subscription revenue growth of at least 27% and organic subscription revenue growth of at least 25%. Shifting the focus to fiscal 2026, we expect only limited growth in the one-time product revenue line this year. One-time product revenue, which used to be about 25% of our total revenue a few years ago, has now reduced to 15% of total revenue during fiscal 2025. With respect to tariffs, we expect limited direct effects on our business, if any. Reselling of hardware has now reduced greatly to only a bit more than 10% of total revenue. Further, and perhaps the most important detail, is that the POS platform has been modernized completely, making it more open and easily adaptable to various kinds and makes of terminal hardware, giving us additional flexibility to manage the supply chain across multiple vendor partners. While macroeconomic headlines give us some caution for the second half of fiscal 2026, we have a lot of reasons to remain bullish on our progress regardless of the macro circumstances. Given our relative small size compared to the humongous total addressable hospitality market and the recent progress we have made with the modernized solutions and the additional competitive ecosystem advantages we have created for ourselves. Duplicating our modern cloud-native ecosystem of software solutions is not going to be easy for other technology vendors in hospitality. This is about as good a barrier to entry, or let's call it as good a barrier to excel as it gets. We will continue to make all the required investments across various business areas to fuel future revenue growth, including in information security, product cybersecurity, sales, marketing, services, customer support, cloud infrastructure, artificial intelligence, and product innovation. We are not going to sacrifice any of our medium-term and long-term revenue growth possibilities for the sake of short-term profitability increases. We will continue to remain disciplined with growth, growing profitability steadily, while remaining ambitious with medium and long-term top-line growth plans. Given all that, we expect full-year fiscal 2026 revenue to be in the range of $308 million to $312 million, driven among other factors by year-over-year subscription revenue growth of 25%. We also expect adjusted EBITDA to be 20% of revenue for the year. Despite continuing good progress by all parties involved, in the massively transformational Marriott PMS project, we have assumed no material subscription revenue contribution from this project in our projections and guidance for fiscal 2026. With that, let me hand over the call to Dave for further color on our financial and operational results.