Agilysys Inc (AGYS) 2014 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Agilysys fiscal 2014 fourth-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, today's call is being recorded.

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 Private Securities Litigation Reform Act of 1995. 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 differ materially from these in the forward-looking statements are set forth in the Company's report on Form 10-K and 10-Q and news releases filed with the Securities and Exchange Commission.

I would now like to turn the conference over to your host, Mr. Jim Dennedy, President and CEO.

Thank you, John, and good afternoon, everyone. We appreciate you joining us on the call today to review our fiscal 2014 fourth-quarter and full-year results. With me this afternoon is our Chief financial officer, Janine Seebeck.

Before we get started, just a quick reminder that we will be discussing some non-GAAP metrics on today's call, primarily adjusted operating income from continuing operations and adjusted income from continuing operations, which eliminate the effects of restructuring and other items that are either non-cash or nonrecurring. Reconciliations to GAAP metrics are provided in the financials in the press release issued earlier today.

24 months ago, we implemented a strategy to align our future to the needs of the hospitality industry. The cornerstones of our strategy focus on emphasizing strong capital discipline while simultaneously prioritizing the continued engineering and development of our solutions to deliver innovative ways for our customers to maximize their connections to their guests, grow revenue, and operate more efficiently. Over the last two years, we have made consistent progress with their execution on these key principles as we have evolved our product portfolio, including our mobility products, to better address our customers' current needs and have similarly evolved our sales efforts and organization to better serve our customers.

We have also made consistent progress with the development of our next-generation platform, a product set that we believe will demonstrate our clear understanding of how technology solutions can benefit hospitality operators across many areas of their enterprise. I believe one of the tremendous advantages Agilysys presents is our willingness to involve and listen to our customers and to turn that feedback into value-added solutions. This key competency will serve us well going forward.

In terms of market focus, following on the earlier divestiture of our Retail Solutions Group, we recently announced the sale of our UK business entity to our former Europe-based management team. Under the terms of the sale they will distribute InfoGenesis, Eatec and Workforce Management, or WMX, across EMEA with exclusivity in the UK. To be clear, we will continue to manage all property management system customers as well as key global accounts in the EMEA market.

With that, let me comment on the results for the fourth quarter and full year, followed by a review of our growth and investment initiatives. As a reminder, all of the financial information we will review on the call reflects the results of our continuing operations.

We are pleased with our results for the fourth quarter as well as for the full year. Total net revenue for the fourth quarter increased 26% to $27.8 million, while the full-year net revenue rose 8% to $101.3 million, reflecting an annual growth rate above the 5% to 7% annual rate of growth for the industry.

It is important to highlight that recurring revenues -- which are comprised of support, maintenance and subscription services -- rose 11% to $14.1 million for the fourth quarter and rose 8% to $53.2 million for the full year. Recurring revenues also continued to rise as a percentage of our total sales, representing over 51% of fourth-quarter net revenues and over 53% of full-year 2014 net revenues. This is an important metric because recurring revenues not only reflect the stability and strength of the business as they provide for additional visibility into future financial performance, but also it offers clear evidence of the success of growing long-term relationships with our customers, which in turn will help generate additional value in our business for our shareholders.

On the expense and investment front, we remain committed to strong capital discipline, including a thoughtful use of our balance sheet, efficient use of our working capital and strict management of operating expense. Quarterly operating expenses -- which include product development, selling and marketing, general and administrative and depreciation expenses -- increased year over year by approximately 5% but declined as a percentage of net revenue to 69% from 83% in the prior-year period.

Our fourth-quarter and full-year results reflect Agilysys' core strategy: maintaining capital discipline and pursuing the highest-value growth opportunities. The growth in our overall revenue, recurring revenues and gross profit reflects a significant strength and long-term stability, which better positions us to continue to capture strategic opportunities in our core and adjacent markets.

During our fourth quarter of fiscal 2014, we reorganized our sales and marketing functions under a new senior Vice President of Sales and Marketing. As part of the evolution of our sales efforts to better serve our customers, we added the function of a business development executive to specifically target net new logo business. We also invested in the capacity of our existing account executives and major account executives to further develop business with our more than 3000 existing customers to focus on increasing the percentage of multiple product customers. During the fourth quarter of 2014 we also reallocated the expense associated with our marketing activities to improve our insight into the key segments we intend to more fully exploit and add critical skills to assist in the launch of our next-generation platform application later this fiscal year.

In order to better serve our customers, we have also realigned how we address the end markets we serve through these changes in the sales and marketing organization. We have grouped the end markets we serve into four principal segments: gaming, both corporate and tribal; hotels, resorts and cruise; food service management; and resorts, universities, stadia and healthcare. We believe these changes will provide incremental opportunities to grow our customer base and increase the percentage of multiple product customers.

Turning now to our segments, the commercial and tribal gaming segment continues to perform very well for us, representing approximately 55% of our total revenues. Casino operators need reliable technology solutions automating critical processes used to deliver exceptional guest service. Our customers recognize and trust that we can help them to better understand and serve their guests, which will increase customer loyalty and repeat business while generating maximum long-term revenue. This is reflected in the new wins we achieved every quarter.

The fourth quarter of fiscal 2014 was no exception, as we announced that Caesars Entertainment, the world's most geographically diverse casino entertainment company, selected InfoGenesis as its enterprise-wide point-of-sale solution. Since Caesars already employed our LMS property management solution and Stratton Warren System inventory and procurement solution, increasing the presence of InfoGenesis into all the food and beverage and retail locations at their properties will enable them to improve the cross-property guest experience and business performance.

We also furthered our relationship with the Chickasaw Nation in Oklahoma, as they selected LMS and InfoGenesis for their WinStar World Casino and Resort in Thackerville, Oklahoma. This is a great example of our ability to gain new business with existing customers using multiple products, as the Chickasaw Nation was already using LMS and InfoGenesis at its other casino hotel properties throughout the state.

The hotel, resort and cruise segment, representing approximately 21% of our total revenue, offers a significant growth opportunity for us both in the United States as well as internationally, as the lodging sector is expected to see continued improvement in occupancy rates and revenue per available room.

We see growth in the Asian markets, where business is expected to remain strong. Our fourth-quarter results in recent announcements reflect this opportunity. Casa Ybel Resort in Sanibel Island recently selected the Visual One property management system to enhance operations and provide superior guest service at its 114-suite destination property. And Resorts World Bimini selected both LMS and the Visual One condo accounting system to streamline operations and provide comprehensive condominium management at the 480-unit Bahama resort scheduled to open in June.

In the highly competitive cruise segment, cruise operators must implement technology that enabled them to streamline operations while creating lasting connections with their guests. This is reflected in our recently announced agreement with Royal Caribbean cruise lines to deploy InfoGenesis on their two newest ships: Quantum of the Seas and Anthem of the Seas. This brings the total number of Royal Caribbean vessels that use Agilysys software solutions to 35. The InfoGenesis solution, with its scaled architecture, flexible configuration and superior innovation capabilities, will enable Royal Caribbean's two newest ships to operate at peak efficiency and deliver the five-star guest experience for which the company is known.

We see continued opportunity to increase our market share in food-service management, which represents approximately 14% of our total revenues, as evidenced by our recent customer wins including Banner Health and State University of New York Cobleskill. We are delivering an array of best-of-breed solutions to the food service industry, from automated Web-based ordering and handheld point-of-sale tools to online inventory and procurement applications that help food-service operators improve accuracy, reduce customer wait times, increase efficiencies, enhance guest services and increase their bottom line.

And in the restaurant, university, stadia and health care segment, which represents approximately 10% of our total revenue, we continue to enjoy new customer wins like Flavors Cafe, who selected WMX to enhance efficiency and reduce costs in all of its New York-based healthy, fresh and natural cafes. This follows other important wins such as Le Duff America, the Crazy Pita and Rainbow Room, which reflect our focus to grow the restaurant vertical around a more full-service establishment.

And in an industry where margins are tight and competition stiff, automated point-of-sale, inventory procurement and workforce management systems work together to increase staff productivity, streamline efficiency, boost profitability and enhance the guest experience.

Turning next to our international business, the sale of our UK business entity at the end of the fourth quarter reflects our emphasis on capital efficiency. We will continue to address the needs of our international customers and continue to develop international end markets. The transformation of our UK business into a reselling partner reflects our belief that, at this time, the best approach to international markets can most efficiently be addressed primarily through a reselling versus a direct-selling model.

Starting last year, our efforts in APAC began the process of developing resellers for the Asian market we serve. We have seen modest progress in 2014. However, we expect greater growth from this transformation in our fiscal 2015.

Turning now to our capital investment program, our next-generation products remain on track to release as scheduled later this fiscal year. Consistent with the development timeline we have previously discussed, we recently began private beta trials with certain members of our customer advisory board. This is an exciting time for us, as our customer advisory board members are now in a position to provide even more valuable feedback on the product through limited operational use. We expect to begin public beta testing later this summer and continue to expect that initial revenue from our next-generation products will be realized late in our current fiscal year.

We are also seeing some early success with our recently announced product introductions including InfoGenesis Flex, a new mobility solution that provides a sleek and modern mobile alternative to traditional point-of-sale solutions.

As we have mentioned in the past, demand for mobility solutions remains strong for the end markets we serve. We see this trend continuing. The ability for our customers to generate increased demand by moving freely around the entertainment venue improves their guest engagement and helps them grow their business.

Our sharpened focus during the past two years, our revised go-to-market strategy and new product introductions are key reasons why we continue to secure new wins, including achieving a consistent increase in the number of customers that purchase multiple solutions from Agilysys. More customers today use more than one of our solutions compared to a year ago.

We are well positioned to be a key player in the point-of-sale evolution, which is taking shape as real-time reservation, loyalty and payments converge. We have a sticky product portfolio, deep penetration in the hospitality market place, increasingly important strategic assets and a high level of customer service that our customers demand. With favorable market trends, a disciplined approach to growth, a focused business, stronger balance sheet and improved operating structure, our investments in innovation and our collaborative business approach will lead to more opportunities to deliver increased value to our customers.

With that, I would now like to turn the call over to our CFO, Janine Seebeck, who will review our financial results before opening the lines for questions.

Thanks, Jim. We are pleased with our year-over-year improvements in revenue and adjusted operating income, which reflect a healthy growth in product sales and recurring revenue as well as our continued prudent management of operating expenses. Before I begin, I would like to remind everyone that our fiscal 2014 fourth-quarter and full-year results, along with the historical periods presented in our press release and discussed today, reflect the classification of the Company's former EMEA operations as a discontinued operation following the sale of that business on March 31, 2014, and of the former Retail Solutions Group as a discontinued operation following the sale of that business on July 1, 2013.

Our fourth-quarter revenue increased 26% year over year to $27.8 million from $22.1 million in the prior-year period. The increase in fourth-quarter revenues was the result of strong growth in product sales to $10.4 million, which includes remarketed product revenues associated with the enterprise-wide selection of InfoGenesis at Caesars Entertainment that Jim mentioned earlier.

In addition, included in our product revenue is an approximate 31% increase in the sale of proprietary products. We also saw 11% growth across our support, maintenance and subscription business, our recurring revenue, with subscription services contributing a 13% increase over the same quarter a year ago.

Moving down the income statement, while we still have peer-leading gross margins, we did see a decrease in gross margins of 730 basis points to 60% in the fourth quarter of fiscal 2014 compared to 67% in the prior-year quarter. This is expected, as we announced during our last quarter call, as we continue to place into service certain capitalized software assets associated with recent product releases.

Operating expenses, which include product development, selling and marketing, general and administrative and depreciation expense, increased 5% from $18.3 million to $19.2 million. As a percentage of revenue, however, operating expenses decreased to 69% compared to 83% a year ago. Product development costs remained level at $6.5 million.

Consistent with our strategy, overall spend continues to increase as we capitalized approximately $4.2 million of software development costs for future use compared to $1.9 million in the prior-year period. We discussed in the past that through fiscal 2015 we anticipate product development expenses as a percentage of revenue will be in the mid-20% (technical difficulty) thereafter, as we complete the core development our next-generation product and begin to commercialize them, that this percentage will move to approximately 20% of revenues, which is more typical for our type of business.

You will notice increases and amortization of intangible expense this quarter. Similar to last quarter, these are largely the result of our long-term strategy to replace our current ERP system with a more cost-effective solution that will yield additional operational efficiencies going forward. The amortization expense increase will continue until we are live on our new ERP software in the first half of fiscal 2015.

As Jim mentioned earlier, we completed a reorganization within our sales and marketing teams during the fourth quarter of fiscal 2014 and, as such, recorded a restructuring charge of approximately $600,000. Our restructuring activities are expected to be completed in the first half of 2015 and total less than $1 million.

Operating loss in the quarter was $2.6 million, a 27% improvement compared to an operating loss of $3.5 million in the fourth quarter of fiscal 2013. On an adjusted basis, we saw an improvement in adjusted operating income of $1.6 million year over year to $1.1 million, reflecting the progress we are making in our business. Adjusted income from continuing operations in the fourth quarter was $1.3 million, or $0.06 per diluted share, compared with an adjusted loss from continuing operations of approximately $100,000, or a loss of $0.01 per share last year.

Loss from continuing operations for the quarter of $1.2 million, or $0.05 per diluted share, compared to a loss from continuing operations of $1.6 million, or $0.07 loss per share for the prior-year period.

Taking a brief look at the results for the fiscal 2014, total net revenues for the full year increased 8% to $101.3 million from $94 million in fiscal 2013, ahead of the market rate of growth. In absolute dollars, gross profit improved 11%, or $6.4 million, to $64 million for fiscal 2014. Gross margin for fiscal 2014 was 63% versus 61% in the prior-year period on the back of a 9% increase in higher-margin recurring revenue.

Operating expenses increased 5% to $70.2 million in fiscal 2014 while adjusted operating income from continuing operations improved by $5.2 million to $4.1 million. Adjusted income from continuing operations of $4.3 million, or $0.19 per diluted share, for fiscal 2014 compares favorably with an adjusted loss from continuing operations of $1.2 million, or a loss of $0.06 per share, for fiscal 2013. This led to a loss from continuing operations for fiscal 2014 of $3.4 million, or $0.15 per diluted share, compared with a loss from continuing operations of $6.2 million, or $0.28 per share, in the prior-year period.

Moving to the balance sheet and cash flow. Cash as of March 31, 2014 was $99.6 million, and we are pleased to see improvements across our net cash used in continuing operations, where we had a $1.4 million year-over-year improvement. We generated positive cash from continuing operations, and adjusted cash provided by continuing operations improved $5.1 million year over year to $3.2 million from the use of cash of $2 million last year.

Total deferred revenues, which includes both paid and unpaid balances, increased to 20% to $31.2 million at March 31, 2014, compared with $26 million at March 31, 2013. This increase is consistent with our focus on generating increased higher-margin, proprietary products and subscription services sales.

With regards to our NOLs, we currently have $160 million for which we can attribute a full valuation allowance and which will help us keep our cash taxes limited to taxes paid in foreign jurisdictions along with minimal state taxes for foreseeable future.

Overall, we are making great progress and remain confident in our business strategy, product offerings and financial positions. These results clearly point to the potential our hospitality-focused business holds, as exhibited in our ability to deliver improved operating results and significant improvements in our adjusted operating income from continuing operations.

With regards to our fiscal 2015 outlook, we expect to achieve above-market revenue growth and to generate break-even to slightly positive adjusted income, adjusted operating income from continuing operations for the full year, as we are still in the middle of our investment cycle.

As we move ahead, we are excited with our planned investments to further leverage our existing client base, expand our penetration in our end markets we serve and build our product portfolio. We remain confident in our business and our ability to continue making operational improvements. We've taken the necessary steps to position Agilysys for sustainable long-term growth. Our fourth-quarter and full-year 2014 results give us confidence that our plans are working and that we are on track to deliver on our goals.

With that, I would now like to turn the call over to John for any questions.

(Operator Instructions) Brian Kinstlinger, from Sidoti & Company.

I'm wondering if you can highlight -- as now you've broken your business out in four segments, if you can highlight the growth rates maybe in fiscal 2014 and which ones maybe you expect are going to grow stronger in fiscal 2015. I assume this year, with Caesars, some of the growth was weighted toward gaming, but maybe that's just one quarter.

No, I think that's fair. So Brian, when we look at growth, what we saw this year, year over year, we definitely saw bigger growth in gaming. And gaming obviously has still been our biggest segment; it was about 52% last year, up to 55% this year. So that's still the biggest. We expect to continue to see gaming to grow. But where we are really hoping to see continued growth and expansion is going to be in the rush segment or the restaurant --

Restaurant, university, stadia and health care. As a point of strategy, Brian, if you evaluate the gaming market, it has more of a finite market opportunity in terms of its own industry growth. With the amount of participation we experience today -- particularly in restaurant, university, less so in stadium but more in health care -- we see more of an opportunity to address market opportunity that we haven't yet participated as fully as we would have liked in those other segments.

In gaming, I think it's going to be more around trying to take share from competition, offering a better business value proposition for gaming customers to switch to Agilysys-provided solutions. There's going to be more new fresh market opportunity in restaurant, universities and health care.

Stadium is in there too?

Stadium is in that group, yes. We call that group -- we refer to it as RUSH: restaurant, university, stadium and health care.

And then is the market in those ripe? And what I mean for that is, is there a cycle of either upgrades in this restaurant/stadium segment? Is it untapped where they are on very, very old software? Just give us a sense for where the market is at right now there.

Well, I think you see in that particular segment with all of the components in it -- whether it's restaurant, university, stadium and health care -- the cycle -- the refresh cycle is more frequent. So you see that sort of averaging in the two-to-three-year period. In the hotel and the gaming segments, we've seen the refresh cycle be sort of more in the three- to five-year period. So you see a little bit greater turnover or inventory turns, if you will, in that restaurant, university, stadium and healthcare. But I also think you see more new starts, particularly in restaurants, than you would in, let's say, gaming. So there's more opportunity for new starts. Now, those deal sizes are smaller than the gaming, certainly, but there are more of them.

And then you haven't touched at all on the hotel, resorts, cruise and the food management services. Should we expect growth there to be a little bit slower maybe then the other two?

Well, I think in that core hotel market you'll see our growth rate in that particular element contribution to hotel resorts and cruise be slower growing until we introduce our next-gen product. Right now the products that we have in the market, whether it's LMS or V One, on the LMS side address more the supertanker-sized property; and on the V One side, or Visual One side, address more of a diversified offering like the hotel/spa/golf packaging that you might see in some of our Visual One customers.

For the core hotel product, we've not participated as strongly with the property management system there, although we think we have a targeted campaign to offer hoteliers a much better F&B offering in our InfoGenesis, Eatec and Workforce Management Solution combined than our competition. We are going to lead with that product offering at least in our fiscal 2015, and you will see us leading more strongly in fiscal 2016 and beyond with a more combined approach with that property management system in our V.NEXT product that can address the core hotel market more effectively than our other two products.

And then you, in the press release and in your presentation, mentioned in fiscal 2015 growth will be better than the hospitality markets. What do you use to gauge what you expect the hospitality market is going to grow? Do you have your own assumptions? Is there some kind of source that you are tracking?

Well, as we indicated on previous calls, we commissioned a study from IHL and Smith Travel Research toward the end of the summer in 2013. And we specifically asked them to focus on these end segments that we serve. In aggregating those end segments, the growth rate we saw averaging into the future by this study from IHL and STR was in the 5% to 7% range. I think if you look at the earnings releases from our competitors in this industry, you will see that a similar rate of growth for the markets or end markets they address is a similar percentage rate of growth. It's still in that 5% to 7% range.

Okay. And that was what you said last quarter. Can you maybe talk about the trends in your two new mobile products that you talked about at the analyst day, what kind of bookings or revenue maybe they are producing? I know it's still a little bit early -- and maybe the feedback and where you expect this contribution might be for this year.

Sure. So I'll take that one, Brian. So obviously we are still pretty early, I think, when we are looking at it. We are obviously seeing good traction from a pipeline perspective. Revenue itself is still pretty nominal from where we are. But from a bookings perspective and from a pipe perspective we are starting to see that fill nicely.

The way we are obviously going to market with it is every time we quote ID or go out with it or go out with LMS, we are actually adding those things to the quote to try to drive that through as part of the strategy. So it is a component of how we think we are going to get that cross-selling and drive that strategy through as part of fiscal 2015. Again, it's still too early to really say it's generating significant impact on the results that we discuss today.

Okay. And then the Caesars product contribution -- will that also hit the current quarter we are in? Or was that a one-time item that hit that revenue line? Should we expect lumpiness, I guess, is basically my question for products.

Sure. So obviously there was a large component of that deal that was related to the hardware there. So there was some components of that that will not repeat when you think about the hardware. But obviously, there's an ongoing support and software stream in the implementation costs that are baked into our assumptions for our growth rates for this year. But, for purposes of modeling and thinking through it, there was some incremental, if you will, that hit in Q4.

Then you mentioned some increased investments in fiscal 2015. Can you highlight maybe one, two, maybe even three of where you are deploying the most capital in terms of your increased investments?

I'll talk about two in particular: sales and marketing, and then product engineering. In the sales and marketing, I think in the third-quarter earnings call and I believe also in the second-quarter earnings call, both yourself and Rob Moses, another investor, happened to ask questions about opening that new logo business in our revenue line. And it was a project on which we were working to address expanding greater participation from net new logo business versus things that our current install base demanded. And so this creation of the role of the business development executive as an additional layer on top of what is already a fairly highly effective account executive and major account executive sales force is really the new investment in the sales area.

The new investment in the marketing area includes greater talent around the area of product marketing to help make our markets more aware of how specific solutions can address the unique needs in each one of these segments. And then we had one other kind of major addition in the marketing area, and that's more around a true SaaS or a cloud-based offering.

So as you think about the products that we have in market today, most of it is sold as a premise-based delivery. InfoGenesis has about 15 years of hosted point-of-sale delivery. We are, I think, market leaders in that, particularly for a product as complex as InfoGenesis is.

For point of sale, as we think about V.NEXT -- and it's primarily a SaaS-based product that has embraced a true cloud architecture -- the selling cadence and the value proposition to the market is modestly different. And we hired a new marketing talent to the organization with that specific experience that they can contribute to the overall voice to the market.

With respect to product engineering, the investment level of 2014, our fiscal 2014, will look approximately the same as the investment level in 2015. However, I think you'll see more focus on select products that we think have greater market opportunity than a more uniform application of investment across all products.

And to be a little bit more clear, if we are targeting or more fully exploiting both the restaurant and, let's say, the hotel markets, there are specific investments in the triad we can do around point-of-sale, inventory procurement, and workforce management that, as a trifecta solution, can deliver a comprehensive offering to the restaurant market, to the university market, to health care, and to hoteliers.

And what we will do with our end-market products is, having completed the majority of the re-factoring of Visual One, is going to be more around maintenance engineering and addressing specific large customer innovation requests. But more of it is going to be around those products that are going to help us more fully exploit the core hotel and the core restaurant market.

Okay. Just two more. The first one, can you maybe comment, which is a follow-up to the increase in sales, can you comment on the number of salespeople you have? Then, with a new head of sales, so to speak, do you expect any disruption based on all the changes you are making there, or should it be pretty seamless?

Well, I expect no disruption but I don't think that expectation is going to be fully met. So with the new addition of Michael Buckham-White as the head of sales and marketing, it makes a lot of sense to me to unify the sales and marketing initiatives at a level -- one level below the CEO and have an executive with experience in having done that lead that effort.

We have retained both ahead of sales, Tony Ross, and the head of marketing, Beth McClure, under Michael. But the effort has been unified under his leadership. That also enables me to spend more time with customers, Janine, and our product engineering team, led by Larry, on how we can more effectively deploy the balance sheet towards really product roadmap advancement. So you will see probably more of my time spent in the area of corporate development than on the area of more business development that Michael and his team will address.

With the addition of this new layer as the business development executive over the top of the major account executives and account executives, we have experienced some turnover in the sales force. But, more importantly, what we have added is probably 25% to 30% additional capacity and new positions created to add an overall greater selling capacity in the organization, from which we expect greater results in 2015 and beyond.

When you say capacity, you are looking to hire them right now, or are you actually starting to --

Yes, sir. Yes. Hire -- we have filled some, and we have still open positions available to fill.

And what is your total sales headcount right now?

Total sales headcount is --

Quota carrying?

Quota carrying.

Yes, it's around the 20 range.

Yes, we are looking somewhere -- we were around the midteens prior to this initiative. So we are just under 20, and the target is right around mid-20s for a total quota-carrying sales force.

Great. Last question, Jim. You have had a lot of cash. You talked a little bit about -- in the past about potentially looking at acquisitions. Are you closer to deploying it? Have you not seen anything you really liked out there? Maybe touch on share repurchases. That's my last one. Thanks.

You got it, Brian. Thank you. Share repurchases is not something that's currently contemplated by the business. In terms of M&A, the typical -- we don't comment on M&A. It's generally insufficient for investors to hear that. We have been active. We are extremely choosy. It's not that we are extremely choosy because we just want to be. We have an experience at Agilysys of having acquired things with the technologies that might be more orthogonal to each other than aligned. And that has taken a substantial amount of investment after acquiring them to integrate them.

So when I think about M&A, it's not just the initial purchase; but it's also what we call an acquired technology remediation plan to get the acquired technology onto the same platform as we have our current products. And then also the investment expense associated with more fully developing them as we move it forward.

For that, we develop a fairly robust business plan for each opportunity we review. It has to have a prescribed return on invested capital opportunity that we can recapture not only what we invested but a respected return on that investment, as our investors would expect. So we are pretty disciplined in our approach to M&A and not just going to deploy the capital just to grow size. It's not that size is the only thing that matters; it's the return on investment that matters more to us.

Thank you.

(Operator Instructions) Okay, and at the moment I show no further questions. I'd like to turn it back to your host for any concluding remarks.

Thank you, John. Well, we believe our fiscal 2014 was a good year for Agilysys, outpacing the rate of growth generally reflected in the markets we serve. We are looking forward to delivering greater value in 2015 and beyond. We are excited at the progress we are making with the development of our next-generation platform and believe our recently introduced innovations and our new solutions will help to grow our overall market opportunities.

The improving outlook for the overall hospitality industry, our more streamlined business, and our success in deploying capital in areas that generate attractive returns provides a solid foundation to drive future improvements in shareholder value.

Though we face tough competition, I have the great privilege to lead the strongest team in our industry. This team has built and is improving our strong solutions portfolio. The team has identified and led the many complicated and value-increasing changes and transformations in our business during the last two years. Our team has clearly demonstrated its ability to not only execute and drive aggressive productivity-improving changes but also to deliver exceptional leadership by retaining the top talent we have while recruiting and integrating additional market-leading talent to the organization.

Thank you all for your time and participation today. I'm sure you can get a sense for our excitement and optimism about the future and our sense of accomplishment around our past. I would also like to take this opportunity to thank my colleagues at Agilysys, who are responsible for our success and the foundation for our future. I also want to express my thanks to our customers, who entrust us with their business, and to our partners, who value our integrity. Thank you.

Okay. Ladies and gentlemen, this does conclude your conference. You may now disconnect, and have a great day.