Good day and welcome to the eGain Fiscal 2017 Fourth Quarter and Full-Year Financial Results Conference Call. Today's call is being recorded. And at this time, I'd like to turn the conference over to Jim Byers of MKR Group. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Welcome to eGain's fiscal 2017 fourth quarter and full-year financial results conference call. On the call today are eGain's Chief Executive Officer, Ashu Roy; and Chief Financial Officer, Eric Smit. Before we begin, I'd like to remind everyone that during this conference call management will make certain forward-looking statements which contain management's expectations, beliefs, plans and objectives, regarding future financial and operational performance. Forward-looking statements are generally preceded by words such as believe, plan, intend, expect anticipate or similar expressions. Forward-looking statements are protected by Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a wide range of risks and uncertainties that could cause actual results to differ in material respect. Information on various factors that could affect eGain's results are detailed in the company's reports filed with the Securities and Exchange Commission. eGain is making these statements, as of today, September 6, 2017 and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call. In addition to GAAP results, we will also discuss certain non-GAAP financial measures in this conference call such as non-GAAP operating income. Our earnings press release can be found on the news release link in the Investor Relations page of eGain's Web site at www.egain.com. The tables included with the earnings press release include reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. A replay of this conference call will also be available at the Investor Relations section of eGain's Web site. Now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.

Thank you, Jim, and hello, everyone. I’ve been waiting to say these words for a while. We successfully completed our transition to a SaaS business in the fourth quarter of fiscal 2017. To put it in perspective, we went from $14.5 million of perpetual license revenue in fiscal 2016 to $4.5 million of perpetual license revenue in fiscal 2017, to an expected less than a $1 million of perpetual legacy license revenue in fiscal 2018. Looking back at the last couple of years, I’m proud of my team and the manner in which they’ve executed the transition in the public eye, while driving customer success, accelerating product innovation and through it all, generating operating cash. As far as I know, we are the only public company of our scale to successfully complete such a business model transition without requiring significant cash infusion. We live dangerously. We executed tenaciously through this transition, but that is all behind us now. Moving forward, we are singularly focused on SaaS growth, even as we guide our legacy perpetual license clients to a better innovation consumption model in the eGain Cloud. As a result, our quarterly financial performance comparisons will be more meaningful sequentially with Q3 of fiscal 2017 as a baseline which had minimal perpetual license revenue rather than against year-over-year quarter comparisons because as you all know our revenue model in fiscal 2016 were still very much influx. With that said, let me turn to financial highlights for the fourth quarter. Our SaaS revenue was up 33% sequentially over the third quarter. We generated $3.9 million in operating cash flow in the fourth quarter, up 39% from the third quarter, and we improved our non-GAAP operating income to $250,000 from a loss of $1.2 million in the third quarter. Looking at our business,…

Thank you, Ashu, and thanks for joining us today. As Ashu noted, we are pleased to report solid sequential growth in our recurring revenue as well as sequential growth in total revenue for the fourth quarter, our first quarter since completing our transition to a recurring revenue business model. In addition, we generated $3.9 million in operating cash flow during the quarter and non-GAAP operating income of $250,000 in Q4 versus a loss last quarter. Our overall sequential improvements in the fourth quarter revenues also reflects the benefit from the timing of several items, some of which has been headwinds for us in the past, but now favorably impacted us in Q4. With the shift to a SaaS model, there has been a lag between new bookings as they convert to revenue. This quarter, we saw the benefit from a good job in shortening the time between bookings closed in the preceding quarter to revenue starts, and in addition we began recognizing revenue from one of the large bookings that had closed almost a year-ago. The other point of note is that in this quarter there was no significant foreign currency impact whereas certainly in the past we’ve seen that, in particular with the impact of the pound and the euro against the dollar. Also before I continue with the review of our financials, I’d like to note that with the completion of our transition to a SaaS business model behind us, we are going to start providing some new metrics that we believe are relevant in highlighting our progress in building a growing and profitable recurring business -- revenue business. Going forward, instead of subscription and support revenue, we will disclose recurring revenue in our financial statements. We will break down our recurring revenue into two components, SaaS revenue…

Thank you. [Operator Instructions] At this time, we will hear from Jeff Van Rhee with Craig-Hallum Capital Group.

Hey, guys. This is Austin on for Jeff, Austin Williams. Could you maybe talk about the competitive landscape and maybe how its changed over the past year?

Sure. Hey, Jeff. This is Ashu here. I have a bad throat, so I apologize for my voice. So competitively, I think the set of -- broadly, there are three sets of competitors that we’ve talked about and maybe give you a little color on trends on those. So the first is when we’re selling direct and we are selling sort of a knowledge management solution as the front of the wedge, then we’re competing mostly with Oracle on Knowledge and competing with people like Verint on Knowledge. Those tend to be the primary competitors on the direct sales side. When we are selling the digital first capabilities in the direct channel, then nowadays it's primarily LivePerson, though Salesforce and Oracle also compete, but LivePerson is probably the primary competitor because digital has turned much more into real-time messaging and that makes it more of a direct competition for them and us. And then when we are selling alongside the contact center partners like Cisco, at that point because it's a bigger proposition, the competition is, say, Genesys and Avaya, and in the enterprise, those are the primary competitors.

Okay, great. Thanks. And second question, just kind of about churn. What is the rate of customer churn look like? Are there any major customers you’re seeing right now that you're concerned about, maybe customers that over 5% or so?

Well, over the past year and a half, we’ve -- as you know, we've invested quite systematically and significantly on the customer success side and that’s shown good results. Our customer retention has improved and we feel very good about where we are for fiscal '18. We have disclosed the big churn of our significant customer in the end of December of 2016. Since then we’ve had churn, but nothing that is outside of the band of what we expect. So we are feeling comfortable about our retention rates in fiscal '18. Eric, you want to add to that?

No, I will agree with that. Certainly nothing in that 5% category that we have aware of that’s in front of us.

Yes. One other thing that I would add is that we are also systematically migrating our customers in the renewal cycle to multiyear contracts. That is also an important factor for us to ensure more visibility and predictability.

Okay, great. Thank you.

At this time, we will hear from Nick Altmann with Northland Capital Markets.

Hey, guys. This is Nick on for Mike Latimore. Thanks for taking our questions. Just kind of staying on that topic, you guys mentioned retention rates have gotten better, they’ve gotten better year-over-year and sequentially, correct?

I guess, absolutely. So I think that obviously if we look at the drop we have in Q3, Q4 was significantly improved, but then overall especially if you took that one outlier out, we’ve definitely seen improvement year-over-year.

Okay. Got it. Good. And then, you guys mentioned you had some good wins in healthcare. Are there any other verticals that are particularly strong in the fourth quarter or maybe you guys have any visibility in the next year, any verticals that you think might be stronger than others?

In the U.S., I think BFSI, the sort of banking and financials, is quite active in fiscal '18, in addition to healthcare.

Got it. Okay. And then, the SaaS growth margins have been improving, 73% this year, I guess just looking ahead maybe at the end of next year, can we still see some improvement there or is 73% kind of the ceiling, do you think in the near-term or any thoughts there would be helpful?

No, I think we can still expect to see slight improvements to that as we continue to build the scale and obviously shift more of our business to the SaaS model.

Okay, got it. Thank you.

That will conclude the Q&A session at this time. I will turn it back over to management for any additional remarks.

Well, thanks again everybody. Again, as I’ve stated, we are excited to enter this next stage for the company and look forward to providing you an update when we release our Q1 results. Thank you.

Once again, that does conclude today’s conference call. Thank you all for your participation.