Good day and welcome to the eGain Fiscal 2018 First Quarter Financial Results Conference Call. Today's conference is being recorded. 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 2018 first quarter 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, November 08, 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 Website 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. And a replay of this conference call will also be available at the Investor Relations section of eGain's Website. And now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.

Thank you, Jim, and hello, everyone. We're executing well with our new SaaS model and we're off to a good start for the year. We're pleased with the customer activity we are seeing. They uniformly seem to be excited about our new solutions and finally our new Head of Sales, Todd, has ramped up nicely and is starting to make some adjustments that we are working together and look forward to executing. Turning to the quarterly highlights, our SaaS revenue was up 16% year-over-year. We also saw a 7% improvement in our non-GAAP operating income and the cash we generated from operations was a strong $5.9 million up 142% from the first quarter a year ago. As a result, we are very pleased to end the quarter in a net cash position. It's a great way to mark the conclusion of our business model transition. Looking at our business, most of our new logos this quarter were in targeted verticals; finance, telco, healthcare and retail. All of our new wins as you know are now SaaS based. In terms of customer renewals and expansion, thanks to our customer success investment, we are now seeing a steady improvement in our renewal terms as well as retention rate. Looking at the broader market and upfront, the market is coming to us. The 2017 Gartner Magic Quadrant report on CRM customer service called out knowledge management, artificial intelligence, digital and analytics as new requirements. Digital continue to disrupt the phone-centric world of customer engagement. Gartner predicts that this year 0.5 million agent positions will transition from phone to digital channels. This is from an estimated worldwide agent population of about $14 million. So, you can see the market opportunity ahead. And now the new wave of AI is building on this digital foundation…

Thank you, Ashu and thanks for joining us today. We're pleased to start -- we're pleased with our start to fiscal 2018. For the first quarter, we reported health year-over-year growth in our SaaS revenue and total revenue excluding legacy license. Our non-GAAP operating margin improved by almost 700 basis points year-over-year. We generated $5.9 million in operating cash flow and we ended the quarter in a net cash position, the first time in over three years. Financially this puts us on solid footing and well-positioned to capitalize on this large market opportunity we see in front of us. Turning to our results for the first quarter, total revenue excluding legacy license was $14.4 million up 10% year-over-year. Our recurring revenue was $11.6 million up 7% year-over-year. As we noted on our last call, our Q4 recurring revenue included approximately $600,000 of catch-up items. Though excluding these items Q1 recurring revenue was up 6% sequentially. Recurring revenue accounted for 80% of total revenue in Q1 up from 74% in the comparable year ago quarter. Breaking out the recurring revenue components, SaaS revenue was $6.8 million up 16% year-over-year and the legacy support revenue was $4.9 million down 3% year-over-year. Our legacy license revenue was $188,000 down 89% year-over-year and our legacy license revenue accounted for only 1% of total revenue, which is down from 11% in the comparable year-ago quarter. Professional services revenue for the quarter was $2.7 million up 23% year-over-year. Now looking at our non-GAAP gross profit and gross margins, gross profit for the quarter was $9.3 million for a gross margin of 64%. This compares to a gross profit of $9.8 million or a gross margin of 66% in the comparable year ago quarter. If you look at the breakout of gross margin by revenue type, our…

Thank you. [Operator instructions] And we'll take our first question from Jeff Van Rhee with Craig-Hallum. Please go ahead.

Hey guys, this is Austin on for Jeff. Just a question around the pipeline, can you talk to me about what's changed over the last 90 to 180 days, maybe through the Cisco channel and maybe through the direct channel and just what's changed there?

So, for us, the pipeline is we have been looking at all three sources, which is historically, we've been looking at it more as separate sources of business as we had set it up about two years ago. One was the direct channel. The other was direct sales. The other was channel and the third was existing accounts. And that is something that Todd has now as I mentioned, he is looking to change that where we want to do more collaborative selling. So, we're going to be driving these opportunities let's say if it's an existing account, which is going through channel, you'll have enterprise sales and channel partners as well as the customer success team, all working these opportunities to maximize them. So as a result, what we're seeing is in the last month or so, that we've been changing that behavior. We are seeing more existing accounts that we have, we're developing opportunities in which is very, very good for us and then on the channel side, we are rolling out as we've talked in the past to our updated, the embedded OEM in the fiscal product and that's something that we have been driving through the go-to-market and so we're seeing more interest in the cloud-based version of our solution in complementary integration to the embedded OEM. So those are two interesting areas where we're seeing more demand.

Okay. Okay. And can you give any accrued sense of the growth in the pipeline?

That's not something that we have been talking about. So, no, I wouldn't be able to do that.

Okay. And I guess I have another question around just the typical duration of contracts. Have you seen any kind of change in the duration of contracts specific to new contracts or renewals over the last six to 12 months or so?

So, what we've seen is that of a standard three-year contract is really where we've settled in. I think that's both for new as well as renewals. I know this is something that we've made a concerted effort to move towards. So that's definitely the direction that it's going.

Okay. Great. Thank you.

And it appears, we have no further questions at this time. Ladies and gentlemen, this does conclude today's call and we thank you for your participation. You may now disconnect.