Good afternoon, everyone. Welcome to the Altigen Communications first quarter fiscal year 2023 results. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Brian Siegel. Sir, the floor is yours.
Thank you. Good afternoon. Welcome to our first quarter of fiscal 2023 earnings call. Joining me today is Jeremiah Fleming, President and Chief Executive Officer, and Carolyn David, Vice President of Finance. Earlier this afternoon, we issued an earnings release reporting financial results for the period ended December 31st, 2022. This release can be found on our IR website at www.altigen.com. Please note that we have added some supplementary tables with revenue breakouts and metrics. We believe this will help improve transparency into our business. We will continue to evaluate additional metrics as our new products begin to contribute to our results. We've also arranged a replay of this call, which may be accessed by phone. This replay will be available approximately an hour after the call's completion and remain in effect for 90 days.
The call can also be accessed from the IR portion of our website. As a reminder, today's call may contain forward-looking information regarding future events and the future financial performance of the company. We wish to caution you that such statements are just predictions and actual results may differ materially due to certain risks and uncertainties that pertain to our business. We refer you to the financial disclosures filed periodically by the company with the OTCQB over-the-counter market, specifically the company's audited annual report for the fiscal year ended September 30, 2022, as well as the safe harbor statement in the press release the company issued today. These documents contain important risk factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. Altigen assumes no obligation to revise any forward-looking information contained in today's call.
During this call, we will also be referring to certain non-GAAP financial measures. These non-GAAP measures are not superior to or a replacement for the comparable GAAP measure. We believe these measures will help investors gain a more complete understanding of results. A reconciliation of GAAP to non-GAAP measures and additional disclosures regarding these measures are included in today's press release. I'd now like to turn the call over to Jeremiah Fleming for opening remarks. Jerry?
Thanks, Brian. Good afternoon, everyone. Thank you for joining us on today's call. I'm gonna begin the call today with a review of our first quarter business, followed by a general business update. After that, I'll turn the call over to Carolyn to review our financials in more detail. As we reported earlier today, revenue for our fiscal first quarter was approximately $3.5 million with a small non-GAAP profit. Expenses in the first quarter were roughly $400,000 higher compared to the same period a year ago, due primarily to higher headcount expenses resulting from our acquisition of ZAACT Consulting. We did expect the business consolidation to take anywhere from 6-12 months to complete. This consolidation, we believe, will largely be accomplished in this current quarter, which now will result in a lower expense rate going forward.
We also experienced a small quarter-over-quarter decline in cloud revenues, but I do wanna point out that nearly 70% of that total was due to lower SIP Trunk revenues, which we attribute to traditional seasonality in this business due to the holidays, combined with a bit of churn in our legacy cloud PBX customer base, which we do believe occurred because some of our customers simply couldn't wait for our new MaxCloud UCaaS platform to be fully available. As we've discussed on prior calls, MaxCloud does represent a significant upgrade to our legacy MaxCS hosted PBX solution.
MaxCloud introduces a complete new suite of unified communications features, including real-time presence, instant messaging, desktop sharing, HD video conferencing, and new mobile apps, none of which were available in our legacy MaxCS hosted PBX, and all of which are required by today's modern businesses, and which we do now have in the MaxCloud platform. In addition, MaxCloud is a complete multi-tenant solution, which enables Altigen to host thousands of customers in a single geographically redundant platform. This not only provides much greater scalability and reliability compared to our MaxCS PBX platform, it also greatly reduces our data center and our cloud administration expenses. We are first targeting for conversion our approximately 500 on-premises legacy MaxCS PBX customers, since they represent the highest incremental revenue potential.
Of course, we also wanna make sure that our current base of MaxCS-hosted PBX customers are taken care of, and we will prioritize the migration of these customers to the new MaxCloud platform based on their desire to add the MaxCloud UC functionality to their environment. As of the end of December, we had approximately 10 customers on our new MaxCloud UC platform, which was roughly split evenly between current and new customers. The MaxCloud UC platform has also now been fully deployed for 3 Fiserv customers, 2 of which who have also deployed our FrontStage Contact Center. Additionally, a third customer has also deployed FrontStage Contact Center on a standalone basis. MaxCloud and FrontStage are both new technologies to Fiserv. As such, they are still ramping up Fiserv, meaning they, still ramping up in terms of both sales and support.
However, each deployment brings Fiserv further down the learning curve, and as they move down that curve, the momentum will continue to build throughout the year. In addition to the net new customers I just referenced, Fiserv is also targeting their base of approximately 100 legacy MaxCS cloud and on-premise customers for migration to both MaxCloud and the Fiserv UCaaS platform. All of these customers represent incremental revenue to Altigen in terms of both additional UCaaS revenue, CCaaS revenue, or in most cases, both CCaaS and UCaaS. During the fiscal first quarter, we also rolled out our first Fiserv secure SIP customer. This new service authenticates callers by verifying the caller's ID and telephone device, which reduces the possibility of fraudulent callers impersonating a legitimate customer in order to gain access to their account.
Because the secure SIP service requires integration to multiple Fiserv core processing systems, we will be doing a phased rollout as each core system is supported. Ultimately, the plan for this service is to be available for all 6,000 Fiserv customers. The good news is that things are progressing nicely with Fiserv across the board. All of our new Fintech solutions that I referenced have now been deployed, at least for initial customers. The plan, in conjunction with Fiserv, is to continue to add customers and additional value-add applications going forward for those customers. Turning to our Microsoft Teams solutions, we are making headway. While we do have a number of solutions for Microsoft Teams, our most significant opportunity still remains with CoreInteract, so again, I will focus on that for today's call.
As a reminder, CoreInteract is the first true digital customer engagement platform specifically designed for Microsoft Teams. Since the inaugural release of what I'll call the basic CoreInteract platform, we have been working hard to add additional features and applications to CoreInteract based on feedback from our customers. I will point out that as we prepared for our initial release of CoreInteract, my expectation was that 80% of the CoreInteract deployments would be for customer-facing enterprise employees, and 20% of those would be for departmental call centers, such as the IT help desk, customer service center, and the like. As we went to market, what we found is that the customer demand has been that 80% of the interest is in departmental call centers and 20% for enterprise customer-facing employees. Okay?
When we translate that to business requirements, what this means is that we had to add more advanced call center features and applications much sooner than expected to CoreInteract. Many of these capabilities were first made available to customers in a major new release that we announced earlier this month. After successful deployments for these existing customers, we've now started a number of new proof of concept or pilots with new customers as well. We still have an extensive product roadmap loaded with new and exciting features, but we do have the base product that we need in order to advance opportunities. Regarding CoreInteract, we do have well over 20 customers using the product in production, many of which are now starting small, but they have plans to extend the use of CoreInteract throughout the enterprise.
In other words, this is a true land and expand opportunity with CoreInteract. Our fiscal first quarter revenue for CoreInteract was small as a result, but that does provide us with a foundation that we can continue to build on as our enterprise customers continue to expand CoreInteract, you know, throughout their businesses. Finally, regarding our services business, as I mentioned at the top of the call, this quarter we expect the consolidation of Altigen and ZAACT Consulting to be pretty much complete. The integration of our accounting and billing functions are done. We've also now integrated our sales, marketing, support, and development organizations to better leverage our respective individual areas of expertise. Everything that has been done has been designed not only to benefit the synergies from our two companies, but also to enable us to drive additional growth in both software and services revenue.
With that, I'll now turn the call to Carolyn to discuss the financial results. Carolyn?
Thanks, Jerry, and hello, everyone. For our 2023 fiscal first quarter, we reported total revenue of $3.5 million, up 27% compared to the same period a year ago. Total cloud services revenue for Q1 was $1.8 million, compared to $1.9 million in Q1 last year. Professional services and other revenue increased 751% to $1.2 million compared to the prior year quarter, reflecting the ZAACT acquisition. Our legacy and on-premise software assurance and software license revenue decreased 32%. Gross margin was 64% compared to 72% in Q1 last year, representing a decrease of approximately 800 basis points. This decrease was primarily the result of a mix shift towards higher professional services revenue resulting from the ZAACT acquisition.
GAAP operating expenses for the quarter totaled $2.4 million, 22% higher than the comparable period last year. On a non-GAAP basis, operating expenses totaled $2.3 million for Q1 compared to $1.9 million last year, representing an increase of roughly 26%. Excluding the impact of ZAACT, both our GAAP and non-GAAP operating expenses would have been slightly lower when compared to Q1 last fiscal year. GAAP net loss for Q1 was $187,000 or -$0.01 per diluted share, compared to GAAP net income of $11,000 or $0.00 per diluted share in the prior year quarter. GAAP net loss included $200,000 in depreciation and amortization, as well as $31,000 in stock-based compensation expenses that was adjusted out of our non-GAAP net income of $44,000 or break-even diluted EPS.
Let's turn to liquidity. We ended Q1 with $2.9 million in cash and cash equivalents, down 11% compared to the preceding quarter. Working capital was $2.1 million compared to $2.3 million in the prior year quarter, representing a decrease of roughly 7%. With that, this concludes the financial summary. I'm going to now turn the call back to Jerry. Jerry?
Okay, Carolyn. Thank you. In conclusion, we finally have all of our new platforms deployed and running in customer environments. Our business is stable and poised for growth. In addition, as a result of the completion of our business integration with ZAACT, we do expect to see reduced expenses and growing profitability going forward. We have the team in place. We have the products in place. We have the game plan in place. Looking forward, our focus is squarely on driving profitable revenue growth. I'll now turn the call back to the operator for Q&A. Operator?
Certainly. At this time, we'll be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask, though, while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Please hold while we poll for questions. There are no questions in the queue at this time.
All right, operator, I'll take it back then. I would like to thank everyone for joining the call. I do believe we are on the right path here, and we look forward to updating you on our next quarterly earnings call. Thanks again.
Thank you, everyone.
Thank you.
Thank you. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.