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eGain Announces Second Quarter 2025 Financial Results

1. eGain reported Q2 revenue of $22.4 million, down 6% year-over-year. 2. GAAP net income was $671,000, lower than $2.2 million last year. 3. Annual recurring revenue grew 17% year-over-year from AI customers. 4. Expecting Q3 revenue between $21.0 million and $21.5 million. 5. Lowering full year revenue guidance to $88.5 million to $90.0 million.

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Why Neutral?

While eGain's recurring revenue is increasing, overall revenue has declined. Past examples show similar mixed guidance can lead to stock stagnation.

How important is it?

The article discusses critical financial results and guidance affecting investor perceptions.

Why Short Term?

The immediate market reaction may stem from current quarterly results. However, the longer-term outlook remains uncertain due to revised guidance.

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NASDAQ: EGAN
February 13, 2025 16:05 ET  | Source: eGain Corporation SUNNYVALE, Calif., Feb. 13, 2025 (GLOBE NEWSWIRE) -- eGain (Nasdaq: EGAN), the AI knowledge management platform for service, today announced financial results for its fiscal 2025 second quarter ended December 31, 2024. “We won several new enterprise logos in the second quarter,” said Ashu Roy, eGain’s CEO. “As a result, our annual recurring revenue from AI Knowledge Hub customers grew by 17% year over year and 5% sequentially. Customer service automation is a strategic focus for AI investment in Global 1000. As a result, we are seeing a growing number of seven-figure ARR deals in our sales pipeline.” Fiscal 2025 Second Quarter Financial Highlights Total revenue was $22.4 million, down 6% year over year.GAAP net income was $671,000, or $0.02 per share on a basic and diluted basis, compared to a GAAP net income of $2.2 million, or $0.07 per share on a basic and diluted basis, in Q2 2024.Non-GAAP net income was $1.3 million, or $0.05 per share on a basic basis and $0.04 per share on a diluted basis, compared to a non-GAAP net income of $3.4 million, or $0.11 per share on a basic and diluted basis, in Q2 2024.Cash provided by operating activities was $6.4 million, or an operating cash flow margin of 29%.Total cash and cash equivalents were $70.5 million, compared to $86.8 million in Q2 2024.Adjusted EBITDA was $1.6 million, compared to $3.8 million in Q2 2024.Total shares purchased through the repurchase program were approximately 421,000 at an average cost per share of $5.73 totaling $2.4 million. Fiscal 2025 First Six Months Financial Highlights Total revenue was $44.2 million, down 8% year over year.GAAP net income was $1.3 million, or $0.05 per share on a basic and diluted basis, compared to a GAAP net income of $4.8 million, or $0.15 per share on a basic and diluted basis, in the same period last year.Non-GAAP net income was $2.6 million, or $0.09 per share on a basic and diluted basis, compared to a non-GAAP net income of $7.2 million, or $0.23 per share on a basic basis and $0.22 per share on a diluted basis, in the same period last year.Adjusted EBITDA was $3.0 million, compared to $6.6 million in the same period last year.Cash provided by operating activities was $7.4 million, or an operating cash flow margin of 17%. Fiscal 2025 Third Quarter Financial Guidance For the third quarter of fiscal 2025 ending March 31, 2025, eGain expects: Total revenue of between $21.0 million to $21.5 million.GAAP net loss of $300,000 to $800,000, or $0.01 to $0.03 per share. Includes stock-based compensation expense of approximately $800,000.Includes depreciation and amortization of approximately $80,000. Non-GAAP net income of breakeven to $500,000, or $0.00 to $0.02 per share. Fiscal 2025 Financial Guidance For the fiscal 2025 full year ending June 30, 2025, eGain is updating its guidance as follows: eGain is lowering its total revenue guidance range to $88.5 million to $90.0 million.eGain is raising its GAAP net income guidance range to $1.1 million to $1.7 million, or $0.04 to $0.06 per share. Includes stock-based compensation expense of approximately $3.0 million.Includes depreciation and amortization of approximately $350,000. eGain is lowering its non-GAAP net income range to $4.1 million to $4.7 million, or $0.14 to $0.16 per share. Guidance Assumption: Weighted average shares outstanding are expected to be approximately 28.5 million for the third quarter of fiscal 2025 and 28.6 million for the full fiscal year 2025. Non-GAAP Financial Measures This press release includes certain non-GAAP financial measures as supplemental information relating to eGain’s operating results, including adjusted EBITDA and non-GAAP net income. Adjusted EBITDA is defined as net income, adjusted for the impact of depreciation and amortization, stock-based compensation expense, interest income, provision for income taxes, other expense, net and severance and related charges. Non-GAAP net income measure is adjusted for stock-based compensation expense. eGain’s management has analyzed the effect of these non-GAAP adjustments on our provision for income taxes and believes the change in our provision for income taxes would be minimal due to these non-GAAP adjustments being attributed to the U.S. jurisdiction where it has recorded full valuation allowance against the deferred taxes. Non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, or GAAP, and may be different from non-GAAP measures used by other companies. eGain’s management uses these non-GAAP measures to compare our performance to that of prior periods for trend analysis and for budgeting and planning purposes. eGain believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other software companies, many of which present similar non-GAAP financial measures to investors, and that it allows for greater transparency with respect to key metrics used by management in our financial and operational decision-making. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. eGain urges investors to review the reconciliation and not to rely on any single financial measure to evaluate our business. In addition, this press release includes eGain’s projected non-GAAP net income for future periods, a non-GAAP measure used to describe eGain’s expected performance. We have not presented a reconciliation to eGain’s projected net income, the most comparable GAAP financial measure, because the reconciliation could not be prepared without unreasonable effort. The information necessary to prepare the reconciliation is not available on a forward-looking basis and cannot be accurately predicted. The unavailable information could have a significant impact on the calculation of the comparable GAAP financial measure. Conference Call Information eGain will discuss its fiscal 2025 second quarter results today via a teleconference at 2:00 p.m. Pacific Time. To access the live call, dial 844-481-2704 (U.S. toll free) or +1 412-317-0660 (International) and ask to join the eGain earnings call. A live and archived webcast of the call will also be accessible on the “Investor relations” section of eGain’s website at www.egain.com. In addition, a phone replay of the conference call will be available starting two hours after the call and will remain in effect for one week. To access the phone replay, dial 877-344-7529 (U.S. toll free) or +1 412-317-0088 (International). The replay access code is 6223725. About eGain eGain AI Knowledge Hub helps businesses improve experience and reduce cost by delivering trusted, consumable answers. Visit www.eGain.com for more info. Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation: our financial guidance for the third quarter of fiscal 2025 and fiscal 2025 full year ending June 30, 2025; expectations regarding demand for our offerings; growth trends in our sales pipeline; our strategic focus; and our market opportunity. The achievement or success of the matters covered by such forward-looking statements, including future financial guidance, involves risks, uncertainties, and assumptions, many of which involve factors or circumstances that are beyond our control. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our actual results could differ materially from the results expressed or implied by the forward-looking statements we make, including our ability to achieve our targets for the third quarter of fiscal 2025 and fiscal 2025 full year ending June 30, 2025. The risks and uncertainties referred to above include, but are not limited to: risks to our business, operating results, and financial condition; the pace of technological advancements in generative AI and the adaptability of our services to incorporate these advancements; market demand for AI-enabled solutions; risks associated with new product releases and new services and products features; risks that customer demand may fluctuate or decrease; risks that we are unable to collect unbilled contractual commitments, particularly in the current economic environment; risks that our lengthy sales cycles may negatively affect our operating results; currency risks; our ability to capitalize on customer engagement; risks related to our reliance on a relatively small number of customers for a substantial portion of our revenue; our ability to compete successfully and manage growth; our ability to develop and expand strategic and third party distribution channels; risks related to our international operations; our ability to continue to innovate; our strategy of making investments in sales to drive growth; general political or destabilizing events, including war, intensified international hostilities, conflict or acts of terrorism; the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including those addressing data privacy, cyber-security and cross-border data transfers; and other risks detailed from time to time in eGain’s public filings, including eGain’s annual report on Form 10-K for the fiscal year ended June 30, 2024 and subsequent reports filed with the Securities and Exchange Commission, which are available on the Securities and Exchange Commission’s website at www.sec.gov. These forward-looking statements are based on current expectations and speak only as of the date hereof. We assume no obligation and do not intend to update these forward-looking statements, except as required by law. eGain, the eGain logo, and all other eGain product names and slogans are trademarks or registered trademarks of eGain Corporation in the United States and/or other countries. All other company names and products mentioned in this release may be trademarks or registered trademarks of the respective companies. Investor RelationsTodd Kehrli or Jim ByersPondelWilkinson, Inc.tkehrli@pondel.comjbyers@pondel.com  eGain CorporationCondensed Consolidated Balance Sheets(in thousands, except par value data)(unaudited)   December 31,  June 30,   2024     2024 ASSETS      Current assets:      Cash and cash equivalents $70,531  $70,003 Restricted cash  8   8 Accounts receivable, less provision for credit losses of $67 and $59 as of December 31, 2024 and June 30, 2024, respectively  15,795   31,731 Costs capitalized to obtain revenue contracts, net  1,231   1,272 Prepaid expenses  2,230   2,915 Other current assets  855   1,195 Total current assets  90,650   107,124 Property and equipment, net  515   441 Operating lease right-of-use assets  3,834   3,811 Costs capitalized to obtain revenue contracts, net of current portion  1,645   1,779 Goodwill  13,186   13,186 Other assets, net  1,427   1,511 Total assets $111,257  $127,852        LIABILITIES AND STOCKHOLDERS' EQUITY       Current liabilities:      Accounts payable $1,838  $2,725 Accrued compensation  6,227   7,642 Accrued liabilities  2,771   5,078 Operating lease liabilities  1,089   1,179 Deferred revenue  37,358   45,989 Total current liabilities  49,283   62,613 Deferred revenue, net of current portion  3,008   3,280 Operating lease liabilities, net of current portion  2,790   2,592 Other long-term liabilities  918   871 Total liabilities  55,999   69,356        Stockholders' equity:      Common stock, par value $0.001 - authorized: 60,000 shares; issued: 33,110 and 32,698 shares; outstanding: 28,481 and 29,160 shares as of December 31, 2024 and June 30, 2024, respectively  33   33 Additional paid-in capital  409,551   407,416 Treasury stock, at cost: 4,629 and 3,538 shares of common stock as of December 31, 2024 and June 30, 2024, respectively  (30,025)  (23,031)Notes receivable from stockholders  (21)  (21)Accumulated other comprehensive loss  (1,942)  (2,240)Accumulated deficit  (322,338)  (323,661)Total stockholders' equity  55,258   58,496 Total liabilities and stockholders' equity $111,257  $127,852   eGain CorporationCondensed Consolidated Statements of Operations(in thousands, except per share data)(unaudited)   Three Months Ended   Six Months Ended   December 31,   December 31,   2024     2023   2024     2023 Revenue:             SaaS $20,847  $21,996   $40,667  $44,319 Professional services  1,542   1,819    3,521   3,672 Total revenue  22,389   23,815    44,188   47,991 Cost of revenue:             Cost of SaaS  4,626   5,109    9,148   10,156 Cost of professional services  2,054   1,881    4,198   3,672 Total cost of revenue  6,680   6,990    13,346   13,828 Gross profit  15,709   16,825    30,842   34,163 Operating expenses:             Research and development  7,708   6,660    15,129   13,292 Sales and marketing  5,251   5,349    10,011   11,453 General and administrative  2,100   2,391    4,543   5,577 Total operating expenses  15,059   14,400    29,683   30,322 Income from operations  650   2,425    1,159   3,841 Interest income  661   982    1,432   1,931 Other expense, net  (431)  (697)   (571)  (87)Income before income tax provision  880   2,710    2,020   5,685 Income tax provision  (209)  (525)   (697)  (904)Net income $671  $2,185   $1,323  $4,781 Per share information:             Earnings per share:             Basic $0.02  $0.07   $0.05  $0.15 Diluted $0.02  $0.07   $0.05  $0.15 Weighted-average shares used in computation:             Basic  28,573   31,179    28,622   31,329 Diluted  29,059   31,843    29,176   31,991               Summary of stock-based compensation included in costs and expenses above:             Cost of revenue $232  $284   $462  $581 Research and development  74   367    251   764 Sales and marketing  114   197    179   356 General and administrative  202   347    362   702 Total stock-based compensation $622  $1,195   $1,254  $2,403   eGain CorporationGAAP to Non-GAAP Reconciliation Table(in thousands, except per share data)(unaudited)   Three Months Ended  Six Months Ended   December 31,  December 31,   2024 2023 2024 2023Income from operations $650  $2,425  $1,159  $3,841 Add:                Stock-based compensation  622   1,195   1,254   2,403 Non-GAAP income from operations $1,272  $3,620  $2,413  $6,244    Three Months Ended  Six Months Ended   December 31,  December 31,   2024 2023 2024 2023Net income $671  $2,185  $1,323  $4,781 Add:                Stock-based compensation  622   1,195   1,254   2,403 Non-GAAP net income $1,293  $3,380  $2,577  $7,184 Per share information:                Non-GAAP earnings per share:                Basic $0.05  $0.11  $0.09  $0.23 Diluted $0.04  $0.11  $0.09  $0.22 Weighted-average shares used in computation:                Basic  28,573   31,179   28,622   31,329 Diluted  29,059   31,843   29,176   31,991    Three Months Ended  Six Months Ended   December 31,  December 31,   2024  2023  2024  2023 Net income $671  $2,185  $1,323  $4,781 Add:            Depreciation and amortization  82   97   175   204 Stock-based compensation expense  622   1,195   1,254   2,403 Interest income  (661)  (982)  (1,432)  (1,931)Provision for income taxes  209   525   697   904 Other expense, net  431   697   571   87 Severance and related charges  278   54   401   135 Adjusted EBITDA $1,632  $3,771  $2,989  $6,583   eGain CorporationOther GAAP to Non-GAAP Supplemental Financial Information(in thousands)(unaudited)   Three Months EndedDecember 31, Growth Rates Constant CurrencyGrowth Rates [1]  2024  2023     Revenue:          GAAP SaaS $20,847  $21,996  (5%) (6%)GAAP professional services  1,542   1,819  (15%) (16%)Total GAAP revenue $22,389  $23,815  (6%) (7%)           Cost of Revenue:          GAAP SaaS $4,626  $5,109     Add back:          Non-GAAP SaaS $4,626  $5,109                GAAP professional services $2,054  $1,881     Add back:          Stock-based compensation  (232)  (284)    Non-GAAP professional services $1,822  $1,597                GAAP total cost of revenue $6,680  $6,990     Add back:          Stock-based compensation  (232)  (284)    Non-GAAP total cost of revenue $6,448  $6,706  (4%) (6%)           Gross Profit:          Non-GAAP SaaS $16,221  $16,887     Non-GAAP professional services  (280)  222     Non-GAAP gross profit $15,941  $17,109  (7%) (7%)           Operating expenses:          GAAP research and development $7,708  $6,660     Add back:          Stock-based compensation expense  (74)  (367)    Non-GAAP research and development $7,634  $6,293  21% 21%           GAAP sales and marketing $5,251  $5,349     Add back:          Stock-based compensation expense  (114)  (197)    Non-GAAP sales and marketing $5,137  $5,152  (0%) (1%)           GAAP general and administrative $2,100  $2,391     Add back:          Stock-based compensation expense  (202)  (347)    Non-GAAP general and administrative $1,898  $2,044  (7%) (8%)           GAAP operating expenses $15,059  $14,400     Add back:          Stock-based compensation expense  (390)  (911)    Non-GAAP operating expenses $14,669  $13,489  9% 8% [1] Constant currency growth rates presented are derived from converting the current period results for entities reporting in currencies other than U.S. Dollars into U.S. Dollars at the exchange rates in effect during the prior period presented rather than the actual exchange rates in effect during the current period.   eGain CorporationOther GAAP to Non-GAAP Supplemental Financial Information(in thousands)(unaudited)   Six Months EndedDecember 31, Growth Rates Constant CurrencyGrowth Rates [1]  2024  2023     Revenue:          GAAP SaaS $40,667  $44,319  (8%) (9%)GAAP professional services  3,521   3,672  (4%) (5%)Total GAAP revenue $44,188  $47,991  (8%) (9%)           Cost of Revenue:          GAAP SaaS $9,148  $10,156     Add back:          Non-GAAP SaaS $9,148  $10,156                GAAP professional services $4,198  $3,672     Add back:          Stock-based compensation  (462)  (581)    Non-GAAP professional services $3,736  $3,091                GAAP total cost of revenue $13,346  $13,828     Add back:          Stock-based compensation  (462)  (581)    Non-GAAP total cost of revenue $12,884  $13,247  (3%) (5%)           Gross Profit:          Non-GAAP SaaS $31,519  $34,163     Non-GAAP professional services  (215)  581     Non-GAAP gross profit $31,304  $34,744  (10%) (10%)           Operating expenses:          GAAP research and development $15,129  $13,292     Add back:          Stock-based compensation expense  (251)  (764)    Non-GAAP research and development $14,878  $12,528  19% 19%           GAAP sales and marketing $10,011  $11,453     Add back:          Stock-based compensation expense  (179)  (356)    Non-GAAP sales and marketing $9,832  $11,097  (11%) (12%)           GAAP general and administrative $4,543  $5,577     Add back:          Stock-based compensation expense  (362)  (702)    Non-GAAP general and administrative $4,181  $4,875  (14%) (15%)           GAAP operating expenses $29,683  $30,322     Add back:          Stock-based compensation expense  (792)  (1,822)    Non-GAAP operating expenses $28,891  $28,500  1% 1% [1] Constant currency growth rates presented are derived from converting the current period results for entities reporting in currencies other than U.S. Dollars into U.S. Dollars at the exchange rates in effect during the prior period presented rather than the actual exchange rates in effect during the current period.

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