EGAIN CORP.
EGAIN CORP.
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eGain Reports Fiscal 2023 Third Quarter Financial Results

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SUNNYVALE, Calif., May 11, 2023 (GLOBE NEWSWIRE) -- eGain (Nasdaq: EGAN), a leading knowledge platform for customer engagement, today announced financial results for its fiscal 2023 third quarter ended March 31, 2023.

“Our North America renewal and expansion rates remained strong during the quarter,” said Ashu Roy, eGain’s CEO. “Despite the market slowdown, we signed several new customers near the end of the quarter, and expense controls enabled us to deliver bottom-line results that exceeded our guidance and street consensus.”

Fiscal 2023 Third Quarter Financial Highlights

  • Total revenue was $23.0 million, down 4% year over year (down 1% in constant currency).
  • SaaS revenue was $20.9 million, up 1% year over year (up 3% in constant currency).
  • GAAP net loss was $372,000, or $0.01 per share on a basic and diluted basis, compared to a GAAP net loss of $615,000, or $0.02 per share on a basic and diluted basis, in Q3 2022.
  • Non-GAAP net income was $1.1 million, or $0.03 per share on a basic and diluted basis, compared to non-GAAP net income of $2.4 million, or $0.08 per share on a basic basis and $0.07 per share on a diluted basis, in Q3 2022.
  • Cash provided by operations was $905,000, or an operating cash flow margin of 4%.
  • Total cash and cash equivalents were $81.3 million, compared to $70.5 million in Q3 2022.
  • Total shares purchased through repurchase program was approximately 145,000 at an average cost per share of $7.57, totaling $1.1 million.

Fiscal 2023 First Nine Months Financial Highlights

  • Total revenue was $73.4 million, up 7% year over year (up 11% in constant currency).
  • SaaS revenue was $66.9 million, up 11% year over year (up 14% in constant currency).
  • GAAP net loss was $492,000, or $0.02 per share on a basic and diluted basis, compared to GAAP net loss of $890,000, or $0.03 per share on a basic and diluted basis in Q3 2022.
  • Non-GAAP net income was $4.8 million, or $0.15 per share on a basic and diluted basis, compared to non-GAAP net income of $8.0 million, or $0.26 per share on a basic basis and $0.25 per share on a diluted basis in Q3 2022.
  • Cash provided from operations was $9.1 million, or an operating cash flow margin of 12%.

Fiscal 2023 Fourth Quarter Financial Guidance

For the fourth quarter of fiscal 2023 ending June 30, 2023, eGain expects:

  • Total revenue of between $23.4 million to $24.0 million.
  • Non-GAAP total revenue, adjusted for constant currency, of between $23.4 million to $24.0 million.
  • GAAP net income of $400,000 to $900,000, or $0.01 to $0.03 per share.
    • Includes stock-based compensation expense of approximately $1.5 million.
    • Includes depreciation and amortization of approximately $125,000.
  • Non-GAAP net income of $1.9 million to $2.4 million, or $0.06 to $0.07 per share.

Fiscal 2023 Financial Guidance

For the fiscal 2023 full year ending June 30, 2023, eGain expects:

  • Total revenue of between $96.8 million to $97.4 million.
  • Non-GAAP total revenue, adjusted for constant currency, of between $99.2 million to $99.8 million.
  • GAAP net loss of $300,000 to GAAP net income of $200,000, or $(0.01) to $0.01 per share.
    • Includes stock-based compensation expense of approximately $6.8 million.
    • Includes depreciation and amortization of approximately $600,000.
  • Non-GAAP net income of $6.5 million to $7.0 million, or $0.20 to $0.21 per share.

Guidance Assumption:

  • Weighted average shares outstanding are expected to be approximately 32.5 million for the fourth quarter of fiscal 2023 and 32.8 million for the full fiscal year 2023.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures as supplemental information relating to our operating results, including non-GAAP total revenue that is only adjusted for constant currency to provide better visibility into the underlying business trends and non-GAAP net income. The 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 income tax provision and believes the change in our income tax provision 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 presentation includes eGain’s projected non-GAAP total revenue, a non-GAAP measure used to describe eGain’s expected performance. We have not presented a reconciliation of this non-GAAP measure to eGain’s projected total revenue, 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 2023 third quarter results today via 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 1400048.

About eGain

eGain Knowledge Hub automates and orchestrates customer engagement across touch points. Powered by AI and analytics, our secure cloud solution delivers personalized digital-first experiences, quick business value, and easy innovation. 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 fourth quarter of fiscal 2023 and fiscal 2023 full year ending June 30, 2023; 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 fourth quarter of fiscal 2023 and fiscal 2023 full year ending June 30, 2023. The risks and uncertainties referred to above include, but are not limited to: risks to our business, operating results, financial condition, and prospects from the COVID-19 pandemic and related economic downturns, including but not limited to, its effect on customer demand for our products and services and the impact of potential delays in customer payments; 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, 2022 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.

MKR Investor Relations
Todd Kehrli or Jim Byers
Phone: 323-468-2300
Email: [email protected]


eGain Corporation
Condensed Consolidated Balance Sheets
(in thousands, except par value data)
(unaudited)
       
  March 31,  June 30, 
  2023     2022 
ASSETS      
Current assets:      
Cash and cash equivalents $81,306  $72,173 
Restricted cash  7   7 
Accounts receivable, less allowance for doubtful accounts of $169 and $123 as of March 31, 2023 and June 30, 2022, respectively  10,214   26,961 
Costs capitalized to obtain revenue contracts, net  1,359   1,487 
Prepaid expenses  2,614   2,612 
Other current assets  1,083   895 
Total current assets  96,583   104,135 
Property and equipment, net  676   831 
Operating lease right-of-use assets  3,086   3,850 
Costs capitalized to obtain revenue contracts, net of current portion  2,561   3,136 
Goodwill  13,186   13,186 
Other assets, net  1,157   871 
Total assets $117,249  $126,009 
       
LIABILITIES AND STOCKHOLDERS' EQUITY       
Current liabilities:      
Accounts payable $1,495  $1,706 
Accrued compensation  7,387   8,708 
Accrued liabilities  5,505   4,926 
Operating lease liabilities  967   1,044 
Deferred revenue  35,106   45,638 
Total current liabilities  50,460   62,022 
Deferred revenue, net of current portion  2,225   3,785 
Operating lease liabilities, net of current portion  1,906   2,537 
Other long-term liabilities  818   808 
Total liabilities  55,409   69,152 
       
Stockholders' equity:      
Common stock, par value $0.001 - authorized: 60,000 shares; outstanding: 32,022 and 31,930 shares as of March 31, 2023 and June 30, 2022, respectively.  32   32 
Additional paid-in capital  399,548   393,157 
Treasury stock, at cost: 145 and 0 common shares as of March 31, 2023 and June 30, 2022, respectively.  (1,101)   
Notes receivable from stockholders  (96)  (95)
Accumulated other comprehensive loss  (2,501)  (2,687)
Accumulated deficit  (334,042)  (333,550)
Total stockholders' equity  61,840   56,857 
Total liabilities and stockholders' equity $117,249  $126,009 


eGain Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
              
  Three Months Ended   Nine Months Ended
  March 31,   March 31, 
  2023     2022   2023     2022 
Revenue:             
Subscription $20,980  $21,728   $67,517  $63,179 
Professional services  2,033   2,176    5,859   5,268 
Total revenue  23,013   23,904    73,376   68,447 
Cost of revenue:             
Cost of subscription  5,393   3,803    13,795   10,811 
Cost of professional services  2,202   2,734    6,834   7,125 
Total cost of revenue  7,595   6,537    20,629   17,936 
Gross profit  15,418   17,367    52,747   50,511 
Operating expenses:             
Research and development  6,687   6,193    20,749   17,988 
Sales and marketing  6,837   8,693    25,191   24,252 
General and administrative  2,406   2,957    7,776   8,687 
Total operating expenses  15,930   17,843    53,716   50,927 
Loss from operations  (512)  (476)   (969)  (416)
Interest income  818   3    1,633   7 
Other (expense) income, net  (245)  200    20   182 
Income (Loss) before income tax provision  61   (273)   684   (227)
Provision for income taxes  (433)  (342)   (1,176)  (663)
Net loss $(372) $(615)  $(492) $(890)
Per share information:             
Loss per share:             
Basic $(0.01) $(0.02)  $(0.02) $(0.03)
Diluted $(0.01) $(0.02)  $(0.02) $(0.03)
Weighted-average shares used in computation:             
Basic  32,122   31,647    32,024   31,451 
Diluted  32,122   31,647    32,024   31,451 
              
Summary of stock-based compensation included in costs and expenses above:             
Cost of revenue $371  $825   $1,213  $2,349 
Research and development  509   783    1,633   2,310 
Sales and marketing  174   580    997   1,840 
General and administrative  393   820    1,440   2,437 
Total stock-based compensation $1,447  $3,008   $5,283  $8,936 


eGain Corporation
GAAP to Non-GAAP Reconciliation Table
(in thousands, except per share data)
(unaudited)
             
  Three Months Ended
March 31,
 Nine Months Ended
March 31,
  2023  2022  2023  2022 
Loss from operations $(512) $(476) $(969) $(416)
Add:            
Stock-based compensation  1,447   3,008   5,283   8,936 
Non-GAAP income from operations $935  $2,532  $4,314  $8,520 
             
Net loss $(372) $(615) $(492) $(890)
Add:            
Stock-based compensation  1,447   3,008   5,283   8,936 
Non-GAAP net income $1,075  $2,393  $4,791  $8,046 
Per share information:            
Non-GAAP earnings per share:            
Basic $0.03  $0.08  $0.15  $0.26 
Diluted $0.03  $0.07  $0.15  $0.25 
Weighted-average shares used in computation:            
Basic  32,122   31,647   32,024   31,451 
Diluted  32,968   32,932   32,909   32,827 


eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
             
  Three Months Ended
March 31,
 Growth Rates Constant Currency
Growth Rates [1]
  2023  2022       
Revenue:            
SaaS revenue $20,854  $20,686   1%  3%
Legacy revenue  126   1,042   (88%)  (87%)
GAAP subscription  20,980   21,728   (3%)  (1%)
GAAP professional services  2,033   2,176   (7%)  (5%)
Total GAAP revenue $23,013  $23,904   (4%)  (1%)
             
SaaS and professional services revenue:            
SaaS revenue $20,854  $20,686   1%  3%
Professional Services  2,033   2,176   (7%)  (5%)
Total SaaS and professional services revenue $22,887  $22,862   0%  2%
             
Cost of Revenue:            
GAAP subscription $5,393  $3,803       
Non-GAAP subscription $5,393  $3,803       
             
GAAP professional services $2,202  $2,734       
Add back:            
Stock-based compensation  (371)  (825)      
Non-GAAP professional services $1,831  $1,909       
             
GAAP total cost of revenue $7,595  $6,537       
Add back:            
Stock-based compensation  (371)  (825)      
Non-GAAP total cost of revenue $7,224  $5,712   26%  29%
             
Gross Profit:            
Non-GAAP subscription $15,587  $17,925       
Non-GAAP professional services  202   267       
Non-GAAP gross profit $15,789  $18,192   (13%)  (11%)
             
Operating expenses:            
GAAP research and development $6,687  $6,193       
Add back:            
Stock-based compensation expense  (509)  (783)      
Non-GAAP research and development $6,178  $5,410   14%  17%
             
GAAP sales and marketing $6,837  $8,693       
Add back:            
Stock-based compensation expense  (174)  (580)      
Non-GAAP sales and marketing $6,663  $8,113   (18%)  (15%)
             
GAAP general and administrative $2,406  $2,957       
Add back:            
Stock-based compensation expense  (393)  (820)      
Non-GAAP general and administrative $2,013  $2,137   (6%)  (3%)
             
GAAP operating expenses $15,930  $17,843       
Add back:            
Stock-based compensation expense  (1,076)  (2,183)      
Non-GAAP operating expenses $14,854  $15,660   (5%)  (2%)

[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 Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
             
  Nine Months Ended
March 31,
 Growth Rates Constant Currency
Growth Rates [1]
  2023  2022       
Revenue:            
SaaS revenue $66,911  $60,331   11%  14%
Legacy revenue  606   2,848   (79%)  (74%)
GAAP subscription  67,517   63,179   7%  10%
GAAP professional services  5,859   5,268   11%  15%
Total GAAP revenue $73,376  $68,447   7%  11%
             
SaaS and professional services revenue:            
SaaS revenue $66,911  $60,331   11%  14%
Professional Services  5,859   5,268   11%  15%
Total SaaS and professional services revenue $72,770  $65,599   11%  14%
             
Cost of Revenue:            
GAAP subscription $13,795  $10,811       
Non-GAAP subscription $13,795  $10,811       
             
GAAP professional services $6,834  $7,125       
Add back:            
Stock-based compensation  (1,213)  (2,349)      
Non-GAAP professional services $5,621  $4,776       
             
GAAP total cost of revenue $20,629  $17,936       
Add back:            
Stock-based compensation  (1,213)  (2,349)      
Non-GAAP total cost of revenue $19,416  $15,587   25%  28%
             
Gross Profit:            
Non-GAAP subscription $53,722  $52,368       
Non-GAAP professional services  238   492       
Non-GAAP gross profit $53,960  $52,860   2%  6%
             
Operating expenses:            
GAAP research and development $20,749  $17,988       
Add back:            
Stock-based compensation expense  (1,633)  (2,310)      
Non-GAAP research and development $19,116  $15,678   22%  25%
             
GAAP sales and marketing $25,191  $24,252       
Add back:            
Stock-based compensation expense  (997)  (1,840)      
Non-GAAP sales and marketing $24,194  $22,412   8%  11%
             
GAAP general and administrative $7,776  $8,687       
Add back:            
Stock-based compensation expense  (1,440)  (2,437)      
Non-GAAP general and administrative $6,336  $6,250   1%  4%
             
GAAP operating expenses $53,716  $50,927       
Add back:            
Stock-based compensation expense  (4,070)  (6,587)      
Non-GAAP operating expenses $49,646  $44,340   12%  15%

[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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