EGAIN Corp

Previous wording

eGain automates customer engagement with an innovative knowledge hub, powered by conversational and generative AI and analytics. We sell mostly to large enterprises across financial services, telecommunications, retail, government, healthcare, and utilities seeking to better serve customers at scale by eliminating content silos and helping to automate customer engagement processes of all levels of complexity that may also require regulatory compliance. With our mantra ofAX + BX + CX = DX™, we guide clients to effortless digital experience (DX) by holistically optimizing agent experience (AX), business experience (BX), and customer experience (CX). Leading brands use eGain’s SaaS solution to improve customer satisfaction, empower agents, reduce service cost, and boost sales. We are headquartered in the United States. We also operate in the United Kingdom and India.

Current wording

eGain automates customer engagement with an AI knowledge hub SaaS solution. We sell to enterprises who want to better serve customers at scale by delivering trusted answers across self-service, contact centers, and field staff. True to our mantra ofAX + BX + CX = DX™, our AI knowledge hub orchestrates effortless Digital eXperience (DX) as it assists Agent eXperience (AX), empowers Business eXperience (BX) and assures Customer eXperience (CX). Many global brands use eGain to improve experience and reduce costs. We are headquartered in the Sunnyvale, California, United States. We also operate in the United Kingdom and India

Previous wording

Non-GAAP operating income is defined as income (loss) from operations, adjusted for the impact of stock-based compensation expense.

Current wording

Non-GAAP operating income is defined as income from operations, adjusted for the impact of stock-based compensation expense.

Previous wording

Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations; and (ii) such expenses can vary significantly between periods as a result of the timing of new stock-based awards. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in the United States of America (GAAP).

Current wording

Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations; and (ii) such expenses can vary significantly between periods as a

Previous wording

The following table presents a reconciliation of GAAP income (loss) from operations to non-GAAP income from operations for each of the following periods:

Current wording

The following table presents a reconciliation of GAAP income from operations to non-GAAP income from operations for each of the following periods:

Previous wording

We believe that the assumptions and estimates, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our condensed consolidated financial statements, associated with revenue recognition, stock-based compensation, allowance for doubtful accounts related to estimated credit losses, the valuation of goodwill, the valuation of deferred tax allowance, and legal contingencies have the greatest potential impact on our condensed consolidated financial statements. We evaluate these estimates on an ongoing basis. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

We believe that the assumptions and estimates, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our condensed consolidated financial statements, associated with revenue recognition, stock-based compensation, provision for credit losses, the valuation of goodwill, the valuation of deferred tax allowance, and legal contingencies have the greatest potential impact on our condensed consolidated financial statements. We evaluate these estimates on an ongoing basis. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Previous wording

Our revenue is comprised of two categories, subscription and professional services. Subscription includes SaaS revenue and legacy revenue. SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support. Legacy revenue is associated with license, maintenance and support contracts on perpetual license arrangements that we no longer sell. Professional services include consulting, implementation, training, and managed services.

Current wording

Our revenue is comprised of two categories including SaaS and professional services. SaaS revenue includes cloud delivery arrangements, term licenses, embedded original equipment manufacturer (OEM) royalties, and associated support. An immaterial amount of SaaS revenue is comprised of our legacy revenue which is associated with license, maintenance, and support contracts on perpetual license arrangements that we no longer sell. Professional services includes consulting, implementation, training, and managed services.

Previous wording

We have a royalty revenue agreement with a customer related to our embedded intellectual property. Under the terms of the agreement, the customer is to provide a combined fixed fee, per agent, for each software license sold containing the embedded software to us. These embedded OEM royalties are included as subscription revenue. Under revenue guidance, since these arrangements are for sales-based licenses of intellectual property, we recognize revenue only as the subsequent sale occurs. However, since such sales are reported by the customer with a quarter in arrears, such revenue is recognized at the time it is reported and paid by the customer given that any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimate and the unavoidable risk that it may lead to significant revenue reversals.

Current wording

these arrangements are for sales-based licenses of intellectual property, we recognize revenue only as the subsequent sale occurs. However, since such sales are reported by the customer with a quarter in arrears, such revenue is recognized at the time it is reported and paid by the customer given that any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimate and the unavoidable risk that it may lead to significant revenue reversals.

Previous wording

As of March 31, 2024, our remaining performance obligations were $67.7 million, of which we expect to recognize $47.9 million and $19.8 million as revenue within one year and beyond one year, respectively.

Current wording

As of September 30, 2024, our remaining performance obligations were $70.4 million, of which we expect to recognize $54.5 million and $15.9 million as revenue within one year and beyond one year, respectively.

Previous wording

We expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign exchange rate fluctuation. We typically issue renewal invoices in advance of the renewal service period. Depending on

Current wording

We expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign exchange rate fluctuation. We typically issue renewal invoices in advance of the renewal service period. Depending on timing, the initial invoice and subsequent renewal invoices may occur in different quarters. This may result in an increase or decrease to our accounts receivable and deferred revenue.

Previous wording

We classify our revenue into two categories: subscription and professional services revenue. We further break down subscription revenue into SaaS revenue and legacy revenue, with SaaS revenue being the key metric.

Current wording

We classify our revenue into two categories: SaaS and professional services revenue, with SaaS revenue being a key metric.

Previous wording

The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2024 and 2023, respectively:

Current wording

The following table presents our SaaS and professional services revenue during the three months ended September 30, 2024 and 2023, respectively:

Previous wording

Our revenue was impacted by foreign exchange rate fluctuation between the U.S. Dollar, Euro, and British Pound. We recalculate our current period results using the comparable prior period exchange rates to exclude the impact of foreign exchange rate fluctuation. Foreign exchange rate fluctuation resulted in an increase of $226,000 and a decrease of $534,000 in total revenue during the three months ended March 31, 2024 and 2023, respectively. Foreign exchange rate fluctuation resulted in an increase of $999,000 and a decrease of $2.4 million for the nine months ended March 31, 2024 and 2023, respectively.

Current wording

Our revenue was impacted by foreign exchange rate fluctuation between the U.S. Dollar, Euro, and British Pound. We recalculate our current period results using the comparable prior period exchange rates to exclude the impact of foreign exchange rate fluctuation. Foreign exchange rate fluctuation resulted in an increase of $144,000 and $426,000 in total revenue during the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Excluding an increase of $208,000 and $925,000 due to foreign exchange rate fluctuation, SaaS revenue decreased by $785,000 and $3.4 million during the three and nine months ended March 31, 2024, respectively, compared to the same periods in fiscal year 2023.

Current wording

Excluding an increase of $132,000 due to foreign exchange rate fluctuation, SaaS revenue decreased by $2.6 million during the three months ended September 30, 2024, compared to the same period in fiscal year 2024.

Previous wording

Professional services revenue includes consulting, implementation, managed services and training. Revenue from professional services decreased by $7,000 and $161,000 during the three and nine months ended March 31, 2024, respectively, compared to the same periods in fiscal year 2023.

Current wording

Professional services revenue includes consulting, implementation, training, and managed services. Revenue from professional services increased by $126,000 during the three months ended September 30, 2024, compared to the same period in fiscal year 2024.

Previous wording

Excluding an increase of $15,000 and $59,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $22,000 and $220,000 during the three and nine months ended March 31, 2024, respectively, compared to the same periods in fiscal year 2023.

Current wording

Excluding an increase of $12,000 due to foreign exchange rate fluctuation, professional services revenue increased by $114,000 during the three months ended September 30, 2024, compared to the same period in fiscal year 2024.

Previous wording

Revenue from North America sales decreased by 2% from $17.9 million during the three months ended March 31, 2023 to $17.4 million during the three months ended March 31, 2024, due to decreases of (i) $498,000 in SaaS revenue and (ii) $29,000 in legacy revenue; partially offset by an increase of $88,000 in professional services revenue.

Current wording

Revenue from North America sales decreased by 14% from $19.0 million during the three months ended September 30, 2023 to $16.4 million during the three months ended September 30, 2024 primarily due to a decrease of $2.5 million in SaaS revenue.

Previous wording

Revenue from EMEA sales decreased by 4% from $5.2 million for the three months ended March 31, 2023 to $4.9 million during the three months ended March 31, 2024, due to decreases of (i) $80,000 in SaaS revenue, (ii) $95,000 in professional services revenue, and (iii) $49,000 in legacy revenue.

Current wording

Revenue from EMEA sales increased by 4% from $5.2 million for the three months ended September 30, 2023 to $5.4 million during the three months ended September 30, 2024, due to increases of (i) $57,000 in SaaS revenue and (ii) $132,000 in professional services revenue.

Previous wording

Cost of subscription revenue consists primarily of expenses related to our cloud services and providing support to our customers. These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead.

Current wording

Cost of SaaS revenue consists primarily of expenses related to our cloud services and providing support to our customers. These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead.

Previous wording

Excluding an increase of $14,000 and $48,000 due to foreign exchange rate fluctuation, cost of subscription revenue decreased by $920,000 and increased by $800,000 during the three and nine months ended March 31, 2024, respectively, from the same periods in fiscal year 2023.

Current wording

Excluding an increase of $3,000 due to foreign exchange rate fluctuation, cost of SaaS revenue decreased by $528,000 during the three months ended September 30, 2024, from the same period in fiscal year 2024.

Previous wording

Cost of professional services increased by $169,000 during the three months ended March 31, 2024, from the same period in fiscal year 2023. This increase was primarily due to an increase of $181,000 in personnel-related costs; partially offset by a decrease of $25,000 in outside consulting costs.

Current wording

Cost of professional services increased by $353,000 during the three months ended September 30, 2024, from the same period in fiscal year 2024. This increase was primarily due to an increase of $358,000 in personnel-related costs; partially offset by a decrease of $2,000 in outside consulting costs.

Previous wording

Excluding increases of $15,000 and $72,000 due to foreign exchange rate fluctuation, cost of professional services revenue increased by $154,000 and decreased by $863,000 during the three and nine months ended March 31, 2024, respectively, compared to the same periods in fiscal year 2023.

Current wording

Excluding a decrease of $3,000 due to foreign exchange rate fluctuation, cost of professional services revenue increased by $356,000 during the three months ended September 30, 2024, compared to the same period in fiscal year 2024.

Previous wording

Research and development expense primarily consists of personnel-related expenses directly associated with our engineering, product management and development, and quality assurance staff. Included in these costs are salaries, benefits, bonuses, and stock-based compensation and allocated overhead. Research and development expense also includes outside consulting services contracted for research and development.

Current wording

Research and development expense primarily consists of personnel-related expenses directly associated with our engineering, product management and development, and quality assurance staff. Included in these costs are salaries,

Previous wording

Cost of subscription revenue increased by $848,000 during the nine months ended March 31, 2024, from the same period in fiscal year 2023. This increase was primarily due to increases of (i) $984,000 in personnel related costs and (ii) $143,000 in outside consulting costs; partially offset by a decrease of $327,000 in cloud-computing costs.

Current wording

Research and development expense increased by $789,000 during the three months ended September 30, 2024, from the same period in fiscal year 2024. This increase was primarily due to increase of $795,000 in personnel-related costs and partially offset by a decrease of $12,000 in outside consulting costs.

Previous wording

Sales and marketing expenses decreased by 20% to $5.4 million for the three months ended March 31, 2024, from $6.8 million in the same period in fiscal year 2023. Excluding an increase of $89,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to decreases of (i) $1.4 million in personnel-related costs, (ii) $69,000 in outside consulting costs, and (iii) $55,000 in lead generation costs.

Current wording

Excluding an increase of $81,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased by $1.4 million during the three months ended September 30, 2024, compared to the same period in fiscal year 2024.

Previous wording

General and administrative expense primarily consists of personnel-related expenses directly associated with our finance, human resources, administrative and legal personnel. Included in these costs are salaries, benefits, bonuses, and stock-based compensation and allocated overhead. General and administrative expenses also include fees for professional services, provision for doubtful accounts and, to a lesser extent, occupancy costs and related overhead.

Current wording

General and administrative expense primarily consists of personnel-related expenses directly associated with our finance, human resources, administrative and legal personnel. Included in these costs are salaries, benefits, bonuses, and stock-based compensation and allocated overhead. General and administrative expenses also include fees for professional services, provision for credit losses and, to a lesser extent, occupancy costs and related overhead.

Previous wording

Income (loss) from operations was income of $938,000 and loss of $512,000 with an operating profit margin of 4% and operating loss margin of 2% during the three months ended March 31, 2024 and 2023, respectively. Income from operations during the three months ended March 31, 2024 included $1.1 million of stock-based compensation and $325,000 of amortization of costs capitalized to obtain revenue contracts. Income from operations during the three months ended March 31, 2023 included $1.4 million of stock-based compensation and $381,000 of amortization of costs capitalized to obtain revenue contracts.

Current wording

Income from operations was $509,000 with an operating profit margin of 2% during the three months ended September 30, 2024. Income from operations was $1.4 million during the three months ended September 30, 2023.

Previous wording

Interest income primarily consists of interest earned on money market accounts which have increased rates compared to prior years. Interest income was $1.0 million and $818,000 during the three months ended March 31, 2024 and 2023,

Current wording

Interest income primarily consists of interest earned on money market accounts. Interest income was $771,000 and $949,000 during the three months ended September 30, 2024 and 2023, respectively, due to lower interest rates in the current period.

Previous wording

Other income (expense), net was income of $74,000 and expense of $245,000 during the three months ended March 31, 2024 and 2023, respectively. Other income (expense), net was expense of $13,000 and income of $20,000 during the nine months ended March 31, 2024 and 2023, respectively. Other income (expense), net primarily included foreign exchange rate fluctuations on international trade receivables, net of transactions.

Current wording

Other (expense) income, net was expense of $140,000 and income of $610,000 during the three months ended September 30, 2024 and 2023, respectively. Other (expense) income, net primarily included foreign exchange rate fluctuations on international trade receivables, net of transactions.

Previous wording

Provision for income taxes consists of state and foreign income taxes. Due to cumulative U.S. book losses, we maintain a valuation allowance against U.S. deferred tax assets as of March 31, 2024. We consider all available evidence, both positive and negative, including but not limited to earnings history, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets. We recorded income tax provision of $521,000 and $1.4 million for the three and nine months ended March 31, 2024, respectively. We recorded income tax provision of $433,000 and $1.2 million for the three and nine months ended March 31, 2023, respectively.

Current wording

Provision for income taxes consists of state and foreign income taxes. Due to cumulative losses, we maintain a valuation allowance against U.S. deferred tax assets as of September 30, 2024. We consider all available evidence, both positive and negative, including but not limited to earnings history, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets. We recorded income tax provision of $488,000 and $379,000 for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

As of March 31, 2024 and June 30, 2023, our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable totaling $93.9 million and $104.8 million, respectively. Our cash, cash equivalents and restricted cash were $83.0 million and $73.2 million as of March 31, 2024 and June 30, 2023, respectively.

Current wording

As of September 30, 2024 and June 30, 2024, our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable totaling $90.3 million and $101.7 million, respectively. Our cash, cash equivalents and restricted cash were $67.2 million and $70.0 million as of September 30, 2024 and June 30, 2024, respectively.

Previous wording

For the nine months ended March 31, 2024 and 2023, our cash flows were as follows (in thousands):

Current wording

For the three months ended September 30, 2024 and 2023, our cash flows were as follows (in thousands):

Previous wording

Cash provided by operating activities mainly consists of net income (loss) adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including commissions and bonus payments, and changes in operating assets and liabilities during the year.

Current wording

Cash provided by operating activities mainly consists of net income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including commissions and bonus payments, and changes in operating assets and liabilities during the year.

Previous wording

Net cash provided by operating activities increased by $8.5 million during the nine months ended March 31, 2024, from the same period in fiscal year 2023, driven primarily by net income, stock-based compensation expense, and the timing of collections for accounts receivable.

Current wording

Net cash provided by operating activities decreased by $7.2 million during the three months ended September 30, 2024, from the same period in fiscal year 2024, driven primarily by the timing of collections for accounts receivable, payments of accounts payable, and recognition of deferred revenue.

Previous wording

Net cash used in investing activities decreased by $69,000 during the nine months ended March 31, 2024, from the same period in fiscal year 2023, driven primarily by activities related to the purchase of equipment for new employees and

Current wording

Net cash used in investing activities increased by $77,000 during the three months ended September 30, 2024, from the same period in fiscal year 2024, driven primarily by activities related to the purchase of equipment for new employees and facility expenditures. Historically, cash used in investing activities has been used to purchase equipment and software to support our business and growth.

Previous wording

Net cash used in financing activities was $7.5 million during the nine months ended March 31, 2024, compared to the net cash provided by financing activities of $7,000 for the same period in fiscal year 2023. Our current proceeds consist primarily of proceeds from the exercise of employee stock options, our employee stock purchase plan, and funds used for repurchases of our common stock of approximately $8.5 million.

Current wording

Net cash used in financing activities increased by $3.9 million during the three months ended September 30, 2024, from the same period in fiscal year 2024. Our current proceeds consist primarily of proceeds from the exercise of employee stock options, our employee stock purchase plan, and funds used for repurchases of our common stock of approximately $4.6 million.

Previous wording

Our principal commitments consist of obligations under leases for office space. Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842,Leases. As of March 31, 2024, the future non-cancelable minimum payments under these commitments were approximately $5.1 million.

Current wording

Our principal commitments consist of obligations under leases for office space. Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases. As of September 30, 2024, the future non-cancelable minimum payments under these commitments were approximately $4.7 million.