EGAIN Corp

Previous wording

*This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.*These statements relate to future periods, future events or our future operating or financial plans or performance. Often, these statements include the words “believe,” “expect,” “target,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “potential,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” or “may,” or the negative of these terms, and other similar expressions. These forward-looking statements that involves risks and uncertainties include statements as to:

Current wording

*This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.*These statements relate to future periods, future events or our future operating or financial plans or performance. Often, these statements include the words “believe,” “expect,” “target,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “potential,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” or “may,” or the negative of these terms, and other similar expressions. These forward-looking statements that involve risks and uncertainties include statements as to:

Previous 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 Sunnyvale, California 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 Sunnyvale, California in the U.S. We also operate in the United Kingdom and India.

Previous wording

We believe the combination of SaaS and professional services revenue is a useful measure to value our business. SaaS revenue is defined as revenue from cloud delivery arrangements, term licenses, embedded OEM royalties and associated support. Professional services revenue includes system implementation, consulting, training, and managed services.

Current wording

We believe total revenue is a useful measure to value our business. SaaS revenue is defined as revenue from cloud delivery arrangements, term licenses, embedded OEM royalties and associated support. Professional services revenue includes system implementation, consulting, training, and managed services.

Previous wording

The following table presents total SaaS and professional services revenue for each of the following periods:

Current wording

The following table presents total revenue for each of the following periods:

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Current wording

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

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, 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

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

Previous wording

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

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

As of December 31, 2024, our remaining performance obligations were $73.6 million, of which we expect to recognize $50.9 million and $22.7 million as revenue within one year and beyond one year, respectively.

Current wording

As of March 31, 2025, our remaining performance obligations were $66.5 million, of which we expect to recognize $44.3 million and $22.2 million as revenue within one year and beyond one year, respectively.

Previous wording

The following table sets forth certain items reflected in our condensed consolidated statements of operations expressed as a percent of total revenue for the periods indicated:

Current wording

The following table sets forth certain items reflected in our condensed consolidated statements of operations expressed as a percentage of total revenue for the periods indicated:

Previous wording

The following table presents our SaaS and professional services revenue during the three and six months ended December 31, 2024 and 2023, respectively:

Current wording

The following table presents our SaaS and professional services revenue during the three and nine months ended March 31, 2025 and 2024, respectively:

Previous wording

Total revenue for the three months ended December 31, 2024 decreased by $1.4 million, while SaaS revenue decreased by $1.1 million, compared to the same period in fiscal year 2024. Total revenue for the six months ended December 31, 2024 decreased by $3.8 million, while SaaS revenue decreased by $3.7 million, compared to the same period in fiscal year 2024.

Current wording

Total revenue for the three months ended March 31, 2025 decreased by $1.3 million, while SaaS revenue decreased by $761,000, compared to the same period in fiscal year 2024. Total revenue for the nine months ended March 31, 2025 decreased by $5.1 million, while SaaS revenue decreased by $4.4 million, compared to the same period in fiscal year 2024.

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 $151,000 and $340,000 in total revenue during the three months ended December 31, 2024 and 2023, respectively. Foreign exchange rate fluctuation resulted in an increase of $298,000 and an increase of $769,000 for the six months ended December 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 a decrease of $33,000 and $226,000 in total revenue during the three months ended March 31, 2025 and 2024, respectively. Foreign exchange rate fluctuation resulted in an increase of $271,000 and an increase of $999,000 for the nine months ended March 31, 2025 and 2024, respectively.

Previous wording

SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support. Revenue from SaaS decreased by $1.1 million and $3.7 million during the three and six months ended December 31, 2024, respectively, compared to the same periods in fiscal year 2024. This represented a decrease in SaaS revenue of 5% and 8% for the three and six months ended December 31, 2024, respectively, compared to the same periods in fiscal year 2024.

Current wording

SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support. Revenue from SaaS decreased by $761,000 and $4.4 million during the three and nine months ended March 31, 2025, respectively, compared to the same periods in fiscal year 2024. This represented a decrease in SaaS revenue of 4% and 7% for the three and nine months ended March 31, 2025, respectively, compared to the same periods in fiscal year 2024.

Previous wording

SaaS revenue represents 93% and 92% of total revenue for the three and six months ended December 31, 2024, respectively, compared to 92% for the same periods in fiscal year 2024.

Current wording

SaaS revenue represents 93% and 92% of total revenue for the three and nine months ended March 31, 2025, respectively, compared to 91% and 92% for the same periods in fiscal year 2024.

Previous wording

Excluding an increase of $144,000 and $276,000 due to foreign exchange rate fluctuation, SaaS revenue decreased by $1.3 million and $3.9 million during the three and six months ended December 31, 2024, respectively, compared to the same periods in fiscal year 2024.

Current wording

Excluding a decrease of $32,000 and an increase of $248,000 due to foreign exchange rate fluctuation, SaaS revenue decreased by $729,000 and $4.7 million during the three and nine months ended March 31, 2025, respectively, compared to the same periods in fiscal year 2024.

Previous wording

Professional services revenue includes consulting, implementation, training, and managed services. Revenue from professional services decreased by $277,000 and $151,000 during the three and six months ended December 31, 2024, respectively, compared to the same periods in fiscal year 2024.

Current wording

Professional services revenue includes consulting, implementation, training, and managed services. Revenue from professional services decreased by $580,000 and $731,000 during the three and nine months ended March 31, 2025, respectively, compared to the same periods in fiscal year 2024.

Previous wording

Excluding an increase of $7,000 and $21,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $284,000 and $172,000 during the three and six months ended December 31, 2024, respectively, compared to the same periods in fiscal year 2024.

Current wording

Excluding a decrease of $1,000 and an increase of $22,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $579,000 and $753,000 during the three and nine months ended March 31, 2025, respectively, compared to the same periods in fiscal year 2024.

Previous wording

Revenue from North America sales decreased by 8% from $18.8 million during the three months ended December 31, 2023 to $17.3 million during the three months ended December 31, 2024, due to decreases of (i) $1.1 million in SaaS revenue and (ii) $356,000 in professional services revenue.

Current wording

Revenue from North America sales decreased by 6% from $17.4 million during the three months ended March 31, 2024 to $16.5 million during the three months ended March 31, 2025, due to decreases of (i) $540,000 in professional services revenue and (ii) $425,000 in SaaS revenue.

Previous wording

Revenue from North America sales decreased by 11% from $37.8 million during the six months ended December 31, 2023 to $33.8 million during the six months ended December 31, 2024, due to decreases of (i) $3.8 million in SaaS revenue and (ii) $288,000 in professional services revenue.

Current wording

Revenue from North America sales decreased by 9% from $55.2 million during the nine months ended March 31, 2024 to $50.2 million during the nine months ended March 31, 2025, due to decreases of (i) $4.2 million in SaaS revenue and (ii) $828,000 in professional services revenue.

Previous wording

Cost of professional services increased by $526,000 during the six months ended December 31, 2024, from the same period in fiscal year 2024. This increase was primarily due to increases of (i) $505,000 in personnel-related costs and (ii) $14,000 in outside consulting costs.

Current wording

Cost of SaaS revenue increased by $107,000 during the three months ended March 31, 2025, from the same period in fiscal year 2024. This increase was primarily due to an increase of $658,000 in cloud-computing costs; partially offset by decreases of (i) $460,000 in personnel-related costs and (ii) $67,000 in outside consulting costs.

Previous wording

Cost of SaaS revenue decreased by $483,000 during the three months ended December 31, 2024, from the same period in fiscal year 2024. This decrease was primarily due to decreases of (i) $208,000 in cloud-computing costs, (ii) $164,000 in personnel-related costs, and (iii) $116,000 in outside consulting costs.

Current wording

Cost of SaaS revenue decreased by $901,000 during the nine months ended March 31, 2025, from the same period in fiscal year 2024. This decrease was primarily due to decreases of (i) $854,000 in personnel-related costs and (ii) $199,000 in outside consulting costs; partially offset by an increase of $168,000 in cloud-computing costs.

Previous wording

Excluding an increase of $4,000 and $7,000 due to foreign exchange rate fluctuation, cost of SaaS revenue decreased by $487,000 and $1.0 million during the three and six months ended December 31, 2024, respectively, from the same periods in fiscal year 2024.

Current wording

Excluding a decrease of $24,000 and $16,000 due to foreign exchange rate fluctuation, cost of SaaS revenue increased by $131,000 and decreased by $885,000 during the three and nine months ended March 31, 2025, respectively, from the same periods in fiscal year 2024.

Previous wording

Cost of SaaS revenue decreased by $1.0 million during the six months ended December 31, 2024, from the same period in fiscal year 2024. This decrease was primarily due to decreases of (i) $490,000 in cloud-computing costs, (ii) $393,000 in personnel related costs, and (iii) $132,000 in outside consulting costs.

Current wording

Cost of professional services decreased by $242,000 during the three months ended March 31, 2025, from the same period in fiscal year 2024. This decrease was primarily due to decreases of (i) $229,000 in personnel-related costs and (ii) $3,000 in outside consulting costs.

Previous wording

Cost of professional services increased by $173,000 during the three months ended December 31, 2024, from the same period in fiscal year 2024. This increase was primarily due to increases of (i) $146,000 in personnel-related costs and (ii) $16,000 in outside consulting costs.

Current wording

Cost of professional services increased by $284,000 during the nine months ended March 31, 2025, from the same period in fiscal year 2024. This increase was primarily due to increases of (i) $271,000 in personnel-related costs and (ii) $10,000 in outside consulting costs.

Previous wording

Research and development expense increased by 16% to $7.7 million for the three months ended December 31, 2024, from $6.7 million in the same period in fiscal year 2024. Excluding an increase of $7,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of (i) $848,000 in personnel-related costs and (ii) $191,000 in outside consulting costs.

Current wording

Research and development expense increased by 13% to $7.5 million for the three months ended March 31, 2025, from $6.7 million in the same period in fiscal year 2024. Excluding a decrease of $43,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of (i) $884,000 in personnel-related costs and (ii) $18,000 in outside consulting costs.

Previous wording

Research and development expense increased by 14% to $15.1 million for the six months ended December 31, 2024, from $13.3 million in the same period in fiscal year 2024. Excluding an increase of $13,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of (i) $1.6 million in personnel-related costs and (ii) $179,000 in outside consulting costs.

Current wording

Research and development expense increased by 14% to $22.6 million for the nine months ended March 31, 2025, from $19.9 million in the same period in fiscal year 2024. Excluding a decrease of $26,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of (i) $2.5 million in personnel-related costs and (ii) $197,000 in outside consulting costs.

Previous wording

Sales and marketing expenses decreased by 2% but remained consistent at $5.3 million for the three months ended December 31, 2024, compared to the same period in fiscal year 2024. Excluding an increase of $40,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to a decrease of $718,000 in personnel-related costs; partially offset by increases of (i) $530,000 in lead generation costs and (ii) $50,000 in outside consulting costs.

Current wording

Sales and marketing expenses decreased by 14% to $4.7 million for the three months ended March 31, 2025, from $5.4 million in the same period in fiscal year 2024. Excluding a decrease of $7,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to decreases of (i) $666,000 in personnel-related costs and (ii) $77,000 in lead generation costs; partially offset by an increase of $6,000 in outside consulting costs.

Previous wording

Sales and marketing expenses decreased by 13% to $10.0 million for the six months ended December 31, 2024, from $11.5 million in the same period in fiscal year 2024. Excluding an increase of $116,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to decreases of (i) $1.5 million in personnel-related costs and (ii) $120,000 in lead generation costs; partially offset by an increase of $83,000 in outside consulting costs.

Current wording

Sales and marketing expenses decreased by 13% to $14.7 million for the nine months ended March 31, 2025, from $16.9 million in the same period in fiscal year 2024. Excluding an increase of $103,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to decreases of (i) $2.2 million in personnel-related costs and (ii) $191,000 in lead generation costs; partially offset by an increase of $90,000 in outside consulting costs.

Previous wording

General and administrative expenses decreased by 12% to $2.1 million for the three months ended December 31, 2024, from $2.4 million in the same period in fiscal year 2024. Excluding an increase of $7,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to decreases of (i) $106,000 in credit loss expense, (ii) $103,000 in outside-consulting costs, (iii) $70,000 in accounting, audit, and administrative fees, (iv) $57,000 in personnel-related costs and (v) $1,000 in investor relations cost; partially offset by an increase of $37,000 in legal related costs.

Current wording

General and administrative expenses decreased by 17% to $2.0 million for the three months ended March 31, 2025, from $2.5 million in the same period in fiscal year 2024. Excluding a decrease of $6,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to decreases of (i) $220,000 in personnel-related costs, (ii) $112,000 in credit loss expense, (iii) $39,000 in outside-consulting costs, (iv) $27,000 in legal related costs, and (v) $7,000 in accounting, audit, and administrative fees; partially offset by an increase of $1,000 in investor relations cost.

Previous wording

General and administrative expenses decreased by 19% to $4.5 million for the six months ended December 31, 2024, from $5.6 million in the same period in fiscal year 2024. Excluding an increase of $14,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to decreases of (i) $792,000 in legal related costs, (ii) $155,000 in outside consulting costs, (iii) $121,000 in personnel-related costs, and (iv) $58,000 in accounting, audit, and administrative fees; partially offset by an increase of (i) $78,000 in credit loss expense.

Current wording

General and administrative expenses decreased by 18% to $6.6 million for the nine months ended March 31, 2025, from $8.0 million in the same period in fiscal year 2024. Excluding an increase of $10,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to decreases of (i) $818,000 in legal related costs, (ii) $342,000 in personnel-related costs, (iii) $194,000 in outside-consulting costs, (iv) $66,000 in accounting, audit, and administrative fees, and (v) $35,000 in credit loss expense; partially offset by an increase of $1,000 in investor relations cost.

Previous wording

Income from operations was $650,000 and $2.4 million with an operating margin of 3% and 10% during the three months ended December 31, 2024 and 2023, respectively. This is primarily due to a reduction in gross margin and an increase in total research and development cost.

Current wording

Income from operations was $27,000 and $938,000 with an operating margin of 0% and 4% during the three months ended March 31, 2025 and 2024, respectively. This is primarily due to a reduction in gross margin.

Previous wording

Income from operations was $1.2 million and $3.8 million with an operating margin of 3% and 8% during the six months ended December 31, 2024 and 2023, respectively. This is primarily due to a reduction in gross margin and an increase in total research and development cost.

Current wording

Income from operations was $1.2 million and $4.8 million with an operating margin of 2% and 7% during the nine months ended March 31, 2025 and 2024, respectively. This is primarily due to a reduction in gross margin.

Previous wording

Interest income primarily consists of interest earned on money market accounts which have decreased rates compared to prior years. Interest income was $661,000 and $982,000 during the three months ended December 31, 2024 and 2023, respectively. Interest income was $1.4 million and $1.9 million during the six months ended December 31, 2024 and 2023, respectively.

Current wording

Interest income, net primarily consists of interest earned on money market accounts which have decreased rates compared to prior years. Interest income, net was $597,000 and $1.0 million during the three months ended March 31, 2025 and 2024, respectively. Interest income, net was $2.0 million and $2.9 million during the nine months ended March 31, 2025 and 2024, respectively.

Previous wording

Other expense, net was $431,000 and $697,000 during the three months ended December 31, 2024 and 2023, respectively. Other expense, net was $571,000 and $87,000 during the six months ended December 31, 2024 and 2023, respectively.

Current wording

Other income (expense), net was an expense of $304,000 and income of $74,000 during the three months ended March 31, 2025 and 2024, respectively. Other income (expense), net was expense of $875,000 and $13,000 during the nine months ended March 31, 2025 and 2024, respectively. Other income (expense), net primarily included foreign exchange rate fluctuations on international trade receivables, net of transactions.

Previous wording

We recorded income tax provision of $209,000 and $697,000 for the three and six months ended December 31, 2024, respectively. We recorded income tax provision of $525,000 and $904,000 for the three and six months ended December 31, 2023, respectively.

Current wording

We recorded income tax provision of $254,000 and $951,000 for the three and nine months ended March 31, 2025, respectively. We recorded income tax provision of $521,000 and $1.4 million for the three and nine months ended March 31, 2024, respectively.

Previous wording

As of December 31, 2024 and June 30, 2024, our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable totaling $86.3 million and $101.7 million, respectively. Our cash, cash equivalents and restricted cash were $70.5 million and $70.0 million as of December 31, 2024 and June 30, 2024, respectively.

Current wording

As of March 31, 2025 and June 30, 2024, our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable totaling $81.2 million and $101.7 million, respectively. Our cash, cash equivalents and restricted cash were $68.7 million and $70.0 million as of March 31, 2025 and June 30, 2024, respectively.

Previous wording

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

Current wording

For the nine months ended March 31, 2025 and 2024, our cash flows were as follows (in thousands):

Previous wording

Net cash provided by operating activities decreased by $8.4 million during the six months ended December 31, 2024, from the same period in fiscal year 2024, driven primarily by the change in net income, deferred revenue, stock-based compensation expense, and the timing of collections for accounts receivable.

Current wording

Net cash provided by operating activities decreased by $8.0 million during the nine months ended March 31, 2025, from the same period in fiscal year 2024, driven primarily by the change in net income, stock-based compensation expense, and the timing of collections for accounts receivable.

Previous wording

Net cash used in investing activities increased by $113,000 during the six months ended December 31, 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.

Current wording

Net cash used in investing activities increased by $203,000 during the nine months ended March 31, 2025, 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 increased by $4.0 million during the six months ended December 31, 2024, from the same period in fiscal year 2024, driven primarily by funds used for repurchases of our common stock of approximately $7.0 million, offset by proceeds from exercises of employee stock options and our employee stock purchase plan.

Current wording

Net cash used in financing activities increased by $3.6 million during the nine months ended March 31, 2025, from the same period in fiscal year 2024, driven primarily by funds used for repurchases of our common stock of approximately $12.0 million, offset by proceeds from exercises of employee stock options and our employee stock purchase plan.