The bookings measure is designed to take into consideration the transition to the hosted model. License deals include a large up front payment and then a much smaller annual maint fee in the future. Hosted is larger rental payments so they take into account the revenues to be booked over the period of the agreement so assuming it is a two year deal the revenues over the two year period are included in the bookings measure even though the actual financial statements will show it in the future.
eGain had a great fourth quarter of last year from a bookings perspective even though the financials stank and we are seeing some of the revenue come through just now. Some of those deals were licenses where conditions are only now being met so they can book the revenue. Some of them were hosted which will produce a steady stream of revenue into the future that you can count on.
If all of eGain's revenues were from hosted business in the third quarter then we would be "sitting pretty" because we could count on $8.5 - $9 million plus each quarter and operational profits into the future. Unfortunately, even though a good portion of that revenue is hosted (and maint) a significant portion is license and professional services which can go away in the future. Hosted and maint can go away too but it is just less likely to go away.
I couldn't tell you the basis of my opinion but when the last 10Q came out I thought that eGain could see revenue decline in the fourth quarter down to the $6.5-$7.0 million range unless the Cisco deal started to kick in. Of course they could sign a big license deal and revenues go up to $10 million. It is just the unknowns that come with owning shares in a software company.
They are doing a lot of things right and I like management a lot but I just am acknowledging a fact that revenues could decline in future quarters.
Isn't this due to most customers switching to hosting model ?
If you take out the 2 big trade days in Dec and Jan, today is turning out to be the highest volume day in 2 years. At least a bottom is being put in.
I still think these guys should be part of a bigger company. Costs can be dramatically reduced. You don't need a CFO, CTO, CEO, VP of Engineering, all the accounting people, etc.
$2 million in bookings this Q. $2.7 in prior, $3.2 million in 1st and even more in 4th Q of last year. In addition I'll bet that cash is down over prior quarter despite stronger revenue. In other words I suppose I'm disappointed over results.
Not disappointed to see the share price increasing though and I still argue the share price is too low.
Hopefully things will kick up in the 4th Q. They did last year and there is reason for optimism given that they almost certainly met or are exceptionally close to meeting the last Cisco milestone.
The numbers/multiples on this company are tough to beat. Their focus is good. The only thing missing for me is to see their software in action. Maybe if all the shareholders on this board agreed the company would be willing.