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eGain Reports 53% SaaS Revenue Growth in Fiscal Second Quarter; Raises Annual Revenue Guidance

SUNNYVALE, Calif., Feb. 07, 2019 (GLOBE NEWSWIRE) -- eGain (EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2019 second quarter ended December 31, 2018.

Ashu Roy, eGain CEO, commented, “We are pleased with the strong top and bottom-line performance we achieved in the second quarter. We hosted a successful DX18 customer event in Chicago and we are encouraged to see growing demand for AI-powered digital customer engagement.”

Fiscal 2019 Second Quarter Financial Highlights – ASC 606 (standard adopted effective July 1, 2018):

  • Total revenue was $17.7 million, up 15% year over.
  • SaaS revenue was $11.9 million, up 53% year over year.
  • Subscription revenue, which includes SaaS and legacy support revenue, was $15.8 million, up 25% year over year and 89% of total revenue.
  • GAAP net income was $2.0 million, or $0.07 per share on a basic and diluted basis, compared to a GAAP net loss of $788,000, or $(0.03) per share on a basic and diluted basis, for Q2 2018.
  • Non-GAAP net income was $2.4 million, or $0.09 per share on a basic basis and $0.08 on a diluted basis, compared to non-GAAP net income of $451,000, or $0.02 per share on a basic and diluted basis, for Q2 2018.
  • Cash provided by operations in the second quarter was $863,000, compared to cash provided by operations of $2.6 million in Q2 2018.
  • Total cash and cash equivalents as of December 31, 2018 was $11.2 million, compared to $11.5 million as of June 30, 2018.

Fiscal 2019 Financial Guidance
For the fiscal year ending June 30, 2019, the Company is raising its previously provided guidance for SaaS revenue growth for the year from between 25% to 30% to between 30% and 35%. The Company is also raising its previously provided guidance for Subscription revenue growth from between 10% and 15% to between 13% and 16%.

Non-GAAP Financial Measures
This press release includes non-GAAP operating income/(loss) and non-GAAP net income/(loss) as supplemental information relating to our operating results. Non-GAAP net income/(loss) is defined as net income/(loss) adjusted for stock-based compensation expense and amortization of acquired intangible assets. 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, and may be different from non-GAAP measures used by other companies. eGain’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analyses 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 the Company’s 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 its 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 the Company’s business.

Quarterly Conference Call Information
eGain will discuss its quarterly results today via teleconference at 2:00 p.m. Pacific Time. To access the live call, please dial (877) 260-1479 (U.S. toll free) or (334) 323-0522 (international), and give the participant pass code 6329790. A live webcast of the call and slide presentation can be accessed from the investors section at www.egain.com. A replay of the conference call will also be available via telephone beginning approximately two hours after conclusion of the call and remain in effect for one week. To access the replay dial-in information, please click here. An archive of the webcast will also be available on the investors section at www.egain.com.

About eGain
eGain customer engagement solutions power digital transformation for leading brands. Our top-rated cloud applications for social, mobile, web, and contact centers help clients deliver connected customer journeys in an omnichannel world. To learn more about eGain, visit www.egain.com.

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. These forward-looking statements include our beliefs regarding demand for our products, including our belief that our pipeline and the demand for our AI-powered customer engagement platform offering is strong and that we see positive business and customer momentum, among other matters.  These forward-looking statements also include our beliefs with respect to SaaS revenue growth and Subscription revenue growth for the current fiscal year. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company’s results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties referred to above include, but are not limited to: risks associated with new product releases; risks that customer demand may fluctuate or decrease; risks that we are unable to collect unbilled contractual commitments; risks that our SaaS based revenue model and lengthy sales cycles may negatively affect our operating results; currency risks; our ability to capitalize on customer engagement; the success of organization changes; 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 invest resources to improve our products and continue to innovate; and other risks detailed from time to time in eGain’s public filings, including eGain’s annual report on Form 10-K filed on September 13, 2018 and subsequent reports filed with the Securities and Exchange Commission, which are available on the Securities and Exchange Commission’s Web site at www.sec.gov. These forward-looking statements are based on current expectations and speak only as of the date hereof. The Company assumes no obligation to update these forward-looking statements.

eGain, the eGain logo, and all other eGain product names and slogans are trademarks or registered trademarks of eGain Corp. 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 Group Investor Relations
Todd Kehrli or Jim Byers
Phone: 323-468-2300
Email: egain@mkr-group.com


             
eGain Corporation
 Condensed Consolidated Balance Sheets 
(in thousands)
(unaudited)
             
    December 31,
2018 (*)
  June 30,
2018
ASSETS            
Current assets:            
Cash and cash equivalents   $ 11,222     $ 11,498  
Restricted cash     6       6  
Accounts receivable, net     16,178       7,389  
Costs capitalized to obtain revenue contracts, net     682       986  
Prepaid expenses     1,688       2,374  
Other current assets     409       285  
Total current assets     30,185       22,538  
Property and equipment, net     468       559  
Costs capitalized to obtain revenue contracts, net of current portion     1,904       891  
Intangible assets, net     429       733  
Goodwill     13,186       13,186  
Other assets     2,039       1,715  
Total assets   $ 48,211     $ 39,622  
             
LIABILITIES AND STOCKHOLDERS' DEFICIT            
Current liabilities:            
Accounts payable   $ 2,384     $ 3,905  
Accrued compensation     4,463       5,706  
Accrued liabilities     1,746       2,285  
Deferred revenue     28,836       18,364  
Capital lease obligations     7       42  
Bank borrowings, net of deferred financing costs     4,996       259  
Total current liabilities     42,432       30,561  
Deferred revenue, net of current portion     6,136       7,833  
Bank borrowings, net of current portion and deferred financing costs           8,941  
Other long-term liabilities     980       1,000  
Total liabilities     49,548       48,335  
Commitments and contingencies            
Stockholders' deficit:            
Common stock     28       28  
Additional paid-in capital     347,182       346,222  
Notes receivable from stockholders     (87 )     (85 )
Accumulated other comprehensive loss     (1,620 )     (1,618 )
Accumulated deficit     (346,840 )     (353,260 )
Total stockholders' deficit     (1,337 )     (8,713 )
Total liabilities and stockholders' deficit   $ 48,211     $ 39,622  
(*) Includes the impact from the adoption of ASU 2014-09 (Topic 606)            
             

 

                           
eGain Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                           
    Three Months Ended      Six Months Ended 
    December 31,      December 31, 
    2018   2017     2018   2017
Revenue:                          
Subscription   $ 15,823     $ 12,629       $ 29,550     $ 24,459  
Professional services     1,881       2,769         3,855       5,514  
Total revenue     17,704       15,398         33,405       29,973  
Cost of revenue:                          
Cost of subscription     3,692       3,188         7,087       6,226  
Cost of professional services     1,850       2,401         3,690       4,789  
Total cost of revenue     5,542       5,589         10,777       11,015  
Gross profit     12,162       9,809         22,628       18,958  
Operating expenses:                          
Research and development     3,596       3,708         7,155       7,139  
Sales and marketing     4,391       4,729         8,385       8,895  
General and administrative     2,046       1,768         4,206       3,574  
Total operating expenses     10,033       10,205         19,746       19,608  
Income (loss) from operations     2,129       (396 )       2,882       (650 )
Interest expense, net     (139 )     (239 )       (329 )     (583 )
Other income (expense), net     (6 )     (30 )       11       (161 )
Income (loss) before income tax benefit (expense)     1,984       (665 )       2,564       (1,394 )
Income tax benefit (expense)     16       (123 )       40       38  
Net income (loss)   $ 2,000     $ (788 )     $ 2,604     $ (1,356 )
Per share information:                          
Earnings (loss) per share:                          
Basic   $ 0.07     $ (0.03 )     $ 0.09     $ (0.05 )
Diluted   $ 0.07     $ (0.03 )     $ 0.09     $ (0.05 )
Weighted-average shares used in computation:                          
Basic     27,875       27,241         27,781       27,213  
Diluted     29,420       27,241         29,687       27,213  
                           
Stock-based compensation included in above costs and expenses:                          
Cost of revenue   $ 70     $ 146       $ 144     $ 209  
Research and development     108       275         224       385  
Sales and marketing     54       129         100       192  
General and administrative     104       186         230       269  
    $ 336     $ 736       $ 698     $ 1,055  
                           
Amortization of intangible assets included in above costs and expenses:                          
Cost of revenue   $ 67     $ 67       $ 134     $ 134  
Research and development           436         170       873  
    $ 67     $ 503       $ 304     $ 1,007  
                           

 

                         
eGain Corporation
GAAP to Non-GAAP Reconciliation Table
(in thousands)
(unaudited)
                         
    Three Months Ended
December 31,
  Six Months Ended
December 31,
    2018   2017   2018   2017
Income (loss) from operations   $ 2,129   $ (396 )   $ 2,882   $ (650 )
Add:                        
Stock-based compensation     336     736       698     1,055  
Amortization of acquired intangibles     67     503       304     1,007  
Non-GAAP income from operations   $ 2,532   $ 843     $ 3,884   $ 1,412  
                         
Net income (loss)   $ 2,000   $ (788 )   $ 2,604   $ (1,356 )
Add:                        
Stock-based compensation     336     736       698     1,055  
Amortization of acquired intangibles     67     503       304     1,007  
Non-GAAP net income   $ 2,403   $ 451     $ 3,606   $ 706  
Per share information:                        
Non-GAAP earnings per share:                        
Basic   $ 0.09   $ 0.02     $ 0.13   $ 0.03  
Diluted   $ 0.08   $ 0.02     $ 0.12   $ 0.03  
Weighted-average shares used in computation:                        
Basic     27,875     27,241       27,781     27,213  
Diluted     29,420     28,000       29,687     27,757  
                         

 

 
eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
                                     
    Three Months Ended
December 31,
  Growth Rates
    2018   2017            
    Reported under
Topic 606
  Topic 606
Impact
  Excluding
Topic 606 Impact
  Reported under
Topic 605
  Reported under
Topic 606
  Excluding Topic
606 Impact
Total deferred revenue:                                    
GAAP deferred revenue   $ 34,972     $ (4,690 )   $ 30,282   $ 29,113              
Unbilled and uncollected contractual commitments (off-balance sheet)     31,408       7,719       39,127     39,273              
Total deferred revenue:   $ 66,380     $ 3,029     $ 69,409   $ 68,386       (3 %)     1 %
                                     
Revenue:                                    
SaaS   $ 11,875     $ (380 )   $ 11,495   $ 7,747       53 %     48 %
Legacy support     3,948       (42 )     3,906     4,882       (19 %)     (20 %)
GAAP subscription     15,823       (422 )     15,401     12,629       25 %     22 %
GAAP professional services     1,881       (603 )     1,278     2,769       (32 %)     (54 %)
Total non-GAAP revenue   $ 17,704     $ (1,025 )   $ 16,679   $ 15,398       15 %     8 %
                                     
Cost of Revenue:                                    
GAAP subscription   $ 3,692                 $ 3,188              
Add back:                                    
Amortization of intangible assets     (67 )                 (67 )            
Non-GAAP subscription   $ 3,625                 $ 3,121              
                                     
GAAP professional services   $ 1,850                 $ 2,401              
Add back:                                    
Stock-based compensation     (70 )                 (146 )            
Non-GAAP professional services   $ 1,780                 $ 2,255              
                                     
GAAP total cost of revenue   $ 5,542                 $ 5,589              
Add back:                                    
Stock-based compensation     (70 )                 (146 )            
Amortization of intangible assets     (67 )                 (67 )            
Non-GAAP total cost of revenue   $ 5,405                 $ 5,376       1 %      
                                     
Gross Profit:                                    
Non-GAAP subscription   $ 12,198                 $ 9,508              
Non-GAAP professional services     101                   514              
Non-GAAP gross profit   $ 12,299                 $ 10,022       23 %      
                                     
Operating expenses:                                    
GAAP research and development   $ 3,596                 $ 3,708              
Add back:                                    
Stock-based compensation expense     (108 )                 (275 )            
Amortization of acquired intangible assets     -                   (436 )            
Non-GAAP research and development   $ 3,488                 $ 2,997       16 %      
                                     
GAAP sales and marketing   $ 4,391     $ 171     $ 4,562   $ 4,729              
Add back:                                    
Stock-based compensation expense     (54 )                 (129 )            
Amortization of acquired intangible assets                       -              
Non-GAAP sales and marketing   $ 4,337                 $ 4,600       (6 %)      
                                     
GAAP general and administrative   $ 2,046                 $ 1,768              
Add back:                                    
Stock-based compensation expense     (104 )                 (186 )            
Amortization of acquired intangible assets                                    
Non-GAAP general and administrative   $ 1,942                 $ 1,582       23 %      
                                     
GAAP operating expenses   $ 10,033                 $ 10,205              
Add back:                                    
Stock-based compensation expense     (266 )                 (590 )            
Amortization of acquired intangible assets                       (436 )            
Non-GAAP operating expenses   $ 9,767                 $ 9,179       6 %      
                                     

 

 
eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
                                     
    Six Months Ended
December 31,
  Growth Rates
    2018   2017            
    Reported under
Topic 606
  Topic 606
Impact
  Excluding
Topic 606 Impact
  Reported under
Topic 605
  Reported under
Topic 606
  Excluding Topic
606 Impact
Total deferred revenue:                                    
GAAP deferred revenue   $ 34,972     $ (4,690 )   $ 30,282   $ 29,113              
Unbilled and uncollected contractual commitments (off-balance sheet)     31,408       7,719       39,127     39,273              
Total deferred revenue:   $ 66,380     $ 3,029     $ 69,409   $ 68,386       (3 %)     1 %
                                     
Revenue:                                    
SaaS   $ 21,599     $ 40     $ 21,639   $ 14,691       47 %     47 %
Legacy support     7,951       (69 )     7,882     9,768       (19 %)     (19 %)
GAAP subscription     29,550       (29 )     29,521     24,459       21 %     21 %
GAAP professional services     3,855       (806 )     3,049     5,514       (30 %)     (45 %)
Total non-GAAP revenue   $ 33,405     $ (835 )   $ 32,570   $ 29,973       11 %     9 %
                                     
Cost of Revenue:                                    
GAAP subscription   $ 7,087                 $ 6,226              
Add back:                                    
Amortization of intangible assets     (134 )                 (134 )            
Non-GAAP subscription   $ 6,953                 $ 6,092              
                                     
GAAP professional services   $ 3,690                 $ 4,789              
Add back:                                    
Stock-based compensation     (144 )                 (209 )            
Non-GAAP professional services   $ 3,546                 $ 4,580              
                                     
GAAP total cost of revenue   $ 10,777                 $ 11,015              
Add back:                                    
Amortization of intangible assets     (134 )                 (134 )            
Stock-based compensation     (144 )                 (209 )            
Non-GAAP total cost of revenue   $ 10,499                 $ 10,672       (2 %)      
                                     
Gross Profit:                                    
Non-GAAP subscription   $ 22,597                 $ 18,367              
Non-GAAP professional services     309                   934              
Non-GAAP gross profit   $ 22,906                 $ 19,301       19 %      
                                     
Operating expenses:                                    
GAAP research and development   $ 7,155                 $ 7,139              
Add back:                                    
Stock-based compensation expense     (224 )                 (385 )            
Amortization of acquired intangible assets     (170 )                 (873 )            
Non-GAAP research and development   $ 6,761                 $ 5,881       15 %      
                                     
GAAP sales and marketing   $ 8,385     $ 293     $ 8,678   $ 8,895              
Add back:                                    
Stock-based compensation expense     (100 )                 (192 )            
Amortization of acquired intangible assets                       -              
Non-GAAP sales and marketing   $ 8,285                 $ 8,703       (5 %)      
                                     
GAAP general and administrative   $ 4,206                 $ 3,574              
Add back:                                    
Stock-based compensation expense     (230 )                 (269 )            
Amortization of acquired intangible assets                                    
Non-GAAP general and administrative   $ 3,976                 $ 3,305       20 %      
                                     
GAAP operating expenses   $ 19,746                 $ 19,608              
Add back:                                    
Stock-based compensation expense     (554 )                 (846 )            
Amortization of acquired intangible assets     (170 )                 (873 )            
Non-GAAP operating expenses   $ 19,022                 $ 17,889       6 %