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eGain Reports SaaS Revenue Growth of 19% Year Over Year and 13% Sequentially in Fiscal Second Quarter

SUNNYVALE, Calif., Feb. 06, 2020 (GLOBE NEWSWIRE) -- eGain (EGAN), a leading provider of omnichannel customer engagement solutions, today announced financial results for its fiscal 2020 second quarter ended December 31, 2019.

“We delivered solid financial performance in the second quarter, with top and bottom line results ahead of our guidance and Street consensus,” said Ashu Roy, eGain CEO. “We are excited about our newly announced OEM agreement with Avaya who will sell our cloud-based digital engagement capabilities as part of their Avaya Workspaces for Elite platform.”

Fiscal 2020 Second Quarter Financial Highlights

  • SaaS revenue was $14.0 million, up 19% year over year.
  • SaaS and professional services revenue was $15.9 million, up 16% year over year and comprised 87% of total revenue, up from 77% in Q2 2019.
  • Total revenue was $18.2 million, up 3% year over year.
  • Non-GAAP gross margin improved to 72%, up from 69% in Q2 2019.
  • GAAP net income was $2.0 million, or $0.06 per share on a basic and diluted basis, compared to GAAP net income of $2.0 million, or $0.07 per share on a basic and diluted basis, for Q2 2019.
  • Non-GAAP net income was $2.5 million, or $0.08 per share on both a basic and diluted basis, compared to non-GAAP net income of $2.4 million, or $0.09 per share on a basic and $0.08 per share on a diluted basis, for Q2 2019.
  • Cash provided by operations was $5.3 million, compared to cash provided by operations of $863,000 in Q2 2019.

Fiscal 2020 Financial Guidance

For the fiscal year ending June 30, 2020, eGain

  • Is increasing the bottom end of its previously provided guidance range for full year SaaS revenue from $53.8 million to $54.8 million. The new guidance range for SaaS revenue for the fiscal 2020 full year is between $54.8 million to $55.4 million (on a constant currency basis), which would represent growth between 22% and 24% year over year;
  • Expects SaaS and professional services revenue of between $61.2 million and $62.4 million (on a constant currency basis), which would represent growth of between 18% and 20% year over year;
  • Expects total revenue for the fiscal 2020 full year to be at the lower end of its previously provided guidance of between $72.0 million to $73.6 million (on a constant currency basis), which would represent growth of 7% year over year; and
  • Is raising its previously provided guidance for non-GAAP net income of between breakeven to $2.0 million, or $0.00 to $0.06 per diluted share. To the new guidance for non-GAAP net income is between $3.1 million to 4.5 million, or $0.10 to $0.14 per diluted share.

For the third quarter of fiscal 2020, eGain expects

  • SaaS revenue of $13.8 million to $14.1 million;
  • SaaS and professional services revenue of $15.5 million to $15.8 million;
  • Total revenue of $17.5 million to $17.8 million; and
  • To generate non-GAAP net income of breakeven to $0.5 million, or $0.00 to $0.01 per diluted share.

Non-GAAP Financial Measures

This press release includes non-GAAP operating income and non-GAAP net income as supplemental information relating to our operating results. Non-GAAP net income is defined as net income 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 analysis and for budgeting and planning purposes. Defined in the supplemental information is SaaS and legacy revenue, where legacy revenue is defined as license, maintenance and support contracts on perpetual license arrangements that we no longer sell. 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.

Conference Call Information

eGain will discuss its fiscal 2020 second quarter results today via teleconference at 2:00 p.m. Pacific Time. To access the live call, dial (800) 353-6461 (US and Canada) or +1 (334) 323-0501 (international) and give the participant passcode 8468938. A live and archived webcast of the call will be accessible on the “Investors” section of the Company’s website at www.egain.com. In addition, a phone replay will be available approximately two hours following the end of the call and will remain available for one week.

About eGain

eGain customer engagement solutions deliver digital transformation for leading brands – powered by virtual assistance, AI, knowledge, and analytics. Our comprehensive suite of applications helps clients deliver memorable, digital-first customer experiences in an omnichannel world. To find out more about eGain, visit http://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 are based on current expectations and include our beliefs regarding demand for our products and services, including, without limitation: our belief that we see positive business and customer momentum; our belief that our pipeline and the demand for our AI-powered customer engagement platform offering is strong; expected increase in growth investment, including the partner ecosystem; and our beliefs with respect to SaaS revenue growth and net income growth for the fiscal year ending June 30, 2020 and the third quarter of fiscal year 2020. 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, the Company’s 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 fiscal year ending June 30, 2020 and third quarter of fiscal year 2020. The risks and uncertainties referred to above include, but are not limited to: 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; 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; 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 economic and market conditions which may adversely affect our industry, general political or destabilizing events, including war, conflict or acts of terrorism, the effect of evolving domestic and foreign government regulations, including those addressing data privacy 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 filed on September 12, 2019 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 and does 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 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 Investor Relations
Todd Kehrli or Jim Byers
Phone: 323-468-2300
Email: egan@mkr-group.com 

eGain Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
           
  December 31,    June 30, 
  2019 (*)   2019
ASSETS          
Current assets:          
Cash and cash equivalents $ 40,314     $ 31,860  
Restricted cash   7       7  
Accounts receivable, net   14,204       20,411  
Costs capitalized to obtain revenue contracts, net   858       740  
Prepaid expenses   1,645       2,517  
Other current assets   688       1,054  
Total current assets   57,716       56,589  
Property and equipment, net   528       525  
Operating lease right-of-use assets   3,733        
Costs capitalized to obtain revenue contracts, net of current portion   1,857       1,777  
Intangible assets, net   160       294  
Goodwill   13,186       13,186  
Other assets   1,578       1,383  
Total assets $ 78,758     $ 73,754  
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Accounts payable $ 1,357     $ 4,173  
Accrued compensation   4,835       5,480  
Accrued liabilities   2,619       2,353  
Operating lease liabilities   1,700        
Deferred revenue   30,335       30,688  
Total current liabilities   40,846       42,694  
Deferred revenue, net of current portion   6,080       5,801  
Operating lease liabilities, net of current portion   2,259        
Other long-term liabilities   691       952  
Total liabilities   49,876       49,447  
Commitments and contingencies          
Stockholders' equity:          
Common stock   31       31  
Additional paid-in capital   372,676       371,099  
Notes receivable from stockholders   (89 )     (88 )
Accumulated other comprehensive loss   (1,650 )     (1,459 )
Accumulated deficit   (342,086 )     (345,276 )
Total stockholders' equity   28,882       24,307  
Total liabilities and stockholders' equity $ 78,758     $ 73,754  
           


eGain Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                       
  Three Months Ended   Six Months Ended
  December 31,    December 31, 
  2019
  2018
  2019
  2018
Revenue:                      
Subscription $ 16,343     $ 15,823     $ 31,914     $ 29,550  
Professional services   1,812       1,881       3,430       3,855  
Total revenue   18,155       17,704       35,344       33,405  
Cost of revenue:                      
Cost of subscription   3,557       3,692       7,307       7,087  
Cost of professional services   1,687       1,850       3,251       3,690  
Total cost of revenue   5,244       5,542       10,558       10,777  
Gross profit   12,911       12,162       24,786       22,628  
Operating expenses:                      
Research and development   4,052       3,596       8,050       7,155  
Sales and marketing   4,821       4,391       9,559       8,385  
General and administrative   2,036       2,046       4,081       4,206  
Total operating expenses   10,909       10,033       21,690       19,746  
Income from operations   2,002       2,129       3,096       2,882  
Interest income (expense), net   124       (139 )     271       (329 )
Other income (expense), net   (186 )     (6 )     (21 )     11  
Income before income tax (provision) benefit   1,940       1,984       3,346       2,564  
Income tax (provision) benefit   33       16       (156 )     40  
Net income $ 1,973     $ 2,000     $ 3,190     $ 2,604  
Per share information:                      
Earnings per share:                      
Basic $ 0.06     $ 0.07     $ 0.10     $ 0.09  
Diluted $ 0.06     $ 0.07     $ 0.10     $ 0.09  
Weighted-average shares used in computation:                      
Basic   30,571       27,875       30,539       27,781  
Diluted   31,880       29,420       31,858       29,687  
                       
Stock-based compensation included in above costs and expenses:                      
Cost of revenue $ 52     $ 70     $ 85     $ 144  
Research and development   201       108       378       224  
Sales and marketing   131       54       278       100  
General and administrative   98       104       192       230  
  $ 482     $ 336     $ 933     $ 698  
                       
Amortization of intangible assets included in above costs and expenses:                      
Cost of revenue $ 67     $ 67     $ 134     $ 134  
Research and development                     170  
  $ 67     $ 67     $ 134     $ 304  
                       


eGain Corporation
GAAP to Non-GAAP Reconciliation Table
(in thousands)
(unaudited)
                       
  Three Months Ended
December 31,
  Six Months Ended
December 31,
  2019   2018   2019   2018
Income from operations $ 2,002   $ 2,129   $ 3,096   $ 2,882
Add:                      
Stock-based compensation   482     336     933     698
Amortization of acquired intangibles   67     67     134     304
Non-GAAP income from operations $ 2,551   $ 2,532   $ 4,163   $ 3,884
                       
Net income $ 1,973   $ 2,000   $ 3,190   $ 2,604
Add:                      
Stock-based compensation   482     336     933     698
Amortization of acquired intangibles   67     67     134     304
Non-GAAP net income $ 2,522   $ 2,403   $ 4,257   $ 3,606
Per share information:                      
Non-GAAP earnings per share:                      
Basic $ 0.08   $ 0.09   $ 0.14   $ 0.13
Diluted $ 0.08   $ 0.08   $ 0.13   $ 0.12
Weighted-average shares used in computation:                      
Basic   30,571     27,875     30,539     27,781
Diluted   31,880     29,420     31,858     29,687
                       


eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
                   
  Three Months Ended
December 31,
  Growth Rates   Constant Currency
Growth Rates [1]
  2019
  2018
       
Revenue:                  
SaaS $ 14,045     $ 11,830     19%   19%
Legacy revenue   2,298       3,993     (42%)   (43%)
GAAP subscription   16,343       15,823     3%   3%
GAAP professional services   1,812       1,881     (4%)   (5%)
Total GAAP revenue $ 18,155     $ 17,704     3%   2%
                   
SaaS and professional services revenue:                  
SaaS $ 14,045     $ 11,830     19%   19%
Professional Services   1,812       1,881     (4%)   (5%)
Total SaaS and professional services revenue $ 15,857     $ 13,711     16%   15%
                   
Cost of Revenue:                  
GAAP subscription $ 3,557     $ 3,692          
Add back:                  
Amortization of intangible assets   (67 )     (67 )        
Non-GAAP subscription $ 3,490     $ 3,625          
                   
GAAP professional services $ 1,687     $ 1,850          
Add back:                  
Stock-based compensation   (52 )     (70 )        
Non-GAAP professional services $ 1,635     $ 1,780          
                   
GAAP total cost of revenue $ 5,244     $ 5,542          
Add back:                  
Stock-based compensation   (52 )     (70 )        
Amortization of intangible assets   (67 )     (67 )        
Non-GAAP total cost of revenue $ 5,125     $ 5,405     (5%)   (6%)
                   
Gross Profit:                  
Non-GAAP subscription $ 12,853     $ 12,198          
Non-GAAP professional services   177       101          
Non-GAAP gross profit $ 13,030     $ 12,299     6%   6%
                   
Operating expenses:                  
GAAP research and development $ 4,052     $ 3,596          
Add back:                  
Stock-based compensation expense   (201 )     (108 )        
Amortization of acquired intangible assets                  
Non-GAAP research and development $ 3,851     $ 3,488     10%   10%
                   
GAAP sales and marketing $ 4,821     $ 4,391          
Add back:                  
Stock-based compensation expense   (131 )     (54 )        
Amortization of acquired intangible assets                  
Non-GAAP sales and marketing $ 4,690     $ 4,337     8%   8%
                   
GAAP general and administrative $ 2,036     $ 2,046          
Add back:                  
Stock-based compensation expense   (98 )     (104 )        
Amortization of acquired intangible assets                  
Non-GAAP general and administrative $ 1,938     $ 1,942     (0%)   0%
                   
GAAP operating expenses $ 10,909     $ 10,033          
Add back:                  
Stock-based compensation expense   (430 )     (266 )        
Amortization of acquired intangible assets                  
Non-GAAP operating expenses $ 10,479     $ 9,767     7%   7%
                   


eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
                   
                   
  Six Months Ended
December 31,
  Growth Rates   Constant Currency
Growth Rates [1]
  2019
  2018
       
Revenue:                  
SaaS $ 26,462     $ 21,414     24%   25%
Legacy revenue   5,452       8,136     (33%)   (32%)
GAAP subscription   31,914       29,550     8%   9%
GAAP professional services   3,430       3,855     (11%)   (10%)
Total GAAP revenue $ 35,344     $ 33,405     6%   7%
                   
SaaS and professional services revenue:                  
SaaS $ 26,462     $ 21,414     24%   25%
Professional Services   3,430       3,855     (11%)   (10%)
Total SaaS and professional services revenue $ 29,892     $ 25,269     18%   19%
                   
Cost of Revenue:                  
GAAP subscription $ 7,307     $ 7,087          
Add back:                  
Amortization of intangible assets   (134 )     (134 )        
Non-GAAP subscription $ 7,173     $ 6,953          
                   
GAAP professional services $ 3,251     $ 3,690          
Add back:                  
Stock-based compensation   (85 )     (144 )        
Non-GAAP professional services $ 3,166     $ 3,546          
                   
GAAP total cost of revenue $ 10,558     $ 10,777          
Add back:                  
Stock-based compensation   (85 )     (144 )        
Amortization of intangible assets   (134 )     (134 )        
Non-GAAP total cost of revenue $ 10,339     $ 10,499     (2%)   (1%)
                   
Gross Profit:                  
Non-GAAP subscription $ 24,741     $ 22,597          
Non-GAAP professional services   264       309          
Non-GAAP gross profit $ 25,005     $ 22,906     9%   11%
                   
Operating expenses:                  
GAAP research and development $ 8,050     $ 7,155          
Add back:                  
Stock-based compensation expense   (378 )     (224 )        
Amortization of acquired intangible assets         (170 )        
Non-GAAP research and development $ 7,672     $ 6,761     13%   14%
                   
GAAP sales and marketing $ 9,559     $ 8,385          
Add back:                  
Stock-based compensation expense   (278 )     (100 )        
Amortization of acquired intangible assets                  
Non-GAAP sales and marketing $ 9,281     $ 8,285     12%   12%
                   
GAAP general and administrative $ 4,081     $ 4,206          
Add back:                  
Stock-based compensation expense   (192 )     (230 )        
Amortization of acquired intangible assets                  
Non-GAAP general and administrative $ 3,889     $ 3,976     (2%)   (2%)
                   
GAAP operating expenses $ 21,690     $ 19,746          
Add back:                  
Stock-based compensation expense   (848 )     (554 )        
Amortization of acquired intangible assets         (170 )        
Non-GAAP operating expenses $ 20,842     $ 19,022     10%   10%