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01/11 07:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance, with impressive SaaS revenue growth, margin expansion, and increased cash flow. The positive outlook is reinforced by optimistic guidance for fiscal 2026, including revenue and EBITDA growth. The Q&A reveals a focus on strategic investments and partnerships, like the JPMorgan deployment, and plans to utilize cash for buybacks or acquisitions. Although some responses were vague, the overall sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
Total Revenue $23.5 million, an increase of 8% year-over-year. This growth was attributed to strong performance across the board.
SaaS Revenue Increased by 10% year-over-year, accounting for 93% of total revenue compared to 91% in the prior year. The increase was driven by product enhancements and operational efficiencies.
SaaS Gross Margin 81%, up from 77% a year ago. The improvement was due to product enhancements enabling cost-efficient deployments and operational efficiencies.
Total Gross Margin 76%, up 600 basis points from 70% a year ago. This was driven by SaaS gross margin expansion and a shift towards SaaS revenue.
Non-GAAP Operating Costs $18.8 million, down 9% year-over-year. The reduction was due to streamlined operations and automation, with savings redeployed into R&D.
Non-GAAP Net Income $4.7 million or $0.17 per share, up from $1.3 million or $0.04 per share in the prior year. This increase was due to higher revenue and cost efficiencies.
Adjusted EBITDA Margin 21%, up from 6% in the prior year. This was driven by revenue growth and cost management.
Cash Flow from Operations $10.4 million, representing a 44% operating cash flow margin, up from $1 million or 4% in the prior year. This was due to better-than-expected cash collection efforts.
Total Cash and Cash Equivalents $70.9 million, up from $62.9 million as of June 30, 2025. The increase was attributed to strong cash flow generation.
SaaS ARR for Knowledge Customers Increased 23% year-over-year, reflecting strong growth in the AI Knowledge business.
SaaS ARR for All Customers Increased 8% year-over-year, indicating overall growth in SaaS revenue.
LTM Dollar-Based SaaS Net Retention for Knowledge Customers 112%, up from 103% a year ago, showing strong customer retention and expansion in the AI Knowledge segment.
LTM Dollar-Based SaaS Net Retention for All Customers 102%, up from 90% a year ago, indicating improved customer retention overall.
LTM Dollar-Based SaaS Net Expansion Rate for Knowledge Customers 119%, reflecting strong growth and expansion within the AI Knowledge customer base.
LTM Dollar-Based SaaS Net Expansion Rate for All Customers 110%, showing overall customer expansion.
Total RPO Increased 23% year-over-year, indicating strong future revenue commitments.
Short-Term RPO $58 million, up 7% year-over-year, reflecting near-term revenue commitments.
AI Knowledge Line of Product Business: Annual Recurring Revenue (ARR) increased by 23% year-over-year, showcasing strong growth in this segment.
New Product Announcements: Three new capabilities were announced at the Solve 25 event: eGain AI Knowledge Method, eGain AI Agent 2, and eGain Composer. These products focus on AI-powered knowledge management, hybrid AI for customer service automation, and a modular AI knowledge platform for developers, respectively.
New Logo Wins: Signed a major health insurer in New York serving 2 million members and a multinational energy company serving 20 million customers. Both implemented eGain's AI knowledge solutions within 100 days.
Expansion of Existing Clients: Existing clients are expanding their use of AI agent products to leverage trusted knowledge bases, reducing costs and improving customer service.
Operational Efficiencies: SaaS gross margin increased to 81% from 77% year-over-year, driven by product enhancements and cost-efficient deployments.
Streamlined Operations: Non-GAAP operating costs decreased by 9% year-over-year due to automation and a shift towards a product-led sales model.
Leadership Expansion: Key hires include a new VP of Marketing, VP of Product Marketing, and VP of Finance to support growth and product innovation.
Focus on AI and Knowledge: Investments in AI and knowledge solutions are driving product-led growth and market momentum.
Regulatory Delays: The recent government shutdown has introduced delays and near-term uncertainty for certain professional services engagements with some government customers.
Revenue Decline from Messaging Platform: Sequential revenue decline is expected due to an approximate $600,000 reduction in revenue from the messaging platform business, which is being sunset over the next year.
Competitive Pressures in AI Solutions: The company faces challenges in differentiating its AI solutions in a competitive market, particularly in delivering nontrivial use cases with compliance and hybrid AI approaches.
Operational Efficiency Risks: While automation and product-led sales models have streamlined operations, there is a risk of over-reliance on these efficiencies potentially impacting service quality or adaptability.
Customer Retention and Expansion Risks: Although net retention rates have improved, maintaining and expanding customer relationships, especially in the AI knowledge segment, remains critical to sustaining growth.
Economic Uncertainty: Broader economic conditions, including potential impacts on customer budgets and spending priorities, could affect the adoption of eGain's solutions.
Revenue Guidance for Q2 FY 2026: Total revenue is expected to be between $22.3 million to $22.8 million. The sequential decline is primarily due to a $600,000 reduction in revenue from the messaging platform business, which is being sunset, and delays in professional services engagements with government customers due to the recent government shutdown.
Full Fiscal Year 2026 Revenue Guidance: Total revenue is projected to be between $90.5 million and $92 million, representing a return to growth for the year.
Profitability Guidance for Q2 FY 2026: GAAP net income is expected to be between $1.2 million to $1.7 million or $0.04 to $0.06 per share. Non-GAAP net income is projected to be between $1.9 million to $2.4 million or $0.07 to $0.08 per share. Adjusted EBITDA is expected to range from $2.7 million to $3.2 million, with a margin of 12% to 14%.
Full Fiscal Year 2026 Profitability Guidance: GAAP net income is expected to be between $3.5 million to $5 million or $0.12 to $0.17 per share. Non-GAAP net income is projected to be between $8.3 million to $9.8 million or $0.29 to $0.34 per share. Adjusted EBITDA is expected to range from $10.4 million to $11.9 million, with a margin of 11% to 13%.
Stock Buyback: During the quarter, we bought back $1.5 million in stock at an average price of $6.38 per share.
The earnings call summary shows strong financial performance, with impressive SaaS revenue growth, margin expansion, and increased cash flow. The positive outlook is reinforced by optimistic guidance for fiscal 2026, including revenue and EBITDA growth. The Q&A reveals a focus on strategic investments and partnerships, like the JPMorgan deployment, and plans to utilize cash for buybacks or acquisitions. Although some responses were vague, the overall sentiment is positive, suggesting a stock price increase of 2% to 8% over the next two weeks.
The earnings call presents a mixed outlook. While there's a strong focus on AI and SaaS growth, with improved customer retention and a significant deal with JPMorgan, there are concerns about messaging product churn and reduced revenue guidance. The Q&A section highlights strategic shifts and operational improvements, but also reveals uncertainties, particularly around product transitions and specific financial details. The absence of market cap data limits precise prediction, but overall, the mixed signals suggest a neutral stock price movement in the short term.
The earnings call reflects a mixed outlook: while there are positives like the mega bank deal and share repurchases, the lowered revenue guidance, client losses, and declining margins overshadow these. The Q&A reveals extended sales cycles and some management vagueness on key details. The market may react negatively, especially with revenue and income guidance lowered, despite some positive developments.
The earnings call reveals several negative indicators: lowered revenue and net income guidance, a decline in total revenue and gross margins, and increased operating costs. Despite some positive developments like new enterprise logos and share repurchases, these are overshadowed by competitive pressures, economic factors affecting client retention, and operational challenges. The Q&A highlights uncertainties in professional services, adding to concerns. Given the overall negative sentiment and the lack of market cap information, a 'Negative' stock price movement is anticipated over the next two weeks.
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