EGain Corporation (EGAN) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Total Revenue (Q4 FY25) $23.2 million, up 11% sequentially and up 3% year-over-year. This represents the first year-over-year increase in revenue in 8 quarters, attributed to momentum building in the AI Knowledge business.
Non-GAAP Gross Margin (Q4 FY25) 73%, up from 71% a year ago. SaaS gross margin for the quarter was 80%, up from 76% a year ago, reflecting improved operational efficiency.
Non-GAAP Operating Costs (Q4 FY25) $13.3 million, down 3% sequentially and down 2% year-over-year, indicating cost control measures.
GAAP Net Income (Q4 FY25) $30.9 million or $1.13 per share on a basic basis and $1.11 on a diluted basis, driven by a one-time income tax valuation allowance of approximately $29 million.
Adjusted EBITDA Margin (Q4 FY25) 19%, up from 11% in the year-ago quarter, reflecting improved profitability.
Non-GAAP Net Income (Q4 FY25) $2.4 million or $0.09 per share, compared to $2.5 million or $0.08 per share in the year-ago quarter, showing stable performance.
Total Revenue (FY25) $88.4 million, down 5% year-over-year, mainly due to churn in the messaging business at the end of FY24.
SaaS Revenue (FY25) $81.9 million, accounting for 93% of total revenue, showing a strong focus on SaaS offerings.
SaaS Gross Margin (FY25) 78%, up from 77% in FY24, indicating slight improvement in efficiency.
Non-GAAP Operating Costs (FY25) $56 million, flat compared to the prior year, reflecting stable operational expenses.
Adjusted EBITDA Margin (FY25) 10%, compared to 12% in the prior fiscal year, reflecting a slight decline in profitability.
Non-GAAP Net Income (FY25) $5.7 million or $0.20 per share, compared to $12.3 million or $0.40 per share in the prior fiscal year, reflecting a decline due to increased R&D investments.
Cash Flow from Operations (FY25) $5.3 million or 6% operating cash flow margin, compared to $12.5 million or 13% in FY24, reflecting reduced cash flow generation.
Total Cash and Cash Equivalents (End of FY25) $62.9 million, compared to $70 million as of June 30, 2024, reflecting share repurchases and other expenditures.
Share Repurchase Program (FY25) Repurchased 2.6 million shares at an average price of $6.03 per share, totaling $15.8 million, reflecting confidence in undervalued shares.
SaaS ARR for Knowledge Customers (FY25) Increased 25% year-over-year or 22% in constant currency, reflecting strong growth in the AI Knowledge business.
SaaS ARR for All Customers (FY25) Increased 11% year-over-year or 9% in constant currency, showing overall growth in SaaS offerings.
LTM Dollar-Based SaaS Net Retention for Knowledge Customers (FY25) 115% or 104% in constant currency, up from 98% a year ago, indicating strong customer retention and expansion.
LTM Dollar-Based SaaS Net Retention for All Customers (FY25) 105% or 103% in constant currency, up from 88% a year ago, showing improved customer retention.
LTM Dollar-Based SaaS Net Expansion Rate for Knowledge Customers (FY25) 121% or 118% in constant currency, reflecting strong growth in customer spending.
LTM Dollar-Based SaaS Net Expansion Rate for All Customers (FY25) 114% or 111% in constant currency, showing overall growth in customer spending.
Total RPO (FY25) Increased 17% year-over-year, reflecting strong future revenue commitments.
Short-Term RPO (FY25) $63 million, up 4% year-over-year, indicating near-term revenue growth.
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Operating Highlights
AI Agent for contact center: Launched in June 2025, this product helps service associates handle over 15 million phone calls annually with real-time guidance powered by trusted answers from the Knowledge Hub.
AI Agent for customer self-service: Launched in March 2025, this product has been enhanced with connectors to platforms like SharePoint, Genesys, and Salesforce.
New client acquisition: Signed the largest nonprofit healthcare network in New Jersey and one of the nation's largest credit unions as clients, leveraging the AI Knowledge Hub for knowledge management and trusted answers.
Partnership with JPMorgan Chase: Secured a major deal with JPMorgan Chase, expanding the AI Knowledge Hub to serve all U.S. Chase business employees. JPMorgan Chase also issued warrants and nominated a senior executive to eGain's board as an observer.
R&D investment: Increased R&D spending by 15% in fiscal 2025 and plans to grow it by 6% in fiscal 2026 to enhance AI Knowledge products.
Operational streamlining: Streamlined operations using AI, improving productivity and quality, with savings reinvested into R&D and profitability.
Sunsetting non-strategic products: Messaging products will be sunset in fiscal 2026 to focus on core AI Knowledge offerings.
Focus on AI Knowledge market: Targeting 20%+ growth in ARR from AI Knowledge offerings, reflecting the foundational need for trusted knowledge in AI applications.
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Risk or Challenges
Market Conditions: The company acknowledges that 95% of AI investments are not showing significant ROI, which could impact the adoption of their AI solutions. Additionally, the sunsetting of non-core messaging products in fiscal 2026 may lead to a revenue decline of approximately $4.7 million.
Competitive Pressures: The company faces challenges from competitors in the AI-powered agent tools market, as many businesses have been unsuccessful in implementing solutions from other providers. This highlights the need for differentiation and trusted knowledge infrastructure.
Regulatory Hurdles: No explicit regulatory risks were mentioned in the transcript.
Supply Chain Disruptions: No explicit supply chain risks were mentioned in the transcript.
Economic Uncertainties: The company’s financial performance is partially dependent on macroeconomic conditions, which were not explicitly discussed but could influence customer spending on AI solutions.
Strategic Execution Risks: The company is increasing R&D investments by 6% in fiscal 2026 to maintain product leadership, which could strain financial resources if not managed effectively. Additionally, the reliance on partnerships, such as with JPMorgan Chase, introduces dependency risks.
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Guidance & Outlook
AI Knowledge ARR Growth: The company expects total AI Knowledge ARR to grow by approximately 20% in fiscal 2026.
R&D Investment: R&D spending will increase by roughly 6% year-over-year in fiscal 2026 to extend product leadership in the AI infrastructure market.
Sunsetting Non-Core Products: The company plans to sunset its messaging products in fiscal 2026, which currently have an ARR impact of approximately $4.7 million.
Revenue Guidance for Fiscal 2026: Total revenue is expected to be between $90.5 million and $92 million for the full fiscal year.
Gross Margin Expansion: Gross margins are expected to expand to between 74% and 75% in fiscal 2026, up from 71% in fiscal 2025, driven by AI automation.
Adjusted EBITDA Growth: Adjusted EBITDA is projected to increase by 20% to 40% year-over-year, with a margin of 11% to 13% for fiscal 2026.
Q1 Fiscal 2026 Revenue Guidance: Total revenue for the first quarter of fiscal 2026 is expected to be between $23 million and $23.5 million.
Q1 Fiscal 2026 Adjusted EBITDA: Adjusted EBITDA for Q1 fiscal 2026 is expected to be between $3.7 million and $4.4 million, with a margin of 16% to 19%.
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Shareholder Return Plan
Share Repurchase Program: During fiscal '25, under our share repurchase program, we repurchased 2.6 million shares at an average price of $6.03 per share, totaling $15.8 million. Of the $40 million authorized, $1.2 million remain available under the program at year-end. As we announced today in a separate press release, our Board of Directors approved a $20 million increase in our stock repurchase program, bringing the aggregate amount we may purchase from $40 million to $60 million of our outstanding common stock. This reflects our belief that our shares are undervalued and our confidence in our AI Knowledge market opportunity.
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Key Q&A
Q:What drives the decision to sunset the messaging products heading into fiscal '26?
A:The company is not investing much in new product capability for messaging products, leading to pressure in retaining clients who seek new solutions. They believe focusing on AI Knowledge will yield a higher ROI.
Q:What is the expected pacing of the impact from sunsetting messaging products?
A:The impact will begin in Q2, with the run rate reducing by roughly 50%. By the end of fiscal '26 and into Q1 of fiscal '27, the run rate is expected to go down to 0.
Q:What is the thought process behind the JPMorgan Board seat and $1.4 million compensation?
A:JPMorgan is seen as a strategic client and design partner, especially in AI and automation. Strengthening this relationship provides a competitive advantage in addressing financial services needs.
Q:How is the company handling AI solution pilots and their conversion to deals?
A:The company runs 30-day pilots and has a self-sign-up model. Conversion rates have stabilized at 2 out of 3, showing improvement from earlier volatility.
Q:What is the nature of the OpEx and COGS changes, and are they sustainable?
A:The changes are sustainable. They stem from migrating clients to a new cloud platform and automating cloud operations, leading to efficiency improvements.
Q:What is the breakdown of SaaS ARR, particularly for AI Knowledge?
A:AI Knowledge accounts for nearly 60% of total ARR. The remaining 40% is split between Analytics Hub and Conversation Hub, with messaging being sunset.
Q:What is the outlook for Analytics Hub and Conversation Hub?
A:Analytics Hub is expected to decline slowly and act as a cash cow. Conversation Hub may see growth in fiscal '27 as AI Knowledge Hub pulls in escalation management.
Q:Are there any mega deals in the pipeline similar to JPMorgan?
A:There are no deals of JPMorgan's size, but there are several 7-figure opportunities, driven by AI and encompassing broader employee bases.
Q:What is the outlook for services gross margins?
A:The goal is to improve services margins to breakeven or slightly positive as the year progresses.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact breakdown of the remaining 40% ARR components beyond mentioning Analytics Hub and Conversation Hub. Additionally, while they discussed the strategic importance of JPMorgan, they did not elaborate on the specific terms or long-term implications of the Board seat and compensation.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Agent
AI Knowledge
Agent product
Financial Results
Full Financial
JPMC
JPMorgan Chase
Knowledge ARR
Knowledge Hub
Results Conference
Solve customer
answer Knowledge
bank
booking
business
center agent
center product
contact center
customer event
demo
desktop
eGain Full
eGain Solve
employee
experience
garbage
infrastructure AI
investment RD
knowledge AI
knowledge infrastructure
leader
need knowledge
product CX
tax
workshop
EGAN Transcript
eGain Corporation (EGAN) Q1 2026 Earnings Call Transcript
Positive11-12
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.
EGain Corporation (EGAN) Q4 2025 Earnings Call Transcript
Unknown9-4
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.
eGain Corporation (NASDAQ:EGAN) Q3 2025 Earnings Call Transcript
Unknown5-16
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.
Earnings call transcript: eGain Q2 2024 misses EPS forecast, stock drops
Unknown2-13
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.
EGAN Slides
EGAN Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
