EGAN eGain Corporation

eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2019 third quarter ended March 31, 2019.

Ashu Roy, eGain CEO, commented, “We are pleased with our financial performance in the third quarter, with healthy SaaS revenue, net income and cash flow from operations. We also completed a successful equity raise to strengthen our balance sheet, positioning us well to capitalize on strong market demand for AI-powered digital customer engagement.”

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

• Total revenue was $17.0 million, up 8% year over year.
• SaaS revenue was $11.8 million, up 31% year over year.
• Subscription revenue, which includes SaaS and legacy support revenue, was $15.3 million, up 15% year over year and comprises of 90% of total revenue.
• GAAP net income was $1.4 million, or $0.05 per share on a basic and diluted basis, compared to a GAAP net loss of $99,000, or $(0.00) per share on a basic and diluted basis, for Q3 2018.
• Non-GAAP net income was $2.0 million, or $0.07 per share on a basic basis and $0.06 on a diluted basis, compared to non-GAAP net income of $713,000, or $0.03 per share on a basic basis and $0.02 on a diluted basis, for Q3 2018.
• Cash provided by operations in the third quarter was $3.8 million, compared to cash used in operations of $189,000 in Q3 2018.
• Total cash and cash equivalents as of March 31, 2019 was $31.1 million, compared to $11.5 million as of June 30, 2018.

Non-GAAP Financial MeasuresThis 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 analysis 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 InformationeGain will discuss its quarterly results today via teleconference at 2:00 p.m. Pacific Daylight Time. To access the live call, please dial (800) 667-5617 (U.S. toll free) or (334) 323-0509 (international), and give the participant pass code 9335927. 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. An archive of the webcast will also be available on the investors section at www.egain.com.

About eGaineGain 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 we see positive business and customer momentum and that our pipeline and the demand for our AI-powered customer engagement platform offering is strong and positions us for enhanced growth opportunities, 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 RelationsTodd Kehrli or Jim ByersPhone: 323-468-2300Email: egain@mkr-group.com

eGain Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
		March 31, 2019 (*)				June 30, 2018
ASSETS
Current assets:
Cash and cash equivalents		$	31,078			$	11,498
Restricted cash			6				6
Accounts receivable, net			15,139				7,389
Costs capitalized to obtain revenue contracts, net			734				986
Prepaid expenses			2,217				2,374
Other current assets			497				285
Total current assets			49,671				22,538
Property and equipment, net			456				559
Costs capitalized to obtain revenue contracts, net of current portion			1,928				891
Intangible assets, net			362				733
Goodwill			13,186				13,186
Other assets			2,171				1,715
Total assets		$	67,774			$	39,622
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	3,683			$	3,905
Accrued compensation			6,007				5,706
Accrued liabilities			2,290				2,285
Deferred revenue			26,316				18,364
Capital lease obligations			1				42
Bank borrowings, net of deferred financing costs			7				259
Total current liabilities			38,304				30,561
Deferred revenue, net of current portion			6,985				7,833
Bank borrowings, net of current portion and deferred financing costs			—				8,941
Other long-term liabilities			969				1,000
Total liabilities			46,258				48,335
Commitments and contingencies
Stockholders' equity (deficit):
Common stock			30				28
Additional paid-in capital			368,599				346,222
Notes receivable from stockholders			(87	)			(85	)
Accumulated other comprehensive loss			(1,584	)			(1,618	)
Accumulated deficit			(345,442	)			(353,260	)
Total stockholders' equity (deficit)			21,516				(8,713	)
Total liabilities and stockholders' equity (deficit)		$	67,774			$	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								Nine Months Ended
		March 31,								March 31,
		2019				2018				2019				2018
Revenue:
Subscription		$	15,318			$	13,364			$	44,868			$	37,823
Professional services			1,686				2,381				5,540				7,895
Total revenue			17,004				15,745				50,408				45,718
Cost of revenue:
Cost of subscription			3,625				3,317				10,711				9,543
Cost of professional services			1,672				2,118				5,362				6,907
Total cost of revenue			5,297				5,435				16,073				16,450
Gross profit			11,707				10,310				34,335				29,268
Operating expenses:
Research and development			3,622				3,641				10,777				10,780
Sales and marketing			4,320				4,360				12,706				13,255
General and administrative			1,976				1,865				6,180				5,439
Total operating expenses			9,918				9,866				29,663				29,474
Income (loss) from operations			1,789				444				4,672				(206	)
Interest expense, net			(120	)			(215	)			(449	)			(798	)
Other expense, net			(199	)			(188	)			(189	)			(349	)
Income (loss) before income tax expense			1,470				41				4,034				(1,353	)
Income tax expense			(72	)			(140	)			(32	)			(102	)
Net income (loss)		$	1,398			$	(99	)		$	4,002			$	(1,455	)
Per share information:
Earnings (loss) per share:
Basic		$	0.05			$	(0.00	)		$	0.14			$	(0.05	)
Diluted		$	0.05			$	(0.00	)		$	0.13			$	(0.05	)
Weighted-average shares used in computation:
Basic			28,426				27,350				27,993				27,258
Diluted			30,229				27,350				29,909				27,258
Stock-based compensation included in above costs and expenses:
Cost of revenue		$	97			$	51			$	241			$	260
Research and development			163				59				387				444
Sales and marketing			81				74				181				266
General and administrative			158				124				388				393
		$	499			$	308			$	1,197			$	1,363
Amortization of intangible assets included in above costs and expenses:
Cost of revenue		$	67			$	67			$	201			$	201
Research and development			—				437				170				1,310
		$	67			$	504			$	371			$	1,511

 

eGain Corporation
GAAP to Non-GAAP Reconciliation Table
(in thousands)
(unaudited)
		Three Months Ended March 31,							Nine Months Ended March 31,
		2019			2018				2019			2018
Income (loss) from operations		$	1,789		$	444			$	4,672		$	(206	)
Add:
Stock-based compensation			499			308				1,197			1,363
Amortization of acquired intangibles			67			504				371			1,511
Non-GAAP income from operations		$	2,355		$	1,256			$	6,240		$	2,668
Net income (loss)		$	1,398		$	(99	)		$	4,002		$	(1,455	)
Add:
Stock-based compensation			499			308				1,197			1,363
Amortization of acquired intangibles			67			504				371			1,511
Non-GAAP net income		$	1,964		$	713			$	5,570		$	1,419
Per share information:
Non-GAAP earnings per share:
Basic		$	0.07		$	0.03			$	0.20		$	0.05
Diluted		$	0.06		$	0.02			$	0.19		$	0.05
Weighted-average shares used in computation:
Basic			28,426			27,350				27,993			27,258
Diluted			30,229			29,048				29,909			27,518

 

eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
		Three Months Ended March 31,															Growth Rates
		2019											2018
		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		$	33,301			$	(3,670	)		$	29,631		$	29,586
Unbilled and uncollected contractual commitments (off-balance sheet)			30,516				5,998				36,514			41,525
Total deferred revenue:		$	63,817			$	2,328			$	66,145		$	71,111				(10	%)		(7	%)
Revenue:
SaaS		$	11,849			$	84			$	11,933		$	9,062				31	%		32	%
Legacy support			3,469				(21	)			3,448			4,302				(19	%)		(20	%)
GAAP subscription			15,318				63				15,381			13,364				15	%		15	%
GAAP professional services			1,686				70				1,756			2,381				(29	%)		(26	%)
Total non-GAAP revenue		$	17,004			$	133			$	17,137		$	15,745				8	%		9	%
Cost of Revenue:
GAAP subscription		$	3,625										$	3,317
Add back:
Amortization of intangible assets			(67	)										(67	)
Non-GAAP subscription		$	3,558										$	3,250
GAAP professional services		$	1,672										$	2,118
Add back:
Stock-based compensation			(97	)										(51	)
Non-GAAP professional services		$	1,575										$	2,067
GAAP total cost of revenue		$	5,297										$	5,435
Add back:
Stock-based compensation			(97	)										(51	)
Amortization of intangible assets			(67	)										(67	)
Non-GAAP total cost of revenue		$	5,133										$	5,317				(3	%)
Gross Profit:
Non-GAAP subscription		$	11,760										$	10,114
Non-GAAP professional services			111											314
Non-GAAP gross profit		$	11,871										$	10,428				14	%
Operating expenses:
GAAP research and development		$	3,622										$	3,641
Add back:
Stock-based compensation expense			(163	)										(59	)
Amortization of acquired intangible assets			-											(437	)
Non-GAAP research and development		$	3,459										$	3,145				10	%
GAAP sales and marketing		$	4,320			$	146			$	4,466		$	4,360
Add back:
Stock-based compensation expense			(81	)										(74	)
Amortization of acquired intangible assets			—											-
Non-GAAP sales and marketing		$	4,239										$	4,286				(1	%)
GAAP general and administrative		$	1,976										$	1,865
Add back:
Stock-based compensation expense			(158	)										(124	)
Amortization of acquired intangible assets			—											—
Non-GAAP general and administrative		$	1,818										$	1,741				4	%
GAAP operating expenses		$	9,918										$	9,866
Add back:
Stock-based compensation expense			(402	)										(257	)
Amortization of acquired intangible assets			—											(437	)
Non-GAAP operating expenses		$	9,516										$	9,172				4	%

 

eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
		Nine Months Ended March 31,															Growth Rates
		2019											2018
		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		$	33,301			$	(3,670	)		$	29,631		$	29,586
Unbilled and uncollected contractual commitments (off-balance sheet)			30,516				5,998				36,514			41,525
Total deferred revenue:		$	63,817			$	2,328			$	66,145		$	71,111				(10	%)		(7	%)
Revenue:
SaaS		$	33,448			$	124			$	33,572		$	23,754				41	%		41	%
Legacy support			11,420				(90	)			11,330			14,069				(19	%)		(19	%)
GAAP subscription			44,868				34				44,902			37,823				19	%		19	%
GAAP professional services			5,540				(735	)			4,805			7,895				(30	%)		(39	%)
Total non-GAAP revenue		$	50,408			$	(701	)		$	49,707		$	45,718				10	%		9	%
Cost of Revenue:
GAAP subscription		$	10,711										$	9,543
Add back:
Amortization of intangible assets			(201	)										(201	)
Non-GAAP subscription		$	10,510										$	9,342
GAAP professional services		$	5,362										$	6,907
Add back:
Stock-based compensation			(241	)										(260	)
Non-GAAP professional services		$	5,121										$	6,647
GAAP total cost of revenue		$	16,073										$	16,450
Add back:
Stock-based compensation			(241	)										(260	)
Amortization of intangible assets			(201	)										(201	)
Non-GAAP total cost of revenue		$	15,631										$	15,989				(2	%)
Gross Profit:
Non-GAAP subscription		$	34,358										$	28,481
Non-GAAP professional services			419											1,248
Non-GAAP gross profit		$	34,777										$	29,729				17	%
Operating expenses:
GAAP research and development		$	10,777										$	10,780
Add back:
Stock-based compensation expense			(387	)										(444	)
Amortization of acquired intangible assets			(170	)										(1,310	)
Non-GAAP research and development		$	10,220										$	9,026				13	%
GAAP sales and marketing		$	12,706			$	438			$	13,144		$	13,255
Add back:
Stock-based compensation expense			(181	)										(266	)
Amortization of acquired intangible assets			—											-
Non-GAAP sales and marketing		$	12,525										$	12,989				(4	%)
GAAP general and administrative		$	6,180										$	5,439
Add back:
Stock-based compensation expense			(388	)										(393	)
Amortization of acquired intangible assets			—											—
Non-GAAP general and administrative		$	5,792										$	5,046				15	%
GAAP operating expenses		$	29,663										$	29,474
Add back:
Stock-based compensation expense			(956	)										(1,103	)
Amortization of acquired intangible assets			(170	)										(1,310	)
Non-GAAP operating expenses		$	28,537										$	27,061				5	%