eGain Reports SaaS Revenue Growth of 21% for First Six Months of Fiscal 2021

SUNNYVALE, Calif., Feb. 10, 2021 (GLOBE NEWSWIRE) -- eGain (NASDAQ: EGAN), a leading provider of omnichannel customer engagement solutions, today announced financial results for its fiscal 2021 second quarter ended December 31, 2020.

“We delivered solid results in the quarter, with healthy SaaS revenue growth and expanding gross margins,” said Ashu Roy, eGain’s CEO. “Our SaaS logo wins are up again 100% year over year for the second quarter in a row. We continue to win new logos with our partner Cisco and during the quarter we added our first Avaya CcaaS customers. Our recently launched SmartIVR™ capability is generating strong market interest, enabling enterprises to quickly shift from voice to digital to cater to customer preference, while driving self-service automation. Our investments in sales and marketing are starting to pay off with the doubling of our sales pipeline, year over year, and we look forward to accelerated SaaS revenue growth in the quarters to come.”

Fiscal 2021 Second Quarter Financial Highlights

  • SaaS revenue was $16.2 million, up 15% year over year.
  • Total revenue was $19.2 million, up 6% year over year.
  • Subscription gross margin was 82%, up 400 basis points year over year.
  • Total gross margin was 76%, up 500 basis points year over year.
  • GAAP net income was $1.6 million, or $0.05 per diluted share, compared to GAAP net income of $2.0 million, or $0.06 per diluted share, in the year ago quarter.
  • Non-GAAP net income was $2.0 million, or $0.06 per diluted share, compared to non-GAAP net income of $2.5 million, or $0.08 per diluted share, in the year ago quarter.
  • Total cash and cash equivalents were $54.2 million, compared to $40.3 million, in the year ago quarter.

Fiscal 2021 First Six Months Financial Highlights

  • SaaS revenue was $32.1 million, up 21% year over year.
  • Total revenue was $38.3 million, up 8% year over year.
  • Subscription gross margin was 82%, up 500 basis points year over year.
  • Total gross margin was 76%, up 600 basis points year over year.
  • GAAP net income was $3.7 million, or $0.11 per diluted share, compared to GAAP net income of $3.2 million, or $0.10 per diluted share, in the year ago quarter.
  • Non-GAAP net income was $4.6 million, or $0.14 per diluted share, compared to non-GAAP net income of $4.3 million, or $0.13 per diluted share, in the year ago quarter.
  • Cash provided by operations was $5.9 million, or 16% operating cash flow margin.

Fiscal 2021 Third Quarter Financial Guidance

For the third quarter of fiscal 2021 ending March 31, 2021, eGain expects:

  • SaaS revenue of between $15.8 million to $16.3 million.
  • Total revenue of between $18.3 million to $18.8 million.
  • GAAP net loss of $500,000 to $1.5 million, or $(0.02) to $(0.05) per share.
  • Non-GAAP net loss of breakeven to $1.0 million, or $0.00 per basic share to $(0.03) per share.

Guidance Assumptions:

  • Includes an expected $300,000 sequential decline in SaaS revenue due to fewer days in the fiscal third quarter than in the second quarter.
  • Includes an expected $400,000 sequential decline in SaaS revenue due to seasonal volume increases in the second quarter that are not expected to repeat in the fiscal third quarter.
  • Includes stock-based compensation expense of approximately $500,000.
  • Includes depreciation and amortization of approximately $100,000.
  • Weighted average shares outstanding of approximately 32.9 million.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures as supplemental information relating to our operating results. Such non-GAAP financial measures are 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.

Conference Call Information

eGain will discuss its fiscal 2021 second quarter results today via teleconference at 2:00 p.m., Pacific Time. To access the live call, dial 800-437-2398 (US and Canada) or +1 929-477-0577 (international) and give the participant passcode 4421302. A live and archived webcast of the call will also be accessible on the “Investor relations” 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. To access the replay dial-in information, please click here.

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 expectations with respect to revenue and GAAP and non-GAAP net income for the third quarter of fiscal year 2021. 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, 2021 and third quarter of fiscal year 2021. The risks and uncertainties referred to above include, but are not limited to: risks associated with current economic uncertainties tied to the COVID-19 pandemic, including but not limited to its effect on customer demand for the Company’s products and services and the impact of potential delays in customer payments; risks associated with the transition to a work-from-home environment; 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, particularly in the current economic environment; risks that our 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; current general economic and market conditions associated with the COVID-19 pandemic and otherwise, 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 11, 2020 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: 213-277-5550
Email: egan@mkr-group.com

eGain Corporation 
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

      
 December 31,  June 30, 
 2020
    2020
ASSETS     
Current assets:     
Cash and cash equivalents$54,203  $46,609 
Restricted cash 7   6 
Accounts receivable, net 16,649   22,708 
Costs capitalized to obtain revenue contracts, net 1,148   1,066 
Prepaid expenses 1,817   2,514 
Other current assets 575   617 
Total current assets 74,399   73,520 
Property and equipment, net 851   713 
Operating lease right-of-use assets 2,323   2,962 
Costs capitalized to obtain revenue contracts, net of current portion 2,251   2,380 
Intangible assets, net    26 
Goodwill 13,186   13,186 
Other assets 941   918 
Total assets$93,951  $93,705 
      
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:     
Accounts payable$1,850  $2,429 
Accrued compensation 5,822   7,916 
Accrued liabilities 3,765   3,423 
Operating lease liabilities 1,675   1,753 
Deferred revenue 33,724   36,644 
Total current liabilities 46,836   52,165 
Deferred revenue, net of current portion 4,731   4,826 
Operating lease liabilities, net of current portion 771   1,385 
Other long-term liabilities 815   688 
Total liabilities 53,153   59,064 
Commitments and contingencies     
Stockholders' equity:     
Common stock 31   31 
Additional paid-in capital 376,546   374,399 
Notes receivable from stockholders (91)  (90)
Accumulated other comprehensive loss (1,270)  (1,631)
Accumulated deficit (334,418)  (338,068)
Total stockholders' equity 40,798   34,641 
Total liabilities and stockholders' equity$93,951  $93,705 

eGain Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

                
 Three Months Ended
 Six Months Ended
 December 31, 
 December 31, 
 2020
    2019
 2020
    2019
Revenue:            
Subscription$17,699  $16,343  $35,447  $31,914 
Professional services 1,534   1,812   2,849   3,430 
Total revenue 19,233   18,155   38,296   35,344 
Cost of revenue:            
Cost of subscription 3,248   3,557   6,470   7,307 
Cost of professional services 1,463   1,687   2,873   3,251 
Total cost of revenue 4,711   5,244   9,343   10,558 
Gross profit 14,522   12,911   28,953   24,786 
Operating expenses:            
Research and development 4,508   4,052   9,013   8,050 
Sales and marketing 6,266   4,821   11,897   9,559 
General and administrative 1,852   2,036   3,796   4,081 
Total operating expenses 12,626   10,909   24,706   21,690 
Income from operations 1,896   2,002   4,247   3,096 
Interest income, net 2   124   6   271 
Other expense, net (160)  (186)  (323)  (21)
Income before income tax (provision) benefit 1,738   1,940   3,930   3,346 
Income tax (provision) benefit (132)  33   (280)  (156)
Net income$1,606  $1,973  $3,650  $3,190 
Per share information:            
Earnings per share:            
Basic$0.05  $0.06  $0.12  $0.10 
Diluted$0.05  $0.06  $0.11  $0.10 
Weighted-average shares used in computation:            
Basic 30,967   30,571   30,910   30,539 
Diluted 32,732   31,880   32,605   31,858 
             
Stock-based compensation included in above costs and expenses:            
Cost of revenue$80  $52  $155  $85 
Research and development 144   201   302   378 
Sales and marketing 175   131   306   278 
General and administrative 27   98   133   192 
 $426  $482  $896  $933 
             
Amortization of intangible assets included in above costs and expenses:            
Cost of revenue$  $67  $26  $134 
 $  $67  $26  $134 

eGain Corporation
GAAP to Non-GAAP Reconciliation Table
(in thousands, except per share data)
(unaudited)

            
 Three Months Ended
December 31,
 Six Months Ended
December 31,
 2020 2019 2020 2019
Income from operations$1,896 $2,002 $4,247 $3,096
Add:           
Stock-based compensation 426  482  896  933
Amortization of intangibles assets   67  26  134
Non-GAAP income from operations$2,322 $2,551 $5,169 $4,163
            
Net income$1,606 $1,973 $3,650 $3,190
Add:           
Stock-based compensation 426  482  896  933
Amortization of intangibles assets   67  26  134
Non-GAAP net income$2,032 $2,522 $4,572 $4,257
Per share information:           
Non-GAAP earnings per share:           
Basic$0.07 $0.08 $0.15 $0.14
Diluted$0.06 $0.08 $0.14 $0.13
Weighted-average shares used in computation:           
Basic 30,967  30,571  30,910  30,539
Diluted 32,732  31,880  32,605  31,858

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]
 2020
 2019
      
Revenue:           
SaaS revenue$16,177  $14,045   15%  14%
Legacy revenue 1,522   2,298   (34%)  (32%)
GAAP subscription 17,699   16,343   8%  8%
GAAP professional services 1,534   1,812   (15%)  (16%)
Total GAAP revenue$19,233  $18,155   6%  6%
            
SaaS and professional services revenue:           
SaaS revenue$16,177  $14,045   15%  14%
Professional Services 1,534   1,812   (15%)  (16%)
Total SaaS and professional services revenue$17,711  $15,857   12%  11%
            
Cost of Revenue:           
GAAP subscription$3,248  $3,557       
Add back:           
Amortization of intangible assets    (67)      
Non-GAAP subscription$3,248  $3,490       
            
GAAP professional services$1,463  $1,687       
Add back:           
Stock-based compensation (80)  (52)      
Non-GAAP professional services$1,383  $1,635       
            
GAAP total cost of revenue$4,711  $5,244       
Add back:           
Stock-based compensation (80)  (52)      
Amortization of intangible assets    (67)      
Non-GAAP total cost of revenue$4,631  $5,125   (10%)  (9%)
            
Gross Profit:           
Non-GAAP subscription$14,451  $12,853       
Non-GAAP professional services 151   177       
Non-GAAP gross profit$14,602  $13,030   12%  11%
            
Operating expenses:           
GAAP research and development$4,508  $4,052       
Add back:           
Stock-based compensation expense (144)  (201)      
Amortization of acquired intangible assets           
Non-GAAP research and development$4,364  $3,851   13%  14%
            
GAAP sales and marketing$6,266  $4,821       
Add back:           
Stock-based compensation expense (175)  (131)      
Amortization of acquired intangible assets           
Non-GAAP sales and marketing$6,091  $4,690   30%  29%
            
GAAP general and administrative$1,852  $2,036       
Add back:           
Stock-based compensation expense (27)  (98)      
Amortization of acquired intangible assets           
Non-GAAP general and administrative$1,825  $1,938   (6%)  (6%)
            
GAAP operating expenses$12,626  $10,909       
Add back:           
Stock-based compensation expense (346)  (430)      
Amortization of acquired intangible assets           
Non-GAAP operating expenses$12,280  $10,479   17%  17%

[1] Constant currency growth rates presented are derived from converting the current period results for entities reporting in currencies other than U.S. Dollars into U.S. Dollars at the exchange rates in effect during the prior period presented rather than the actual exchange rates in effect during the current period.

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]
 2020
 2019
      
Revenue:           
SaaS$32,148  $26,462   21%  20%
Legacy revenue 3,299   5,452   (39%)  (41%)
GAAP subscription 35,447   31,914   11%  10%
GAAP professional services 2,849   3,430   (17%)  (18%)
Total GAAP revenue$38,296  $35,344   8%  7%
            
SaaS and professional services revenue:           
SaaS$32,148  $26,462   21%  20%
Professional Services 2,849   3,430   (17%)  (18%)
Total SaaS and professional services revenue$34,997  $29,892   17%  16%
            
Cost of Revenue:           
GAAP subscription$6,470  $7,307       
Add back:           
Amortization of intangible assets (26)  (134)      
Non-GAAP subscription$6,444  $7,173       
            
GAAP professional services$2,873  $3,251       
Add back:           
Stock-based compensation (155)  (85)      
Non-GAAP professional services$2,718  $3,166       
            
GAAP total cost of revenue$9,343  $10,558       
Add back:           
Stock-based compensation (155)  (85)      
Amortization of intangible assets (26)  (134)      
Non-GAAP total cost of revenue$9,162  $10,339   (11%)  (12%)
            
Gross Profit:           
Non-GAAP subscription$29,003  $24,741       
Non-GAAP professional services 131   264       
Non-GAAP gross profit$29,134  $25,005   17%  15%
            
Operating expenses:           
GAAP research and development$9,013  $8,050       
Add back:           
Stock-based compensation expense (302)  (378)      
Amortization of acquired intangible assets           
Non-GAAP research and development$8,711  $7,672   14%  14%
            
GAAP sales and marketing$11,897  $9,559       
Add back:           
Stock-based compensation expense (306)  (278)      
Amortization of acquired intangible assets           
Non-GAAP sales and marketing$11,591  $9,281   25%  24%
            
GAAP general and administrative$3,796  $4,081       
Add back:           
Stock-based compensation expense (133)  (192)      
Amortization of acquired intangible assets           
Non-GAAP general and administrative$3,663  $3,889   (6%)  (6%)
            
GAAP operating expenses$24,706  $21,690       
Add back:           
Stock-based compensation expense (741)  (848)      
Amortization of acquired intangible assets           
Non-GAAP operating expenses$23,965  $20,842   15%  14%

[1] Constant currency growth rates presented are derived from converting the current period results for entities reporting in currencies other than U.S. Dollars into U.S. Dollars at the exchange rates in effect during the prior period presented rather than the actual exchange rates in effect during the current period.


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