- Total Revenue: $22.4 million for Q2, down 6% year over year.
- SaaS Revenue: Accounted for 93% of total revenue.
- Non-GAAP Gross Margin: 71% for the quarter, compared to 72% a year ago.
- Non-GAAP Operating Costs: $14.7 million, up 9% from $13.5 million in the year-ago quarter.
- Non-GAAP Net Income: $1.3 million or $0.05 per share (basic), $0.04 per share (diluted).
- Operating Cash Flow: $6.4 million, representing a 29% operating cash flow margin.
- Cash and Cash Equivalents: $70.5 million at the end of the quarter.
- SaaS ARR for AI Knowledge Customers: Increased 17% year over year.
- Total SaaS ARR: Decreased 3% year over year, up 2% sequentially.
- Net Retention Rate for AI Knowledge Customers: 99%.
- Net Retention Rate for All Customers: 89%.
- Net Expansion Rate for AI Knowledge Customers: 104%.
- Net Expansion Rate for All Customers: 105%.
- Total RPO: Decreased 5% year over year, up 5% sequentially.
- Short Term RPO: $51 million, down 9% year over year.
- Share Repurchase: Approximately 421,000 shares repurchased at an average price of $5.73 per share, totaling $2.4 million.
- Fiscal 2025 Revenue Guidance: Lowered to $88.5 million to $90 million.
- Fiscal 2025 Non-GAAP Net Income Guidance: Lowered to $4.1 million to $4.7 million, or $0.14 to $0.16 per share.
- Fiscal 2025 GAAP Net Income Guidance: Raised to $1.1 million to $1.7 million, or $0.04 to $0.06 per share.
- Q3 2025 Revenue Guidance: Expected between $21 million to $21.5 million.
- Q3 2025 GAAP Net Loss Guidance: Expected between $300,000 to $800,000, or $0.01 to $0.03 per share.
- Q3 2025 Non-GAAP Net Income Guidance: Expected between breakeven to $500,000, or 0 to $0.02 per share.
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- eGain Corp (EGAN, Financial) closed several exciting new enterprise deals, including a major US airline, a leading interactive entertainment company, and a global money transfer company.
- The company's AI knowledge hub offering is driving growth, with a 17% increase in AI knowledge hub ARR year over year.
- eGain Corp (EGAN) is seeing a growing number of seven-figure deals in its sales pipeline, indicating strong demand for its solutions.
- The company successfully hosted its eGain Solve 24 event, where clients shared success stories about the value derived from eGain's AI capabilities.
- eGain Corp (EGAN) is on track to launch its new omnichannel conversational product, eGain AI agent, in the current quarter, with strong customer interest.
Negative Points
- Total revenue for the second quarter was $22.4 million, down 6% year over year, primarily due to the loss of two large clients.
- The company lowered its fiscal 2025 revenue guidance to $88.5 million to $90 million, down from the original guidance of $92 million to $93 million.
- Non-GAAP net income decreased to $1.3 million from $3.4 million in the previous year, reflecting a decline in profitability.
- The strategic importance of AI knowledge hub deals is extending sales cycles, leading to delays in closing large deals.
- eGain Corp (EGAN) reduced its professional services revenue target by $2 million for fiscal 2025, impacting overall revenue expectations.
Q & A Highlights
Q: Can you explain the significant reduction in professional services revenue guidance and any staffing adjustments needed?
A: Ashutosh Roy, CEO, explained that the reduction is primarily due to the development of more connectors and built-in capabilities, reducing the need for custom integration. Additionally, partnerships are being developed to create third-party implementation capabilities. Eric Smit, CFO, mentioned that they will assess staffing to align with revised numbers.
Q: Regarding the major US airline deal, what was the competitive landscape and what systems did you displace?
A: Ashutosh Roy, CEO, stated that the airline had multiple knowledge systems, including a legacy stand-alone solution, a CRM platform with Microsoft, and SharePoint. The deal was both a replacement and a consolidation effort.
Q: What are the drivers behind the changes in your guidance for fiscal 2025?
A: Eric Smit, CFO, noted two main factors: the reduction in professional services revenue due to improved product capabilities and the strategic importance of the AI knowledge hub, which is extending sales cycles for large deals. This has led to a lowered revenue guidance range.
Q: How is the AI knowledge hub impacting your business and sales pipeline?
A: Ashutosh Roy, CEO, highlighted that the AI knowledge hub is driving growth, with a 17% increase in AI knowledge hub ARR year over year. The hub is becoming more strategic for global enterprises, leading to larger deals in the pipeline, although with longer sales cycles.
Q: What are the expectations for SaaS revenue and net income for fiscal 2025?
A: Eric Smit, CFO, stated that SaaS revenue is expected to account for approximately 93% of total revenue. Non-GAAP net income guidance has been lowered to $4.1 million to $4.7 million, or $0.14 to $0.16 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
