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eGain Corporation$6.80($.11)(1.59%)

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 eGain Reports 31% SaaS Revenue Growth in Fiscal Third Quarter
   Wednesday, May 08, 2019 4:05:00 PM ET

SUNNYVALE, Calif., May 08, 2019 (GLOBE NEWSWIRE) -- 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 Measures
This 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 Information
eGain 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 eGain
eGain 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 Relations
Todd Kehrli or Jim Byers
Phone: 323-468-2300
Email: 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%  
                  

eGain logo.jpg

Source: eGain Corporation


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