GlobeNewswire Inc | Feb 10, 2021 04:05PM EST

February 10, 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, eGains 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. eGains management uses these non-GAAP measures to compare the Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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 eGains public filings, including eGains annual report on Form 10-K filed on September11, 2020 and subsequent reports filed with the Securities and Exchange Commission, which are available on the Securities and Exchange Commissions 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 RelationsTodd Kehrli or Jim ByersPhone: 213-277-5550Email: egan@mkr-group.com

eGain CorporationCondensed Consolidated Balance Sheets(in thousands)(unaudited)

December31, June30, 2020 2020ASSETS 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, 1,148 1,066 netPrepaid 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, 2,251 2,380 net of current portionIntangible 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 771 1,385 portionOther 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 CorporationCondensed Consolidated Statements of Operations(in thousands, except per share data)(unaudited)

Three Months Ended Six Months Ended December31, December31, 2020 2019 2020 2019Revenue: 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 1,463 1,687 2,873 3,251 servicesTotal 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 4,508 4,052 9,013 8,050 developmentSales and marketing 6,266 4,821 11,897 9,559 General and 1,852 2,036 3,796 4,081 administrativeTotal operating 12,626 10,909 24,706 21,690 expensesIncome 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 1,738 1,940 3,930 3,346 tax (provision) benefitIncome tax (provision) (132 ) 33 (280 ) (156 )benefitNet 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-basedcompensation included in above costs andexpenses:Cost of revenue $ 80 $ 52 $ 155 $ 85 Research and 144 201 302 378 developmentSales and marketing 175 131 306 278 General and 27 98 133 192 administrative $ 426 $ 482 $ 896 $ 933 Amortization ofintangible assets included in above costsand expenses:Cost of revenue $ ? $ 67 $ 26 $ 134 $ ? $ 67 $ 26 $ 134

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

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

eGain CorporationOther GAAP to Non-GAAP Supplemental Financial Information(in thousands)(unaudited)

Constant Three Months Ended Growth Currency December 31, Rates 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 $ 17,711 $ 15,857 12% 11%services revenue Cost of Revenue: GAAP subscription $ 3,248 $ 3,557 Add back: Amortization of intangible ? (67 ) assetsNon-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 ? (67 ) assetsNon-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 (144 ) (201 ) expenseAmortization of acquired ? ? intangible assetsNon-GAAP research and $ 4,364 $ 3,851 13% 14%development GAAP sales and marketing $ 6,266 $ 4,821 Add back: Stock-based compensation (175 ) (131 ) expenseAmortization of acquired ? ? intangible assetsNon-GAAP sales and marketing $ 6,091 $ 4,690 30% 29% GAAP general and $ 1,852 $ 2,036 administrativeAdd back: Stock-based compensation (27 ) (98 ) expenseAmortization of acquired ? ? intangible assetsNon-GAAP general and $ 1,825 $ 1,938 (6%) (6%)administrative GAAP operating expenses $ 12,626 $ 10,909 Add back: Stock-based compensation (346 ) (430 ) expenseAmortization of acquired ? ? intangible assetsNon-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 CorporationOther GAAP to Non-GAAP Supplemental Financial Information(in thousands)(unaudited)

Constant Six Months Ended Growth Currency December 31, Rates 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 $ 34,997 $ 29,892 17% 16%services revenue Cost of Revenue: GAAP subscription $ 6,470 $ 7,307 Add back: Amortization of intangible (26 ) (134 ) assetsNon-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 (26 ) (134 ) assetsNon-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 (302 ) (378 ) expenseAmortization of acquired ? ? intangible assetsNon-GAAP research and $ 8,711 $ 7,672 14% 14%development GAAP sales and marketing $ 11,897 $ 9,559 Add back: Stock-based compensation (306 ) (278 ) expenseAmortization of acquired ? ? intangible assetsNon-GAAP sales and marketing $ 11,591 $ 9,281 25% 24% GAAP general and $ 3,796 $ 4,081 administrativeAdd back: Stock-based compensation (133 ) (192 ) expenseAmortization of acquired ? ? intangible assetsNon-GAAP general and $ 3,663 $ 3,889 (6%) (6%)administrative GAAP operating expenses $ 24,706 $ 21,690 Add back: Stock-based compensation (741 ) (848 ) expenseAmortization of acquired ? ? intangible assetsNon-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.