SOURCE: eGain

eGain

September 08, 2016 16:05 ET

eGain Announces Fiscal 2016 Fourth Quarter and Full Year Financial Results

SUNNYVALE, CA--(Marketwired - Sep 8, 2016) - eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2016 fourth quarter and full year ended June 30, 2016.

Fiscal 2016 Fourth Quarter Financial Highlights

  • Total revenue was $17.6 million, up 3% from $17.1 million in the same quarter a year ago (up 8% on a constant currency basis)
  • Subscription and support revenue was $10.8 million, up 8% from $10.1 million in the same quarter a year ago (up 12% on a constant currency basis)
  • Gross margin increased to 69%, compared to 63% in the year ago quarter
  • GAAP net income was $1.4 million, or $0.05 per share on a basic and diluted basis (which included a $1.5 million income tax benefit), compared to a GAAP net loss of $2.9 million, or a loss of $0.11 per share on a basic and diluted basis, for the year ago quarter
  • Adjusted EBITDA improved to $1.9 million, up from an Adjusted EBITDA loss of $307,000 in the year ago quarter
  • Cash flow generated from operations in the fourth quarter was $2.2 million, compared to cash flow used in operations of $3.6 million in the year ago quarter
  • New subscription ACV (non-GAAP), which is the annualized value of new cloud and term license contractual obligations signed in the quarter, was $3.4 million, up 76% year over year

Fiscal 2016 Full Year Financial Results

  • Total revenue was $69.4 million, down 9% from $75.9 million in fiscal 2015 (down 6% on a constant currency basis) as the company transitioned to a cloud only offering
  • Subscription and support revenue was $42.8 million, up 1% from $42.3 million in fiscal 2015 (up 4% on a constant currency basis)
  • Gross margin increased to 66%, compared to 61% in the prior year
  • GAAP net loss was $6.2 million, or a loss of $0.23 per share on a basic and diluted basis, compared to net loss of $12.4 million, or a loss of $0.47 per share on a basic and diluted basis, for fiscal 2015
  • Adjusted EBITDA improved to $1.9 million, up from an Adjusted EBITDA loss of $1.4 million for the prior fiscal year
  • Cash flow generated from operations for fiscal 2016 was $1.9 million, compared to cash used in operations of $10.5 million for fiscal 2015
  • Total cash, cash equivalents and restricted cash as of June 30, 2016 was $11.8 million, up from $9.3 million as of June 30, 2015
  • New subscription ACV (non-GAAP) for the full year fiscal 2016 was $7.7 million, up 113% year over year
  • Total subscription ACV (non-GAAP) for the full year fiscal 2016 was $25.4 million, up 10% year over year (up 17% on a non-GAAP constant currency basis)

Ashu Roy, eGain CEO, commented, "Our solid bookings growth reflects our continued business transition to the cloud. We aligned our sales and business operations this year around a land and expand strategy that is showing positive early results. We are excited to see the enterprise market increasingly preferring our broad and deep customer engagement suite delivered via the secure eGain cloud."

Eric Smit, eGain CFO, added, "While successfully executing our cloud transition through the year, we improved our gross margin. We also delivered significantly improved net loss of $6.2 million for the full year, compared to a $12.4 million net loss a year ago, and an Adjusted EBITDA of $1.9 million for the full year, compared to a $1.4 million loss a year ago. In addition, we generated $1.9 million in cash flow from operations for the year compared to using cash of $10.5 million in the prior year."

Non-GAAP Financial Measures
These reported results include Annual Contract Value (ACV), Constant Currency and Adjusted EBITDA as supplemental information relating to our operating results. Adjusted EBITDA is a non-GAAP financial measure, defined as net income/(loss), adjusted for the impact of purchase accounting adjustments to deferred revenue related to acquisitions, depreciation and amortization, stock-based compensation expense, interest expense, net, income tax provision (benefit), amortization of acquired intangible assets, acquisition-related expenses and severance and related charges. We define ACV as being the annualized value of new cloud and term license contractual obligations signed in the quarter. 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. 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 analyses, 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
eGain will discuss its quarterly results today via teleconference at 2:00 p.m. Pacific Daylight Time. To access the live call, please dial (888) 710-4011 (U.S. toll free) or (913) 312-0380 (international), and give the participant pass code 3077138. 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. To access the replay dial-in information, please click here. An archive of the webcast will also be available on the investors section at www.egain.com.

About eGain
eGain's 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 a multichannel world. To find out more about eGain Corporation, visit http://www.egain.com/company/investors/

Headquartered in Sunnyvale, California, eGain has operating presence in North America, EMEA, and APAC. To learn more about us, visit www.eGain.com or call our offices: +1-800-821-4358 (US), +44-(0)-1753-464646 (EMEA), or +91-(0)-20-6608-9200 (APAC).

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 belief that we are seeing and will continue to see benefits of the Company's transition to a cloud-based business and will continue to see success in implementing a land and expand sales model, and that the enterprise market is increasingly preferring our broad and deep customer engagement suite delivered via the secure eGain cloud, among other matters. 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: our ability to capitalize on customer engagement; the success of organization changes; risks that our hybrid revenue model and lengthy sales cycles may negatively affect our operating results; 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 associated with new product releases; 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 filings with the Securities and Exchange Commission, including eGain's quarterly report on Form 10-Q for the quarter ended March 31, 2016 and its annual report on Form 10-K filed on September 11, 2015,, 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.

Note: eGain is a registered trademark, and the other eGain product and service names appearing in this release are trademarks or service marks, of eGain. All other company names and products are trademarks or registered trademarks of their respective companies.

   
eGain Corporation  
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
                 
    June 30, 
2016
    June 30, 
2015
 
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 11,780     $ 8,633  
  Restricted cash     5       676  
  Accounts receivable, net     11,876       13,118  
  Deferred commissions     787       633  
  Prepaid expenses     1,480       906  
  Other current assets     426       719  
    Total current assets     26,354       24,685  
Property and equipment, net     1,688       3,136  
Deferred commissions, net of current portion     325       297  
Intangible assets, net     4,839       7,620  
Goodwill     13,186       13,186  
Other assets     1,671       807  
    Total assets   $ 48,063     $ 49,731  
                 
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY                
Current liabilities:                
  Accounts payable   $ 2,099     $ 1,779  
  Accrued compensation     5,642       6,910  
  Accrued liabilities     5,670       2,664  
  Deferred revenue     12,672       14,395  
  Capital lease obligations     329       471  
  Bank borrowings     828       505  
    Total current liabilities     27,240       26,724  
Deferred revenue, net of current portion     3,045       1,417  
Capital lease obligations, net of current portion     153       295  
Bank borrowings, net of current portion     20,223       18,259  
Other long term liabilities     1,679       1,937  
    Total liabilities     52,340       48,632  
Stockholders' (deficit) equity:                
  Common stock     27       27  
  Additional paid-in capital     342,689       341,329  
  Notes receivable from stockholders     (81 )     (78 )
  Accumulated other comprehensive loss     (1,663 )     (1,170 )
  Accumulated deficit     (345,249 )     (339,009 )
    Total stockholders' (deficit) equity     (4,277 )     1,099  
    Total liabilities and stockholders' (deficit) equity   $ 48,063     $ 49,731  
                 
                 
   
eGain Corporation  
Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
(unaudited)  
                                 
    Three Months Ended     Tweleve Months Ended  
    June 30,     June 30,  
    2016     2015     2016     2015  
Revenue:                                
  Subscription and support   $ 10,828     $ 10,070     $ 42,783     $ 42,311  
  License     3,807       2,784       14,466       18,325  
  Professional services     2,987       4,220       12,126       15,277  
    Total revenue     17,622       17,074       69,375       75,913  
  Cost of subscription and support     3,065       2,918       12,401       12,082  
  Cost of license     5       3       29       61  
  Cost of professional services     2,450       3,442       11,259       16,998  
  Total cost of revenue     5,520       6,363       23,689       29,141  
    Gross profit     12,102       10,711       45,686       46,772  
Operating expenses:                                
  Research and development     3,939       3,999       16,063       16,042  
  Sales and marketing     6,311       6,716       27,722       32,703  
  General and administrative     1,743       1,986       7,774       9,313  
    Total operating expenses     11,993       12,701       51,559       58,058  
Income (loss) from operations     109       (1,990 )     (5,873 )     (11,286 )
Interest expense, net     (437 )     (256 )     (1,958 )     (834 )
Other income (expense), net     217       (157 )     728       11  
Loss before income tax benefit (provision)     (111 )     (2,403 )     (7,103 )     (12,109 )
Income tax benefit (provision)     1,488       (530 )     863       (320 )
Net income (loss)   $ 1,377     $ (2,933 )   $ (6,240 )   $ (12,429 )
                                 
Per share information:                                
  Basic net income (loss) per common share   $ 0.05     $ (0.11 )   $ (0.23 )   $ (0.47 )
  Weighted average shares used in computing basic net income (loss) per common share     27,096       26,890       27,056       26,609  
  Diluted net income (loss) per common share   $ 0.05     $ (0.11 )   $ (0.23 )   $ (0.47 )
  Weighted average shares used in computing diluted net income (loss) per common share     27,607       26,890       27,056       26,609  
                                 
                                 
                                 
Summary of amortization of purchased intangibles from businesscombinations in the costs and expenses above:                                
  Cost of revenue   $ 67     $ 67     $ 268     $ 242  
  Research and development   $ 437     $ 437     $ 1,748     $ 1,577  
  Sales and marketing   $ 173     $ 172     $ 690     $ 623  
  General and administrative   $ 18     $ 19     $ 75     $ 68  
                                 
Summary of stock-based compensation included in the costs and expenses above:                                
  Cost of revenue   $ 45     $ 67     $ 249     $ 476  
  Research and development   $ 98     $ 142     $ 472     $ 736  
  Sales and marketing   $ 53     $ 153     $ 169     $ 574  
  General and administrative   $ 4     $ 125     $ 298     $ 531  
                                   
                                   
   
eGain Corporation  
GAAP to Non-GAAP Reconciliation Table  
(in thousands)  
(unaudited)  
   
    Three Months Ended     Tweleve Months Ended  
    June 30,     June 30,  
    2016     2015     2016     2015  
  Revenue   $ 17,622     $ 17,074     $ 69,375     $ 75,913  
  Add: Purchase accounting adjustments to deferred revenue related to acquisitions     19       53       77       372  
  Non-GAAP Revenue   $ 17,641     $ 17,127     $ 69,452     $ 76,285  
                                 
Adjusted EBITDA                                
  Net income (loss)   $ 1,377     $ (2,933 )   $ (6,240 )   $ (12,429 )
  Add: Purchase accounting adjustments to deferred revenue related to acquisitions     19       53       77       372  
      Depreciation and amortization     459       605       2,057       2,503  
      Stock-based compensation expense     200       487       1,188       2,317  
      Interest expense, net     437       256       1,958       834  
      Income tax provision (benefit)     (1,488 )     530       (863 )     320  
      Amortization of acquired intangible assets     695       695       2,781       2,510  
      Acquisition-related expenses     -       -       -       844  
      Severance and related charges     224       -       959       1,294  
  Adjusted EBITDA   $ 1,923     $ (307 )   $ 1,917     $ (1,435 )
                                 
Per share information:                                
    Basic Adjusted EBITDA per common share   $ 0.07     $ (0.01 )   $ 0.07     $ (0.05 )
    Diluted Adjusted EBITDA per common share   $ 0.07     $ (0.01 )   $ 0.07     $ (0.05 )
    Weighted average shares used in computing basic Adjusted EBITDA per common share     27,096       26,890       27,056       26,609  
    Weighted average shares used in computing diluted Adjusted EBITDA per common share     27,607       26,890       27,615       26,609  
                                 
                                 
 
eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
 
    June 30,     Growth   Constant currency                        
    2016     2015     rates   growth rates [5]                        
Total subscription and support revenue ACV[1]:                                                
  Subscription   $ 25,437     $ 23,152     10%   17%                        
  Support     18,020       20,027     -10%   -1%                        
Total subscription and support revenue ACV   $ 43,457     $ 43,179     1%   9%                        
                                                 
Backlog [2]   $ 46,812     $ 42,273     11%   18%                        
                                                 
    Three Months Ended             Tweleve Months Ended          
    June 30,     Growth   Constant currency   June 30,     Growth   Constant currency
      2016       2015     rates   growth rates [5]     2016       2015     rates   growth rates [5]
                                                 
New subscription and support ACV [3]                                                
  Subscription   $ 3,378     $ 1,916     76%   93%   $ 7,667     $ 3,595     113%   124%
  Support     559       374     49%   51%     3,615       3,656     -1%   3%
Total new subscription and support ACV   $ 3,937     $ 2,290     72%   86%   $ 11,282     $ 7,251     56%   63%
                                                 
Gross bookings [4]   $ 26,900     $ 21,300     26%   42%   $ 73,900     $ 78,500     -6%   1%
                                                 
Revenue:                                                
  GAAP Subscription and support   $ 10,828     $ 10,070     8%   12%   $ 42,783     $ 42,311     1%   4%
  GAAP License     3,807       2,784               14,466       18,325          
  GAAP Professional services     2,987       4,220               12,126       15,277          
  GAAP total revenue     17,622       17,074               69,375       75,913          
  Purchase accounting adjustments to deferred revenue related to acquisitions     19       53               77       372          
  Non-GAAP revenue   $ 17,641     $ 17,127     3%   8%   $ 69,452     $ 76,285     -9%   -6%
                                                 
Cost of revenue:                                                
  GAAP subscription and support   $ 3,065     $ 2,918             $ 12,401     $ 12,082          
  Add back:                                                
    Depreciation and amortization     (288 )     (364 )             (1,259 )     (1,466 )        
    Amortization of acquired intangible assets     (67 )     (67 )             (268 )     (242 )        
    Severance and related charges     -       -               (36 )     (4 )        
  Non-GAAP subscription and support   $ 2,710     $ 2,487             $ 10,838     $ 10,370          
                                                 
  GAAP professional services   $ 2,450     $ 3,442             $ 11,259     $ 16,998          
  Add back:                                                
    Depreciation and amortization     (37 )     (80 )             (210 )     (344 )        
    Stock-based compensation expense     (45 )     (67 )             (249 )     (476 )        
    Severance and related charges     -       -               (26 )     (269 )        
  Non-GAAP professional services   $ 2,368     $ 3,295             $ 10,774     $ 15,909          
                                                   
  GAAP total cost of revenue   $ 5,520     $ 6,363             $ 23,689     $ 29,141          
  Add back:                                                
    Depreciation and amortization     (325 )     (444 )             (1,469 )     (1,810 )        
    Stock-based compensation expense     (45 )     (67 )             (249 )     (476 )        
    Amortization of acquired intangible assets     (67 )     (67 )             (268 )     (242 )        
    Severance and related charges     -       -               (62 )     (273 )        
  Non-GAAP total cost of revenue   $ 5,083     $ 5,785     -12%   -7%   $ 21,641     $ 26,340     -18%   -14%
                                                 
Gross profit:                                                
  Non-GAAP subscription and support   $ 8,137     $ 7,636             $ 32,022     $ 32,313          
  Non-GAAP license     3,802       2,781               14,437       18,264          
  Non-GAAP professional services     619       925               1,352       (632 )        
  Non-GAAP gross profit   $ 12,558     $ 11,342     11%   16%   $ 47,811     $ 49,945     -4%   -2%
                                                   
Operating expenses:                                                
  GAAP research and development   $ 3,939     $ 3,999             $ 16,063     $ 16,042          
  Add back:                                                
    Depreciation and amortization     (53 )     (76 )             (261 )     (306 )        
    Stock-based compensation expense     (98 )     (142 )             (472 )     (736 )        
    Amortization of acquired intangible assets     (437 )     (437 )             (1,748 )     (1,577 )        
    Severance and related charges     -       -               (5 )     (35 )        
  Non-GAAP research and development   $ 3,351     $ 3,344     0%   3%   $ 13,577     $ 13,388     1%   4%
                                                   
  GAAP sales and marketing   $ 6,311     $ 6,716             $ 27,722     $ 32,703          
  Add back:                                                
    Depreciation and amortization     (52 )     (62 )             (229 )     (297 )        
    Stock-based compensation expense     (53 )     (153 )             (169 )     (574 )        
    Amortization of acquired intangible assets     (173 )     (172 )             (690 )     (623 )        
    Severance and related charges     (141 )     -               (718 )     (843 )        
  Non-GAAP sales and marketing   $ 5,892     $ 6,329     -7%   1%   $ 25,916     $ 30,366     -15%   -9%
                                                   
  GAAP general and administrative   $ 1,743     $ 1,986             $ 7,774     $ 9,313          
  Add back:                                                
    Depreciation and amortization     (29 )     (23 )             (98 )     (90 )        
    Stock-based compensation expense     (4 )     (125 )             (298 )     (531 )        
    Amortization of acquired intangible assets     (18 )     (19 )             (75 )     (68 )        
    Severance and related charges     (83 )     -               (174 )     (143 )        
    Acquisition-related expenses     -       -               -       (844 )        
  Non-GAAP general and administrative   $ 1,609     $ 1,819     -12%   -8%   $ 7,129     $ 7,637     -7%   -4%
                                                   
  GAAP operating expenses   $ 11,993     $ 12,701             $ 51,559     $ 58,058          
  Add back:                                                
    Depreciation and amortization     (134 )     (161 )             (588 )     (693 )        
    Stock-based compensation expense     (155 )     (420 )             (939 )     (1,841 )        
    Amortization of acquired intangible assets     (628 )     (628 )             (2,513 )     (2,268 )        
    Severance and related charges     (224 )     -               (897 )     (1,021 )        
    Acquisition-related expenses     -       -               -       (844 )        
  Non-GAAP operating expenses   $ 10,852     $ 11,492     -6%   0%   $ 46,622     $ 51,391     -9%   -5%
                                                   
Adjusted EBITDA                                                
  Net income (loss)   $ 1,377     $ (2,933 )           $ (6,240 )   $ (12,429 )        
  Add: Purchase accounting adjustments to deferred revenue related to acquisitions     19       53               77       372          
    Depreciation and amortization     459       605               2,057       2,503          
    Stock-based compensation expense     200       487               1,188       2,317          
    Interest expense, net     437       256               1,958       834          
    Income tax provision (benefit)     (1,488 )     530               (863 )     320          
    Amortization of acquired intangible assets     695       695               2,781       2,510          
    Acquisition-related expenses     -       -               -       844          
    Severance and related charges     224       -               959       1,294          
  Adjusted EBITDA   $ 1,923     $ (307 )           $ 1,917     $ (1,435 )        
                                                   
Per share information:                                                
  Basic Adjusted EBITDA per common share   $ 0.07     $ (0.01 )           $ 0.07     $ (0.05 )        
  Diluted Adjusted EBITDA per common share   $ 0.07     $ (0.01 )           $ 0.07     $ (0.05 )        
  Weighted average shares used in computing basic Adjusted EBITDA per common share     27,096       26,890               27,056       26,609          
  Weighted average shares used in computing diluted Adjusted EBITDA per common share     27,607       26,890               27,615       26,609          
 
[1] Annual Contract Value (ACV) is defined as the annualized value of the contractual obligations in place at the end of the reporting period.
[2] Backlog presented are derived from the deferred revenue on our balance sheets plus unbilled and uncollected contractual commitments.
[3] New subscription and support ACV is defined as the annualized value of new cloud, term license and support contractual obligations signed in the reporting period.
[4] Gross bookings presented are derived from GAAP revenue plus the change in Backlog from the beginning and the end of the reporting period.
[5] 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.
 
 

Contact Information

  • MKR Group Investor Relations
    Todd Kehrli or Jim Byers
    Phone: 323-468-2300
    Email: egain@mkr-group.com