SOURCE: eGain

eGain

February 04, 2016 16:05 ET

eGain Announces Fiscal 2016 Second Quarter Financial Results

SUNNYVALE, CA--(Marketwired - Feb 4, 2016) - eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2016 second quarter ended December 31, 2015.

Ashu Roy, eGain's CEO, commented, "I am pleased with our performance this quarter, with gross bookings up 35% year over year including a large Cisco SolutionsPlus license expansion deal. We were also awarded a large expansion of our agreement with the Veterans Administration that significantly increased their web self-service sessions. On the cloud front, we signed a leading US financial institution that will deploy eGain's Knowledge Management solution."

"We continued to streamline our operations to increase efficiencies and saw significant improvement to our adjusted EBITDA and cash flow for the quarter. This improvement was driven by a 16% reduction in operating expenses year to date, which included a 21% year to date decrease in sales and marketing, while still improving our overall sales productivity. With a growing pipeline, particularly around new cloud business, we look to finish the fiscal year strong as we execute on our new land and expand sales strategy."

Fiscal 2016 Second Quarter Results:

Total GAAP revenue for the fiscal 2016 second quarter was $19.0 million, compared to $18.9 million in the same period last year. Subscription and support revenue for the fiscal second quarter was $10.8 million, compared to $11.0 million in the same period last year. License revenue for the fiscal second quarter was $5.1 million, an increase of 41% on a year-over-year basis. Professional services revenue for the fiscal second quarter was $3.1 million, a decrease of 28% on a year-over-year basis.

For the six months ended December 31, 2015, total GAAP revenue was $35.5 million, a decrease of 10% from the same period last year. Subscription and support revenue was $21.6 million, an increase of 1% from the same period last year. License revenue was $7.5 million, a decrease of 27% from the same period last year. Professional services revenue was $6.3 million, a decrease of 20% from the same period last year.

Gross profit for the fiscal second quarter was $13.0 million, compared to $10.7 million for the second quarter of fiscal 2015. Gross margin for the fiscal second quarter was 69%, compared to 56% in the second quarter last year, attributable to the business mix. The subscription and support revenue gross margin for the fiscal second quarter was 71%, compared to 70% in the same quarter last year.

For the six months ended December 31, 2015, gross profit was $23.0 million, compared to $24.4 million for the same period last year. Gross margin was 65%, compared to 62% for the same period last year. The subscription and support revenue gross margin for the six months ended December 31, 2015 was 71%, compared to 71% for the same period last year.

Adjusted EBITDA for the fiscal second quarter was $1.0 million, or $0.04 per share on a basic and diluted basis, compared to an adjusted EBITDA net loss of $2.4 million, or $0.09 per share on a basic and diluted basis, for the second quarter of fiscal 2015.

For the six months ended December 31, 2015, adjusted EBITDA was $274,000, or $0.01 per share on a basic and diluted basis compared to an adjusted EBITDA net loss of $1.5 million, or $0.06 per share on a basic and diluted basis, for the same period last year.

GAAP net loss for the fiscal second quarter was $1.4 million, or a loss of $0.05 per share on a basic and diluted basis, compared to a GAAP net loss of $5.5 million, or a loss of $0.20 per share on a basic and diluted basis, for the second quarter of last year. Net loss for the fiscal second quarter includes amortization of acquired intangible assets of $695,000, stock-based compensation expense of $229,000 and interest, net expense of $676,000 and tax expense of $113,000, compared to amortization of acquired intangible assets of $695,000, stock-based compensation expense of $750,000 and interest, net expense of $145,000 and tax benefit of $191,000 in the second quarter last year.

For the six months ended December 31, 2015, GAAP net loss was $4.6 million, or a loss of $0.17 per share on a basic and diluted basis, compared to net loss of $7.1 million, or $0.27 per share on a basic and diluted basis, for the same period last year. Net loss for the six months ended December 31, 2015 includes amortization of acquired intangible assets of $1.4 million, stock-based compensation expense of $742,000 and interest, net expense of $1.0 million and tax expense of $447,000, compared to amortization of acquired intangible assets of $1.1 million, stock-based compensation expense of $1.3 million and interest, net expense of $268,000 and tax benefit of $159,000 for the same period last year.

Total cash, cash equivalents increased to $9.8 million as of December 31, 2015, from $8.6 million as of June 30, 2015.

Total deferred revenue (which includes both deferred revenue on the balance sheet of $12.7 million and unbilled deferred revenue that remains off balance sheet of $28.3 million, collectively representing contractual commitments that have not been recognized as revenue) was $41.0 million as of December 31, 2015, compared to $42.3 million as of June 30, 2015.

Non-GAAP Financial Measures
These reported results include Annual Contract Value (ACV), Gross Bookings, Backlog 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, amortization of acquired intangible assets, acquisition-related expenses and severance and related charges. 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 Standard Time. To access the live call, please dial (888) 395-3227 (U.S./Canada toll free) or (719) 457-2645 (international), and give the participant pass code 8593463. A live webcast of the call can be accessed from the investors section at www.egain.com. An audio replay of the conference call can be accessed at (888) 203-1112 (U.S. toll-free) or (719) 457-0820 (international). The replay will be available starting two hours after the call and remain in effect for one week. The required pass code is 8593463. 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 organizational changes, including a growing business pipeline, particularly around new cloud business, the Company's belief that it will finish the fiscal year strongly, and that we can execute on our new land and expand sales strategy, 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 annual report on Form 10-K filed on September 11, 2015, and eGain's quarterly reports on Form 10-Q, 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)  
             
    December 31,
2015
    June 30,
2015
 
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 9,792     $ 8,633  
  Restricted cash     17       676  
  Accounts receivable, net     10,830       13,118  
  Deferred commissions     514       633  
  Prepaid and other current assets     1,445       1,625  
    Total current assets     22,598       24,685  
Property and equipment, net     2,542       3,136  
Deferred commissions, net of current portion     342       297  
Intangible assets, net     6,229       7,620  
Goodwill     13,186       13,186  
Other assets     783       807  
    Total assets   $ 45,680     $ 49,731  
                 
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY                
Current liabilities:                
  Accounts payable   $ 2,170     $ 1,779  
  Accrued compensation     4,993       6,910  
  Accrued liabilities     3,089       2,664  
  Deferred revenue     11,510       14,395  
  Capital lease obligations     323       471  
  Bank borrowings     807       505  
    Total current liabilities     22,892       26,724  
Deferred revenue, net of current portion     1,198       1,417  
Capital lease obligations, net of current portion     227       295  
Bank borrowings, net of current portion     22,348       18,259  
Other long term liabilities     1,881       1,937  
    Total liabilities     48,546       48,632  
Stockholders' (deficit) equity:                
  Common stock     27       27  
  Additional paid-in capital     342,145       341,329  
  Notes receivable from stockholders     (78 )     (78 )
  Accumulated other comprehensive loss     (1,335 )     (1,170 )
  Accumulated deficit     (343,625 )     (339,009 )
    Total stockholders' (deficit) equity     (2,866 )     1,099  
    Total liabilities and stockholders' (deficit) equity   $ 45,680     $ 49,731  
                     
                     
                     
eGain Corporation  
Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
(unaudited)  
                       
  Three Months Ended     Six Months Ended  
  December 31,     December 31,  
  2015     2014     2015     2014  
Revenue:                              
  Subscription and support $ 10,783     $ 10,956     $ 21,625     $ 21,401  
  License   5,064       3,583       7,490       10,311  
  Professional services   3,139       4,364       6,347       7,895  
    Total revenue   18,986       18,903       35,462       39,607  
  Cost of subscription and support   3,116       3,264       6,195       6,143  
  Cost of license   9       26       16       54  
  Cost of professional services   2,851       4,951       6,237       9,031  
  Total cost of revenue   5,976       8,241       12,448       15,228  
    Gross profit   13,010       10,662       23,014       24,379  
Operating expenses:                              
  Research and development   4,016       4,160       7,916       7,901  
  Sales and marketing   7,617       9,599       14,285       18,104  
  General and administrative   1,893       2,573       4,139       5,515  
    Total operating expenses   13,526       16,332       26,340       31,520  
Loss from operations   (516 )     (5,670 )     (3,326 )     (7,141 )
Interest expense, net   (676 )     (145 )     (1,009 )     (268 )
Other income (expense), net   (74 )     163       166       153  
Loss before income tax benefit (provision)   (1,266 )     (5,652 )     (4,169 )     (7,256 )
Income tax benefit (provision)   (113 )     191       (447 )     159  
Net loss $ (1,379 )   $ (5,461 )   $ (4,616 )   $ (7,097 )
                               
Per share information:                              
  Basic and diluted net loss per common share $ (0.05 )   $ (0.20 )   $ (0.17 )   $ (0.27 )
  Weighted average shares used in computing basic and diluted net loss per common share $ 27,036     $ 26,657     $ 27,029     $ 26,422  
                               
Summary of amortization of purchased intangibles from business combinations in the costs and expenses above:                              
  Cost of revenue $ 67     $ 67     $ 134     $ 108  
  Research and development $ 437     $ 437     $ 874     $ 704  
  Sales and marketing $ 172     $ 172     $ 344     $ 278  
  General and administrative $ 19     $ 19     $ 38     $ 30  
                               
Summary of stock-based compensation included in the costs and expenses above:                              
  Cost of revenue $ 66     $ 174     $ 160     $ 303  
  Research and development $ 123     $ 217     $ 270     $ 410  
  Sales and marketing $ (62 )   $ 195     $ 70     $ 319  
  General and administrative $ 102     $ 164     $ 242     $ 276  
                                 
                                 
                                 
eGain Corporation  
GAAP to Non-GAAP Reconciliation Table  
(in thousands)  
(unaudited)  
   
  Three Months Ended     Six Months Ended  
  December 31,     December 31,  
  2015     2014     2015     2014  
  Revenue $ 18,986     $ 18,903     $ 35,462     $ 39,607  
  Add: Purchase accounting adjustments to deferred revenue related to acquisitions   19       162       39       248  
  Non-GAAP Revenue $ 19,005     $ 19,065     $ 35,501     $ 39,855  
                               
Adjusted EBITDA                              
  Net loss $ (1,379 )   $ (5,461 )   $ (4,616 )   $ (7,097 )
  Add: Purchase accounting adjustments to deferred revenue related to acquisitions   19       162       39       248  
    Depreciation and amortization   543       623       1,092       1,291  
    Stock-based compensation expense   229       750       742       1,308  
    Interest expense, net   676       145       1,009       268  
    Income tax benefit (provision)   113       (191 )     447       (159 )
    Amortization of acquired intangible assets   695       695       1,390       1,120  
    Acquisition-related expenses   -       229       -       844  
    Severance and related charges   147       644       171       704  
  Adjusted EBITDA $ 1,043     $ (2,404 )   $ 274     $ (1,473 )
                               
Per share information:                              
  Basic Adjusted EBITDA per common share $ 0.04     $ (0.09 )   $ 0.01     $ (0.06 )
  Diluted Adjusted EBITDA per common share $ 0.04     $ (0.09 )   $ 0.01     $ (0.06 )
  Weighted average shares used in computing basic Adjusted EBITDA per common share   27,036       26,657       27,029       26,422  
  Weighted average shares used in computing diluted Adjusted EBITDA per common share   27,625       26,657       27,614       26,422  
                               
                               
                               
eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
                                         
    December 31,     Growth   Constant currency                    
    2015     2014     rates   growth rates [4]                    
Total recurring revenue ACV[1]:                                                
  Subscription   $ 22,759     $ 21,845     4%   6%                        
  Support     20,538       19,684     4%   8%                        
Total recurring revenue ACV   $ 43,297     $ 41,529     4%   7%                        
                                                 
Backlog [2]   $ 40,998     $ 41,672     -2%   0%                        
                                                 
    Three Months Ended             Six Months Ended          
    December 31,     Growth   Constant currency   December 31,     Growth   Constant currency
    2015     2014     rates   growth rates [4]   2015     2014     rates   growth rates [4]
                                                 
Gross bookings [3]   $ 20,292     $ 14,991     35%   42%   $ 34,148     $ 41,551     -18%   -13%
                                                 
Revenue:                                                
  GAAP Subscription and support   $ 10,783     $ 10,956             $ 21,625     $ 21,401          
  GAAP License     5,064       3,583               7,490       10,311          
  GAAP Professional services     3,139       4,364               6,347       7,895          
  GAAP total revenue     18,986       18,903               35,462       39,607          
  Purchase accounting adjustments to deferred revenue related to acquisitions     19       162               39       248          
  Non-GAAP revenue   $ 19,005     $ 19,065     0%   2%   $ 35,501     $ 39,855     -11%   -8%
                                                 
Cost of revenue:                                                
  GAAP subscription and support   $ 3,116     $ 3,264             $ 6,195     $ 6,143          
  Add back:                                                
    Depreciation and amortization     (332 )     (354 )             (662 )     (752 )        
    Amortization of acquired intangible assets     (67 )     (67 )             (134 )     (108 )        
  Non-GAAP subscription and support   $ 2,717     $ 2,843             $ 5,399     $ 5,283          
                                                   
  GAAP professional services   $ 2,851     $ 4,951             $ 6,237     $ 9,031          
  Add back:                                                
    Depreciation and amortization     (58 )     (91 )             (127 )     (178 )        
    Stock-based compensation expense     (66 )     (174 )             (160 )     (303 )        
  Non-GAAP professional services   $ 2,727     $ 4,686             $ 5,950     $ 8,550          
                                                   
  GAAP total cost of revenue   $ 5,976     $ 8,241             $ 12,448     $ 15,228          
  Add back:                                                
    Depreciation and amortization     (390 )     (445 )             (789 )     (930 )        
    Stock-based compensation expense     (66 )     (174 )             (160 )     (303 )        
    Amortization of acquired intangible assets     (67 )     (67 )             (134 )     (108 )        
  Non-GAAP total cost of revenue   $ 5,453     $ 7,555     -28%   -26%   $ 11,365     $ 13,887     -18%   -15%
                                                 
Gross profit:                                                
  Non-GAAP subscription and support   $ 8,085     $ 8,230             $ 16,265     $ 16,321          
  Non-GAAP license     5,055       3,601               7,474       10,301          
  Non-GAAP professional services     412       (321 )             397       (654 )        
  Non-GAAP gross profit   $ 13,552     $ 11,510     18%   20%   $ 24,136     $ 25,968     -7%   -5%
                                                 
Operating expenses:                                                
  GAAP research and development   $ 4,016     $ 4,160             $ 7,916     $ 7,901          
  Add back:                                                
    Depreciation and amortization     (78 )     (79 )             (149 )     (151 )        
    Stock-based compensation expense     (123 )     (217 )             (270 )     (410 )        
    Amortization of acquired intangible assets     (437 )     (437 )             (874 )     (704 )        
    Severance and related charges     -       (10 )             -       (10 )        
  Non-GAAP research and development   $ 3,378     $ 3,417     -1%   1%   $ 6,623     $ 6,626     0%   3%
                                                   
  GAAP sales and marketing   $ 7,617     $ 9,599             $ 14,285     $ 18,104          
  Add back:                                                
    Depreciation and amortization     (58 )     (77 )             (120 )     (165 )        
    Stock-based compensation expense     62       (195 )             (70 )     (319 )        
    Amortization of acquired intangible assets     (172 )     (172 )             (344 )     (278 )        
    Severance and related charges     (147 )     (491 )             (171 )     (551 )        
  Non-GAAP sales and marketing   $ 7,302     $ 8,664     -16%   -7%   $ 13,580     $ 16,791     -19%   -12%
                                                   
  GAAP general and administrative   $ 1,893     $ 2,573             $ 4,139     $ 5,515          
  Add back:                                                
    Depreciation and amortization     (17 )     (22 )             (34 )     (45 )        
    Stock-based compensation expense     (102 )     (164 )             (242 )     (276 )        
    Amortization of acquired intangible assets     (19 )     (19 )             (38 )     (30 )        
    Severance and related charges     -       (143 )             -       (143 )        
    Acquisition-related expenses     -       (229 )             -       (844 )        
  Non-GAAP general and administrative   $ 1,755     $ 1,996     -12%   -9%   $ 3,825     $ 4,177     -8%   -6%
                                                   
  GAAP operating expenses   $ 13,526     $ 16,332             $ 26,340     $ 31,520          
  Add back:                                                
    Depreciation and amortization     (153 )     (178 )             (303 )     (361 )        
    Stock-based compensation expense     (163 )     (576 )             (582 )     (1,005 )        
    Amortization of acquired intangible assets     (628 )     (628 )             (1,256 )     (1,012 )        
    Severance and related charges     (147 )     (644 )             (171 )     (704 )        
    Acquisition-related expenses     -       (229 )             -       (844 )        
  Non-GAAP operating expenses   $ 12,435     $ 14,077     -12%   -5%   $ 24,028     $ 27,594     -13%   -7%
 
[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 balance sheet plus unbilled and uncollected contractual commitments.
[3] Gross bookings presented are derived from GAAP revenue plus change in Backlog from the beginning and the end of the reporting period.
[4] 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

  • eGain
    Charles Messman, VP Finance
    Phone: 408-636-4500
    Email: iregain@egain.com

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