SOURCE: eGain

eGain

September 06, 2017 16:28 ET

eGain Reports 33% Sequential Growth in SaaS Revenue and $3.9 Million in Operating Cash Generated in Q4 2017

SUNNYVALE, CA--(Marketwired - Sep 6, 2017) - eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2017 fourth quarter and full year ended June 30, 2017.

Fiscal 2017 Fourth Quarter Financial Highlights

  • SaaS revenue was $6.8 million, up 33% sequentially from Q3 2017. 
  • Total revenue was $14.6 million, up 6% sequentially from Q3 2017.
  • Recurring revenue was $11.6 million, up 14% sequentially from Q3 2017 and 79% of total revenue.
  • Recurring revenue gross margin improved to 73%, up from 69% in Q3 2017.
  • GAAP net loss improved to $45,000, or $(0.00) per share on a basic and diluted basis, compared to a GAAP net loss of $2.5 million, or $(0.09) per share on a basic and diluted basis, for Q3 2017.
  • GAAP operating loss improved to $331,000, compared to $1.8 million in Q3 2017, and non-GAAP operating income improved to $251,000, compared to non-GAAP operating loss of $1.2 million in Q3 2017.
  • Cash generated from operations was $3.9 million, up 39% sequentially from $2.8 million in Q3 2017.
  • Non-GAAP total deferred revenue was $60.2 million as of June 30, 2017, up 13% from $53.5 million as of March 31, 2017. 

Ashu Roy, eGain CEO, commented, "We are pleased to report solid sequential growth in SaaS and recurring revenue in our first quarter since completing our transition to a recurring revenue business model. We continue to gain market share with our industry leading customer engagement solutions and look forward to continued SaaS and recurring revenue growth, as well as generating operating cash in fiscal 2018."

Fiscal 2017 Full Year Financial Highlights

  • SaaS revenue was $23.9 million, up 12% on a constant currency basis from $22.5 million in fiscal 2016.
  • Total revenue was $58.2 million, down 16% from $69.4 million in fiscal 2016, with the decrease primarily due to the expected decline in perpetual license revenue from $14.5 million in fiscal 2016 to $4.6 million in fiscal 2017, reflecting the company's successful completion of its transition to a recurring revenue business model.
  • Recurring revenue was $43.6 million, up 10% on a constant currency basis from $42.8 million in fiscal 2016.
  • Recurring revenue gross margin was 73%, up from 71% in the same period last year.
  • GAAP net loss was $6.0 million, or $(0.22) per share on a basic and diluted basis, compared to a GAAP net loss of $6.2 million, or $(0.23) per share on a basic and diluted basis, for fiscal 2016.
  • GAAP operating loss improved to $3.7 million, compared to a GAAP operating loss of $5.9 million for fiscal 2016 and non-GAAP operating loss improved to $968,000, compared to a non-GAAP operating loss of $1.9 million for fiscal 2016.
  • Cash flow from operations improved to $5.4 million, a 184% increase compared to $1.9 million in fiscal 2016.
  • Total cash, cash equivalents and restricted cash as of June 30, 2017, was $10.6 million, compared to $11.8 million as of June 30, 2016. The company paid down approximately $5.6 million in debt during fiscal 2017.

Non-GAAP Financial Measures
These reported results include Constant Currency where noted and non-GAAP operating income/ (loss) as supplemental information relating to our operating results. Non-GAAP operating income/ (loss) is defined as operating income/ (loss) adjusted for stock-based compensation expense and amortization of acquired intangible assets. 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. Recurring revenue is made up of SaaS revenue and legacy support revenue. SaaS revenue includes ratable revenue from cloud subscription, term and ratable licenses and associated support contracts. Legacy support is revenue associated with perpetual license arrangements the Company is no longer selling. Total deferred revenue includes both GAAP deferred revenue and non-GAAP unbilled deferred revenue that remains off balance sheet, collectively representing contractual commitments that have not been recognized as revenue. 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 (877) 741-4253 (U.S. toll free) or (719) 325-4754 (international), and give the participant pass code 1427089. 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 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 belief that we have successfully completed our transition to a SaaS based business, that we are seeing and will continue to see benefits to the Company from this transition, including growth in market share, SaaS and recurring revenue growth, and generating operating cash, 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: 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 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 13, 2016 and quarterly reports on Form 10-Q for the quarters ended September 30, 2016 and December 31, 2016, and March 31, 2017 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.

   
eGain Corporation  
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
             
    June 30,
2017
    June 30,
2016
 
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 10,627     $ 11,780  
  Restricted cash     6       5  
  Accounts receivable, net     7,201       11,876  
  Deferred commissions     690       787  
  Prepaid expenses     1,737       1,480  
  Other current assets     370       426  
    Total current assets     20,631       26,354  
Property and equipment, net     1,059       1,688  
Deferred commissions, net of current portion     694       325  
Intangible assets, net     2,748       4,839  
Goodwill     13,186       13,186  
Other assets     1,433       1,671  
    Total assets   $ 39,751     $ 48,063  
                 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
  Accounts payable   $ 2,363     $ 2,099  
  Accrued compensation     4,339       5,642  
  Accrued liabilities     2,364       5,670  
  Deferred revenue     18,332       12,672  
  Capital lease obligations     108       329  
  Bank borrowings     805       828  
    Total current liabilities     28,311       27,240  
Deferred revenue, net of current portion     4,887       3,045  
Capital lease obligations, net of current portion     42       153  
Bank borrowings, net of current portion     14,802       20,223  
Other long-term liabilities     1,330       1,679  
    Total liabilities     49,372       52,340  
Stockholders' deficit:                
  Common stock     27       27  
  Additional paid-in capital     343,367       342,689  
  Notes receivable from stockholders     (83 )     (81 )
  Accumulated other comprehensive loss     (1,663 )     (1,663 )
  Accumulated deficit     (351,269 )     (345,249 )
    Total stockholders' deficit     (9,621 )     (4,277 )
    Total liabilities and stockholders' deficit   $ 39,751     $ 48,063  
                     
                     
   
eGain Corporation  
Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
(unaudited)  
             
    Three Months Ended     Twelve Months Ended  
    June 30,     June 30,  
    2017     2016     2017     2016  
Revenue:                                
  Recurring   $ 11,603     $ 10,828     $ 43,585     $ 42,783  
  License     333       3,807       4,557       14,466  
  Professional services     2,685       2,987       10,073       12,126  
    Total revenue     14,621       17,622       58,215       69,375  
  Cost of recurring     3,080       3,065       11,956       12,401  
  Cost of license     15       5       50       29  
  Cost of professional services     2,318       2,450       9,193       11,259  
  Total cost of revenue     5,413       5,520       21,199       23,689  
    Gross profit     9,208       12,102       37,016       45,686  
Operating expenses:                                
  Research and development     3,487       3,939       13,753       16,063  
  Sales and marketing     4,553       6,311       20,436       27,722  
  General and administrative     1,499       1,743       6,552       7,774  
    Total operating expenses     9,539       11,993       40,741       51,559  
Income (loss) from operations     (331 )     109       (3,725 )     (5,873 )
Interest expense, net     (379 )     (437 )     (1,730 )     (1,958 )
Other income (expense), net     (79 )     217       (32 )     728  
Loss before income tax provision     (789 )     (111 )     (5,487 )     (7,103 )
Income tax benefit (provision)     744       1,488       (533 )     863  
Net income (loss)   $ (45 )   $ 1,377     $ (6,020 )   $ (6,240 )
                                 
Per share information:                                
  Basic net income (loss) per common share   $ (0.00 )   $ 0.05     $ (0.22 )   $ (0.23 )
  Weighted average shares used in computing basic net income (loss) per common share     27,114       27,096       27,108       27,056  
  Diluted net income (loss) per common share   $ (0.00 )   $ 0.05     $ (0.22 )   $ (0.23 )
  Weighted average shares used in computing diluted net income (loss) per common share     27,114       27,607       27,108       27,056  
                                 
Summary of amortization of purchased intangibles from business combinations in the costs and expenses above:                                
  Cost of revenue   $ 67     $ 67     $ 268     $ 268  
  Research and development     436       437       1,747       1,748  
  Sales and marketing     -       173       67       690  
  General and administrative     -       18       8       75  
    $ 503     $ 695     $ 2,090     $ 2,781  
                                 
Summary of stock-based compensation included in the costs and expenses above:                                
  Cost of revenue   $ 19     $ 45     $ 131     $ 249  
  Research and development     55       98       281       472  
  Sales and marketing     (37 )     53       80       169  
  General and administrative     41       4       175       298  
    $ 78     $ 200     $ 667     $ 1,188  
                                 
                                 
   
eGain Corporation  
GAAP to Non-GAAP Reconciliation Table  
(in thousands)  
(unaudited)  
   
    Three Months Ended   Twelve Months Ended  
    June 30,   June 30,  
    2017     2016   2017     2016  
                               
Income (loss) from operations   $ (331 )   $ 109   $ (3,725 )   $ (5,873 )
Add: Stock-based compensation expense     78       200     667       1,188  
  Amortization of acquired intangible assets     503       695     2,090       2,781  
Non-GAAP income (loss) from operations   $ 250     $ 1,004   $ (968 )   $ (1,904 )
                               
                               
                             
    June 30,   Growth   Constant currency   March 31,       Growth   Constant currency
    2017   2016   rates   growth rates [1]   2017       rates   growth rates [1]
Total Deferred Revenue                                        
  - GAAP deferred revenue on balance sheet   $ 23,219   $ 15,717           $ 19,662              
  - Unbilled and uncollected contractual commitments     36,981     31,095             33,838              
    $ 60,200   $ 46,812   29%   30%   $ 53,500         13%   11%
                                         
                                         
    Three Months Ended           Twelve Months Ended        
    June 30,   Growth   Constant currency   June 30,   Growth   Constant currency
    2017   2016   rates   growth rates [4]   2017   2016   rates   growth rates [1]
                                         
Revenue:                                        
  - SaaS Revenue   $ 6,803   $ 5,496   24%   29%   $ 23,921   $ 22,492   6%   12%
  - Legacy Support     4,800     5,332   -10%   -3%     19,664     20,291   -3%   7%
  GAAP Recurring   $ 11,603   $ 10,828   7%   13%   $ 43,585   $ 42,783   2%   10%
  GAAP License     333     3,807   -91%   -90%     4,557     14,466   -68%   -65%
  GAAP Professional services     2,685     2,987   -10%   -4%     10,073     12,126   -17%   -9%
  GAAP Total revenue   $ 14,621   $ 17,622   -17%   -12%   $ 58,215   $ 69,375   -16%   -9%
                                         
Cost of revenue:                                        
  GAAP recurring   $ 3,080   $ 3,065           $ 11,956   $ 12,401        
  Add back:                                        
    Amortization of acquired intangible assets     (67 )   (67 )           (268 )   (268 )      
  Non-GAAP recurring   $ 3,013   $ 2,998           $ 11,688   $ 12,133        
                                           
  GAAP professional services   $ 2,318   $ 2,450           $ 9,193   $ 11,259        
  Add back:                                        
    Stock-based compensation expense     (19 )   (45 )           (131 )   (249 )      
  Non-GAAP professional services   $ 2,299   $ 2,405           $ 9,062   $ 11,010        
                                           
  GAAP total cost of revenue   $ 5,413   $ 5,520           $ 21,199   $ 23,689        
  Add back:                                        
    Stock-based compensation expense     (19 )   (45 )           (131 )   (249 )      
    Amortization of acquired intangible assets     (67 )   (67 )           (268 )   (268 )      
  Non-GAAP total cost of revenue   $ 5,327   $ 5,408   -1%   5%   $ 20,800   $ 23,172   -10%   -4%
                                         
Gross profit:                                        
  Non-GAAP recurring   $ 8,590   $ 7,830           $ 31,897   $ 30,650        
  Non-GAAP license     318     3,802             4,507     14,437        
  Non-GAAP professional services     386     582             1,011     1,116        
  Non-GAAP gross profit   $ 9,294   $ 12,214   -24%   -18%   $ 37,415   $ 46,203   -19%   -11%
                                         
Operating expenses:                                        
  GAAP research and development   $ 3,487   $ 3,939           $ 13,753   $ 16,063        
  Add back:                                        
    Stock-based compensation expense     (55 )   (98 )           (281 )   (472 )      
    Amortization of acquired intangible assets     (436 )   (437 )           (1,747 )   (1,748 )      
  Non-GAAP research and development   $ 2,996   $ 3,404   -12%   -7%   $ 11,725   $ 13,843   -15%   -10%
                                         
  GAAP sales and marketing   $ 4,553   $ 6,311           $ 20,436   $ 27,722        
  Add back:                                        
    Stock-based compensation expense     37     (53 )           (80 )   (169 )      
    Amortization of acquired intangible assets     -     (173 )           (67 )   (690 )      
  Non-GAAP sales and marketing   $ 4,590   $ 6,085   -25%   -19%   $ 20,289   $ 26,863   -24%   -19%
                                         
  GAAP general and administrative   $ 1,499   $ 1,743           $ 6,552   $ 7,774        
  Add back:                                        
    Stock-based compensation expense     (41 )   (4 )           (175 )   (298 )      
    Amortization of acquired intangible assets     -     (18 )           (8 )   (75 )      
  Non-GAAP general and administrative   $ 1,458   $ 1,721   -15%   -11%   $ 6,369   $ 7,401   -14%   -10%
                                         
  GAAP operating expenses   $ 9,539   $ 11,993           $ 40,741   $ 51,559        
  Add back:                                        
    Stock-based compensation expense     (59 )   (155 )           (536 )   (939 )      
    Amortization of acquired intangible assets     (436 )   (628 )           (1,822 )   (2,513 )      
  Non-GAAP operating expenses   $ 9,044   $ 11,210   -19%   -13%   $ 38,383   $ 48,107   -20%   -15%
                                           
                                           

[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.

Contact Information

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