SOURCE: eGain

eGain

May 10, 2017 16:05 ET

eGain Reports New SaaS Bookings Growth of 88% and Backlog Growth of 43% Year Over Year in Q3 2017

SUNNYVALE, CA--(Marketwired - May 10, 2017) - eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2017 third quarter ended March 31, 2017.

The following SaaS-related financial highlights reflect the company's progress following completion of its transition to a SaaS revenue model:

  • New SaaS bookings (non-GAAP) was $4.6 million, up 47% sequentially and up 88% year over year (89% on a constant currency basis with the prior year).

  • Total annual contract value (ACV) (non-GAAP) was $44.8 million at the end of Q3, up 7% on a constant currency basis with the prior year despite the impact of a previously announced, one-time $5 million reduction in ACV in the quarter due to the transition of one customer away from the cloud.

  • Total backlog (non-GAAP) was $53.5 million at the end of the fiscal third quarter, up 43% year over year (50% on a constant currency basis with the prior year).

Ashu Roy, eGain CEO, commented, "We generated solid sequential and year-over-year growth in our new SaaS bookings during the third quarter. Our transition to a SaaS revenue model is complete, and we look forward to more predictable SaaS type revenue growth in fiscal 2018 and beyond."

Eric Smit, eGain CFO, added, "Operating expenses for the first nine months are down 21 percent year over year, reflecting our improved operating efficiencies. We generated $2.8 million in cash from operations in the quarter, which puts us at $1.5 million in net cash from operations year to date. With the improved cash flow, we paid down approximately $2 million from our loan during the quarter and are pleased to have successfully executed the transition of our business model through internal cash generation."

Fiscal 2017 Third Quarter Financial Summary

Total revenue for the fiscal 2017 third quarter was $13.9 million ($15.0 million on a constant currency basis with the prior year), compared to $16.3 million in the same quarter a year ago. Subscription and support revenue was $10.1 million ($11.0 million on a constant currency basis with the prior year), compared to $10.3 million in the same quarter a year ago. Professional services revenue was $2.6 million, compared to $2.8 million in the prior year quarter. License revenue was $1.2 million, compared to $3.2 million in the same quarter a year ago, reflecting the company's transition to a SaaS based business.

Gross margin for the fiscal 2017 third quarter was 59%, compared to 65% in the same quarter a year ago. GAAP net loss improved to $2.5 million, or $(0.09) per share on a basic and diluted basis, compared to a GAAP net loss of $3.0 million, or $(0.11) per share on a basic and diluted basis, for the same quarter a year ago. Adjusted EBITDA for the fiscal 2017 third quarter was a loss of $814,000, compared to adjusted EBITDA loss of $280,000 in the same quarter a year ago.

Fiscal 2017 First Nine Months Financial Summary

Total revenue for the nine months ended March 31, 2017 was $43.6 million ($47.6 million on a constant currency basis with the prior year), compared to $51.8 million in the same period last year. Subscription and support revenue was $32.0 million ($34.8 million on a constant currency basis with the prior year), compared to $32.0 million in the same period last year. Professional services revenue was $7.4 million, compared to $9.1 million in the prior year period. License revenue was $4.2 million, compared to $10.7 million in the same period last year.

Gross margin for the nine months ended March 31, 2017 was 64%, compared to 65% for the same period last year. GAAP net loss improved to $6.0 million, or $(0.22) per share on a basic and diluted basis, compared to a GAAP net loss of $7.6 million, or $(0.28) per share on a basic and diluted basis, for the same quarter a year ago. For the nine months ended March 31, 2017, adjusted EBITDA was a loss of $55,000, compared to adjusted EBITDA loss of $6,000 in for the same period a year ago.

Non-GAAP Financial Measures
These reported results include New SaaS Bookings, Annual Contract Value (ACV), Backlog, 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, amortization of acquired intangible assets and severance and related charges. ACV is defined as the annualized value of the contractual obligations in place at the end of the reporting period. We define New SaaS Bookings as being the annualized value of new cloud, support and term license contractual obligations signed in the quarter. Backlog presented is derived from the deferred revenue on balance sheet plus unbilled and uncollected contractual commitments. 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 Standard Time. To access the live call, please dial (888) 339-3503 (U.S. toll free) or (719) 785-1753 (international), and give the participant pass code 3761311. 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 and that SaaS based revenue will be more predictable to a SaaS based business, 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, 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)  
           
  March 31,
2017
    June 30,
2016
 
ASSETS              
Current assets:              
  Cash and cash equivalents $ 10,345     $ 11,780  
  Restricted cash   6       5  
  Accounts receivable, net   7,745       11,876  
  Deferred commissions   773       787  
  Prepaid expenses   1,262       1,480  
  Other current assets   378       426  
    Total current assets   20,509       26,354  
Property and equipment, net   1,240       1,688  
Deferred commissions, net of current portion   645       325  
Intangible assets, net   3,252       4,839  
Goodwill   13,186       13,186  
Other assets   2,005       1,671  
    Total assets $ 40,837     $ 48,063  
               
               
LIABILITIES AND STOCKHOLDERS' DEFICIT              
Current liabilities:              
  Accounts payable $ 2,624     $ 2,099  
  Accrued compensation   4,221       5,642  
  Accrued liabilities   2,680       5,670  
  Deferred revenue   15,811       12,672  
  Capital lease obligations   178       329  
  Bank borrowings   787       828  
    Total current liabilities   26,301       27,240  
Deferred revenue, net of current portion   3,851       3,045  
Capital lease obligations, net of current portion   64       153  
Bank borrowings, net of current portion   18,391       20,223  
Other long-term liabilities   1,727       1,679  
    Total liabilities   50,334       52,340  
Stockholders' deficit:              
  Common stock   27       27  
  Additional paid-in capital   343,275       342,689  
  Notes receivable from stockholders   (81 )     (81 )
  Accumulated other comprehensive loss   (1,494 )     (1,663 )
  Accumulated deficit   (351,224 )     (345,249 )
    Total stockholders' deficit   (9,497 )     (4,277 )
    Total liabilities and stockholders' deficit $ 40,837     $ 48,063  
                   
                   
                   
eGain Corporation  
Condensed Consolidated Statements of Operations  
(in thousands, except per share data)  
(unaudited)  
                       
  Three Months Ended     Nine Months Ended  
  March 31,     March 31,  
  2017     2016     2017     2016  
Revenue:                              
  Subscription and support $ 10,137     $ 10,330     $ 31,982     $ 31,955  
  License   1,156       3,169       4,224       10,659  
  Professional services   2,557       2,792       7,388       9,139  
    Total revenue   13,850       16,291       43,594       51,753  
  Cost of subscription and support   3,149       3,141       8,876       9,335  
  Cost of license   24       8       35       24  
  Cost of professional services   2,486       2,572       6,875       8,809  
  Total cost of revenue   5,659       5,721       15,786       18,168  
    Gross profit   8,191       10,570       27,808       33,585  
Operating expenses:                              
  Research and development   3,360       4,208       10,266       12,124  
  Sales and marketing   5,102       7,126       15,883       21,412  
  General and administrative   1,560       1,892       5,053       6,031  
    Total operating expenses   10,022       13,226       31,202       39,567  
Loss from operations   (1,831 )     (2,656 )     (3,394 )     (5,982 )
Interest expense, net   (470 )     (512 )     (1,351 )     (1,521 )
Other income, net   12       345       47       512  
Loss before income tax provision   (2,289 )     (2,823 )     (4,698 )     (6,991 )
Income tax provision   (226 )     (178 )     (1,277 )     (625 )
Net loss $ (2,515 )   $ (3,001 )   $ (5,975 )   $ (7,616 )
                               
Per share information:                              
  Basic and diluted net loss per common share $ (0.09 )   $ (0.11 )   $ (0.22 )   $ (0.28 )
  Weighted average shares used in computing basic and diluted net loss per common share   27,105       27,070       27,107       27,043  
                               
Summary of amortization of purchased intangibles from businesscombinations in the costs and expenses above:                              
  Cost of revenue $ 67     $ 67     $ 201     $ 201  
  Research and development   437       437       1,311       1,311  
  Sales and marketing   -       173       67       518  
  General and administrative   -       19       8       56  
  $ 504     $ 696     $ 1,587     $ 2,086  
                               
Summary of stock-based compensation included in the costs and expenses above:                              
  Cost of revenue $ 33     $ 44     $ 112     $ 204  
  Research and development   57       104       226       374  
  Sales and marketing   1       46       117       116  
  General and administrative   39       52       134       294  
  $ 130     $ 246     $ 589     $ 988  
                               
                               
                               
eGain Corporation  
GAAP to Non-GAAP Reconciliation Table  
(in thousands)  
(unaudited)  
   
  Three Months Ended     Nine Months Ended  
  March 31,     March 31,  
  2017     2016     2017     2016  
  Revenue $ 13,850     $ 16,291     $ 43,594     $ 51,753  
  Add: Purchase accounting adjustments to deferred revenue related to acquisitions   9       19       33       58  
  Non-GAAP Revenue $ 13,859     $ 16,310     $ 43,627     $ 51,811  
                               
Adjusted EBITDA                              
  Net loss $ (2,515 )   $ (3,001 )   $ (5,975 )   $ (7,616 )
  Add: Purchase accounting adjustments to deferred revenue related to acquisitions   9       19       33       58  
    Depreciation and amortization   288       506       962       1,598  
    Stock-based compensation expense   130       246       589       988  
    Interest expense, net   470       512       1,351       1,521  
    Income tax provision   226       178       1,277       625  
    Amortization of acquired intangible assets   504       696       1,587       2,086  
    Severance and related charges   74       564       121       734  
  Adjusted EBITDA $ (814 )   $ (280 )   $ (55 )   $ (6 )
                                 
                                 
                                 
eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
                 
                 
  March 31,          
  2017   2016   Growth rates   Constant currency growth rates [4]  
Total subscription and support ACV[1] $ 44,760   $ 44,741   0%   7%  
                     
Backlog [2] $ 53,450   $ 37,502   43%   50%  
                                         
    Three Months Ended             Nine Months Ended          
    March 31,             March 31,          
    2017     2016     Growth rates   Constant currency growth rates [4]   2017     2016     Growth rates   Constant currency growth rates [4]
                                                 
Gross bookings [3]   $ 21,000     $ 12,800     64%   68%   $ 50,340     $ 47,000     7%   19%
                                                 
Revenue:                                                
  GAAP Subscription and support   $ 10,137     $ 10,330     -2%   6%   $ 31,982     $ 31,955     0%   9%
  GAAP License     1,156       3,169     -64%   -60%     4,224       10,659     -60%   -57%
  GAAP Professional services     2,557       2,792     -8%   0%     7,388       9,139     -19%   -10%
  GAAP total revenue     13,850       16,291     -15%   -8%     43,594       51,753     -16%   -8%
  Purchase accounting adjustments to deferred revenue related to acquisitions     9       19               33       58          
  Non-GAAP revenue   $ 13,859     $ 16,310     -15%   -8%   $ 43,627     $ 51,811     -16%   -8%
                                                 
Cost of revenue:                                                
  GAAP subscription and support   $ 3,149     $ 3,141             $ 8,876     $ 9,335          
  Add back:                                                
    Depreciation and amortization     (183 )     (309 )             (620 )     (972 )        
    Amortization of acquired intangible assets     (67 )     (67 )             (201 )     (201 )        
    Severance and related charges     -       (36 )             (10 )     (36 )        
  Non-GAAP subscription and support   $ 2,899     $ 2,729             $ 8,045     $ 8,126          
                                                 
  GAAP professional services   $ 2,486     $ 2,572             $ 6,875     $ 8,809          
  Add back:                                                
    Depreciation and amortization     (24 )     (46 )             (78 )     (173 )        
    Stock-based compensation expense     (33 )     (44 )             (112 )     (204 )        
    Severance and related charges     -       (26 )             -       (26 )        
  Non-GAAP professional services   $ 2,429     $ 2,456             $ 6,685     $ 8,406          
                                                 
  GAAP total cost of revenue   $ 5,659     $ 5,721             $ 15,786     $ 18,168          
  Add back:                                                
    Depreciation and amortization     (207 )     (355 )             (698 )     (1,145 )        
    Stock-based compensation expense     (33 )     (44 )             (112 )     (204 )        
    Amortization of acquired intangible assets     (67 )     (67 )             (201 )     (201 )        
    Severance and related charges     -       (62 )             (10 )     (62 )        
  Non-GAAP total cost of revenue   $ 5,352     $ 5,193     3%   8%   $ 14,765     $ 16,556     -11%   -4%
                                                 
Gross profit:                                                
  Non-GAAP subscription and support   $ 7,247     $ 7,620             $ 23,970     $ 23,887          
  Non-GAAP license     1,132       3,161               4,189       10,635          
  Non-GAAP professional services     128       336               703       733          
  Non-GAAP gross profit   $ 8,507     $ 11,117     -23%   -15%   $ 28,862     $ 35,255     -18%   -10%
                                                 
Operating expenses:                                                
  GAAP research and development   $ 3,360     $ 4,208             $ 10,266     $ 12,124          
  Add back:                                                
    Depreciation and amortization     (32 )     (59 )             (105 )     (208 )        
    Stock-based compensation expense     (57 )     (104 )             (226 )     (374 )        
    Amortization of acquired intangible assets     (437 )     (437 )             (1,311 )     (1,311 )        
    Severance and related charges     (10 )     (5 )             (10 )     (5 )        
  Non-GAAP research and development   $ 2,824     $ 3,603     -22%   -18%   $ 8,614     $ 10,226     -16%   -11%
                                                 
  GAAP sales and marketing   $ 5,102     $ 7,126             $ 15,883     $ 21,412          
  Add back:                                                
    Depreciation and amortization     (32 )     (59 )             (104 )     (177 )        
    Stock-based compensation expense     (1 )     (46 )             (117 )     (116 )        
    Amortization of acquired intangible assets     -       (173 )             (67 )     (518 )        
    Severance and related charges     (64 )     (406 )             (91 )     (576 )        
  Non-GAAP sales and marketing   $ 5,005     $ 6,442     -22%   -15%   $ 15,504     $ 20,025     -23%   -16%
                                                 
  GAAP general and administrative   $ 1,560     $ 1,892             $ 5,053     $ 6,031          
  Add back:                                                
    Depreciation and amortization     (17 )     (33 )             (55 )     (68 )        
    Stock-based compensation expense     (39 )     (52 )             (134 )     (294 )        
    Amortization of acquired intangible assets     -       (19 )             (8 )     (56 )        
    Severance and related charges     -       (91 )             (10 )     (91 )        
  Non-GAAP general and administrative   $ 1,504     $ 1,697     -11%   -8%   $ 4,846     $ 5,522     -12%   -7%
                                                 
  GAAP operating expenses   $ 10,022     $ 13,226             $ 31,202     $ 39,567          
  Add back:                                                
    Depreciation and amortization     (81 )     (151 )             (264 )     (453 )        
    Stock-based compensation expense     (97 )     (202 )             (477 )     (784 )        
    Amortization of acquired intangible assets     (437 )     (629 )             (1,386 )     (1,885 )        
    Severance and related charges     (74 )     (502 )             (111 )     (672 )        
  Non-GAAP operating expenses   $ 9,333     $ 11,742     -21%   -15%   $ 28,964     $ 35,773     -19%   -13%
 
[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 is 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

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