Sunnyvale, CA (November 08, 2018) – eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2019 first quarter ended September 30, 2018.
Ashu Roy, eGain CEO, commented, “Our SaaS and subscription revenue grew nicely in the first quarter. We also generated $3.3 million in operating cash, helping us achieve GAAP profitability for the quarter. Our pipeline is strengthening around our exciting virtual assistant offering. We look forward to hosting customers, partners and thought leaders at eGain DX18 in Chicago next week.”
Adoption of the New Revenue Recognition Standard – ASC 606
eGain adopted the new revenue recognition accounting standard Accounting Standards Codification (“ASC”) 606 effective July 1, 2018 on a modified retrospective basis. Financial results for reporting periods during fiscal 2019 are presented in compliance with the new revenue recognition standard. Historical financial results for reporting periods prior to fiscal 2019 are presented in conformity with amounts previously disclosed under the prior revenue recognition standard ASC 605. This press release includes additional information to reconcile the impacts of the adoption of the new revenue recognition standard on the Company’s financial results for the quarter ended September 30, 2018, which includes the presentation of financial results during fiscal 2019 under ASC 605 for comparison to the prior year.
Fiscal 2019 First Quarter Financial Highlights – ASC 606 (standard adopted effective July 1, 2018):
- SaaS revenue was $9.7 million, up 40% year over year from Q1 2018 (up 46% year over year under ASC 605).
- Total revenue was $15.7 million, up 8% year over year from Q1 2018 (up 9% year over year under ASC 605).
- Subscription revenue, which includes SaaS and legacy support revenue, was $13.7 million, up 16% year over year and 87% of total revenue (up 19% year over year and 89% of total revenue under ASC 605).
- Subscription revenue gross margin was 75%, up from 74% in Q1 2018.
- GAAP operating income was $753,000, compared to a GAAP operating loss of $254,000 in Q1 2018.
- Non-GAAP operating income was $1.4 million, compared to non-GAAP operating income of $569,000 in Q1 2018.
- GAAP net income was $604,000, or $0.02 per share on a basic and diluted basis, compared to a GAAP net loss of $568,000, or $(0.02) per share on a basic and diluted basis, for Q1 2018.
- Non-GAAP net income was $1.2 million, or $0.04 per share on a basic and diluted basis, compared to non-GAAP net income of $255,000, or $0.01 per share on a basic and diluted basis, for Q1 2018.
- Cash provided by operations in the first quarter was $3.3 million, compared to cash provided by operations of $5.9 million in Q1 2018.
- Total cash and cash equivalents as of September 30, 2018 was $11.5 million, compared to $11.5 million as of June 30, 2018.
- GAAP deferred revenue increased 37% year over year to $36.9. million as of September 30, 2018
- Total deferred revenue increased 15% year over year to $71.4 million as of September 30, 2018
Non-GAAP Financial Measures
This press release includes non-GAAP operating income/(loss) and non-GAAP net 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. Non-GAAP net income/(loss) is defined as net income/(loss) adjusted for stock-based compensation expense and amortization of acquired intangible assets. 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.
Adjusted Presentation of Condensed Consolidated Statement of Operations
Through June 30, 2018, eGain’s revenue was classified as recurring, legacy license and professional services revenue. In connection to eGain’s adoption of accounting standard ASC 606 as of July 1, 2018, the Company now classifies its revenue as subscription and professional services revenue. eGain’s legacy license revenue, which has been declining related to the Company’s focus on cloud offerings, is included with subscription revenue. Subscription revenue is made up of SaaS revenue and legacy support revenue. SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support contracts. Legacy support is revenue associated with perpetual license arrangements the Company is no longer selling.
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) 260-1479 (U.S. toll free) or (334) 323-0522 (international), and give the participant pass code 8529536. 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.
eGain customer engagement solutions deliver digital transformation for leading brands – powered by virtual assistance, AI, knowledge, and analytics. Our comprehensive suite of applications help clients deliver memorable, digital-first customer experiences in an omnichannel world. To find out more about eGain, visit https://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 beliefs regarding demand for our products, including our belief that our pipeline and demand for our virtual assistant offering is strong, that we will continue to see benefits to the Company from our transition to a SaaS based business, including growth in our SaaS and recurring revenue, improvements in our recurring revenue gross margin, increased operating income and net income, and increased cash from operations, 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 associated with new product releases; risks that customer demand may fluctuate or decrease; risks that we are unable to collect unbilled contractual commitments; 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 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 public filings, including eGain’s annual report on Form 10-K filed on September 13, 2018 and subsequent reports filed with the Securities and Exchange Commission, 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.
MKR Group Investor Relations
Todd Kehrli or Jim Byers