- Total Revenue (FY 2024): $92.8 million, down 5% year-over-year.
- Total Revenue (Q4 2024): $22.5 million, down 9% year-over-year.
- Non-GAAP Net Income (FY 2024): $12.3 million or $0.39 per diluted share, up 47% year-over-year.
- Non-GAAP Net Income (Q4 2024): $2.5 million or $0.08 per share.
- Gross Margin (FY 2024): 72%, down from 74% in the prior year.
- Gross Margin (Q4 2024): 71%, down from 74% in the year-ago quarter.
- Non-GAAP Operating Costs (FY 2024): $56 million, down 13% year-over-year.
- Non-GAAP Operating Costs (Q4 2024): $13.7 million, down 8% year-over-year.
- Adjusted EBITDA Margin (FY 2024): 12%, up from 9% in the prior fiscal year.
- Adjusted EBITDA Margin (Q4 2024): 11%, down from 16% in the year-ago quarter.
- Cash Flow from Operations (FY 2024): $12.4 million or a 13% operating cash flow margin.
- Share Repurchase (FY 2024): Approximately 2.8 million shares at an average price of $6.28 per share, totaling $17.3 million.
- Total Cash and Cash Equivalents (End of FY 2024): $70 million.
- Revenue Guidance (Q1 FY 2025): $21.4 million to $21.8 million.
- Net Loss Guidance (Q1 FY 2025): $400,000 to $1.2 million or $0.01 to $0.05 per share.
- Non-GAAP Net Loss Guidance (Q1 FY 2025): $400,000 to net income of $500,000 or a loss of $0.01 to a gain of $0.02 per share.
- Revenue Guidance (FY 2025): $92 million to $93 million.
- Non-GAAP Net Income Guidance (FY 2025): $5 million to $6 million or $0.17 to $0.2 per share.
- GAAP Net Income Guidance (FY 2025): Breakeven to $1 million or zero to $0.03 per share.
Release Date: September 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- eGain Corp (EGAN, Financial) finished the fiscal year with revenue and profitability ahead of projections, with total revenue of $92.8 million and non-GAAP net income of $12.3 million.
- The company saw increased new logo momentum in its AI Knowledge Hub offering, securing significant clients across various industries.
- New logo win RFPs for AI knowledge were up 50% year-over-year, indicating strong market interest.
- Non-GAAP operating costs for the full fiscal year were down 13% year-over-year, reflecting effective expense controls.
- eGain Corp (EGAN) has a strong balance sheet with total cash and cash equivalents of $70 million at the end of the year.
Negative Points
- Total revenue for the fourth quarter was $22.5 million, down 9% year-over-year, primarily due to the loss of two large clients.
- Gross margin for the fourth quarter decreased to 71% from 74% a year ago.
- Non-GAAP net income for Q4 was $2.5 million, down from $3.6 million in the year-ago quarter.
- Total revenue for the full year was down 5% year-over-year.
- The company expects a net loss of $400,000 to $1.2 million for Q1 of fiscal 2025.
Q & A Highlights
Q: Can you discuss the competitive landscape for your AI knowledge wins? What are you displacing and competing with?
A: We target companies with 5,000+ employees, typically over $1 billion in revenue. We often replace SharePoint, homegrown solutions, Confluence, Salesforce, and occasionally Genesis. Our main competitors are those trying to retain these knowledge setups.
Q: You mentioned a 75% conversion rate for pilots to customers. Can you provide more context on this?
A: This high conversion rate is due to better qualification before initiating pilots. We expect to maintain this rate, although partner-led pilots might have a slightly lower conversion rate.
Q: Are you planning to increase your sales headcount?
A: Our focus is on generating more pipeline through brand and market demand investments. We believe our current sales capacity is sufficient, given our deal sizes are around $200,000 ARR for new logos.
Q: How are you ensuring customer satisfaction and avoiding large churn in your Conversation and Analytics Hubs?
A: We are hyper-focused on customer satisfaction and value delivery. We aim to integrate our knowledge and AI solutions into existing customer operations to enhance stickiness and reduce churn risk.
Q: What has changed in your spending strategy, given your previous focus on cost controls?
A: We are seeing increased interest from existing clients for faster knowledge rollout and more inbound interest, even during summer months. Additionally, opportunities are progressing to decisions more predictably, prompting us to invest in product and brand marketing.
Q: Are there any updates on large-scale pilots or new significant customer engagements?
A: We continue to engage with large, reputable companies. While initial ARR purchases are smaller, around $200,000, the potential for expansion within these large companies remains significant.
Q: How do you plan to allocate your cash reserves? Any focus on technology acquisitions?
A: We are increasing R&D investments, particularly in knowledge systems, to differentiate and dominate this emerging market. Our primary focus remains on internal innovation rather than acquisitions.
Q: What are your expectations for revenue and net income for fiscal 2025?
A: We expect total revenue between $92 million to $93 million, non-GAAP net income of $5 million to $6 million, and GAAP net income of breakeven to $1 million.
Q: How are you managing the shift in revenue recognition from your Cisco OEM business?
A: We expect a deferral of approximately $1.3 million in revenue due to a shift to more ratable recognition. This will primarily impact Q1 of fiscal 2025.
Q: Can you provide more details on your customer metrics and retention rates?
A: LTM dollar-based net retention for knowledge customers is 97%, while total net retention is 85%. The net expansion rate for knowledge customers is 1.6, and total net expansion rate is 1.3.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
