eGain Corporation (EGAN) 2024 Q4 Earnings Call Summary

Optimistic Highlights

• Revenue and Profitability

Finished fiscal year with revenue of $92.8 million and non-GAAP net income of $12.3 million, ahead of projections.

• New Logo Momentum

Increased new logo momentum in AI knowledge offering, including big brands like a travel management subsidiary of a financial mega brand in the U.S., a mobility division of a multinational conglomerate in Germany, and a global consumer brand based in London.

• AI Knowledge Market

New logo wins and RFPs for AI Knowledge were up 50% year-over-year, with strong pipeline activity in July and August.

• AssistGPT Launch

Launched AssistGPT in February, a solution to automate routine tasks for customer service agents and knowledge authors, which has been enthusiastically received in the market.

• Customer Event

Annual customer event, Solve 24, will be held in Chicago on October 29 and 30, featuring client success stories and new product announcements.

Pessimistic Highlights

• Revenue Decline

Total revenue for the fourth quarter was $22.5 million, down 9% year-over-year, primarily due to the impact of two large client losses.

• Gross Margin Decline

Gross margin for the fourth quarter was 71%, down from 74% a year ago.

• Net Income Decline

Non-GAAP net income for Q4 was $2.5 million or $0.08 per share, compared to $3.6 million or $0.11 per share in the year-ago quarter.

• Total ARR Decrease

Total SaaS ARR decreased 10% year-over-year.

• RPO Decrease

Total RPO decreased 19% year-over-year.

Company Outlook

• Revenue Guidance

For fiscal 2025, total revenue is expected to be between $92 million to $93 million.

• Net Income Guidance

Non-GAAP net income for fiscal 2025 is expected to be between $5 million to $6 million or $0.17 to $0.20 per share.

• Investment Focus

Increased investments in R&D and brand marketing to capitalize on AI Knowledge market opportunity.

• Cisco OEM Business

Expected change in revenue forecasted from Cisco OEM business, with a shift to more ratable recognition.

• Q1 Guidance

For Q1 of fiscal 2025, total revenue is expected to be between $21.4 million to $21.8 million, with a net loss of $400,000 to $1.3 million.

Q & A Highlights

• Q: Competitive Landscape for AI Knowledge Wins (Jeff Van Rhee, Craig-Hallum)

A: Replacing homegrown solutions like SharePoint and Confluence, as well as Salesforce and Genesis' knowledge. Competing against these incumbents. (Ashutosh Roy)

• Q: Conversion of Pilots to Customers (Jeff Van Rhee, Craig-Hallum)

A: More than 10 in the last few quarters, with a 75% conversion rate due to better qualification before pilots. (Ashutosh Roy)

• Q: Sales Front and Quota Reps (Jeff Van Rhee, Craig-Hallum)

A: Focus on driving more pipeline and generating more demand. Current sales capacity is sufficient for growth expectations. (Ashutosh Roy)

• Q: Risk of Future Large Churn in Conversation and Analytics Hub (Jeff Van Rhee, Craig-Hallum)

A: Hyper-focused on customer satisfaction and value delivery to avoid future large churn. (Ashutosh Roy)

• Q: Shift in Spending Stance (Richard Baldry, ROTH Capital)

A: Increased interest from existing clients, more inbound interest, and more predictable prosecution of opportunities to decisions. (Ashutosh Roy)

• Q: Larger Scale Pilots (Richard Baldry, ROTH Capital)

A: Quality of companies engaged with remains high, with initial ARR north of $200,000. (Ashutosh Roy)

• Q: Capital Allocation and Technology Investments (Richard Baldry, ROTH Capital)

A: Increasing R&D investment, focusing on AI Knowledge systems, and continuing to differentiate and dominate the emerging market. (Ashutosh Roy)