EX-99.1 2 ex-99d1.htm EX-99.1 egan_Ex99_1

Exhibit 99.1

 

eGain Reports 40% Growth Year over Year in SaaS Revenue (46% growth under ASC 605)

 

Sunnyvale, CA (November 8, 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, which includes Non-GAAP unbilled 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.

1


 

 

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.

 

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 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

Phone: 323-468-2300

Email: egain@mkr-group.com

 

 

2


 

eGain Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

    

September 30,
2018 (*)

    

June 30,
2018

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,542

 

$

11,498

Restricted cash

 

 

 6

 

 

 6

Accounts receivable, net

 

 

16,872

 

 

7,389

Costs capitalized to obtain revenue contracts, net

 

 

623

 

 

986

Prepaid expenses

 

 

1,925

 

 

2,374

Other current assets

 

 

334

 

 

285

Total current assets

 

 

31,302

 

 

22,538

Property and equipment, net

 

 

507

 

 

559

Costs capitalized to obtain revenue contracts, net of current portion

 

 

1,819

 

 

891

Intangible assets, net

 

 

496

 

 

733

Goodwill

 

 

13,186

 

 

13,186

Other assets

 

 

2,112

 

 

1,715

Total assets

 

$

49,422

 

$

39,622

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,426

 

$

3,905

Accrued compensation

 

 

4,719

 

 

5,706

Accrued liabilities

 

 

2,141

 

 

2,285

Deferred revenue

 

 

28,972

 

 

18,364

Capital lease obligations

 

 

21

 

 

42

Bank borrowings, net of deferred financing costs

 

 

325

 

 

259

Total current liabilities

 

 

38,604

 

 

30,561

Deferred revenue, net of current portion

 

 

7,917

 

 

7,833

Bank borrowings, net of current portion and deferred financing costs

 

 

5,744

 

 

8,941

Other long-term liabilities

 

 

918

 

 

1,000

Total liabilities

 

 

53,183

 

 

48,335

Commitments and contingencies

 

 

 

 

 

 

Stockholders' deficit:

 

 

 

 

 

 

Common stock

 

 

28

 

 

28

Additional paid-in capital

 

 

346,801

 

 

346,222

Notes receivable from stockholders

 

 

(86)

 

 

(85)

Accumulated other comprehensive loss

 

 

(1,664)

 

 

(1,618)

Accumulated deficit

 

 

(348,840)

 

 

(353,260)

Total stockholders' deficit

 

 

(3,761)

 

 

(8,713)

Total liabilities and stockholders' deficit

 

$

49,422

 

$

39,622

(*) Includes the impact from the adoption of ASU 2014-09 (Topic 606)

 

 

 

 

 

 

 

3


 

eGain Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

    

2018

    

2017

Revenue:

 

 

 

 

 

 

Subscription

 

$

13,727

 

$

11,830

Professional services

 

 

1,974

 

 

2,745

Total revenue

 

 

15,701

 

 

14,575

Cost of revenue:

 

 

 

 

 

 

Cost of subscription

 

 

3,395

 

 

3,038

Cost of professional services

 

 

1,840

 

 

2,388

Total cost of revenue

 

 

5,235

 

 

5,426

Gross profit

 

 

10,466

 

 

9,149

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

3,559

 

 

3,431

Sales and marketing

 

 

3,994

 

 

4,166

General and administrative

 

 

2,160

 

 

1,806

Total operating expenses

 

 

9,713

 

 

9,403

Income (loss) from operations

 

 

753

 

 

(254)

Interest expense, net

 

 

(190)

 

 

(344)

Other income (expense), net

 

 

17

 

 

(131)

Income (loss) before income tax benefit

 

 

580

 

 

(729)

Income tax benefit

 

 

24

 

 

161

Net income (loss)

 

$

604

 

$

(568)

Per share information:

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

Basic

 

$

0.02

 

$

(0.02)

Diluted

 

$

0.02

 

$

(0.02)

Weighted-average shares used in computation:

 

 

 

 

 

 

Basic

 

 

27,687

 

 

27,185

Diluted

 

 

29,954

 

 

27,185

 

 

 

 

 

 

 

Stock-based compensation included in above costs and expenses:

 

 

 

 

 

 

Cost of revenue

 

$

74

 

$

63

Research and development

 

 

116

 

 

110

Sales and marketing

 

 

45

 

 

63

General and administrative

 

 

126

 

 

83

 

 

$

361

 

$

319

 

 

 

 

 

 

 

Amortization of intangible assets included in above costs and expenses:

 

 

 

 

 

 

Cost of revenue

 

$

67

 

$

67

Research and development

 

 

170

 

 

437

 

 

$

237

 

$

504

 

4


 

eGain Corporation

GAAP to Non-GAAP Reconciliation Table

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

    

2018

 

2017

 

 

Reported under
Topic 606

 

Reported under
Topic 605

Income (loss) from operations

 

$

753

 

$

(254)

Add:

 

 

 

 

 

 

Stock-based compensation

 

 

361

 

 

319

Amortization of acquired intangibles

 

 

237

 

 

504

Non-GAAP income from operations

 

$

1,351

 

$

569

 

 

 

 

 

 

 

Net income (loss)

 

$

604

 

$

(568)

Add:

 

 

 

 

 

 

Stock-based compensation

 

 

361

 

 

319

Amortization of acquired intangibles

 

 

237

 

 

504

Non-GAAP net income

 

$

1,202

 

$

255

Per share information:

 

 

 

 

 

 

Non-GAAP earnings (loss) per share:

 

 

 

 

 

 

Basic

 

$

0.04

 

$

0.01

Diluted

 

$

0.04

 

$

0.01

Weighted-average shares used in computation:

 

 

 

 

 

 

Basic

 

 

27,687

 

 

27,185

Diluted

 

 

29,954

 

 

27,514

 

5


 

eGain Corporation

Other GAAP to Non-GAAP Supplemental Financial Information

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Growth Rates

 

 

2018

 

2017

 

 

 

 

 

 

 

 

Reported under
Topic 606

    

Topic 606
Impact

    

Excluding
Topic 606 Impact

    

Reported under
Topic 605

    

Reported under
Topic 606

    

Excluding Topic
606 Impact

Total deferred revenue:

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP deferred revenue

 

$

36,889

 

 

 

 

 

 

 

$

26,959

 

 

 

 

 

 

Unbilled and uncollected contractual commitments (off-balance sheet)

 

 

34,529

 

 

 

 

 

 

 

 

35,229

 

 

 

 

 

 

Total deferred revenue:

 

$

71,418

 

 

 

 

 

 

 

$

62,188

 

 

15%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SaaS

 

$

9,724

 

$

420

 

$

10,144

 

$

6,944

 

 

40%

 

 

46%

Legacy support

 

 

4,003

 

 

(27)

 

 

3,976

 

 

4,886

 

 

(18%)

 

 

(19%)

GAAP subscription

 

 

13,727

 

 

393

 

 

14,120

 

 

11,830

 

 

16%

 

 

19%

GAAP professional services

 

 

1,974

 

 

(203)

 

 

1,771

 

 

2,745

 

 

(28%)

 

 

(35%)

Total non-GAAP revenue

 

$

15,701

 

$

190

 

$

15,891

 

$

14,575

 

 

8%

 

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Revenue:

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription

 

$

3,395

 

 

 

 

 

 

 

$

3,038

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(67)

 

 

 

 

 

 

 

 

(67)

 

 

 

 

 

 

Non-GAAP subscription

 

$

3,328

 

 

 

 

 

 

 

$

2,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services

 

$

1,840

 

 

 

 

 

 

 

$

2,388

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

(74)

 

 

 

 

 

 

 

 

(63)

 

 

 

 

 

 

Non-GAAP professional services

 

$

1,766

 

 

 

 

 

 

 

$

2,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP total cost of revenue

 

$

5,235

 

 

 

 

 

 

 

$

5,426

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

(67)

 

 

 

 

 

 

 

 

(67)

 

 

 

 

 

 

Stock-based compensation

 

 

(74)

 

 

 

 

 

 

 

 

(63)

 

 

 

 

 

 

Non-GAAP total cost of revenue

 

$

5,094

 

 

 

 

 

 

 

$

5,296

 

 

(4%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP subscription

 

$

10,399

 

 

 

 

 

 

 

$

8,859

 

 

 

 

 

 

Non-GAAP professional services

 

 

208

 

 

 

 

 

 

 

 

420

 

 

 

 

 

 

Non-GAAP gross profit

 

$

10,607

 

 

 

 

 

 

 

$

9,279

 

 

14%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development

 

$

3,559

 

 

 

 

 

 

 

$

3,431

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

(116)

 

 

 

 

 

 

 

 

(110)

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

(170)

 

 

 

 

 

 

 

 

(437)

 

 

 

 

 

 

Non-GAAP research and development

 

$

3,273

 

 

 

 

 

 

 

$

2,884

 

 

13%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

3,994

 

 

 

 

 

 

 

$

4,166

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

(45)

 

 

 

 

 

 

 

 

(63)

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

 —

 

 

 

 

 

 

 

 

 -

 

 

 

 

 

 

Non-GAAP sales and marketing

 

$

3,949

 

 

 

 

 

 

 

$

4,103

 

 

(4%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative

 

$

2,160

 

 

 

 

 

 

 

$

1,806

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

(126)

 

 

 

 

 

 

 

 

(83)

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

 —

 

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

Non-GAAP general and administrative

 

$

2,034

 

 

 

 

 

 

 

$

1,723

 

 

18%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

$

9,713

 

 

 

 

 

 

 

$

9,403

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

(287)

 

 

 

 

 

 

 

 

(256)

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

(170)

 

 

 

 

 

 

 

 

(437)

 

 

 

 

 

 

Non-GAAP operating expenses

 

$

9,256

 

 

 

 

 

 

 

$

8,710

 

 

6%

 

 

 

 

6