eGain(US:EGAN)2024-11-15 16:17Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $21.8 million, down 10% year-over-year, primarily due to the loss of two large clients in the Conversation and Analytics business [16][17] - Non-GAAP gross profit was $15.4 million, with a gross margin of 70%, compared to 73% a year ago [17] - Non-GAAP net income was $1.3 million or $0.04 per share, down from $3.8 million or $0.12 per share in the prior year [19] - Cash flow from operations was $954,000, significantly lower than $8.1 million in the year-ago quarter [20] Business Line Data and Key Metrics Changes - SaaS ARR for Knowledge customers increased 16% year-over-year, while total SaaS ARR for all customers decreased 4% year-over-year but was up 2% sequentially [21] - LTM dollar-based SaaS net retention for Knowledge customers was 103%, up from 98% at the end of the last quarter [22] - Total RPO decreased 15% year-over-year, with short-term RPO of $54.5 million down 9% year-over-year [23] Market Data and Key Metrics Changes - North America accounted for 75% of total revenue, down from 79% in the year-ago quarter [17] - The company noted a strong performance in EMEA, while North America experienced a decline due to customer losses [38][40] Company Strategy and Development Direction - The company is focusing on product innovation, particularly in AI and knowledge management, to capitalize on market opportunities [15][28] - A new solution, eGain AI Agent, was announced, aimed at improving customer self-service capabilities [14] - The company is emphasizing the centralization of knowledge as a key trend in the market, which enhances compliance, experience, and productivity [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in the AI Knowledge business and the potential for growth in SaaS revenue [28] - The company expects total revenue for Q2 2025 to be between $22.2 million to $22.6 million, with a GAAP net loss projected between $400,000 to $900,000 [25] - For the fiscal year ending June 30, 2025, total revenue is expected to be between $92 million to $93 million, with SaaS revenue projected to grow in the high single digits [26][27] Other Important Information - The company repurchased approximately 671,000 shares at an average price of $6.84 per share during the quarter [20] - The company will participate in the 13th Annual ROTH Technology Conference in New York City on November 20 [28] Q&A Session Summary Question: Update on sales cycle improvements and new bookings - Management noted a steady RFP pace and significant year-over-year improvement in new bookings, although the current quarter is seasonally slow [31][32] Question: Investment in marketing and R&D - Marketing expenses were impacted by seasonal events, while R&D spending is expected to increase as new product announcements approach [33][34] Question: Geographical performance and market demand - The decline in North America was attributed to customer losses rather than a change in market demand, with the US still being the growth engine [39][40] Question: Confusion in the AI market and competition - Management acknowledged ongoing confusion in the market but noted a trend towards recognizing the need for comprehensive solutions rather than narrow offerings [42][43] Question: Large trials and sales cycle timing - There are more large trials underway, indicating serious interest from big companies, with sales cycles remaining around 9 to 12 months [44]