eGain(US:EGAN)2025-05-14 22:00Financial Data and Key Metrics Changes - Total revenue for Q3 was $21 million, down 6% year over year, primarily due to the impact of two large client losses from the previous year [15][21] - SaaS revenue accounted for 93% of total revenue, with SaaS gross margin at 77%, down from 78% a year ago [15][16] - Non-GAAP net income was $765,000 or $0.03 per share, compared to $2.6 million or $0.08 per share in the year-ago quarter [18][22] - Operating cash flow generated was $2.2 million, up from $1.7 million in the year-ago quarter, resulting in an 11% operating cash flow margin [19] Business Line Data and Key Metrics Changes - SaaS ARR for knowledge customers increased 11% year over year, while total SaaS ARR for all customers decreased 6% year over year [20] - Non-GAAP operating costs were $13.8 million, down 6% sequentially and flat compared to the year-ago quarter [17] Market Data and Key Metrics Changes - The company secured a significant deal with the U.S. Consumer Group of a major bank, expanding its AI knowledge platform across more than half of the bank, impacting over 100,000 users [6][7] - Gartner rated eGain as a leader in the emerging market quadrant for generative AI knowledge management apps, highlighting the importance of knowledge management in the AI era [12] Company Strategy and Development Direction - The company is focused on investing in AI knowledge offerings and capitalizing on emerging market opportunities, with a strategic emphasis on product innovation [13][22] - The launch of the eGain AI agent for contact centers is expected to enhance service performance and broaden the addressable market [8][23] Management's Comments on Operating Environment and Future Outlook - Management noted that while macro uncertainty impacted deal closures in Q3, they are seeing good deal closures in the current quarter, including the mega bank deal [5][13] - The company expects total revenue for Q4 to be between $22.8 million to $23.3 million, with GAAP net income guidance revised upward for the full fiscal year [21][22] Other Important Information - The company repurchased 895,000 shares at an average price of $5.61 per share during the quarter [19] - Total cash and cash equivalents at the end of the quarter was $68.7 million, indicating a strong balance sheet [19] Q&A Session Summary Question: Can you talk about the mega bank win and the pace of rollout? - Management indicated that the deployment is on pace and expected to be fully deployed by late fall, with an expansion that is significantly larger than previous engagements [24][25] Question: Have sales cycles stabilized? - Management confirmed that sales cycles have stabilized, now averaging nine to twelve months due to the size of opportunities and the number of groups involved in the evaluation process [27] Question: What will the revenue ramp look like for the mega bank deal? - The revenue from the deal is structured to ramp up from the beginning rather than in phases, indicating a strong initial impact [34] Question: What are the drivers of sequential growth from Q3 to Q4? - The growth is expected to be driven by the significant mega bank deal and other strong bookings [35] Question: What does the growth formula look like for 2026 and beyond? - Management anticipates that 2026 will show a real top-line impact from AI knowledge investments made over the past two years [36][37]