eGain(US:EGAN)2025-05-14 22:02Financial 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 last year [15][20] - SaaS revenue accounted for 93% of total revenue, with SaaS gross margin at 77% compared to 78% a year ago [15][16] - Non-GAAP net income was $765,000 or $0.03 per share, down from $2.6 million or $0.08 per share in the year-ago quarter [17] - Operating cash flow was $2.2 million, up from $1.7 million in the year-ago quarter, reflecting an 11% operating cash flow margin [18] 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 [19] - Non-GAAP operating costs for Q3 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 the bank, impacting over 100,000 users [6][8] - Gartner rated eGain as a leader in the emerging market quadrant for generative AI knowledge management apps, indicating strong market positioning [12] Company Strategy and Development Direction - The company is focused on capitalizing on the emerging market opportunity in AI knowledge management, investing in product innovation [13][21] - The launch of the eGain AI agent for contact centers aims to enhance service performance and broaden the addressable market [9][21] 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 [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 [20][21] Other Important Information - The company repurchased 895,000 shares at an average price of $5.61 per share during the quarter [18] - Total cash and cash equivalents at the end of the quarter was $68.7 million, indicating a strong balance sheet [18] Q&A Session Summary Question: Can you talk about the mega bank win and the pace of rollout? - Management indicated that deployment is on pace, with full deployment expected by late fall, and the expansion is significantly larger than previous engagements, approximately 10 times bigger [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][28] Question: What does the revenue ramp look like for the mega bank deal? - The revenue recognition will ramp up from the beginning, and the implementation process is expected to be fairly standard for large enterprises, with the bank being aggressive on the AI front [35][36] 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 factors contributing to visibility in revenue [36] Question: What does the growth formula look like for 2026 and beyond? - Management anticipates that 2026 will show real top-line impact from AI knowledge investments made over the past two years, particularly in fiscal 2025 [37][38]