eGain(US:EGAN)2026-02-03 23:02Financial Data and Key Metrics Changes - Total revenue for Q2 was $23 million, up 3% year-over-year, exceeding guidance and street consensus [14] - SaaS revenue increased by 5% year-over-year, accounting for 95% of total revenue, up from 93% in Q2 last year [14] - Non-GAAP net income was $3 million or $0.11 per share, up from $1.3 million or $0.05 per share in the year-ago quarter [16] - Adjusted EBITDA margin for the quarter was 14%, up from 7% in the year-ago quarter [16] - Operating cash flow was $10.1 million, representing a 44% operating cash flow margin, compared to $6.4 million at 29% in the year-ago quarter [17] Business Line Data and Key Metrics Changes - SaaS ARR for AI knowledge customers increased 27% year-over-year, now representing 64% of total SaaS ARR [18][22] - SaaS ARR for all customers increased 7% year-over-year, and 11% when excluding non-core messaging products [18] - LTM dollar-based SaaS net retention for AI knowledge customers was 116%, up from 99% a year ago [18] Market Data and Key Metrics Changes - More than 50% year-over-year increase in top-of-the-funnel AI knowledge leads [4] - Partner-sourced leads in the first half of fiscal 2026 increased 80% year-over-year [10] Company Strategy and Development Direction - The company is focused on becoming a leader in AI-driven knowledge automation, with a strategy centered around customer experience (CX) and extending to enterprise use cases [12][39] - The introduction of the eGain Composer is aimed at driving product sales and attracting new ecosystem partners [11] - The company is investing in product innovation while reducing spending on legacy products [16] Management's Comments on Operating Environment and Future Outlook - Management noted strong business momentum and positive results from go-to-market strategies, with expectations for continued growth [12][22] - The company anticipates total revenue for Q3 to be between $22.2 million and $22.7 million, and for the full year to be between $90.5 million and $92 million [19][21] - Management expressed confidence in capturing market leadership in AI-driven knowledge automation [22] Other Important Information - The company has a strong balance sheet with total cash and cash equivalents at $83.1 million, up from $62.9 million as of June 30, 2025 [17] - The company did not repurchase any shares during the quarter and has $19.7 million remaining under the buyback program [17] Q&A Session Summary Question: Can you provide more details about the large software deal? - The deal involved a long sales cycle of about a year and a half, replacing a lack of an enterprise-wide knowledge platform [26] Question: Can you clarify the impact of the non-core messaging products? - 50% of the non-core messaging revenue was reduced in Q2, with the remainder to be phased out in Q1 2027 [29] Question: What is driving the strength in partner-driven lead generation? - Momentum is seen from small boutique knowledge consulting firms and contact center knowledge deals [30] Question: What are the barriers to replicating the company's software platform? - Key barriers include architecture, understanding use cases, and non-functional requirements like reliability and scalability [36] Question: How is the company planning to deploy its cash reserves? - The focus will remain on internal investments to drive top-line growth, with share buybacks and opportunistic inorganic options being considered [40][41] Question: What are the hiring plans moving forward? - The company is reallocating resources towards high-end engineering and technology talent while increasing marketing investments [44]