eGain (EGAN) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Item 6. Selected Financial Data

The selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our Consolidated Financial Statements and Notes thereto, and other financial information included elsewhere in this Annual Report on Form 10-K. The selected consolidated financial data below reflects the retrospective voluntary change to our accounting policy for sales commissions related to new cloud (hosting) contracts with customers, from recording an expense when incurred to deferral and amortization of the sales commission in proportion to the revenue recognized over the term of the contract. Historical results are not necessarily indicative of results that may be expected for future periods.

	Year ended June 30,
	2012			2011			2010			2009			2008
	(in thousands, except per share information)
Revenue:
License	$	11,067		$	17,371		$	7,389		$	8,613		$	6,570
Recurring		23,594			20,040			16,617			15,382			15,330
Professional services		8,703			6,654			5,871			9,224			8,207
Total revenue		43,364			44,065			29,877			33,219			30,107
Cost of license		(39	)		34			168			263			80
Cost of recurring		5,363			5,273			4,492			4,371			4,395
Cost of professional services		8,112			5,609			5,048			6,112			7,161
Total cost of revenue		13,436			10,916			9,708			10,746			11,636
Gross profit		29,928			33,149			20,169			22,473			18,471
Operating expenses:
Research and development		6,132			5,551			5,510			5,481			5,098
Sales and marketing		20,086			14,071			10,184			10,281			11,331
General and administrative		5,743			3,974			3,211			3,271			4,240
Total operating expenses		31,961			23,596			18,905			19,033			20,669
Income / (loss) from operations		(2,033	)		9,553			1,264			3,440			(2,198	)
Interest expense, net		(722	)		(1,230	)		(1,123	)		(1,435	)		(1,659	)
Other income / (expense)		(677	)		245			(67	)		230			332
Income / (loss) before income tax		(3,432	)		8,568			74			2,235			(3,525	)
Income tax benefit / (expense), net		(390	)		(196	)		(159	)		129			(206	)
Net income / (loss)	$	(3,822	)	$	8,372		$	(85	)	$	2,364		$	(3,731	)
Per share information:
Basic net income / (loss) per common share	$	(0.16	)	$	0.37		$	(0.00	)	$	0.11		$	(0.24	)
Diluted net income / (loss) per common share	$	(0.16	)	$	0.34		$	(0.00	)	$	0.11		$	(0.24	)
Weighted average shares used in computing basic net income / (loss) per common share		24,329			22,709			22,180			20,611			15,330
Weighted average shares used in computing diluted net income / (loss) per common share		24,329			24,289			22,180			20,612			15,330
Below is a summary of stock-based compensation included in the costs and expenses above:
Cost of professional services and recurring revenue	$	77		$	32		$	35		$	29		$	41
Research and development	$	180		$	52		$	78		$	46		$	57
Sales and marketing	$	274		$	46		$	49		$	25		$	67
General and administrative	$	325		$	88		$	82		$	141		$	153

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	June 30,
	2012		2011		2010			2009			2008
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments (including restricted cash)	$	10,946	$	13,096	$	5,733		$	7,511		$	3,790
Working capital	$	2,860	$	4,251	$	(490	)	$	(1,426	)	$	(2,310	)
Total assets	$	27,943	$	28,727	$	15,958		$	19,236		$	14,330
Deferred revenue	$	8,083	$	5,824	$	5,103		$	5,531		$	5,164
Long-term debt	$	7,230	$	3,333	$	8,752		$	7,999		$	16,553

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