EGAN - Earnings call transcript Q4 2021

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Operator

Please standby. Good day. And welcome to the eGain Fiscal 2021 Fourth Quarter and Full Year Financial Results Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jim Byers of MKR Investor Relations. sir. ahead, go Please

Jim Byers

and quarter everyone. results and Operator, fiscal conference to XXXX fourth full good you, Welcome afternoon, eGain’s call. Thank year financial

Ashu Officer, call and the today eGain’s Executive On are Chief Smit. Eric Officer, Financial Chief Roy;

Before objectives that this we and regarding certain statements, future conference everyone expectations, management’s performance. make during which will financial begin, convey like management beliefs, remind would forward-looking I to call, plans operational and

anticipate words by such believe, or preceded similar generally expect, expressions. are statements Forward-looking plan, as intend,

contained provisions statements results Harbor with the Safe or a by detailed results of reports protected September are is call. in respects. are information Commission. of eGain X, uncertainties company’s forward-looking the statements Litigation obligation to Securities in Securities These update this wide revise and no material these Act assumes Exchange actual Information to eGain’s are statements in of filed making Reform in publicly XXXX, any could risks Forward-looking could Private to as cause on that differ today, forward-looking that and range affect various XXXX. of the conference subject factors and

earnings income. In tables financial measures, the most operating certain financial addition included GAAP we measures. non-GAAP the GAAP as a non-GAAP with financial to discuss such reconciliation include measures to results, will press the of non-GAAP release The historical directly comparable

found be call website link for Release conference News release week. available on Relations the of press and egain.com at eGain’s one on a page be Investor earnings at can phone Our will this the replay

CEO, Ashu like to turn Now, call with to the I’d that eGain’s over Roy. said,

Ashu Roy

everyone. and good Thank afternoon, you, Jim,

are as street XXXX, market in product a we our In of year. plan In further fiscal fiscal X%. to XXXX guidance us intend we the year for exceeded the grew continue exciting we grow that very to goal. start business Plus With XX% a the balance bottomline pleased our are XXXX, leadership. topline a with We’ve our seven good faster. We by already to off growth We for leadership to current fiscal an consensus. as of our That’s we for ahead into financial to for invest deals figure top performance our strong believe can We sheet, were in pursuit to of well fiscal jump XXXX. we our XXXX. as fiscal quarter fiscal and full to results our grow closed in XX% in and and topline team translate first quarter XXXX. the quarter, ARR

new first crypto customers. serve one logo global exchange better looking The a is hyper-growth win its a to

knowledge seamlessly for customer capabilities big customer enhance SAP. solutions engagement proven our our looking functional and that of The rate the a the with to product premier they are eGain, knowledge and capabilities, more validated us. And management The enterprises of as Gartner, richness and the a investment engagement. design for other we instance, the Government digital value Forrester, and being are connector by roster when growing enhance their in analysts to their eGain Knowledge. enable certified scalability, to seen an knowledge leading experience. powered customer global are agency like status cloud Gartner SAP digital contact context. provider CRM availability looking considerations of get we, of are systems plus clients to center announced connectors management our partners modernize from is According to our offerings security, modern is partnering and U.S. Last client, were platform to engagement engagement connector key solution. eGain will knowledge best-in-class, on-demand automation In existing improve week with who cases, capabilities This with deploying both beyond actively one

We’re our for Knowledge seeing Solution. in the early base already client SAP global interest

includes value now deployments. which will expanding CRM library, connector eGain Microsoft Salesforce, their are our and good from getting expand SAP. continue and investment, Thanks to eGain We now our to customers sustained

As plus ARR in for number dollar clients result, us of total grew the million XX% a XXXX. by fiscal

side, be mentioned we is look programs enterprise the of the trending sort counterbalanced positive, average evidence success But our Coach initiatives, than these to value As clients with other union about this expansion by adoption that with which in business this metrics. launch ARR in establish been down we projects logo wins after solution. Financial continue as GreenPath our XX paying the multiyear launched Coach nicely. to scale fact for bullish Virtual month, new for more on our to partnership March we pilot user Switching year. before, we solution of buyers that and early announced credit has engagements, flip is going Last to opportunities are in

union credit they small- capability clients, a financial are and solution banks coaching and after small- of within serve small need and mid-size mid-sized months, The So going now with unions, to are we with clients. got customers to credit to we’ve unions credit matter suits as uniquely banks XX the solution. These options. turnkey paying the intelligent five personalized because

over growth the pursue for believe plenty GreenPath. of in this partner a our we mid-sized That with So credit it’s us to U.S. no unions X,XXX banks small- gives to opportunity brainer and

are we very excited ahead, about fiscal XXXX. Looking

fiscal in plan customer we XXXX, setting next reps in increased December stage sales We and our time, As and in hire are and tranche of sales with you with invest in go now marketing. transition we the to growth opportunities these In by sales bearing then some to and XXXX. to after sales first onboard enterprise. These enterprise disproportionately investments as the continue all in marketing SaaS know, investments for our will as fruit knowledge and fiscal XXXX, expansion fiscal our accelerate we’ve new XXXX. been seen

value-added the to we Today, fiscal from a there develop on have in our in capability accelerate such from eGain the growing do value-added aggressively successful At platform. investment and offer is to a market Most build functional interest to integrated this out We to This Moreover, is ecosystem, the also to manner. in enrichment our value-added and customers time, is capabilities platform. XXXX product better. just there to platform a as partners our marketplace interest who handful idea the innovation consume certified the solutions increase our prospects an SaaS plan businesses same know. eGain and we new well. of of partners on not sell development enhance

growth investment this we we the forward financial in I growth knowledge emerge as significant to in creates in XXXX our color We market we’ve product fiscal However, year. toward financial of know throughout will We this increased With investments ask Smit, on the Eric sharing will on among R&D leverage fiscal you driven create option in Eric? which front. XXXX along operations. are look driving is made fiscal will performance with that, more around segment fiscal R&D engagement, our the driven and really add we will growth XXXX powered our options, first. product be and Officer progress that to believe based Chief our the strategic initiatives that that because best what Financial

Eric Smit

and us for Ashu, thanks, joining today. everyone, Thanks, Great.

bottomline delivered And sales increased and top earnings even do street that flow results Ashu margins noted, gross in and our and performance strong in and investments consensus. we As we exceeded fiscal the financial fiscal our with strong year. a guidance XXXX, improve and cash marketing, with for

the in Difficulty] revenue than XXXX. QX accelerate topline highlight was model legacy X% fiscal new our a of our our total behind are [Technical fiscal with Another XXXX beyond. starting hitting plan less growth bring transition in year finally target and we to With to us,

year, share financial full guidance highlights year. SaaS our for period let a year XXXX, the grew to same ago. compared quarter the me revenue and into XX% for some We and the Before fiscal for getting XX% for our outlook and quarter the

Our grew ago. compared period quarter by the for the same a to the total X% year and year revenue for X%

XX%, our year and non-GAAP up margins, or at gross for a quarter fourth a of XX% from was profits $XX.X ago. gross gross gross million profit Looking margin the

fiscal was million the year. gross XXXX, from XX% or of in $XX.X For a XX% gross profit prior margin

or quarter ago share, $X.X million or compared diluted This share for quarter. $X.XX net Non-GAAP of non-GAAP million in Looking share net to fourth in non-GAAP net income year. share. income for or the fiscal $X.X income per year at $X.X million the compares fiscal the $X.X was the of diluted per to net per million diluted prior $X.XX income or our bottomline, $X.XX non-GAAP per $X.XX year was

Turning to cash and our balance flows. sheet

Our strong. remains balance sheet

from from end a During cash of million, at $XX.X flow million, year of year cash up XXXX was fiscal we ago. operations cash and XX% the equivalents total the and $XX.X generated

in in due mentioned our RPO, renewals current performance this customer quarter-to-quarter. of the or create can remaining I’ve timing concentrations, balance at as obligation fluctuations from to Looking the past,

over our quarter healthy However, renewals with with million. XX% increased XX fourth we customers in experienced current renewing, to year-over-year XX.X RPO the

Looking includes trailing which a quarter. churn be unusual and percent was retention QX, churn customer uplift with at rates, sequentially metrics, in XX up over upsell, our no months other continued to and the from

quarters consistently SaaS Our XX% the expansion eight churn that million customers ARR and month increased last year-over-year. was the of over trailing which have XXX%, -- number XX-month million which $X $X over been rates excludes ARR this

growth. primary our start guidance, on with be our to XXXX, focus on outlook financial the Now fiscal and topline of will

with great year. SaaS seen the to of fiscal wins this from increase we our this have results in investment of upon investments, in customer year and penetrate and market and continue sales expansions success, brand to past further us. our Based massive share and marketing see opportunity awareness front this more capture We we plan this early coming

plan strategy. build R&D to on and in product maintain to our advantage lead our we addition, growth In investment competitive increase

We needed also the to will scale that in be as systems plan internal planned. invest and business to processes

our Now guidance. on to

breakeven per of to net to For X% we would share growth million to share million, GAAP net of zero quarter million the share of non-GAAP $X.X $X.XX or to $X.XX [ph] per between and XX% which XXXX, of per income fiscal represent share. cents total $XX.X revenue or $X first year-over-year. million $X.XX $XXX,XXX per income expect $XX.X of to

loss additional outstanding full QX average we loss to XXXX and million the year-over-year, net approximately which of $X.X XX.X highlight, per total fiscal and zero XXXX compensation loss for $XXX,XXX XX.X amortization million weighted we and share. expense approximately for estimate XXXX. Depreciation to expense and of of $XXX,XXX approximately items fiscal for for per QX share-based year million XXXX. shares revenue to for to $X.X For a the for of $XXX and million breakeven million per $XX.X of fiscal million, a cents $X.X $XX.X A expect few between million of share QX and year GAAP entire of million fiscal share loss growth $X.XX to or to non-GAAP to $X.XX XX% of or $X.XX XX% represent

of launch the summary, evidenced forward expansion in new fiscal deals support as our momentum year finally, continue progress this we our financial year. continued our strength for throughout high to in pleased growth the sheet products, on our execute growth we closed We demand is to and look driving extending by is updates really plan our the topline are fiscal XXXX from to as on the in have balance ecosystem install And see base So, to QX. providing growing drive our customers we investment beyond. with and performance more past we Also, year, our partner opportunities. local sales best-in-class

month. Virtual Investor Investor calendar, be in two looking at the Firstly, this eGain Relations Conferences later will participating

week, Next Conference be Software participating on D.A. Virtual and in Xth. we’ll September the Davidson Internet

be remarks. now presenting these at prepared virtually September -- Operator, Jefferies XX. at see questions. hope Conference Software concludes Virtual of will on open some We the participant our conferences. to the for will call This we you also We

Operator

Baldry Capital. [Operator Instructions] Thank you. Richard from question with come Our first ROTH

Richard Baldry

both Thanks. anything accelerate the spiked even drivers to And meaningfully this deferred about growth says. XX% looking I year-over-year? maybe mean, line for above the that it guidance Could sharply, would talk up sequentially and the quarter, argue the unusual current I’m in Is what just deferred. you implied revenue of fairly pretty there at there,

anomalous out figure to there? is trying if just there I’m So Thanks. anything

Ashu Roy

Hi, Rich. Yes.

a I mentioned, the strong as number renewals of quarter. we in think, had the end came at I’d of that

want again, I’d no part that’s about a of that drove the point. would renewal this feel to on rates, So we comment of think, nothing good outside at say big So churn, I but unusual what that?

Richard Baldry

meaningful change of contracts else duration any the wasn’t drive there average anything So or to to that?

Ashu Roy

a couple have year those Though, we I that typically did renewals think federal duration. one contract in of are

from certainly the term that’s have So would skewed shorter that elements regards.

Richard Baldry

that the that by dampened Okay. maybe you There then How deeper you learned help you year-end? you’ve next just And experience onboarding cohorts plan tenure with ramping? how in are some has add on is now? overall a little the cohorts can about both process that Is things environment? going been a think hiring recruiting are talk or that to sort into COVID you will you of from that

Ashu Roy

we That’s we how a so, to that it. yes, way remote much in to able to attract to quite not do sales him found we mid-level obviously but good this which are else, are then Yes. to on What can learning we dampen, Rich, like put attract everyone talent, we is feel we a COVID it’s the easy attract board bring sales able well. talent, way.

now. we that quite that’s And working So been consistently our are strategy.

are like the that, that that some that were faster, thing think are we people to be I we we the learn not learn seem bunch people those big control of easier COVID. join first outside than around. people the noticed left. some was what things And was hiccups, few the ones found big some other more that thing our in But who stuck had

of that’s things So driving one we next over cohort. we are learned that obviously and have car the the

Richard Baldry

XXX,XXX legacy something you the run then fiscal really done dropping like sides two, three $XXX and push zero the about end Can should several will you looks that of that, And talk quarters? now quarter. maintenance that another be to that a think it then is And only and or is past ‘XX? that maybe million,

Ashu Roy

some color you that? do want Eric, to provide on

Eric Smit

Ashu. that take can I

but we’re them actively are that moment, remainder, it’s material I migrate, the the lag. again, the been internal be we engaged make many is below down customers And move so pleased very they may sit have for with So that most of them. up at X% good the news placed now that have think there obviously The level. of and dependencies creating that plans where that to that

working forcing so list to zero, small off So meet of customers. we we a with to them instead can sort date, are of this drop that of this

that us we you fiscal to said from it’s to look time, for don’t years. have can perspective, meaningful drag forward So in out that that trail but previous over we as believe that going ‘XX,

focus course. So is really this to on this our going on an that’s that call revenue it’s of years focus is to why have impact than had total knowing less of growth previous in

Richard Baldry

below actually pretty professional revenues of we’d the last about ‘XX we grow quarters. way And where had being for topline just think see beat prior Is with below, factors two oscillate above me the recurring so would tandem Okay. we down any want what the look to this it what build should as models? but make curious of that quarter-over-quarter was in to be it to going solidly, service is our sort the Pro-Services sort how the there or Thanks.

Eric Smit

No, I good. think -

we’ve that Something closely. looking been at

get expansion numbers XX-step [Technical decline where Difficulty] opportunities, talked we I Difficulty] [Technical below about all forward the you think where percentage down would just less are [Technical test just products, the there’s that’s revenue with But [Technical that. buying forward, our of of not with that same new say we’ve I Difficulty] as into look associated expectation as decline the in Difficulty] mock that Difficulty]. further the [Technical typically rate significance deployments a deployments attach is as customers as

Operator

speaker, that on Thank please you. line. line Sir, connection we And the re-establish while his lose just hear did is with to becoming we difficult remain you.

Ashu Roy

sure will for will talk, some is back once issues. you technical I reconnects, Richard, complete having his apologize come I’m that. But he Hi, I’m we sure Eric to not he

Richard Baldry

a next Congrats a year. the nice good question. I’ll largely anything year of end for my else he No, outlook offline. on and take did answer

Ashu Roy

Rich. you, Thank

Operator

our question from Benchmark. And Mark with Schappel come next

Mark Schappel

for Hi, question. taking my thank you

plan the by Some in headcount of company ‘XX, XX%. grew its or at the Salesforce fiscal least grow to sales

How I capacity much was announced a you increase in the coming that think beginning fiscal the anticipating year. the of sales of are year?

Ashu Roy

wise, XX%. go channel Certainly kind that of versus is Yes. wise headcount the sense XX%. scale its think and I quarters are wise, endeavor the to will we or we by targeting. that’s how what Whether organize we on that capacity another go programs. direct depends think up capacity I not My we But by will

Mark Schappel

you capabilities additional you. the that some I you Okay. you planning then in into, And looking to focus provide year. you’re product if color Thank mean, could are development around or are grow Great. development? investments for let’s upcoming what the see what planning to product add and on

Ashu Roy

Sure.

in added that into with some to partners do interested was which And marketplace I they and of inbound level environment investment So developer few a Delta And that we and both I we’re of clients we around of has out value alluded platform more that efficiently one platform kind do of from eGain we selling integrating can already solution get that as in the the the providers. And our the it with are are for do percentage to thing inquiries a and or quite a now mentioned, it of all building small-to-midsize partners of terms working so revenue. kind profitably. direct getting to. the are

So that’s in we And that a not quickly. today. capability sure to marketplace that want that have make put we place do we

element. big So that’s one

parts and so management we on is is next of seeing taking enterprise, quick, interest is facing case, The customers whether getting a that in side, - focusing the agent what is we on system it capability it of it so every into across enterprise as engagement where functional the in HR, where knowledge to something sometimes second out the are a and side, start embedding We scaling IT starting the going more forth. is on more lot knowledge whole self-service, be internal interest we area in. we knowledge and the with or of more are out customer step the almost tracing. are But

in. that’s area we product So will an where our increase also investment

Mark Schappel

Great. Thank That’s all you. Thanks. for me.

Ashu Roy

Thank you.

Operator

Van with comes question our And next Craig-Hallum. from Rhee Jeff

Jeff Van Rhee

A taking me, for questions. from would. my couple Thanks Great. if you

know partner specific it Ashu I about been this on a it’s commentary guess couple quarter. a of hear the big questions. much I side, as didn’t focus. I

you You’ve had two any meaningful recent second two, I with is, or customers question another? XXX% of in commentary one terms in most And XXX%. and think, the trend or directionally the maybe way from customers, that of Just changes logos in around more then partner those specific XX% Any us momentum kind is quarter, growth? numbers from growth put a the the partners? can partners value in point overall or growth little some to is, your And give on bookings finer the there.

Ashu Roy

I’ll first Okay. the the then, try you to maybe question address part first, question. Eric, second and of Jeff’s take could Jeff,

Okay.

Eric Smit

Sure.

Ashu Roy

Okay.

terms in fiscal XXXX, last So even logo fiscal, that logos we new of XXXX. good fiscal new this partners. fiscal from continues through saw year, And meaning acquisition

has pipeline opportunities of from good Our number as new partners well. logo

that will, we’re healthy think I partner side I probably in a you the split, So of zone kind today. XX:XX seeing as the, split direct of a on would if logo say, versus new

the you maybe terms Eric, answer of more. first can that question, In

Eric Smit

Sure.

Ashu Roy

Yes.

Eric Smit

So clear both partner, a listed then and a they’re is one one combination second of is as partner customer. customers those so just resale to a a solely be of the relationship. And

right this in business seen so, quarter think, has I if anything, the And the for haven’t direction. continued

the those two So, revenue no was changes the customers in anticipated quarter. from in

Jeff Van Rhee

going know Avaya. Yes. mean, you’ve had just side, lot And line on I the with a I along that partner then maybe

lot you’ve Amazon. time from in a about got just of particular things for any I eGain. where talked of going seeing to strength? You’ve particular and Cisco’s callouts mean, obviously terms you’re time BT

Ashu Roy

Avaya now BT the partnership we $X kind in but mutual a Europe, SAP the as for now the are the about so for some for because of we’re of their market as from globally far the And probably the though - say, right about In leader excited are seeing side would the I is good motion two go-to on U.S. U.S. with top channel partner teams on well standpoint us. and Cisco in us. interest field in it’s the developing

Jeff Van Rhee

if one, last I One could. enough. Fair

you other mentioned said quarter You being player. that you existing ARR a signed new deals government And crypto one figure I was seven agency, an logo the think the close. two post

was in quick that? just there Assuming can in us glimpse of those, some you’re a seeing deals each like you into competition give who

Ashu Roy

Right.

competitive was the players eGain case, versus crypto - as clearly there the where the was the in particular of one the kind expansion - to no of government so significant client, our client case all the people in their - logo, were go is competitive which this Salesforce we already we though that were So In proposition in there in the case with play environment in competitive environment like large has solutions with deal sponsors agency game, some of was that the made alternatives. new this a CRM system record. from very

very the Salesforce evaluating they pure-play knowledge some they were in like So management as they piece for this knowledge players as Oracle And evaluating seriously. evaluated were well. well case

were client connectors So in ones we will crypto our they through of this the those Salesforce. doing told case integrating And us will our tightly what solution about. be into is the be we

Jeff Van Rhee

nice Thank Great. Okay. Very you. quarter.

Ashu Roy

you. Thank

Operator

question from Horan And our with comes Oppenheimer. next Tim

Tim Horan

you Thanks, of bit next a where color does I the think up the partners a value-added services evolve guys. follow give financial Can And had bring? on Do just that years? more the this to of then couple can quick in kind guidance. on you little

Ashu Roy

Okay.

journey So the beginning we Tim. here, just are

that with like not with And be do be create people today. in that and to step the that two in at apps be others So and looking that the create certify we economic one. put eGain clients we idea work Salesforce model to for of want then whether - around some platform. where a confidence but step connected sort And into able will them something the will simple eGain is and to can marketplace it a use to will to environment these begin the our

players is need, there and unmet we So steps there think customers of as prospects is and need to behind ease we seeing we sort knowledge as market of add with I centric smaller onto are are value customer that trying small in that especially of Does platform. asking from segment, plugging But engagement, playing providers which our is a that that couple for well that. add a both value an know and help? and that our

Tim Horan

ramp Yes. looks if looking revenue is expenses it And XX%. guide, to double can then this rapidly? even I basically few are faster doing for think to accelerate like of because revenue years? year? revenue looking going Thanks. spending Thanks. helpful. on showing out at you I’m are you than growth it operating grow that you this Or your right That’s you’re you’re up grow the maintain next And growth you you can doing what it to kind over mean, the

Ashu Roy

can in foundational get My function an And look industry what the Eric, is operational capabilities, somewhat parlance. better get you a My to invest you look we are where way a view step call that. then in add scale to in and minimum need at core the more are - to more that IP we investments on people that we to here. at of using we and view returns efficient if top would and capabilities of need at that systems sort and that I can level to level marginal operational

end of XXXX we in top surprise XXXX. a it That growth reflect So as and on may in XXXX. tail certainly saying. accelerate fiscal topline growth lot whatever of that’s should and XXXX what not But of will in topline seeing you’re fiscal are our in

Eric Smit

we point, in that is just end think, investments XXXX think began the that one I many of add to I loaded. So more to other back

just the looking ramp, you look not looks at as it steep if sequential So it’s just comparisons. the when at year-over-year as

Tim Horan

helpful. That’s Thank you.

Eric Smit

Thank you.

Operator

management. I’ll to question-and-answer conference over that the turn And session. the does now back conclude

Ashu Roy

the I for our listening put upcoming forward to excited Thank providing Great. as Well, in. look Again you results. we so thanks about out everybody year, very updates QX you.

Operator

participation. conclude conference. day. you And We Thank for excellent that your you. do Have an thank does today’s

eGain (EGAN) 2 Sep 212021 Q4 Earnings call transcript