EGAN - Earnings call transcript Q3 2022

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Operator

Good day and welcome to the eGain Fiscal 2022 Third Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jim Byers, MKR Group. Please go ahead.

Jim Byers

Thank you, operator, and good afternoon, everyone. quarter XXXX third call. results eGain's to of financial fiscal conference Welcome

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

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

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

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

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

that for eGain's CEO, we Investor over release, turn press call release this one-week. earnings of of to page to Relations Roy. eGain's eGain's presentation now the lastly, of with also the conference press I'd the with to website updated like Investor on phone the be investor site. a And Earnings Our www.egain.com. link can said call Relations be available clicking posted found release the replay Ashu And will at Along page an by have

Ashu Roy

and quarter. hello well to Jim, executed everyone. in third another the quarter record of We revenue Thank deliver you,

our revenue total Our up in X% million, from and up was year-over-year sequentially record $XX.X revenue QX. XX%

and guidance grew SaaS of consensus, revenue and our ahead XX% was our year-over-year. revenue Our quarterly

in we Finally, quarter the million cash. positive than $XX flow cash were ending with more

nice. that So was

share new wins me the some for Let SaaS notable quarter.

a some deliver We globe with ones; customer regulations. the selected country-specific good in our have Hub crypto compliance leading service to Knowledge across exchange

Fortune the solution. selected management firm, a legacy one, XXX knowledge replace to us Another investment

leading Another business a one, again a global Knowledge experience. it's eGain improve and multibillion-dollar vehicle agent business, selected to

a responsible Another one development new selected U.S. which one, a citizen in agency solution to want on-premise And for the eGain out, to marked bring us cloud, the the on-premise serving been greatest us but company, I world. deliver and for this in one the then is state a we this U.S. but from service. insurance in more moved better latest them to our logo where workforce is Top have X

that decided left few this has now move As in mode, cloud. one have to customers you to we a the eGain know, and

So and our in still financial that was good care services, demand government. health good like is in particularly the insurance, for sectors us. Overall, enterprise,

the team to demand our has continues side, plans, grow. On sales

We year, this one first QX. the and fiscal have in now quarter cohorts in hired one two

year. we seeing coming direct both with is demand sector, the believe new FedRAMP start We in partners. as up. the will federal logos we our shaping now well is cohort through both are certification; early the government increasing side, and With which first thing, in fiscal on interesting The now as the interest winning is second – an state,

knowledge a is And capabilities a and investment combination one that, big for certified. of providers that So we the I that know are few digital very of was FedRAMP with us.

this an well So we us. area believe is that for work out will

we the center ecosystem the is with partnerships is which that connectors area well Another planned have. contact all going as expanded

about quarter for all FiveX. talked added we connector we you the As may last recall

the all Knowledge way but it our for much The alongside contact the just in expansion, to to also center providers. market. require enterprise of we CCaaS significant are center and voice, these is, digital So connected we that channels activity seeing with are not that now now RFPs seem We're more contact is solution. that And pretty agents-facing more knowledge. connected more

new that's so demand we're early an enterprise want final but of and one the with And around is bring new one And clients growth. for focused building then integrators. system couple good. partnerships terms is the interesting common it's I opportunity. is kind in interesting fit And is high potential us and and days, These are some which new, of to out, but of exciting global the it relatively

are are in excited, growth. the as that fire we us for iron is – our something This investing. we we So is another drive

released first initiatives it Portal growth On say we product-led the to the eGain term us for ecosystem to in we foundation the event because and And to of effects. Developer short-term, provides front, from partners significant pleased the At launch the in models. a enhanced SDKs marketplace eGain the I'm apps the with is our partner for certify on time, interest version refreshed and is the eGain This and us in April, platform. benefit the publish the awareness APIs, same that medium milestone new strong. product

about are implement using our This practitioners, launched and eGain that and functionality. partners it operate. and In learning a implement teaching solution, for part customers. we to University, center is several sort What's learning the Academy the to and we management in technique how also on eGain online fact, in the have Academy, how features It's to and that solution, on content Also usual the for new is new self-paced different and of Knowledge practitioners easy Knowledge make to the operate to already knowledge how April, pipeline. about Knowledge about not focuses the of apps how eGain platform. development

we know, the the academy As of first kind in Knowledge as is its far this space.

a gap we the in of as to we knowledge. response see Now step to back, just these in investments made market what

management recommended At adoption the by is, is service feel rate management technology as of you. limited corresponding of as that shared of functionality. we Gartner the this Now the same lack is we we beyond customer all Research by technology knowledge for lack area X around have knowledge the investment before a with Number in of the Knowledge technology in capability time, whole believe product what XXXX. still

do in. select, So eGain platform. beyond now adopt platforms, implement clients with to on Knowledge go offering of Knowledge next the marketplace the have new capability we course, to focusing our product the a partner functionality, enhanced we strong advantage Academy, and help easily portal, going which and are the But triad go now that of developer this we to the to level old we of feel just believe

conclusion, for So familiar we big we to is enablement, technology, are can for this see shift with, execution tools, we couple effective are very a as be pleased overall contact as the demand big which our with strong. and of all far quarters. the last step-up. for desktop for In over ecosystem And macro us still for service agents seems customer as headwinds, center despite

knowledge And power benefit our so from that. portfolio

add around the and are academy before, in build-out, we we we platform brand believe around awareness line by our portal, developer ask growth. Chief have financial sales lead color underpinned to going Eric will going With expansion, top the as talked forward, operations. and that expansion, help Smit, we our which the ecosystem this to that, the about Officer, to just Financial more is Eric? said continue to accelerate I'll invest and which marketplace Moving our to us

Eric Smit

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

and million, of total delivered we quarter record in record mentioned, and $XX.X estimates. consensus our sequentially X% of up quarter our is revenue Ashu guidance third up quarterly of the revenue. This year-over-year and As XX% consecutive ahead

sequentially. for $XX.X X% SaaS up Legacy million, year-over-year million, nine For XX% from total a was and sequentially. first the million, catch-up months, up of due in QX was to revenue the down customer. was XX% The sequential approximately legacy $XX.X up was but renewal revenue year-over-year, increase $XXX,XXX QX XX% $X year-over-year. up revenue

We our be proceeding. on X% recent customers support SaaS, which as revenue to revenue our customer current SaaS, to legacy in other progress this the an them QX. of see decline moving total moving outlier. is this requires to are process for the given And expectation on in before We to of below

Looking margin at for XX% mix The the profit QX, including in year-over-year margins. a XX%. gross professional and increase reflects profits million, quarter of up for $XX.X sequential a healthy Gross was gross in non-GAAP slight revenue gross sequential decline services.

we organization AI target our of up with total medium As work, set. we we revenue, we move are the still and our in to more sequential term X% ramping business, contributed seeing knowledge only ranges to the PS remain comfortable margin long- was PS and PS increased consultative that and more investments decline. QX and

million increased $XX.X year-over-year. operating Now for in driven turning increase operations. quarter. by million ago compared $XX the primarily Non-GAAP XX% came at year in costs The and sales quarter to the marketing, which was in investments to

share a a non-GAAP Looking diluted at in from the our quarter $X.X XX%, quarter. net compares margin $X.X was operating an $X.XX per the of year-ago quarter. non-GAAP $X.XX unchanged on on to million year or basis. share for the income $X.XX operating million share quarter was ago income $X.X per bottom and basis the basic This or net million line, in Non-GAAP per of income or

our and balance to sheet flows. cash Turning

or cash nine we flow cash operating X% $X.X from fiscal operations flow operations the the million quarter, for months the cash generated of During And $X.X flow year, is from margin. million. for

remains balance $XX.X Our cash with to cash XX% ended the quarter metrics. ago. equivalents our a and we turning customer million, of and up strong, sheet year third total from

customer metrics expansion improvement within of the in our and This several Our the the quarter. for by strong of bookings and highlighted healthy new customer existing wins in mix quarter customers. reflected the is

year to retention SaaS XXX% LTM XXX% Our a rates dollar-based net from increased ago.

$XX.X business, X customers excluding million increased XX% our number ARR The of XX% Our SaaS total ARR, year-over-year and OEM million. year-over-year, XX% to increased increased RPO year-over-year.

quarterly to on our Now guidance.

Before to guidance, a few items. highlight sharing our I'd updated like

we this strength U.S. current impact Therefore, better will pound into for currency to estimates providing revenue continues, expectations the on euro also a business dollar underlying constant QX. purposes, if the for basis trends. our the First, comparable the of visibility provide are to and

we mentioned $XXX,XXX X% QX increase do there earlier, to that legacy I drop in revenue. we QX revenue to below stated, I expect in revenue not a legacy expect total our in was And As of repeat as QX. in

and sales bottom-line in continued marketing our to our to updating also are investments We growth. drive reflect guidance

Now on guidance. the to

between total $XX.X for year-over-year. $XX expect we total XX%. revenue constant of QX, expect of to to to XX% XX% million, revenue we million, QX between to currency, $XX.X growth of of representing For growth million XX% representing $XX.X Adjusted million

for million end QX, revenue ahead of is we high for if guidance you get through revenue our which the our XXXX midpoint revenue $XX.X QX FY total total the the previous year. add adjusted at of Looking currency through the to of

outstanding negative growth. shares momentum well in XX.X expect just quarter executing be GAAP million and XXXX. for and a saw revenue to $X.XX average per $XXX,XXX loss to loss $X.XX with we QX to QX, In be the $X we of expense record compensation amortization for total fiscal summary, to are Weighted net of to loss expect the per of of or quarter Non-GAAP expected and Turning or of of a cents third stock-based positive are to fourth and bottom share, line $X.XX zero of double-digit $X.X a loss share. breakeven million update. net the approximately approximately million $XXX,XXX. one In closing, consecutive $X.X million includes which continued to depreciation we approximately

the investor we calendar, Conference and meeting virtually And conferences X. taking with on will be three presenting will Annual Investor Francisco Investor we San in day, On in with on Craig-Hallum Conference Relations Institutional June. Jefferies the meeting investor's investors the We'll be X. June following the at Software at be in place in-person participating June

dates participating for Conference closer call remarks. We to at June. more Capital get see details hope Operator, provide in questions. conferences. these open we the Investor some our these now will as also concludes the and in Loop This We'll we Markets of prepared you be will to

Operator

will to go first Richard question Baldry go from Instructions] Capital. Thank ROTH you. We from Please our ahead. [Operator

Richard Baldry

you XXXX? you've or drill hiring is first how into might think sort repeat talk repeat itself fiscal had pipelines, you feel any about maybe to cohort cohort looking out you the And conversions? your of where early maybe sales you Thanks. terms of Could so not can experience far that Thanks. pattern then building itself in hiring cohort

Ashu Roy

Sure.

one mentioned, So two of in one wins, The cohorts, in – One wins wins got QX got right? already them but going, the as Rich, small they've some I going. QX, couple a QX. some have

of With and in prepared on-boarding feel and So cohort, worked remarks, the roughly which the the we – in next And from be them They've the process sort know end will we the cohort, be months. the for reasonably. XXXX, that So has should early. average the and right? of XX that's as of good. still that to months early at three pipeline production ramping QX mentioned QX like I primary two building seeing fiscal that's an process been with in fiscal I QX then of

the now process I down. So we have think

Now well people, which the for kind the right of I we than cohort first different profile it's also a question think we getting went in of one, defined for will us. bear have second the which

that. So about in doing what and good feel yes, refinement measurement terms are I and operational optimizing we of

Richard Baldry

to now have sort And the of then if ahead leading pretty been quick. I started look have services the the side, costs up of at which grow revenues, professional

should in-house? demand talk Thanks. – to as out maybe can the And tying that you're how customers winning prospects seeing about we that services to new new there? bring base you're professional those sort of of do we indicator So abilities that with resource view a greater you and increased that you for resource leading then how types

Ashu Roy

Right.

three points to I'll make So that.

we we some First build was their et sort There's the scalably infrastructure that for cost organizations could team. have services then have step-up it overhead, so of around a us, scale answers efficient which significant is we and building the to, minimum of important to teams that from cetera. get in thing

So is one that element.

elements. The other two

in Eric AI investment, that a seeing managed service way one the second as well in driving more, knowledge project, adoption mentioned, as and stickiness. more The the service, long are implementation we both as in the really and especially goes in is,

the curve So in adoption. some the of of cases, we are investing ahead increased

on-boarded who us is little I a the part is going which bit for to certain think are cost help way, that them definitely team to on. a services them in equally them that of So and for overhead starting good is enable, third there a working of are structure. in terms we bit that get we little partners, in our services current our inject piece, projects the showing And with

enablement that we make also happy is an that to are So early investment

Richard Baldry

of human people from if one, have by operator are think these person that features asking maybe live of the tied before of at And you sort costs higher a sort replacement Thanks. sort perspective. you a that bots – just the to them being sort tighter lower into But through to Thanks. higher head general looking last adding solutions, selling do live able much very couldn't versus sort interactions? done as you'd Knowledge deflecting many particularly how to of cost a macro I'm costs How for as enabling reason is, solution we were cost solutions? to you be backdrop, human-intensive to push economic lower

Ashu Roy

in say we what Yes. seeing that to the except answer a good about. right it high, is appropriate pressure just observation, a but one not of terms availability good a in in that now fairly agents the of and service, I is That cost is cost because population. makes agent, very of very don't experience have there agent workforce argument for lower But there are also on think we investing is

So lot a is attrition of creating that havoc.

and reducing train time are go which so take that. people up are again doing again in investing people And the of lot and need to tools, a

solution element service know, self-service that self-service and relevant self-service has of – which is alongside assisted you reasonable a in not as service users side level So most the And for I general on as dollar think dollar is that's speaking, a one argument. both conversation versus this one, businesses. in assessment well center at my is typically That's assisted realization. realization number same the components. the as contact the the But generally dollar our

Richard Baldry

Alright. Congrats on great a quarter.

Ashu Roy

Thank you.

Operator

We'll Rhee you. ahead. to Craig-Hallum. from Van go Jeff now go our question Thank next from Please

Jeff Van Rhee

Greetings. A number of from me.

of and breadth to at lot resources pipeline the and particularly you've touch be lot think of I guys, and maybe pipeline. front a the legion I added on end a of that. driving maybe, the the of mean, got depth

what's pipeline a growth give maybe could know, don't then color the specifically, little you in of I year-over-year? magnitude pipeline. the So quantify the if on the changing And in

Ashu Roy

Yes.

you the we in kind the just end. middle of tell metric of not pretty I'll one So is front the pipeline, which track closely, that at

three the months, of we Over a last doing couple have been this days ago.

year. to I level about last So that front our in it. That's number not pipeline, a for the three the pipeline. that of months seeing are responded The of remember we have but feel of what we same we responded RFPs That's that for is of not of end the double gives the pipeline. increase you to the

Jeff Van Rhee

that often Yes. management, yourself inflection And knowledge – and terms understanding things the got make involved of versus of support the other what your you is in getting how Is that in channels? an do just digital market agents coverage, much better you of all that to doubling? more in to

Ashu Roy

now we so effective, There an fact we bulk to state I are say, have it that, other probably that is give are So it's effect I that number our more But the our will direct seen – government through one – a example, certification. places my sense. the think on – of and FedRAMP was the partners gotten increase the we have that would than I for of our marketing, fact that in the is right?

Jeff Van Rhee

It looking at here. That's with end your obviously, is year we're the year, helpful. the – of fiscal

you you frame forward guidance be Do just margins, models? mean, even even XXXX? growth lining some some directional we'd of that, and around think to for I help you're it for XX% preliminary growth, for mean, But I maybe accelerated year-over-year So June. our on advance FY thoughts guardrails looks to us some in up us like formal looking similar growth. can commentary give you'd forward ended see XXXX

Eric Smit

Sure.

of So I We've that we'll moving low from of growth XX% that up into XX% execute looking in no that we've to continuing of closer out medium-term the deck, seen plan. models, as rate be to range our would sort that pull years. that goal right, us think ultimate back updated getting – with to at XX% things the sort

So that's directionally, where all be. sort of where we'll we're

So more up on, but year. have continuing we obviously, the finish we'll work details to when

Jeff Van Rhee

Amazon didn't then And could. a number Okay. Obviously, last, you things. Cisco, one I are if There Avaya, mention of Connect.

You've got a of partners. number

et You referenced what also bit some load boat you really move needle? trying seeing SIs connectors, also of that that teaser a And little materially the than in of different a a cetera. sort Genesis, been you what launched you're on Like through that XX/XX, maybe previously what's ramp matters? their had global up, FiveXs, could to

Ashu Roy

built the right? connectors the the built think that more know, have all of I of months, all the been focused So you doing cloud whereas nine was historic contact on connectors right, have were suite. Knowledge models, we've Whereas we as Avaya the ones, the Cisco, earlier more all we the and solution the in last center cloud model in side,

that more it I'm progress the but seeing as conversations. one up to that and I in be only coming big the we some are some quarters. start The early that more where not we So of hopeful we'll report Knowledge-specific and making to But away, replicability able a it's brought because GSI one one right are really change activity. leading That's there pipeline comment. is

Jeff Van Rhee

Yes.

taking updates Okay. here the questions. for and guys. Yes, for the real Thanks nice progress

Operator

like show would you. Thank this remarks. the now to further questions closing no for we management time. have at turn I back to I

Ashu Roy

you. We everybody Thank you look we as thanks updates listening finish forward our Well, today. Okay. to the for up year-end. fiscal giving

Operator

Thank you for participation. concludes you. call. today's This Thank your

disconnect. now may You

eGain (EGAN) 8 May 222022 Q3 Earnings call transcript