- Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to the eGain Fiscal 2023 First Quarter Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Jim Byers, MKR Investor Relations. Please go ahead.

Jim Byers

Thank you, operator, and good afternoon, everyone. XXXX Financial Fiscal Conference eGain's to First Results Quarter Call. Welcome

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

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

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

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

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

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

Ashutosh Roy

hello, and our Both the our Thank results consensus and you, Street and bottom guidance line Jim, top for everyone. exceeded quarter.

in XX% revenue currency. $XX.X million, constant a record Our up was year-over-year total

constant in year-over-year grew margin revenue currency, Our SaaS EBITDA was XX%. and adjusted XX% our

performance the good quarter. a So for

some Let notable me share customer in the quarter. wins

operating analytics a were eGain major enjoy moving customer and contact for is SaaS legacy to They to globally. us, American experiences. a our platform The performance robust With monitor customer they'll first solution, Cloud. airline improve center a and they're the now hub

over Moving hub opportunities them also them opens cloud knowledge our to for to other platform up our offerings. and adopt

win, include second seasonal hires professional logo that and global contact first platform well rates sports improve in time, they sports contact season. merchandise. to agent the resolution a partners in creating The and licensed leader is a reduce a many next-generation especially leagues. wanted one are holiday center We're sports onboarding for as digital new with They training during as

is So retail looking out-of-the-box our as handle service to that omnichannel desktop some this team. personalized solves good brand they had the expansions quarter for an our give and integration of business and to for by well. very selected all and going Genesis with We source need Genesis the customer easily. in their connector easily knowledge knowledge were single We also a them hub, processes

in was have in federal year last on center. we order placed where onetime one rollout U.S. ended a a contact quarter. expanded they first order our The offsets agency the that COVID expansion their significantly This

to their outsourcing clients. knowledge XXX They're Fortune process Next one have hub business X,XXX They the eGain is serve market. use a business enterprise of more over enterprise expanded clients. in with now

the state back U.S. centers. the agency business of travel is contact expanded contact picked across centers citizen in They've They one a eGain a up their their third of the expanded their The global out last across the one is And would of as post-COVID. more platform. I eGain use bring global use BXB large

and Moving updates. customer to product

last month eGain X-year customer like like success and enjoy conference, including held is which person. XX, success. gap, X which shared with feedback each experience a resounding clients was our the sharing new customer leaders after Our at Record their Solve positive a L.L.Bean, participants. eGain stories annual was Navy best customers tenured other We like Fed practices from in Customers clients received Liberty very conference, Mutual.

prospects from transparently learn excited the While were clients. dos to don'ts and eGain

We to also Clients our effective richness and the maximize kudos eGain heard our around value an capability services consistent comprehensive from solutions. as way of managed out functional offering their product called investments.

value-added been with center our seeded In analytics solutions marketplace announced future, to ease leading we certified certified compliance, built The solutions partners. front, out by see and gamification, our and for build much be confidence. we platform showcasing and expect will clients platforms. us by solutions eGain list a publishing the These of On marketplace, has connectors can our contact from more. with initially and CRM partners used

machine in instant On the answer the knowledge to attendees eGain by trying the our capability instant exciting from This learning this Days experience to recently the very enhance of our further hub, received XX Innovation product is front, in knowledge with base. conjunction part capability, guide right quickly interest attendees. our surface knowledge Numerous state-of-the-art core our introduced capabilities, Applying answers out agents innovation easily Offer. in which AI hub via techniques an leadership. well expressed answers was is

guide from was in score That XXXX was systems. market management early eGain product for informed And the from XXXX nice service hub knowledge the leadership for earned week, only October, perfect to solution last knowledge we Gartner were then a team. that our we in customer Choice the prestigious a their win Speaking KMWorld. of Award accolade Readers'

both the lead to proud innovation choice. technical is market user and in team Our

market and business. overall our the at Looking

in our Retention knowledge and decision interest expansion high number while now our hub look record within lines costs the of to grow Businesses continues to technology offerings drive knowledge-powered to the At our business And include impact with time which to as we relatively be uncertainty U.S. getting remains current cautious. of same deals extended time, X-figure down customer economic deals. continue though, the for becoming for a healthy. seeing are are and more are opportunities, agent inbound continues the engagement on improving experience. our New areas. pipeline buyers

However, in challenges our European we are business. some seeing

the factors we growth combination balanced of these our mind, for a take company. more in profitability to and approach plan With to business

the very the we So pausing of next reps are hiring sales our cohort productive. we about making for current of on remain our now, reps. opportunity. focusing market Overall, Instead, we are excited

must-have AI-powered the management We are automation in to as need and marketplace. confident grow enterprise a that continue will knowledge

a So revenue we quarter. in summary, delivered record

remains Our interest good. new inbound

As to for our a a demand offerings. continue pipeline, we and result, see we have healthy

to a prevailing profitability. approach more the economic we growth uncertainty, given and to However, plan take balanced

to color on focused I'll and Officer, innovation will build-out. our continue operations. Eric? such, our our maintain add more ecosystem ask As Smit, investments product to financial around Financial we Eric Chief experience that, With

Eric Smit

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

and Let our and me financial the share fiscal for some highlights outlook XXXX. guidance before getting QX for into quarter

the macroeconomic have metrics are impact on seeing America, our compared we will when As include conditions where greater regional European business North relevant. a I to

in the XX% SaaS XX% up down decrease revenue the $XX.X to or looking in was XX% revenue for revenue from total a X% constant and and million, QX. record of up up sequentially now million, accounted $XX.X Total ago XX% in America year-over-year. at of by Europe for currency sequentially revenue, $X.X million, was in side. First, QX in contrast, was from revenue region, a year-over-year accounts XX% million, QX from up X% North just and revenue revenue or was QX. for year-over-year. quarter. on America Legacy total constant currency $XXX,XXX from up was XX% less revenue. total XX% Total than up $XX.X XX% North When year X% of from revenue year-over-year Where,

was XX% a gross to gross year-over-year at in margin XX% gross profit Gross the quarter XX% for up $XX.X up Looking million, sequentially of non-GAAP XX% for QX. profit margins. from prior first the from but and quarter compared

at year. were driven in costs by and operating and the costs to for million company-wide were the quarter. to the at compared the development investments turning the Now this beginning in $XX.X and that costs in operations. annual product again, the primarily first compensation are marketing of increase in year. effective came Included ago adjustments expenses, the quarter last million year in $XX.X quarter fiscal the over The Non-GAAP sales

I However, current hiring. should the at marketing mentioned, and flat And sales spend to -- as 'XX. sequentially when the compared sales conditions, when in of with QX actually were we paused looking current the they QX,

the the Looking year up at net compared ago line, of non-GAAP the in quarter fourth million the from and quarter non-GAAP QX of margin margin million $X.XX XX% fiscal share. net quarter. bottom margin $X.X again, was or quarter. and And our or Non-GAAP operating first for quarter operating or in EBITDA the income for XX% 'XX. income compares $X.X of million per preceding per operating This X% income was to QX adjusted X% from to in in $X.XX for year X% an ago $X share up was of

to Turning $XXX,XXX operations cash sheet quarter operating from a flow balance was flows. for for our the flow Cash cash margin. and X%

was year and from the Total a up Our cash million, remains cash strong. at the of sheet equivalents $XX.X balance end quarter ago. X%

Now turning to our customer metrics.

was macroeconomic is by for bookings the conditions, a further Our first quarter impacted typically in seasonally current that slow especially quarter Europe.

was dollar-based ago. compared to XXX% LTM rate XXX% net year Our retention a

base while again challenges customer closer by to it seeing continued are the NRR where at NRR European be in the retentions U.S. relatively our within expansions base dropped Looking with and XXX. XXX, below the region, healthy to we

positive side, year-over-year. the ARR of customers million increased the On XX% number X

up when deals the excluding XX% X/X hub, the accounted makes now ARR Our total as bookings by XX% of SaaS knowledge ARR months. new XX And knowledge increased looking SaaS last hub of our year-over-year. product OEM, our ARR, in at for

Looking short-term increased XX% RPO $XX.X our at year-over-year XX% increased and our RPO million, year-over-year. Total to RPO.

transitions up before discretionary of of program time -- million which I -- prices common to eGain. stock to or basis eGain financial announced appropriate on from So moving share a note through outstanding on we its and market to guidance, time XX want may the negotiated outstanding deemed to by repurchase to on $XX at purchase open transactions our common today, moving outlook under privately million

of less eGain the or open from made insider repurchase might market at doing The number of stock under would common laws and trading extended a immediately, repurchased specified X-year shares. also self-imposed effective when a In addition, be a eGain, and has permit XXbX-X not is term will adoption to Rule from does repurchase to precluded discretion so otherwise obligate restrictions. be acquire program trading under stock which common a plan, of company be stock

a our look plan business, to without While sheet, of remains implement impacting our with is focus the at balance see we our strong And we growing stock use our price repurchase reserves. strategy. good long-term excess stock eGain cash current on the the investing in growth

outlook Now on financial and our to guidance.

euro, and constant pound With strength the the of estimates revenue U.S. providing underlying the comparable are on current to purposes, currency a into the provide we for basis business to dollar also visibility better trends.

total the to Adjusted fiscal growth million, between for million, growth to $XX.X XXXX, $XX.X $XX So total XX% of of currency, constant million quarter we QX to XX% expect to of revenue million between of expect of we year-over-year. XX%. X% representing second revenue a representing for $XX.X

Turning to the bottom line QX. for

We includes net which share, million expense $XXX,XXX loss $X $X per approximately $X.XX expect to of $XXX,XXX. a or amortization and of of stock-based depreciation GAAP approximately and compensation million to $X.XX

We average XX XXXX. are to $X.XX share, non-GAAP million the million million $X.XX second $X.X to approximately net expect for weighted expected be to and the or income of $X.X of outstanding quarter fiscal shares per

an we share given again, our by slightly are million, targets $X.XX previous a guidance costs and year, expenses full current midpoint non-GAAP total the our projected our the XXXX environment, of EPS greater optimizing revenue our our improvement the fiscal amount, profitability by but growth $X macroeconomic by midpoint. adjusting the lowering to per in and of guidance resulting at For by

approximately revenue would $X.X loss of ending approximately XX%. Non-GAAP million to million net XXXX, now to $X.XX XX% where $XXX,XXX. share. of XX, $XXX XX% to growth share-based million to to representing $XXX.X for of to currency, GAAP $X.X per constant million, $XXX that expense representing of total million year-over-year. So per we for or $X.XX $X.X we million, share, $X.X growth equal million or net million fiscal June $XXX.X depreciation and $X.XX XXXX, to Adjusted and full income X% compensation between $X.X $X.XX to expect estimate year of of amortization million of

for pound of sorry. the as For X, currency and 'XX, to pound assuming conversion are British This follows: to rate pound where British FY USD GBP was assumptions British are And $X X. QX rate compares to Our to USD -- USD we to a X. to FY 'XX, to XXXX was $X.XX QX to $X.XX GBP 'XX, GBP $X.XX

summary, in another revenue So record we quarter. delivered

balance robust a balanced as But remains approach current conditions, is new repurchase the a and are pipeline million and $XX and we taking stock strong believe to We profitability. good high. continued business we the given growth demand announced macro we generation, prices. stock With sheet a current investment have more our the at cash program our

before event. this Wednesday, be to Lastly, Technology participate New we ROTH I in the in close, will York

are you planning to questions. York attend the This conference, prepared love If remarks. see call now we'd in the Operator, we will New there. and you for open concludes to our

Operator

[Operator Instructions].

Baldry Our Capital. ROTH with first question Richard will come from

Richard Baldry

I'm slower geography? changes really sales is vary overall? of cycles the seeing to sales by curious, you or just sort are that top of the Or it funnel

Ashutosh Roy

is Richard, Ashu here. this

on seeing are interest -- it's the There think which top of seems end. levels delaying where be on good delta. still we decision-making, front more I the the the to the is

Richard Baldry

legacy Can that Are would keeping if you Okay. about that virtually And revenue sunset? that's away? there to of to away, on that onetime a when the gone. amount P&L small now go be fully material up that the costs last maintenance benefit sort there of that talk would would goes side,

Eric Smit

No, small relatively point, this impact. of customers, number the Richard, cost given Eric. huge there's not at is this a

So -- change any from we that in customers. our wouldn't perspective, these to costs it support see just meaningful

Richard Baldry

sort because it slow of probably this feels That's to I'm sales being. then fairly at And a Okay. the hiring the what on like down into curious recession. decision is quick turns the it cohort

demand in resumes, people of you've them, sort team train on time pushing long keep considerable Why balance and up go. on that it turn board, bring when if already the your bring and is them sort takes got not sort ready to to so resources. given that just sheet of of So things a

Ashutosh Roy

that's mean, Rich. a I alternative, Yes. reasonable

thought extend. to on that once that. see upwards. school backwards want there's as trends good -- to says that stabilize, now, economic just a we be backwoods little into conditions. decision a it's Right think to unclear bit, slowdown better to we'll And Our I back if of you we going the to want jump is the said, quick the it's But sense see cycle back moving see get continues meaning we a

Richard Baldry

Okay. seeing sort then of stay And now. the assuming we're lastly, way them conditions

on Or state of cash using existing do think On reserves to the hold the a buyback where sort a drawing front, you'd steadier envision basis sort they're pursue reserves would prefer down you you of buyback? and from operations at?

Eric Smit

certainly, -- think current certainly firm on So healthy the again, the that made and flow. relying we haven't just I a we we would using cash sheet, would as yet. we're to still evaluating current But consider balance But operating on opposed at that. given decision prices, resources

Operator

next Our Van will Rhee come Hallum. question with from Craig Jeff

Jeff Van Rhee

currency like into looks some good It Couple. pretty execution headwinds.

a congratulations. expand you the have So than on just Obviously, did is cutting that very decline few seats? color on NRR. lower the I customers? how just is first out? downturn you back guess, Can material really core loss on EMEA How concentrated then helpful. is business. be that? and a And Maybe the away? would that usage, Or little are go of they there playing customers Like the large

Ashutosh Roy

Yes, sure.

of we a is, has I given kind of think as concentration know. in U.K., couple the hard been Europe So I One business U.K. our in comments. impacted think the the

delta the are getting is customers they're reduce the in significant -- have larger feeling even their though can the significantly. And so they to we where seen some spend pressure of value,

continuing get with don't cost mode a to solutions, have rather now, needs. And into the the value. reduction business primary right But going couple of driver are frankly to made deliver the go than them being of so that choice they their which

expect something in of we that's So not it to these customer is situations, see but many too we what saw.

and, And these and forward. customers careful in to make planning and of to course, that in be that we moving want careful some the sure so are game the being retention with we of ensuring trying be

So back with believe still they're available engage that be may not that adequate in come with what we these once we -- alternatives and them. are working to the

Jeff Van Rhee

geographies. compete with alternatives other Are you in would these that

those is other So behavior specific something seen that... is not of that kind in Or geographies? alternatives you've with

Ashutosh Roy

exist good other really yes, these but considering yes, that's seen alternatives -- haven't Yes, viable geographies, now, as question. geographies do -- sorry, in mean I we right? other alternatives And them right

Jeff Van Rhee

deterioration. terms there? end sales XX-plus of markets? steady little in a And lengthening of the days the the health as timing that Any substantial the Is then in decline progress looked put it can in cycles, over the a you point other last recent on just color sort of of finer how mainly you

Ashutosh Roy

in budgets, decision that gotten seen see -- thought gotten have to that's which time, And this cycle say them common were would the have pushed calendar of I calendar in threat lengthening. what have the we 'XX. which material fiscal some at I are 'XX we

Jeff Van Rhee

one on momentum then Any traction? commentary differences in versus the the And Okay. channel last, efforts? just direct any channel-related sales

Ashutosh Roy

No.

I both But forward them that have channel on terms if moving could evidence consolidation, now, be pressure that we that. be better do us of more the of we the useful right over any But change. seem time. could channel is same think selectively have to think don't vendor to in for there

Operator

[Operator Instructions].

Tim from come will Horan question next Oppenheimer. with Our

Timothy Horan

So quality how is of think, you I Can were well traded said thoughts kind relative as down or lower you some productivity just them relative to, customers? clear, think, Have they services the yours. were? Europe, you relatively as kind test before? you're new of the lower be Any quality? work know I don't cheaper maybe much on services And way any And what in customers saying. that priced, are seen to I these

Ashutosh Roy

Yes.

almost competitors. more is say a what I like solution, would not in one of kind other a environment. typically which is that we not see So any these our The are

the way particular this to costs clients feeling to be that pressure I almost solve to XX something knowledge go that try think ago let's I are done problem, just with in cut cases. think another years the say, led And has management. to these with to used them

U.S. but right trend that's will feel that's our we not the probably market, So least we that is see in now. a at where view

Timothy Horan

comparisons And productivity any quality theirs? or versus your on

Ashutosh Roy

things the are I impact, So training scores they at that your resolution making like to bunch sort present search. it we contact -- measure, and want things first And to AI, on of think improving through CSAT content your or people these whereas don't solutions it -- that or who target. it improving your no even even time. of customer focus value Those look a business of collecting we They make use available kind there's contact nothing that deliver of -- sort. not right? it

still there's them. that believe the back think to a we'll So triaging right going at very decided to reasons their in. these clients to for get then and these close chance this we're business go different opportunity be a to own approach accounts, have just get to going we I stay that And And time. making with with probably for a are perhaps and decision chances

Timothy Horan

think pretty Got but contact is in you Europe, it industry? it think in Or it. center, prevalent? whole to Europe, And is do they I do general, guess the apply your comments, you just

Ashutosh Roy

contact sorry, effect. getting wallet more it are America. -- macro I but that I'd have not than to or squeezed not, impacts sizes in believe in Europe are a buying centers sure cycles that equally say it's if I'm North

Timothy Horan

else capital on the more thoughts any yes. with general? just to understood. have free or Totally in you do flow Yes, that structure cash what And

Ashutosh Roy

gives it stock when good have think is decision itself. a For to our an investment as the that presents see we now, a us buyback I one opportunity made good

cash. door kind for And good some the that use of so of opens

any public around Beyond decisions cash. made that, really we our haven't

Operator

session. any questions. for are no conference This concludes I over would closing to back question-and-answer remarks. appears like It the there your to turn further management

Eric Smit

Great.

person. Okay. a New meet happy Well, anybody appreciate we'd Thanks you everybody. be Bye. have in thanks, week, And lot. I to listening. this in again, York

Operator

you now Thank conference attending has concluded. The today's presentation. for

You may now disconnect.

eGain (EGAN) 15 Nov 222023 Q1 Earnings call transcript