Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the eGain Fiscal 2023 Second Quarter Financial Results Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the call over to Jim Byers of MKR Investor Relations. ahead. go Please

Jim Byers

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

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

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

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

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

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

of on call the Relations have website. investor available the page one conference updated release be with of also the the Relations can release's found phone Investor lastly, press to week. a Investor an earnings be link eGain's clicking presentation posted Our we replay And egain.com. eGain's website this by of release, for will earnings Along page at press

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

Ashu Roy

everyone. another delivered revenue. hello, of Jim, you, quarter record and Thank We

constant and estimates. revenue total was guidance in exceeded million, year-over-year consensus XX% our $XX.X currency Our up and

from flow strong quarter over currency. in operations $X And of we revenue million. cash SaaS constant grew XX% year-over-year in Our generated the

quarter. Turning some highlights, share the let in expansions to business me notable customer

with as significant healthcare to was provider leading their business. digitally a First services a continue expansion they transform

with specialty insurance more provider was products cloud second as driving adoption. a The they're of global

The one company, Last I in has technology mention adopted first is one, fast-growing to want retail multinational a Europe. a bank with was hub. that's their engagement as eGain third with insurance and customer Solutions

especially Our in showing continued retention, Europe with our focus expansion stabilizing on clients and client results. is

Moving to announced an Instant product availability Answers. the exciting of we week, This eGain update. past general

and into kind with trialing AI it's release its GPT. of outstanding Instant answers enterprise been knowledge an by responses enables relevant repositories capability, First using content hit business. tapping late knowledge answers Answers in plans. to How pain since We've with the attributable the to Answers solution generative minimal Instant find been users like management. deliver year a last relevant point effort Because curation addresses our knowledge in and limited technology

knowledge We market in first a solution. such are the with the management

analytics, because combined and are our be think design we opportunities, going combining key. all delivers is attributes responsible. around Attributes a management that experiences it presents attributes we technology believe AI with and automation platform compliance, this approach more, for is safe enterprise new required generative to knowledge what the and solution critical smartly consumable, excited this this especially with when like breakthrough We bringing and so offers, is critical

technologies quickly they as Thanks available. our composable architecture, incorporate we new become to can

automation. trajectory it bullish drive technology, given of this user friendly using marshaling we and the And it so to are disruptive about

overall market and business, market our powered demand for the our remains knowledge high at customer offering. Looking engagement

The the reduction. focus our service experience in large businesses. interest with New steady be sweet cost BXC improvement to inbound of continues customer opportunities of more spot and

tools. management X% continues low the leaders recommendation assessment know, is for top between in Gartner's know to tools And XX% according market. market we the for to still also customer service support we and and be of Gartner's technology knowledge knowledge As penetration investment management

At with need and this knowledge increasingly are enterprises. decisions continue the slowing and of now around the time, in that to in due believe need So environment, our we down, comprehensive same market cycle become for sales best current careful this strengthening. reconsideration solution, the management priorities. will see to spending, Buying confident we the are cautious we mission we have critical solutions

of on Given number these in we're an having longer so that sales versus and members way ongoing team sets. our sales larger in enterprises, we cycles refining focusing fact we professionals a are model, hiring sales the junior are direct seasoned more

we marketing parallel, customer are expansion. ecosystem and success, maintaining highlighting In around leadership, brand

clients our fact, marquee next with one our XX. February [Indiscernible] of is scheduled In customer on webinar success

of With level the sheet, well we business market healthy balance investment, we to intend maintain share our and sales marketing so strength positioned improve. capture as of a are to conditions that

flow. In another we of summary, revenue with record delivered strong cash quarter

large offering. a opportunity our for see knowledge to continue We market led

our offering innovation Instant as solutions, we in the AI engagement. improve and innovate, to with for continue We like technology customer lead delivering market Answers our

even steady remains in this interest environment. inbound New

are to model team more and sales refining of new sales hiring enablement we our continuing sales seasoned so, and build people focusing the our And We're business productivity. on pipeline.

intend that conditions we And well positioned investment improve. finally, strong and us with maintain our be sales allows balance a to marketing of to business as sheet, level

Eric Chief around ask color to Officer, Smit, Financial more I'll that, add operations. With financial our our Eric?

Eric Smit

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

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

million, revenue or XX% $XX.X from X% QX QX. for QX. year-over-year was and currency up sequentially XX% currency a $XX.X revenue sequentially from Total constant and was up year-over-year in million, X% XX% constant in XX% record up or SaaS up

than revenue from XX% decrease year-over-year. was When to Europe by X% total quarter, contrast was in $XX.X was for Total a quarter. X% XXX,XXX revenue million, North and $X.X accounted accounted where revenue up the ago year-over-year, down million, from of revenue XX% year in less America total from in for up revenue the just this of North Legacy region, America XX% at QX revenue quarter. of total in looking

at year-over-year margin gross for XX% X% year the $XX.X for the preceding Looking the gross million, in of and margins, and to first up profits gross XX%, gross for compared a prior quarter. quarter second non-GAAP was profit XX% quarter

turning in to $XX.X compared QX. in operating at $XX.X non-GAAP Now the in quarter million and for second $XX.X million, year operations, quarter came million to costs the ago

opportunity having Given mentioned, continue continue as the number members, sales professionals current we given marketing lengthening larger to seasoned junior sales level team direct market a we sales see. the macro hiring but sales and of cycles, investment refine model conditions and we to versus a Ashu of maintain our that more large

income income ago our a preceding operating ago quarter per non-GAAP to was $X diluted $X.XX for the X%, net XX% quarter. Looking $X.X $X million in compared and line, first the from share for X% EBITDA margin this the X% basis from share, quarter. operating in for in net or the non-GAAP up year QX was X%, operating or an compares per second quarter, was or the preceding basic and $X.XX million adjusted first in up quarter of the year bottom share a to margin of income margin an at of on Non-GAAP million per on $X.XX quarter

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

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

million Now customers the to focus Consistent turning selling BXC ARR number service businesses, experience metrics. $X to in our large interested increased customer our with of improve cost, to on management customer reduce knowledge year-over-year. XX% and

now Hub total average our Our customer least up sales revenue of at was up XXX,XXX of Knowledge XX% makes year-over-year XX% approximately ARR. and our

Turning to LTM metrics. our retention dollar-based SaaS

year a from XXX% basis, in saw sequential the quarter, compared number On an XXX% the XXX%, total as first ago. in the For at improvement came quarter. we to a

improvement within be base retention region, Looking retention in healthy a the XXX%. expansion just to U.S. to NRR over and at the slight with by quarter our rates in continues

Europe, quarter-over-quarter with in the the additional a number customer has still quarter. as but saw in Europe we was base reductions improvement XXX%, slight significant stabilized the no below also

will quarter impact revenue the to begin in our However, QX. discussed we losses last

to Our year-over-year excluding looking RPO, OEM increased at RPO and SaaS million. X% our $XX.X ARR increased year-over-year XX% total

guidance, Before for taken third to outlook determining guidance the into like when account moving our and that items a few on to we've quarter. our I'd highlight financial

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

than In addition, are less resulting every experienced fiscal in $XXX,XXX the fewer there quarter in third quarter, second in days in we revenue. as approximately our two year,

million our not quarter. benefited quarter approximately uptick In revenue anticipate third a revenue for that from addition, in volume in in accounted seasonal our fiscal $X we do that significant recurring second

quarter for between million quarter of last discussed With And loss revenue of $XX finally, we total customers approximately said, total QX constant $XX.X QX million. we expect $XX expect $XX.X of third between by for fiscal that of revenue million $XXX,XXX. revenue EMEA the currency, adjusted XXXX, we million, reduce the to will to the

a million in to expense $X.XX loss of to for million $X.X amortization approximately compensation expect depreciation approximately QX, Turning of of or includes share, and we per GAAP net line bottom million $X.XX the $X.X $X.X to which XXX,XXX. stock-based

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

with environment, revising macro extending fiscal given timelines deals are XXXX, we previously to full-year current economic for guidance. the our -- For the provided close, the given

currency to total full-year $XX for So we constant million. XX, million XXXX, ending expect million $XXX that for between revenue fiscal the now full equal could $XXX million, June to adjusted $XX XXXX of

we $XXX,XXX. income to share, million $X.X Non-GAAP net estimated where a $X.X million $X.XX for the and share, year $XXX,XXX or $X.X net per $X.XX loss approximately share-based million depreciation $X.XX $X of $X.XX GAAP compensation to to expense million approximately of to per of amortization and or expense of

of are for to was ‘XX, $X, are $X.XX the USD currency assumptions to USD $X.XX remainder of $X.XX to year $X. QX and to as GBP when rate when USD the and rate Our compares to we rate pound QX $X. was to fiscal conversion ‘XX, ‘XX GBP assuming British This ‘XX fiscal the to for follows:

So revenue cash in and the flow summary, in delivered we strong record quarter.

to customer While interest high. market engagement knowledge-powered sales cycles and current remains continue in the environment, lengthen

versus having our and adjustments strong our be model, to balance focusing team seasoned and level we the improve. a on of members. large of sales junior that more to made sales sales professionals by to direct conditions with refining as plan But our marketing number investment positioned sales sheet, enterprises us business maintain team allows hiring have We well

we calendar, Also, California. we spoke and of investors providing be more be XX a going person. hope in as date answers features Relations demo that at in March, eGain Investor closer We’ll at we details the will new a March Point, be to Roth where be place Annual product and Conference are to the presenting of the on doing our of. taking of meeting Lastly, XX with attributes Dana Ashu to the that end see some you there virtual instant will highlighting get

As well as offering. management knowledge broader our

weeks. more coming We the that on in details will provide events

we for our This will prepared the concludes open remarks. questions. Operator, call now

Operator

you. Thank

session. We Baldry begin the will Instructions] Richard question-and-answer from [Operator from question now Please ROTH first comes Capital. ahead. Our go

Richard Baldry

a seasoned bit you with changes reps? replace in talk weed still about people? more find it about out to sort challenging effort little Is in Thanks. right given proactive teams? of the this people? sort the hearing underperformers find Was more is to the the sales the, easier and going of, of that How a Could those we're to tech Or space? layoffs effort is them that

Ashu Roy

is actually this Richard, [Indiscernible]. Yes.

look intended So at, which the looking sales just quite scale continue like we had what significantly. as element the we to the people, said, and team at to hired one seeing so we we started manage then one productivity, part and up you that is some the do. it refinement And the performance two to the we was is enablement things, of as felt of that

more better we're and seasoned larger is upgrade we one that the to doing as opportunities that's for of are we management go then that driving feel bottom. the in performance again sales more other part it's from reps team The of enterprises, the and the other some us coming that sort into seeing the

Richard Baldry

on in similar have quickly is about something more sort it Instant different higher see of, And your technology technology, the to that it an similar bit what built on on on you've be costs? that or embedded what depending offering version for past I piece you do like might you've technologies add is So, will that Thanks. but ChatGPT done to generative type quite And will the just the catch own? Is didn't Great. can what in of standalone? you you a that AI economics being you an have of a embedded enough. talk little that how Answers? the or know,

Ashu Roy

Right.

the are one much of large get large capability to the language first model the generative of you layered is billions knowledge manifestation As of and all, content capability be Instant hub, space Answers model amount and technologies, following a just ChatGPT So our it's top way on a an to us humongous on So going of right? underlying parameters, others pre-trained right? right? language is of the that is who know, underlying and capabilities the very AI answer using better to

that specific And pre-training is tuning is and enterprise ChatGPT, what them, is So for core a we with to content, bleeding doing the is language content, about not privacy so they then that models are their but sure training care their some the businesses, the fine of improves. way, that content so underlying enterprises, using back making is which in done training those of of large taking business. in that into that especially secure

ChatGPT. elements the of So pre-trained common

find a way you -- much to get works to search to used except So the and where so results. summary it's the your search still that's that answer the right tool pretty ability

part detailed the where can have as to question exciting. you be have that really content answer generative or That's in that the to very XX- XX-word to question long a you're a opposed becomes say document. asking Let's responded in-depth read enterprises having whole documents and of

So second that's the part.

working an third to capability product, get likely of expose is our around our doing we large we're more a is so of the level And that are into [Indiscernible] we’re still our something customers. there retraining the of that's might early amount the quite as have something element with and an is COGS that's that fact going in we advanced sense a but are that The cost, something there that, to out that embed on to depositors. still we on larger part the And context base service. to add large part That's will content figuring that of back solution. of very scale, enterprise cognizant some as that

Richard Baldry

And tough, cash deploy one any you'd me -- plan or been headwinds sort of, has be, the announced this curious, good. begin your are Great. aggressively pretty that the would Thanks. last while there quick fleet? for generation market and buyback Has to

Eric Smit

Sure.

purchases place, plan So we have -- the that's quarter. buyback in last was but through evaluating so we structured no put be obviously the quarter, There through we'll a that.

Now see be if will any made this announcement adjustments we what just to made.

Richard Baldry

Thanks.

Operator

Hallum. next [Operator question go Rhee from ahead. Please Jeff Instructions] from Craig Van comes Our

Jeff Van Rhee

there maybe in the rest terms in momentum the couple the want the, talk seen Great. or me, you Thanks A the channel was the the Rich front, -- now channel for the business? have motion for what questions. my of the you of taking and asking the the side. motion know sales I I touch on motion excuse about on direct sales particularly maybe to versus

Ashu Roy

is a we see Yes, good channel still that. it's question. generating The opportunities,

in that difference the of, of CCAP sizes I channel kind an are the -- in and think what sizes are is but up direct sort chasing partnerships. channel add-on the still through the are sales, we we is is sort SI the, channel we're opportunities particularly that area sorry. are that there through And building logos, more with opportunity where and steadily opportunity right is see. There and a SI direct that the the the logos that the the of larger coming channel

right are kinds opportunities. so And those of large the

do a are have they and to conversations cycle those they of because our them, SI through strategic course, they have and organizations large early-stage seeing at a some coming more are conversation. looking we an is into knowledge but Of more -- project,

So to very that's that encouraging. me -- is

Jeff Van Rhee

having happened a saying enough. what GPT, to you? Fair surprising at and recently. are and but look time on And feedback, the It's customers then understanding prospects it's customers, and that is you potentially how as lot get prospects of your

Ashu Roy

customers, just analysts. about So talking not everyone is partners, it,

analysts we Gartner, at to talk of to level. conversation talk it there we a is Now every around other and lot

saying at And fact Now think we sure responsible safe taking we good are we now we take have that are details we to can it? you puts in but to of people we said, of a, get a been we this generally have advantage That the making here and a the are when that like the the available. way, how say months, I we can levels, make us advantage that are time right? in are now this for demonstrating few solution senior we at last position

the Because has sure X.X% and with with that happened well was, where Google, well fact engagement, of to you guys judgment to in has case it what and whatever or everyone it attribute correctness. I’m case enough of In you do Google, are have were in anyway. aware do to to is environment is know we answers of our that with terms business nothing that's And in it which [Indiscernible] right? know that with customer matter how the that in

a minimize You generative have have that incorrect, is that grossly you absolutely the the of providing right? to so manages that -- bit, risk system

enterprise And constraints, to so are right, understand attribution, correctness. to keen really it make in people compliance, how work their security,

to we we've the So to are are about those we being can out. And in doing things because do happy, months, been talk things say, that's are you feel what working those brought the several that in it? we last

Jeff Van Rhee

awesome. Okay,

said had number of here. And that of difficult, a from last taking you've reprioritization were of well other you as the the a referenced lengthened the they've things number reasons and a on bit be might commented spend bookings you environment, quarter So obviously lengthening, then sales maybe cycles place. last more me side, macro on was

Just ability this sort done? not maybe getting close didn't you going What's And expand the to expand business little with what's in a are on get and that on Just to people respect things What's saw quarter? done? on on reprioritizing? bookings little what there? that bit bit getting of done. the What specifically a more

Ashu Roy

Yes.

what but are are is not saying in evaluate, cases, seeing people to their every going So this right? in in seeing quarter the evaluating several which we case, we people are So priorities. is are we

hearing. are enough. the right and Also, that's let's of deals things now. then are thing the talking that people, calendar year, moving for seeing we hearing saying, for which the are watch market the People will are slowing about middle up ones we the not fast are open we we those So are the and On two down. I'm right? Those budget

Jeff Van Rhee

if one last side And I sales as well. Okay. the just could sneak on in maybe one,

-- what healthy it did S&M Where you'll commented percentage dollars end little do or rep the if you you expect know can that terms ‘XX? ‘XX? you the don't it's end standpoint, continue, a that, want you and are like point thinking a you On spend finer on you on I of, you in put if think or from where to quantify to

Ashu Roy

capacity I even we still we making are of doubled have mean, where have the -- where the where -- most we at are today, even from capacity current -- capacity, we we that. were doubled we’re our

a that's and sales been team executed. I enablement a like healthy, of and so set have mean And has structure I what we members good by feel

continue course, Of to we drive that.

they and productive sure So that's the point. focus that it's matter really of making a become at us, this to

Jeff Van Rhee

my Thanks Okay. for questions. taking

Ashu Roy

welcome. You’re

Operator

to further for questions. back management concludes turn I remarks. Showing our would to the closing conference like any over no session. question-and-answer This

Ashu Roy

and when to everybody, you. Thanks, update QX an for our look Thank you you Thanks, route operator. forward Yes. listening results. providing

Operator

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

disconnect. now may You

eGain (EGAN) 14 Feb 232023 Q2 Earnings call transcript