EGAN - Earnings call transcript Q3 2024

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Operator

Good afternoon, everyone, and welcome to the eGain Fiscal 2024 Third Quarter Conference Call. [Operator Instructions] Please also note today's event is being recorded.

At this time, I'd like to turn the floor over to Jim Byers from MKR Investor Relations. Sir, please go ahead.

Jim Byers

Thank you, operator, and good afternoon, everyone. XXXX Financial Fiscal Conference eGain's to Third 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

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

eGain's release comparable call certain presentation In replay financial post And earnings page we investor available phone to of reconciliation operating also we And with release, addition results, along X also Investor financial week. be GAAP updated eGain's be press historical non-GAAP have page with by Investor can a will this release's the press non-GAAP Relations lastly, egain.com. found the link of will -- the on of to such conference for of the eGain's directly at measures measures. press will to Relations website. as website income. discuss most included GAAP tables the posted earnings clicking an include The the non-GAAP the release measures earnings financial

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

Ashutosh Roy

Jim, to new driven you, from good and through business and about momentum function economy in offering. the experience Thank skills. We our year, last quarter, In using potential report everyone. by customer revolutionize generative knowledge and saw wins agent in customer logo AI good I and afternoon, generative activity talked self-service the productivity about talked of and enhancing improving AI the across digital agent AI operations McKinsey

companies knowledge a eGain And a potential with trillion businesses effort we I because billion technology down answers creating that are customer was within was knowledge AssistGPT could a the to barrier source the is savings as serve $XXX at service. hub of AI that prevented this customer it year in truth. in that said which curating annually single breaking the they barrier That deliver there manual for from service and say collectively offering, spend in who, delivering for latest our $X.X scale. trusted

looking on These to are significantly experience. companies times solution their boosting us. for cost, cost of customer reduce reduce service comprehensive of service to customer exciting for them the while are As customer promise AI our delivers

some signed in mention new few. good a we QX. So business, knowledge looking at our customers I'll

mega bank. is X U.S. First the

one X. So of the big

experience starting costs service are their with as contain they're of them looking They're growing their and to customer We fast-growing group. multibillion-dollar in divisions. with agent grappling a one in rapidly

more opportunity we with been exciting for and to I'll that AI really It's working with a across the platform becoming more talk we have opportunities knowledge Following this now us. in Mega the are to on. looking later we couple for of them years forward a have client bank, and that, our pipeline little for that something bank.

one available existing Fortune enterprise-wide and is to business out in with U.S. service compliant, time, by the the We're bring to that of replacing XXX want an for I one starting an them contextual enable mortgage units. out intent to both for is enterprise next and is The customers capability their Over a financing conversational solution employees.

management as see They improve core are empower business. knowledge to a growth The next capability fast-growing AI to I and is one want customer a they a billion experience as U.S.-based their company. mention in $X property employees driving

last They're And answers platform the next want related of deliver a trusted eGain current to and one, and mention knowledge to is and bicycles the agents. I with one their manufacturer to high-end products. leading customers replacing

to activity and well. in as improved business have at the the Looking this continues quarter in improve market, our market

RFP reflects the for by customer growing In last in seeing of grew growing accounts, we as of year-over-year. fact, interest effective over AI -- months them X and service. foundation management trust the are This in new the XX% both a use logo our knowledge 'XX, fiscal sorry,

Now is mega case about bank the that the we won I a in talked point. in quarter

of our to of as knowledge most X.X LLMs ready time. for customer Most prime they've are their exploration For can opportunities run AI they AI architecture concluded for with that are for context, within engaging the their trusted we of like they initiatives surprise. this growing AI deliver knowledge case, to the content AI they business, having they the foundation running multiple In needed composable so whenever and past to answers enterprises, large evaluation complementarity tools. feed through share their new years, in awareness a service. been And their plug that of trusted they and no their in

easily XX% content accuracy a wrong service know, a business tapping all into As thoughtless function result or in by a With our enough. answer or customer we curation. not in our AssistGPT QX in for AI rolled we answer leadership solution customer good the delivered uncontrolled Canada service, where uncurated is could lawsuit clients is product to Extending out market Air knowledge creation knowledge help our recently. and yet, AI automate directly worse [indiscernible]

them by the of same as and the their on today webinar, joined factor lessons by well-attended help by slash reduced their earlier improving our build European and a answer of at we ours effort share time, us fact, marketing story X client using In our errors to quality knowledge success learned Xx a solution.

innovation vantage are it driving automate trusted unique taking orchestrate better enrich gives knowledge management, in and risk to to position the thereby answers. cost market AI to of knowledge we faster AI point the a experts customer and with our advantage full down products so current us service and of Our

behind this see in keen To conclude, pipeline for At knowledge we're sure capitalize such, supporting putting we AI we opportunity. eye marketing continued same the and time, logo And wood arrow disruptive to dominate to all R&D keeping we are market that making momentum are wins as and new a service. in on costs the investing on activity. this customer and our

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

Eric Smit

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

Cisco Cisco our a from to from $XX.X provide revenue with me on-premise the before OEM to was revenue continues financial for the for QX the implement XXXX. revenue, timing cloud. anticipated more and down guidance Let on fiscal its X% QX our to discussing Contribution about of year-over-year. total quarter in business results shift recognition, for was issue Starting than lower details due million, outlook QX an model

$XX.X to recognition In come this revenue North anticipated than originally America revenue shifted revenue for quarter, our by at caused ratable of looking contrast year, the North X% America revenue to from expectations. in region, total the $X ago accounted was in quarter, down XX% million, When down revenue quarter. in whereas million, more below our revenue which year for year-over-year. as was from Total this X% last Europe total same

prior $XX.X quarter non-GAAP margins. compared profit was profits million for quarter. third year for the Gross and for Looking margin the of XX% XX% gross gross a gross at to

Now reflecting we came X% from implemented. the $XX.X costs expense controls year operations. operating have in turning $XX.X for quarter, the third in improvement Non-GAAP million the ago to million, quarter at a

net net was ago in at QX or Looking non-GAAP $X.X ago $X.XX XXX% per basis per of share income XX%, year basis the or quarter. from million $X.XX was X% a margin income up up quarter XXX the the points $X.X million line, in non-GAAP quarter. Adjusted the from bottom year on dollar EBITDA for share, for

up We $X.X flows. in balance X% ago and quarter. our the flow an cash year margin, million or $XXX,XXX the to flow generated quarter operating from cash operations from Turning sheet for cash in

an cash from For cash the first flow million X flow XX%. operating of operations margin or $XX.X was months,

XXX,XXX Of the share. under at repurchase remained quarter, we share the million per the quarter. program, million million program available $X.X our $X.X or at $X.XX approximately authorized shares the end repurchased During $XX price of average the of under an

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

net expansion for for SaaS was metrics. on customer Now was continued our net customers XXX%. turning knowledge additional share to With rate will our our knowledge, some XXX%, while total I customer knowledge metrics LTM dollar-based customers. our expansion rate focus

was for XX%. dollar-based our LTM customers was retention XX%, retention Our knowledge SaaS net net

Looking decreased X% increased ARR, ARR knowledge for X% year-over-year. while SaaS sales at total ARR customers total year-over-year

remaining Looking customer XX% performance for up by we was in Total driven losses The quarter the decreased decrease at our of and accounts to quarter. last year-over-year lower $XX.X discussed renewal RPO obligation. number a the million.

X% million, Our short-term down year-over-year. RPO was $XX.X

Now to and guidance. turning outlook our financial

we quarter, fourth $XX.X between million to the million. $XX.X For total expect revenue of

line. Turning the to bottom

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

to $X.XX $XXX,XXX or net We $X.XX of non-GAAP expect income to $XXX,XXX per share.

million. total model, expect The between in across a $XX.X reduction fiscal OEM see the in the guidance full to to full revenue to XXXX, revenue the less see more revenue Cisco is slight the expect where upfront For we adjust spread term -- million contracts. of $XX.X to and now year of accelerated shift for we ratable

GAAP our of or compensation are depreciation $X.XX the $X.X million per million and We to of to approximately $X.X We approximately year. $XXX,XXX share-based amortization to for estimate million share income increasing net for year. and expense expense the for $X.XX $X guidance

for for We to income share. $X.XX to are per $XX.X million million to our guidance non-GAAP net $X.XX increasing or year also $XX the

expect year. weighted approximately and at we XX.X shares fourth fiscal XX.X full the Looking quarter for outstanding, million for million average the

the in new into knowledge pleased by our activity QX, good momentum continued AI we wins driven with which the So continues are customer business offering. and in summary, in quarter,

We from of improved generate while buying continue operations to flow strong and shares cash significantly stock. our profitability back

concludes our AI healthy sheet balance opportunity well ahead. questions. for and We knowledge with prepared call we remarks. generative significant in the our will the This and on flows cash now and capitalize positioned Operator, to continue open capabilities to remain invest

Operator

Instructions] Our ROTH. comes [Operator question Baldry Richard first today from from

Richard Baldry

is? cycles maybe it changes sales you're Do be $XX and others about Could similar of about would second a little revenue, Have talk think of all be Fortune largest but any X any -- in you think any seeing north status a last talked I large-scale? was billion couple added, trials nearing you talk XX, you quarter, you in about add Can a were trials, faster the or been out? few logos. would the fallen -- it's those shorter companies how Have bit the were completion? new then or

Ashutosh Roy

Sure.

a mortgage financing the bank mega that's So that couple mentioned, company, actually of XX a the I including the Fortune XXX Fortune the ones U.S. and company.

did X those going half that I those couple dozen a yes, this that of none to pilots tracking that good. still close the we So on fallen have mentioned, of convert. quarter. off are yet. That's are have Then a Interestingly,

promising. So that's also

that where what advanced seem We RFPs to And though now the with people with even you're decisions, seeing sales they is are the are opportunities point number conversion making with more is are of be pilots. are RFPs seeing that with we the we say XX% but just we coming But this are of the our predictable. cycles change organizations. larger shorter, and is is much kind at across seeing

my are budgeting lot is in seeing, mentioned are seeing conversations, The 'XX. are around a we what are other early for prepping but which which prepared we thing we I remarks, of for

that now. of are we lot a So seeing as well

a also us. good that's for think thing I So

Richard Baldry

have for sort on then how larger a from to the deployment being trials when about get they you scale deals those big over they they recognition into into long So over Do of revenue we will full And start should an of the to with those complexities, into time? play talk it idea live, move take Or sort of would how a time. purposes. bang? P&L grow

Ashutosh Roy

an these Our that ARR in past, in we with be could for start is our -- logos I right? about. that's logos this new them That think right? So we are relatively range, shared of still deployment. of average, have small some average $XXX,XXX the Most for talking initial large

from others. there. little south But the initial the scales that then some maybe to and deployments that be ZIP opportunity So tend in code, cases, north a that of of a in little

Operator

Our comes Daniel question next from Hibshman Craig-Hallum. from

Daniel Hibshman

is on Rhee. Daniel for Van This Jeff

example that the you maybe me an on I U.S. some AssistGPT -- bank, have pipe, already bank years. upsell Just mega that these an mega understood down an be of of using the if wrong, several been up, using coming to correct you upsells said of you -- I'm as having the for onto

that of would terms with compare, just what the potential these to they're upsell X, maybe how scale say, a X, of Now a sizing as win trying to you? already cetera? et figures, percentage the Just for or in sense get wins X doing

Ashutosh Roy

Got it.

So have talking I new think about net somehow wrong logo a mega I us. we're for impression. may the conveyed is bank The

see of lot terms we question, the a with expansion what a can So capability in self-service. excitement that's I X is roll of is are think your feel which part that, into having to give you more said So accounts, there's point. right? seeing But existing what for in AssistGPT, we I out

So in to lot where because still your there self-service self-service a comfortable conversationally. kind not of consumers has very it's rigid historically getting and very area been been an has use challenge of

we with well. is AssistGPT, so that driving seeing as And something are people are that

agent is of whatever to the effectively the interesting you think you our side. -- that us do mind, that in that So can proposition because doubles on

You same in self-service of therefore, business us. revenue terms and to can on the roughly do customer value, the side

Daniel Hibshman

Then to relation just timing on headwind the Cisco. in

or headwind? bounds that size, not have guide gotten say, what size how Or would just the or did middle maybe Just was upper where just of the compare? near, the if that of that exactly

Eric Smit

of It would point. range. us of have top probably good of to upper our ahead end the the got the bound, end Again,

Daniel Hibshman

X just me. then And for Okay. house item cleaning

of how of be the new thinking thinking of as the specifically sort On developing? service we be the Or and should margins, normal? we COGS levels of of a gross sort should that sort new

Eric Smit

margins where was came quarter, lower this certainly it. movement think in there the some seen I where we've than

margins margins So back I sort single to think service of teens to -- into looking forward, the of range. we would high expect sort low those digit, get

Operator

time, additional remarks. Instructions] [Operator this at floor questions. I'm gentlemen, back And turn any for showing over to closing like ladies and the no I'd

Eric Smit

Thanks, listening thanks, operator, today. for and everyone,

I us. exciting for think time an

you our QX forward Thank So to with we look updating results. you.

Operator

that, we'll call presentation. And ladies you and joining. with conclude thank conference today's gentlemen, We for and

disconnect may your now You lines.

eGain (EGAN) 9 May 242024 Q3 Earnings call transcript