EGAN - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the eGain Fiscal 2024 Fourth Quarter and Full Year Financial Results Call. [Operator Instructions]. Please note this event is being recorded.

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

Jim Byers

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

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

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

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

in wide protected the of that are safe risks to by material results Reform statements provisions contained differ and actual Securities statements Act respects. Private Forward-looking XXXX. are harbor Litigation subject range uncertainties forward-looking These cause in to could a of

reports filed the Exchange various in making statements update eGain this conference no and factors these the with is could any Commission. publicly to information on assumes of or XXXX, results and that revise X, company's of today, are obligation September as eGain's Securities Information the affect detailed call. in forward-looking

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

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

Ashutosh Roy

share. or $XX.X with net diluted profitability million the income was was revenue Thank finished $XX.X and of fiscal Total projections. for everyone. We ahead year $X.XX and and revenue our million our hello, year our per you, Jim, non-GAAP

fourth our for quarter mega the This new momentum increased subsidiary in big at brands, U.S. in a brand specifically, of financial example, logo management offering. knowledge some Looking AI travel saw the we included a

will their Our homegrown replace knowledge Knowledge AI Hub base.

mobility a of conglomerate is division in a Germany. Next multinational

consolidate Here, and Salesforce their internal include across Hub silos, which will multiple knowledge Knowledge our knowledge other AI spaces.

in logo XX The to global for is one brand I countries, highlight leader AI out third is introductions to an London savings industry product want the And based across Knowledge selected U.S. consumer have I their to point the they the of new support Hub. out eGain's education want higher last

will knowledge this Hub AI legacy Knowledge client's systems. replace Our

business XXXX, in and activity knowledge were at new are July remains in seeing Looking offerings. our overall up growing And the our In AI knowledge our fiscal RFPs and for interest win August. strong market, and year-over-year. logo we pipeline AI XX% our inbound

been summer this in strongest years, since the fact, pretty In X much has COVID.

agent-assistant To share sense give virtual and goals." that very strong a published of a year. customer I you the June was service recently an in let foundational report that verbatim quote, Gartner in in of with from excerpt knowledge value me specifically, a AI role this fail good Gartner. modern their That's management will from and assistant, customer knowledge projects experience systems virtual reduction AI, meet statement cost integration generative of customer XXX% operational lacks XXXX, coming "By to to delivering

reduce years, that XX is from this time application, are business AI I've have apply And this, CEO for apply key Gartner basically many. seeing many read to demanding from a of and I'm you like prediction has the generative means, been sure a number operating XXX% which the months predictor do over years, average this read technology. cannot or frame, What months. many large a every few now months it a of now technology doing you the at and and I teams that on cost reports a scale. recall, XX that on urgently is we is an their generative that AI and

So they move the needle.

costs As of customer in business. item we significant service the know, operating line is one

Gen solid we value, the that to more AI knowledge foundation centralize not surprising and looking more points Gartner out, seeing that deliver are needs Given to businesses a that platform. knowledge and modernize as

So knowledge on of half from as been knowledge offerings. saying for quarters, down comes AI opportunity. we doubling we've revenue AI Currently, a are few our this market

AI toward the have rotated Over R&D we past our year, increasingly knowledge investments products.

but customer know, received year, knowledge novel for This in an AssistGPT, eGain we automate market. and February what authors. in solution launched a has time routine product, As may the service this tasks agents you taking enthusiastically accelerate are to and been

proverbial centralization clients knowledge a and what you the call through helping eGain we knowledge and Gordian offerings. would been are creation Historically, at slash AI it Knot, has with scale

in we'll At Before XX. I our to will Officer, want we'll Chicago have new event, XX October operations, I our to And many our success also mention customer add our Eric, capabilities. financial color Knowledge held announce stories and that ask demo AI clients Solve XX, Chief and Financial on more to annual Hub. share-ing event, be that using product

excited we're very that. So about

over And Eric. to now

Eric Smit

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

XXXX Let discussing and the guidance XXXX. me fiscal the about for financial provide of more fourth our quarter details full fiscal for and before year results outlook

our decline other call, large impact the guidance fourth year-over-year. X down our on million, Hub. of ahead discussed quarter Conversation -- due QX our from but the primarily was one client them of of our revenue. losses we Total for at large have to Looking was and and our The X% Analytics is revenue from $XX.X the the Hub

by the revenue, the prior X% America XX% for looking And $XX.X year, accounted revenue year-over-year. down region the revenue of full our at for For in as total North million, the year. fourth same was total year.

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

margin million year. the gross XXXX, XX% was profit of gross of fiscal compared For prior for to a $XX.X XX%

operating ago expense the operations. our fourth Non-GAAP the million, the at controls Non-GAAP in costs earlier from we were came to fiscal costs implemented million, reflecting year. for $XX.X X% in $XX down XX% down quarter, operating quarter the in for full year-over-year. turning the $XX.X million Now year year

AI plan As this from opportunity. exciting we investments in our marketing to increase very on offering, see R&D increased we particularly capitalize Knowledge momentum and brand to

Looking at our bottom line.

quarter. million quarter. per the For non-GAAP XX% $X.X margin $X.XX income to QX, quarter EBITDA year was million for was Adjusted net or XX% compared to in share year $X.XX $X.X or ago ago share the compared the in per

on net a XX% diluted million share net a of income dollar on basis $X.XX on basis, million X% prior per basic year, Adjusted $XX.X year. a basis or prior compared in $X.XX fiscal from $X.XX and $X.X year. fiscal For per year diluted non-GAAP and a or a share margin per share on in fiscal the up the the XX% for to the income EBITDA was share on was full $X.XX basic non-GAAP per fiscal

balance and sheet Turning flows. to cash our

the For operations was cash million XX% cash fiscal from operating a $XX.X or flow year, flow full margin.

million. X.X average share, During fiscal totaling approximately $XX.X shares $X.XX of price XXXX, we repurchased at an per million

the of the at million million Since began inception, purchased buyback the under program of the X.X authorized, when the remained outstanding $XX available we we shares Of the or end XX% shares year. million program. $XX have

ago. compared at remains end the balance to were $XX sheet a million year million Our cash of strong. the and $XX very equivalents Total year cash

With our customer from our Now broken the turning on AI the to total out focus knowledge I've metrics. knowledge, metrics. metrics

planned I'm total losses, previously metrics and to pleased As discussed. these all customer the X during analytics a that the with -- reminder, by Outside were renewals material of in I quarter. impacted as conversation customers' came losses report

at expansion customers while dollar-based total XXX, net was rate knowledge for dollar-based knowledge customers, Looking was retention while at retention in our net SaaS total XX%. expansion came was LTM SaaS LTM for net net rate that XXX. XX%

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

obligations. decreased we Looking in came XX% year-over-year remaining had mentioned, new sequentially from strong also and quarter. Total at but RPO up XX% as renewals last was the as I performance quarter bookings in, our

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

from guidance. item like our is and One before call out outlook forecasted financial I'd expected Cisco business. our the to revenue our to on guidance in change Now providing OEM

more last deferral revenue this that of fiscal change seeing XXXX. would a result to of million recognized quarter, otherwise have and $X.X I in recognition, approximately we we will are estimate As the in shift mentioned ratable been

we more most QX impact be it taking clear, we've previously. revenue, this don't in Just not ratably than -- recognize that are we expect And lose place to that see to of rather 'XX. of instead we done upfront but

For the to the guidance. -- first now

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

line. Turning to bottom the

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

$XXX,XXX a of We net expect quarter. loss or to a $X.XX share for gain to of the $XXX,XXX per income loss non-GAAP of of net $X.XX

at year June XXXX Looking fiscal XX, full XXXX. ending

expect non-GAAP $X between compensation breakeven million or $XXX,XXX. estimate $X million, of We to amortization $X.XX per $X.XX GAAP and to revenue $XX of net to million share, million to expense expense of of per We of $X net or income share. approximately share-based income million $XX million $X.XX and total $X $X depreciation and approximately to

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

analytics And momentum with we full to new seeing on for are high down conversation while AI AI business market value on we our summary, offering. doubled ensuring knowledge and are and in opportunity, strong customers So satisfaction the knowledge customer continued focused remaining we delivering customers. our

and Day Lastly, Chicago a events we investors and XX. customers with Analyst more to our on with analysts October learn an hosting about opportunity conjunction is customer event This for and prospective meet will business. event in great be Investor our upcoming in

can event register We for the you hope on can us. join website. our You

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

Operator

Instructions]. [Operator

Van Craig-Hallum. Our first Rhee Jeff comes from question with

Jeff Van Rhee

AI wins. A I'm could. curious if I handful of on the knowledge questions,

to talked X competitive specific love customers, bit landscape. X the or and would hear You about a about

solution. don't others, recall. took I out think in I one you said And in a homegrown you

I are about the sales you just displacing you I had with? and competing landscape, talking you might recall. have think what competitive a second, what the competitor But are force in if

Ashutosh Roy

Ashu Yes. Jeff. here, This is Yes.

sweet incumbency, going have employees we with that what a and So customer after, are of the -- that's or going sense our we a both we're what or right? So let who replacement target we seeing more. are what competition, as in profile as That's -- we know, in companies more. are employees well point, me you give terms at of maybe who seconds this as is after take terms to you companies X,XXX of are spot few X,XXX customers

in plus billion $X typically so revenue. And

do we these below agent when where we turnover and companies Now well. have and an needs that. who complex where large do get content But issue, is customers are compliance that's

targeting So are the of the need that's companies. that we the and size

people to be In fed more that and Gen typically, and trying end. we more winning investments up their end where been a -- terms recognizing when service, that's who these automate do into there the them on project. tools AI they to and of doing trusted for highlighted failed getting trusted because the being to in content are needs has more job more And knowledge AI that they're other realize knowledge customer Gen is

are -- Point, homegrown. Number Number for what I replacement replacement. right? Salesforce. Share confluence that's one, ingrown us would say, we So Again, replacement two it replacing is is is three means, number essentially,

do the it's that pressure deploy people knowledge. as the have value Genesis' replacing And knowledge is much the more. as want, fourth And not one been we delivering is they So Salesforce to right? on and

the setups, Salesforce people So of and while terms part working of these people in competitors, in ones confluence responses last have the The broadly, are terms been built to the because business. of we those -- dominant for also are around right? and are and trying are those say homegrown retain the knowledge they've And who are up replacement would solutions. a against, I we but that in incumbency competitors

Jeff Van Rhee

number. sense That's you in the a Okay. of Give of ability of I XX% quote good me you very, here. that presentation, to size think to number what's helpful. And pilots the mean, customers, a conversion Obviously, a I talk about the there. indication repeat that? and in quality the sample very

Ashutosh Roy

few last I last the of couple in quarters. would say, in the more than XX --

Jeff Van Rhee

of anything that gives there can you pace is that those And retain about you doubt conversion? that

Ashutosh Roy

to much and That's probably would say. qualify that's what to how like know say. hard we feel better I now, I

the we of high we being So conversion are we the is I part pilot. think rate that -- are reason put through things qualifying the well for them innovation that before

are have conversion. doing I some But good. that, expand actually expect those should pilots metric, conversion and might that, be partner-led As some with then long as we're that we perhaps a lower think do developing, if we of I smaller that we we partners

Jeff Van Rhee

On a a I you about you spend are development. think you reps branding if the around going bit XX rep be Where on to sales said quota do recall, the What on at are sales, you front, I bit you'll you're quota in right think and then months? wise? Where headcount?

Ashutosh Roy

that feel on drive pipeline. more sizes are generate our We that's is to biggest we and reasonable. the are reps, right why feel we more a our now focusing good brand sometimes because that So And demand and sort market of with deal investments. especially place the opportunity are in we pipeline

XXX,XXX talking still about are We north of for logos. new ARR

knowledge the that well side. can we So the we feel AI reasonably on expectation all with manage growth have we bookings like

Jeff Van Rhee

squeak got -- it there and couple a of The keeping in in I going sat on is side, seats, Okay. and in. customer a on focus catching could And obviously, then one tailwind things so speak. analytics. last, And and here, you've to one obviously, your conversation if knowledge butts

the avoiding comfortable that in your churn with you've your got mean, future couple off of I conversation and and at had base churn? customers I'm how ears big you customers sure large risk You the really are of analytics ago. quarters any getting other tuned. X hub you're not a

Ashutosh Roy

a Yes, that's point. good

finding with expect, opportunities. that cycle that focused continuing happens to with are you sort we every delivery satisfaction, these stream creates in to of of clients are these accounts. We that -- side, find value one slip these the can it time investing as to work as and hyper and they into AI on that customers And collective and the only on AI have ways as opportunity knowledge are get stickiness because knowledge of then well

Operator

with Baldry question Our Richard comes from Capital. next ROTH

Richard Baldry

side. guys pretty spending conservative to have be tended You on the

about curious of and now controls sort only ago, we're a investments. I'm of that we were couple talking So cost about quarters talking

Sort So you're could forward? whether what funnel, of sort changing ARPUs? of that's top give stance some about us why of positive there in the or you seeing maybe talk your for that cycles, that's backdrop shift looking sales

Ashutosh Roy

Okay.

say we X of or One things. other functions interest One businesses clients, facing. X is like with is increase really. things, a or -- faster seeing I'd knowledge rollout in in self-service enterprise that that other are So consistent existing across

with we where agent-facing -- So we for with those are already knowledge solutions. are in there

of that's right? the the most ground. So ear one, So reliable to kind our that's

in seeing been And the side. on next inbound sort thing sales more been of we are kind us up in as consistently very is interest. has even busy And summer this unusual. of be It's that I the summer for to has months, months edging the This mentioned. that unusual

Eric and we it's summer As felt I like were time of right? and the active So a talking, while. last XXXX, this busy were we was been

pointing are a opportunities predictably it seeing more way the then also is all more our the these decision and leadership third noticing that prosecute second before. thing out, of the item. And more changed and that's has to this much So is sales I'm than that we

going People will executing when whether people eventually, of they RFPs, in, the So It's tire is come not. they kind execute. of or around amount they down. deciding happening say are that and win we they're and time kicking

Eric that like Richard. product making platform. investment investment, point to something to areas current saying X marketing the not with gets can then right investment that's those And the are and lag really become we are we posture. And where with are investing capacity, our said, X right? to we're pipeline change starts the our us handle we're now, Right Those we important, as is it brand seeing So going sales are now. things this a primary investment then --

Richard Baldry

that? hard on working Got sort any of And of X, it. it's fill there. pretty Is gone but of Fortune anything because funnel into through? some or the to And you've know some et of scale just curious fit while sort or to in Any their are of continuing I'm larger that through the if there's trialers larger update the top how any past pilots going changes, about cetera. sort way XX, I they quarter it's lumpy, there are others new that your specifics

Ashutosh Roy

say. of couple I'll things A

ARR brand engaging on in foot I of we're good, this door very I these think -- of if I brand side. got have that when companies. right? the When the Europe, the be just I Global So are very quality on specifically, and in a a brands, even to in the where XXX was example, I financial brand, reasonably on with in are U.S. acquiring. Then like continues are So we we talking companies for our pilot with financial it, feel Germany, meant the at terms we're many company, size said the said in companies, a the right? multinational look conglomerate, side, large chunky deal mega logos about there the I mega large the mega

see, this we multimillion-dollar of see we one we it's is Eric? is that. many purchases anymore. What right, don't Now north of Like the and initial a secular as XXX,XXX, good. We I just things the said, do don't pretty thing, see ARR is average see

Eric Smit

XXX,XXX. of north Yes,

Ashutosh Roy

of But companies large. is potential era. the is these large, the Initial quality

us. like So I a trend that feel is good for

Richard Baldry

term? more whether the remains or do focused product over there still your sheet of on think of the of for you're last sitting you Is the meaningful The me. technology side then some doing table after around And capital keep cash a anything on on the sort pretty allocation of pretty -- wrapping it's buybacks near side, sort to interesting on AI still the the balance good even amount buybacks.

Ashutosh Roy

that balance the good in burning our a increasing know new increasing I the investment. R&D. -- in hole it's terms are are not innovation. So sheet, it's of not in it's we've rotation big investment but that done And thing we we a

of that and for lot runway have AI differentiate dominate amount the knowledge. the emerging we some the as That a is an market we as chunky and invest knowledge are there's attempt to So money an make very we'll to of the time of we in people that systems. continue area capability think a around well putting in their because to

say primary I would right our that's now. So focus

Operator

back for would concludes management over our conference eGain closing That session. the turn remarks. like to I question-and-answer to any

Eric Smit

Well, some our Solve to today October. and Chicago thanks, of in at event the the seeing of time you. everybody, look you Thank taking forward for at end

Operator

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

now disconnect. may You

eGain (EGAN) 5 Sep 242024 Q4 Earnings call transcript