eGain Communications Corporation ((EGAN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for eGain Communications Corporation presented a neutral sentiment, balancing significant achievements with notable challenges. On the positive side, the company secured a major deal with a US mega bank and launched a new AI product. However, these were offset by a decline in revenue and extended sales cycles, leading to an overall balanced outlook.
Mega Bank Deal Secured
eGain announced securing one of its largest deals ever with a US mega bank. This deal will expand eGain’s AI knowledge platform to over 100,000 users across more than half of the bank, marking a significant milestone for the company.
Launch of AI Agent for Contact Center
The company launched a new AI Agent for Contact Centers, which has garnered strong customer interest. A banking client is already rolling out this innovative solution, highlighting its potential impact on the market.
Gartner Recognition
eGain was recognized as a leader in Gartner’s emerging market quadrant for generative AI knowledge management apps, underscoring the company’s strong position in the industry.
Profitability Exceeded Projections
The company exceeded its profitability projections, delivering solid operating cash flow, which is a positive indicator of its financial health.
Increased R&D Investment
To support product innovation and capitalize on emerging market opportunities, eGain increased its R&D spending by 15% year-over-year.
Revenue Decline
Total revenue for the third quarter was $21 million, reflecting a 6% decline year-over-year. This decrease was attributed to the loss of two large clients in the previous year.
Extended Sales Cycles
Bookings were impacted by extended sales cycles, now averaging nine to twelve months, which poses a challenge for the company’s growth.
Decline in SaaS Gross Margins
SaaS gross margin for the quarter was 77%, slightly down from 78% a year ago, while the total gross margin was 69%, down from 71% a year ago.
Net Income Decline
Non-GAAP net income was $765,000 or $0.03 per share, a decrease from $2.6 million or $0.08 per share in the year-ago quarter, indicating a decline in profitability.
Revised Downward Revenue Guidance
The company revised its full-year revenue guidance down to $88 million to $88.5 million from an original range of $88.5 million to $90 million, reflecting a cautious outlook.
Forward-Looking Guidance
Looking ahead, eGain provided guidance for the future, expecting total revenue between $22.8 million to $23.3 million for Q4 and a non-GAAP net income of $1.7 million to $2.2 million or $0.06 to $0.08 per share. For the full fiscal year 2025, the company revised its revenue guidance slightly downward but raised its GAAP net income guidance. A significant expansion deal with a US mega bank is expected to positively impact SaaS ARR and contribute to sequential revenue growth into fiscal 2026.
In conclusion, eGain’s earnings call presented a balanced view of its current position and future prospects. While the company celebrated significant achievements like the mega bank deal and new AI product launch, it also faced challenges such as revenue decline and extended sales cycles. The forward-looking guidance suggests cautious optimism, with expectations of revenue growth and improved profitability in the coming quarters.