eGain (EGAN) AI Stock Analysis

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eGain

(NASDAQ:EGAN)

61Neutral

eGain's strong financial foundation is evident in its high gross profit margin and low leverage, contributing positively to its overall score. However, challenges like declining revenue, negative cash flow metrics, and reduced fiscal guidance weigh heavily. The stock's current bearish technical indicators and high valuation relative to earnings suggest caution. The company's strategic focus on AI and recent client acquisitions are promising, but operational efficiency and cash flow improvements are necessary for a more robust financial outlook.

eGain (EGAN) vs. S&P 500 (SPY)

Market Cap

$134.18M

Dividend YieldN/A

Average Volume (3M)59.78K

Price to Earnings (P/E)32.7

Beta (1Y)0.89

Revenue Growth-6.94%

EPS Growth-34.87%

CountryUS

Employees539

SectorTechnology

Sector Strength49

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.14

Shares Outstanding28,130,920

10 Day Avg. Volume52,229

30 Day Avg. Volume59,785

Financial Highlights & Ratios

PEG Ratio1.18

Price to Book (P/B)N/A

Price to Sales (P/S)1.53

Price to Cash Flow (P/CF)5.30

P/FCF Ratio5.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$8.00

Price Target Upside73.54% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

eGain Business Overview & Revenue Model

Company DescriptioneGain Corporation develops, licenses, implements, and supports customer service infrastructure software solutions in North America, Europe, the Middle East, Africa, and the Asia Pacific. It provides unified cloud software solutions to automate, augment, and orchestrate customer engagement. It also offers subscription services that provides customers with access to its software on a cloud-based platform; and professional services, such as consulting, implementation, and training services. It serves customers in various industry sectors, including the financial services, telecommunications, retail, government, healthcare, and utilities. The company was incorporated in 1997 and is headquartered in Sunnyvale, California.

How the Company Makes MoneyeGain makes money through a subscription-based revenue model, where clients pay recurring fees to access its cloud-based customer engagement solutions. Key revenue streams include software-as-a-service (SaaS) subscriptions, professional services such as implementation and consulting, and ongoing customer support. The company also benefits from strategic partnerships with major technology firms, which help expand its market reach and enhance its offerings. Additionally, eGain's ability to continually innovate and adapt its software to emerging market trends and customer needs plays a significant role in driving its earnings.

eGain Financial Statement Overview

Summary

eGain exhibits a strong gross profit margin and a solid balance sheet with low leverage, reflecting financial stability. However, the company faces challenges in revenue growth and cash flow management, which could impact long-term profitability if not addressed. Focused efforts on operational efficiency and cash generation can enhance financial performance.

Income Statement

Positive

eGain's TTM (Trailing-Twelve-Months) gross profit margin stands strong at 69.2%, showcasing effective cost management. However, the net profit margin of 5.95% indicates room for improvement in operational efficiency. The revenue declined by 4.1% from the previous year, suggesting challenges in maintaining growth. The EBIT and EBITDA margins are moderate at 3.7% and 5.4%, respectively, indicating potential for higher earnings with operational optimizations.

Balance Sheet

Positive

The company's debt-to-equity ratio is low at 0.07, indicating a strong equity position with minimal reliance on debt. The return on equity (ROE) is modest at 9.58%, reflecting moderate profitability. With an equity ratio of 49.7%, eGain maintains a solid balance of assets financed by equity, ensuring financial stability.

Cash Flow

Positive

The free cash flow growth rate is negative, reflecting a decrease in cash generation capabilities. The operating cash flow to net income ratio is negative, indicating challenges in converting profits into cash. The free cash flow to net income ratio is also negative, signaling potential liquidity issues. These metrics highlight the need for improved cash management strategies.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
89.00M	92.80M	98.01M	91.95M	78.29M	72.73M
	Gross Profit
61.56M	65.21M	70.70M	67.41M	59.02M	51.65M
	EBIT
3.29M	5.97M	1.39M	-2.14M	5.25M	5.29M
	EBITDA
4.80M	12.70M	1.39M	-614.00K	7.34M	7.41M
	Net Income Common Stockholders
5.30M	7.78M	2.11M	-2.44M	6.96M	7.21M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
7.59M	70.00M	73.20M	72.17M	63.23M	46.61M
	Total Assets
16.96M	127.85M	130.12M	126.01M	114.56M	93.70M
	Total Debt
8.83M	3.77M	2.59M	3.58M	2.26M	3.14M
	Net Debt
1.25M	-66.23M	-70.61M	-68.59M	-60.97M	-43.47M
	Total Liabilities
19.45M	69.36M	68.42M	69.15M	68.50M	59.06M
	Stockholders Equity
-2.49M	58.50M	61.70M	56.86M	46.06M	34.64M
Cash Flow		Free Cash Flow
3.69M	12.26M	4.33M	7.49M	13.46M	13.54M
	Operating Cash Flow
4.01M	12.45M	4.62M	8.12M	13.86M	14.06M
	Investing Cash Flow
-311.00K	-198.00K	-288.00K	-628.00K	-402.00K	-514.00K
	Financing Cash Flow
-19.40M	-15.39M	-4.08M	3.33M	2.35M	1.41M

eGain Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.61

Price Trends

50DMA

5.03

Negative

100DMA

5.52

Negative

200DMA

5.73

Negative

Market Momentum

MACD

-0.10

Negative

RSI

42.20

Neutral

STOCH

41.46

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EGAN, the sentiment is Negative. The current price of 4.61 is below the 20-day moving average (MA) of 4.77, below the 50-day MA of 5.03, and below the 200-day MA of 5.73, indicating a bearish trend. The MACD of -0.10 indicates Negative momentum. The RSI at 42.20 is Neutral, neither overbought nor oversold. The STOCH value of 41.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EGAN.

eGain Risk Analysis

eGain disclosed 38 risk factors in its most recent earnings report. eGain reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

eGain Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EGAN	61 Neutral	$134.18M	32.75	7.08%	―	-6.94%	-34.87%
Sector *	58 Neutral	$11.04B	9.83	-6.56%	3.16%	7.59%	-10.43%
OCFT	53 Neutral	$235.09M	50.30	-24.21%	―	-39.77%	-27.77%
EGHT	51 Neutral	$208.08M	―	-40.78%	―	-2.23%	19.48%
ONTF	51 Neutral	$196.39M	―	-24.82%	―	-9.55%	12.28%
LPSN	39 Underperform	$71.02M	―	-137.76%	―	-22.27%	-20.58%

* Technology Sector Average

Performance Comparison

EGAN

eGain

4.61

-1.45

-23.93%

EGHT

8X8

1.58

-0.57

-26.51%

LPSN

Liveperson

0.75

0.19

33.93%

OCFT

OneConnect Financial Technology

6.07

4.25

233.52%

NUKK

Nukkleus

13.89

6.47

87.20%

ONTF

ON24

4.52

-2.11

-31.83%

eGain Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: -26.48% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook. While the company achieved significant growth in its AI knowledge hub and secured new enterprise clients, it faced revenue declines and reduced guidance for fiscal 2025. The company's strategic investments in AI and product innovation are promising, but the extended sales cycles for large deals and reduced PS revenue present challenges.

Highlights

New Enterprise Logos and AI Knowledge Hub Growth

eGain Corporation closed several new enterprise logos, leading to a 17% year-over-year increase in AI knowledge hub Annual Recurring Revenue (ARR). Notable new clients include a major US airline, a leading interactive entertainment company, and a global money transfer company.

Successful eGain Solve 2024 Event and Product Launch

The company held a successful eGain Solve 2024 event in Chicago, where it announced the eGain AI Agent, a new omnichannel conversational product. Customer interest in the eGain AI Agent is strong, and it is set to launch in the current quarter.

Strong Cash Position and Share Repurchase Program

eGain generated $6.4 million in cash flow from operations, with total cash and cash equivalents at the end of the quarter amounting to $70.5 million. Additionally, the company repurchased 121,000 shares, totaling $2.4 million, under its share repurchase program.

Lowlights

Decrease in Total Revenue and Adjusted EBITDA Margin

Total revenue for the second quarter was $22.4 million, down 6% year over year. Adjusted EBITDA margin for the quarter was 7%, compared to 16% in the year-ago quarter, reflecting a decrease in profitability.

Guidance Reduction for Fiscal 2025

eGain lowered its total revenue guidance for fiscal 2025 to $88.5 million to $90 million, down from the original guidance of $92 million to $93 million. Non-GAAP net income guidance was also reduced.

Professional Services Revenue Decline

The company reduced its Professional Services (PS) revenue target for fiscal 2025 by approximately $2 million due to recent product improvements and a strategy to decrease PS revenue through increased product capabilities and third-party partnerships.

Company Guidance

During the call, eGain Corporation provided guidance for fiscal year 2025, highlighting several key metrics. They reported a total revenue of $22.4 million for the second quarter, a 6% decline year-over-year, primarily due to the loss of two large clients. SaaS revenue comprised 93% of total revenue, while non-GAAP net income was $1.3 million, or $0.05 per basic share. The company adjusted its fiscal year 2025 revenue guidance to a range of $88.5 million to $90 million, down from $92 million to $93 million, with SaaS revenue expected to remain at approximately 93%. Additionally, they revised their non-GAAP net income guidance to $4.1 million to $4.7 million, and GAAP net income guidance to $1.1 million to $1.7 million. The company noted a 17% increase in AI knowledge hub ARR and an expansion in the pipeline of seven-figure ARR deals, despite longer sales cycles. Operating cash flow for the quarter was $6.4 million, with total cash and equivalents at $70.5 million.

eGain Corporate Events

Executive/Board Changes

eGain Approves CEO Compensation and Executive Stock Options

Neutral

Dec 12, 2024

eGain Corporation’s Board approved a variable annual cash compensation of $60,000 for CEO Ashutosh Roy for fiscal year 2024, without altering his base salary. Additionally, stock options were granted to key executives, priced at $5.71 per share, vesting in September 2025, potentially impacting executive retention and motivation.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.