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eGain Announces Financial Results for the Fourth Quarter and Fiscal Year Ended June 30, 2009

Also Announces the Approval of a Stock Repurchase Program

Quarter Highlights

  • Total revenue of $8.9 million up 33% from the comparable year-ago quarter
  • GAAP net income of $929,000 compared to a net loss of $1.9 million in the comparable year-ago quarter

Fiscal Year 2009 Highlights

  • Total revenue of $33.2 million up 10% from the prior year
  • GAAP net income of $2.2 million compared to a net loss of $4.1 million in the prior year

Mountain View, Calif. (September 14, 2009) – eGain Communications (OTC BB: EGAN.OB),  a leading provider of customer service and contact center software, today announced financial results for the fourth quarter and fiscal year ended June 30, 2009.

Total revenue for the fourth quarter of fiscal year 2009 was $8.9 million, an increase of 33% from the comparable year-ago quarter. Total revenue for the fiscal year 2009 was $33.2 million, an increase of 10% from the prior year.

Gross margin for the fourth quarter of fiscal year 2009 was 68% compared to 57% in the comparable year-ago quarter. Gross margin for the fiscal year 2009 was 68% compared to 61% in the prior year. Total operating costs and expenses for the fourth quarter of fiscal year 2009 were $4.6 million, a decrease of 10% from the comparable year-ago quarter. Total operating costs and expenses for the fiscal year 2009 were $19.2 million, a decrease of 9% from the prior year.

Net income for the fourth quarter of fiscal year 2009 was $929,000, or $0.04 per share on a basic and diluted basis, compared to a net loss of $1.9 million, or $(0.12) per share for the comparable year-ago quarter. Net income for the fourth quarter of fiscal year 2009 included stock-based compensation of $19,000 and a net of interest expense and tax benefit of $240,000, compared to stock-based compensation expense of $77,000 and interest and tax expense of $542,000 for the comparable year-ago quarter.

Net income for the fiscal year 2009 was $2.2 million, or $0.11 per share on a basic and diluted basis, compared to a net loss of $4.1 million, or $(0.27) per share for the prior year. Net income for the fiscal year 2009 included stock-based compensation of $241,000 and a net of interest expense and tax benefit of $1.3 million, compared to stock-based compensation expense of $318,000 and interest and tax expense of $1.9 million for the prior year.

Total cash and cash equivalents were $7.5 million at June 30, 2009, compared to $3.8 million at June 30, 2008. Cash provided by operations was $3.7 million for the fiscal year 2009, compared to cash used in operations of $2.8 million in the prior year. Days sales outstanding in receivables for the quarter ended June 30, 2009 were 43 days, compared to 37 days for the comparable year-ago quarter. Deferred revenues totaled $5.5 million at June 30, 2009, up from $5.2 million at June 30, 2008.

eGain’s revenues for the year ended June 30, 2009 were negatively impacted by the reduced value of foreign currencies when compared to U.S. dollars. If currency exchange rates had remained constant from June 30, 2008 through June 30, 2009, revenues for the fiscal year 2009 would have been up approximately 24%, rather than up 10% when compared to fiscal year 2008.

“We grew our top line in a challenging economic environment, while delivering profits and positive cash flow,” said Ashu Roy, eGain CEO. “Our leading products continue to set the standard in enterprise Customer Interaction Hub implementations for scalable architecture and best-of-breed functionality on a unified platform.”

Stock Repurchase Program

eGain also announced today that its board of directors has approved a repurchase program under which it may begin purchasing up to 1,000,000 shares of its Common Stock. The duration of the repurchase program is open-ended. Under the program, the Company could purchase shares of Common Stock from time to time through open market and privately negotiated transactions at prices deemed appropriate by management. The repurchase will be funded by cash on hand. As of June 30, 2009, the Company had 22.2 million shares of Common Stock outstanding.

“We are pleased to announce the approval of a stock repurchase program,” said Eric Smit, eGain CFO. “We qualified for this program based upon our positive financial performance in fiscal year 2009 and believe that the repurchase of our stock is an attractive investment opportunity.”

Business Highlights

New Hosting and License Bookings¹

  • New hosting and license bookings for the fourth quarter of fiscal year 2009 were $4.5 million, an increase of 261% from the comparable year-ago quarter. Of the total new hosting and license bookings in the fourth quarter of fiscal year 2009, 28% was from new hosting bookings and 72% was from new license bookings, compared to 19% from new hosting bookings and 81% from new license bookings in the comparable year-ago quarter. If currency exchange rates had remained constant from June 30, 2008 (the last day of our prior fiscal year) through June 30, 2009, bookings for the fourth quarter of fiscal year 2009 would have been up approximately 328%, rather than up 261% when compared to the same period last year.
  • New hosting and license bookings for the fiscal year 2009 were $15.2 million, an increase of 65% from the prior year. Of the total new hosting and license bookings in the fiscal year 2009, 29% was from new hosting bookings and 71% was from new license bookings, compared to 38% from new hosting bookings and 62% from new license bookings in the prior last year. If currency exchange rates had remained constant from June 30, 2008 through June 30, 2009, bookings for the fiscal year 2009 would have been up approximately 92%, rather than up 65% when compared to the same period last year.

New Milestones, Products and Industry Recognition

  • eGain was selected by Forrester as a leader in interaction-centric customer service software solutions in the October 2008 report.
  • eGain was positioned in the Leaders Quadrant by Gartner, Inc. in the “Magic Quadrant for E-Service Suites 2008” report.
  • eGain released eGain Service™ 8 suite, the company’s most advanced Customer Interaction Hub solution with rich functional enhancement and significant platform improvement.
  • eGain introduced a unique “Solution-as-a-Service” offering called “eGain SLaaS™”. “Solution-as-a-Service is a unique combination of value-based pricing with hosted software and bundled services on tap,” said Johan Jacobs, Research Director at Gartner, Inc. “SLaaS has the potential to transform enterprise software adoption in a tough economic climate.”

Partnerships

  • Our steady investment in partnerships is showing results. For fiscal year 2009, new hosting and license bookings through partners grew to 45% of total new hosting and license bookings.
  • We extended our multi-year relationship with Cisco to be their OEM supplier for email management and web collaboration products as part of the Cisco Contact Center Suite.

Customer Momentum

eGain continued to acquire marquee enterprise customers in fiscal year 2009. Notable customer acquisitions include:

  • A fortune 100 personal lines insurer
  • A fortune 100 leader in networking for the Internet
  • One of the nation’s top 10 financial holding companies
  • One of the world’s foremost nutrition companies
  • A multinational insurance group
  • Multiple subsidiaries of a world leading mobile telecommunications company
  • A leading European entertainment and communications company

Market and Business Outlook

According to market analysts, the market for Customer Interaction Hub solutions continues to grow—based on the need for improved efficiency and better customer experience. Businesses are looking for integrated solutions for multichannel service that are scalable, quick to deploy, and cost-effective. We continue to extend our product leadership by leveraging our proven, scalable J2EE platform architecture and rapid innovation capability to deliver unified, feature-rich solutions for demanding enterprise clients.

Even though the economic environment seems to be stabilizing, we believe that many businesses will continue to be cautious in increasing their investment in the near future. So in fiscal year 2010, we will remain prudent in our sales and marketing investment—choosing selective growth opportunities in new geographies and specific verticals. Further, the mix of on-premise (one time license deals) and on-demand (steady subscription revenue stream) deployments in the enterprise will be difficult to predict. Therefore, instead of fixating on the short-term revenue impact of license versus hosted bookings on our business, we will measure our progress in terms of new bookings growth and operating cash flow.

For fiscal year 2010 we currently expect an increase in new license and hosting bookings when compared to fiscal 2009. In addition, we currently expect to generate positive cash flows from operations in fiscal year 2010.

¹We define New Hosting and License Bookings as new contractual commitments (excluding renewals) received by the company for the purchase of product licenses and hosting services. Such contracts are not cancelable for convenience but may be subject to termination by our customers for cause or breach of contract by us. Furthermore, because we offer a hybrid delivery model, the mix of new license and hosting business in a quarter could also have an impact on our revenue in a particular quarter. Due to effects that these trends have on our short-term revenue and profitability, we believe that it is useful to disclose New Hosting and License Bookings detail in this and future financial releases. We use this metric internally to focus management on the productivity of the sales team and period-to-period changes in our core business. Therefore, we believe that this information is meaningful and helpful in allowing individuals to better assess the ongoing nature of our core operations.

About eGain Communications Corporation

eGain (OTCBB: EGAN.OB) is the leading provider of multichannel customer service and knowledge management software for on-site or on-demand deployment. For over a decade, hundreds of the world’s largest companies have relied on eGain to transform their traditional call centers, help desks, and web customer service operations into multichannel customer interaction hubs (CIHs). Based on the Power of One™, the concept of one unified platform for multichannel customer interaction and knowledge management, eGain solutions improve customer experience, optimize service processes end to end, increase sales, and enhance contact center performance.

Headquartered in Mountain View, California, eGain has operating presence in North America, EMEA and APAC. To learn more about us, visit www.eGain.com or call our offices: +1-800-821-4358 (US), +44-(0)-1753-464646 (EMEA), or +91-(0)-20-6608-9200 (APAC). Also, follow us on Twitter at @eGain (http://twitter.com/egain) and Facebook at (http://facebook.com/egain).

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Cautionary Note Regarding Forward-looking Statements

All statements in this release that involve eGain’s forecasts (including the above stated guidance), beliefs, projections, expectations, including but not limited to our financial performance, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on information available to eGain at the time of this release, are not guarantees of future results; rather, they are subject to risks and uncertainties that may cause actual results to differ materially from those set forth in this release. These risks include, but are not limited to, the uncertainty of demand for eGain products, including our guidance regarding bookings and revenue; our expectations related to our operations; our ability to invest resources to improve our products and continue to innovate; our partnerships; our future markets; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K filed on September 23, 2010, and the Company’s quarterly reports on Form 10-Q. eGain assumes no obligation to update these forward-looking statements.

Note: eGain is a registered trademark, and the other eGain product and service names appearing in this release are trademarks or service marks, of eGain Communications Corp. All other company names and products are trademarks or registered trademarks of their respective companies.

June 2009 quarter financial data

Company contact:

Jamie Abayan
Phone: 650-230-7532
Email: PR@eGain.com

Investor contact:

IRegain@eGain.com