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eGain Announces Financial Results for the Third Fiscal Quarter Ended March 31, 2010

Quarter Highlights

  • Total revenue up 6% from comparable year-ago quarter
  • Recurring services revenue up 15% from comparable year-ago quarter
  • License revenue up 204% from comparable year-ago quarter

Mountain View, Calif. (May 12, 2010) – eGain Communications (OTC BB: EGAN.OB), a leading provider of customer service and contact center software, today announced financial results for the third fiscal quarter ended March 31, 2010.

Total revenue for the third quarter of fiscal year 2010 was $6.9 million, an increase of 6% from the comparable year-ago quarter. Total revenue for the nine months ended March 31, 2010 was $23.2 million, a decrease of 4% from the same period last year.

License revenue for the third quarter of fiscal year 2010 was $1.4 million, an increase of 204% from the comparable year-ago quarter. License revenue for the nine months ended March 31, 2010 was $5.9 million, an increase of 5% from the same period last year. Recurring services revenue for the third quarter of fiscal year 2010 was $4.3 million, an increase of 15% from the comparable year-ago quarter. Recurring services revenue for the nine months ended March 31, 2010 was $12.5 million, an increase of 9% from the same period last year. Professional services revenue for the third quarter of fiscal year 2010 was $1.3 million, a decrease of 47% from the comparable year-ago quarter. Professional services revenue for the nine months ended March 31, 2010 was $4.8 million, a decrease of 34% from the same period last year.

Gross margin for the third quarter of fiscal year 2010 was 66%, an increase of 3% from the comparable year-ago quarter. Gross margin for the nine months ended March 31, 2010 was 68%, which was unchanged from the same period last year. Total operating costs and expenses for the third quarter of fiscal year 2010 were $4.6 million, an increase of 13% from the comparable year-ago quarter. Total operating costs and expenses for the nine months ended March 31, 2010 were $13.4 million, a decrease of 8% from the same period last year.

Net loss for the third quarter of fiscal year 2010 was $318,000, or $(0.01) per share, compared to a net loss of $196,000, or $(0.01) per share for the comparable year-ago quarter. Net loss for the third quarter of fiscal year 2010 included stock-based compensation of $59,000 and interest and tax expense of $308,000, compared to stock-based compensation expense of $50,000 and interest and tax expense of $356,000 for the comparable year-ago quarter.

Net income for the nine months ended March 31, 2010 was $1.5 million, or $0.07 per share on a basic and diluted basis, compared to a net income of $1.3 million, or $0.06 per share on a basic and diluted basis for the same period last year. Net income for the nine months ended March 31, 2010 included stock-based compensation of $191,000 and interest and tax expense of $957,000, compared to stock-based compensation expense of $222,000 and a net of interest expense and tax benefit of $1.1 million for the same period last year.

Total cash and cash equivalents was $7.6 million at March 31, 2010, compared to $7.5 million at June 30, 2009. Cash provided by operations was $4.1 million for the nine months ended March 31, 2010, compared to cash provided by operations of $2.0 million for the same period last year. Days sales outstanding in receivables for the third quarter of fiscal year 2010 was 35 days, compared to 50 days for the comparable year-ago quarter. Deferred revenue totaled $6.3 million at March 31, 2010, compared to $5.5 million at June 30, 2009.

“Our recurring services business grew nicely along with our overall revenue in a traditionally slow quarter, when compared to the same quarter a year ago,” said Ashu Roy, eGain’s CEO. “Our increased sales and marketing investments are showing early promise. We expect them to have a positive impact on our top line in the second half of calendar year 2010.”

Business Highlights—New Hosting and License Bookings¹

  • New hosting and license bookings for the third quarter of fiscal year 2010 were $1.9 million, an increase of 18% from the comparable year-ago quarter. Of the total new hosting and license bookings in the third quarter of fiscal year 2010, 31% were from new hosting bookings and 69% were from new license bookings, compared to 55% from new hosting bookings and 45% from new license bookings in the comparable year-ago quarter. On a constant currency basis, using the exchange rates in effect on June 30, 2009, bookings for the third quarter of fiscal year 2010 would have been up approximately 20%, rather than up 18%, when compared to the comparable year-ago quarter.
  • New hosting and license bookings for the nine months ended March 31, 2010 were $10.3 million, a decrease of 4% from the same period last year. Of the total new hosting and license bookings in the nine months ended March 31, 2010, 37% were from new hosting bookings and 63% were from new license bookings, compared to 30% from new hosting bookings and 70% from new license bookings in the same period last year. On a constant currency basis, using the exchange rates in effect on June 30, 2009, bookings for the nine months ended March 31, 2010 would have been up approximately 6%, rather than down 4%, when compared to the comparable year-ago quarter.

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. 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 (http://twitter.com/egain) and Facebook (http://facebook.com/egain).

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Cautionary Note Regarding Forward-looking Statements

All statements in this release that involve eGain’s plans, forecasts (including the above stated guidance), beliefs, projections, expectations, strategies and intentions, including but not limited to our allocation of resources, future financial performance and the effect of global currency exchange rates on our business, 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; the actual mix in new business between hosting and license transactions when compared with management’s projections; volatility of the value of certain currencies in relation to the US dollar, particularly the U.K. pound, Indian rupee and Euro; the increased complexity of certain transactions and the timing of revenue recognition on such transactions; 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 28, 2009, 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.

March 2010 quarter financial data

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