New Subscription and Support ACV bookings in Q2 up 47% sequentially
Sunnyvale, California (February 9, 2017) – eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2017 second quarter ended December 31, 2016.
Fiscal 2017 Second Quarter Financial Summary
- Total revenue was $15.0 million ($16.6 million on a constant currency basis with the prior year), compared to $14.7 million in the first quarter of fiscal 2017 and $19.0 million in the same quarter a year ago.
- Subscription and support revenue was $11.0 million ($12.0 million on a constant currency basis with the prior year), compared to $10.9 million in the first quarter of fiscal 2017 and $10.8 million in the same quarter a year ago.
- Professional services revenue was $2.6 million, compared to $2.2 million in the first quarter of fiscal 2017 and $3.1 million in the prior year quarter, with margin improving to 13% compared to 9% in the same quarter a year ago.
- License revenue was $1.4 million, compared to $1.7 million in the first quarter of fiscal 2017 and $5.1 million in the same quarter a year ago, as the company continued its transition to a SaaS based business.
- Gross margin was 66%, compared to 69% in the same quarter a year ago.
- GAAP net loss improved to $(1.0) million, or $(0.04) per share on a basic and diluted basis, compared to a GAAP net loss of $(1.4) million, or $(0.05) per share on a basic and diluted basis, for the same quarter a year ago.
- Adjusted EBITDA was $684,000, compared to adjusted EBITDA of $1.0 million in the same quarter a year ago.
- New subscription and support ACV (non-GAAP), which is the annualized value of new cloud, support and term license contractual obligations signed in the quarter, was $3.1 million, up 47% sequentially and 5% year over year (13% on a constant currency basis with the prior year).
Ashu Roy, eGain CEO, commented, “We made very good progress with our SaaS transition this quarter. Our subscription and support revenue comprised 73 percent of total revenue for the second quarter, up from 57 percent in the prior year quarter. Moving forward, we expect all new business to be SaaS based, except for a very small amount of legacy business. In addition, during the quarter we launched a new version of our software suite with enhanced AI, expanded analytics and a new chat SDK.”
Eric Smit, eGain CFO, added, “We significantly improved operating efficiencies in the first six months of fiscal 2017, which resulted in a year-over-year increase in adjusted EBITDA during the period, despite a decrease in total revenue due to our transition to a SaaS based business model.”
Non-GAAP Financial Measures
These reported results include Annual Contract Value (ACV), Constant Currency and Adjusted EBITDA as supplemental information relating to our operating results. Adjusted EBITDA is a non-GAAP financial measure, defined as net income/(loss), adjusted for the impact of purchase accounting adjustments to deferred revenue related to acquisitions, depreciation and amortization, stock-based compensation expense, interest expense, net, income tax provision, amortization of acquired intangible assets and severance and related charges. We define subscription and support ACV as being the annualized value of new cloud, support and term license contractual obligations signed in the quarter. Constant currency growth rates presented are derived from converting the current period results for entities reporting in currencies other than U.S. Dollars into U.S. Dollars at the exchange rates in effect during the prior period presented rather than the actual exchange rates in effect during the current period. Non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies. eGain’s management uses these non-GAAP measures to compare the company’s performance to that of prior periods for trend analyses, and for budgeting and planning purposes. eGain believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors, and that it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. eGain urges investors to review the reconciliation and not to rely on any single financial measure to evaluate the company’s business.
Quarterly Conference Call
eGain will discuss its quarterly results today via teleconference at 2:00 p.m. Pacific Standard Time. To access the live call, please dial (888) 631-5926 (U.S. toll free) or (913) 312-0946 (international), and give the participant pass code 5566416. A live webcast of the call and slide presentation can be accessed from the investors section at www.egain.com. A replay of the conference call will also be available via telephone beginning approximately two hours after conclusion of the call and remain in effect for one week. To access the replay dial-in information, please click here. An archive of the webcast will also be available on the investors section at www.egain.com.
eGain customer engagement solutions power digital transformation for leading brands. Our top-rated cloud applications for social, mobile, web, and contact centers help clients deliver connected customer journeys in an omnichannel world. To learn more about eGain, visit www.egain.com.
Cautionary Note Regarding Forward-Looking Statements. This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include our belief that we are seeing and will continue to see benefits of the Company’s transition to a SaaS based business, among other matters. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company’s results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties referred to above include, but are not limited to: our ability to capitalize on customer engagement; the success of organization changes; risks that our hybrid revenue model and lengthy sales cycles may negatively affect our operating results; risks related to our reliance on a relatively small number of customers for a substantial portion of our revenue; our ability to compete successfully and manage growth; our ability to develop and expand strategic and third party distribution channels; risks associated with new product releases; risks related to our international operations; our ability to invest resources to improve our products and continue to innovate; and other risks detailed from time to time in eGain’s filings with the Securities and Exchange Commission, including eGain’s annual report on Form 10-K filed on September 13, 2016, which is available on the Securities and Exchange Commission’s Web site at www.sec.gov. These forward-looking statements are based on current expectations and speak only as of the date hereof. The Company assumes no obligation to update these forward-looking statements.
eGain, the eGain logo, and all other eGain product names and slogans are trademarks or registered trademarks of eGain Corp. in the United States and/or other countries. All other company names and products mentioned in this release may be trademarks or registered trademarks of the respective companies.
MKR Group Investor Relations
Todd Kehrli or Jim Byers