eGain Announces Fiscal 2016 Third Quarter Financial Results
SUNNYVALE, CA -- (Marketwired) -- 05/05/16 -- eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2016 third quarter ended March 31, 2016.
Ashu Roy, eGain's CEO, commented, "We delivered solid new subscription bookings this quarter, including a seven figure cloud deal through our Cisco channel. We continued to streamline our business as we operationalize our cloud transition, achieving cash flows from operations of $2.8 million this quarter. Our top line revenue declined over the prior year, primarily due to lower sales of perpetual licenses as we continue our transition to the cloud."
Ashu added, "The enterprise market continues to embrace our customer engagement solutions delivered via the secure eGain cloud. We look forward to finishing the year strong in new cloud bookings."
Fiscal 2016 Third Quarter Results:
Total GAAP revenue for the fiscal 2016 third quarter was $16.3 million, compared to $19.2 million in the same period last year. Subscription and support revenue for the fiscal third quarter was $10.3 million, compared to $10.8 million in the same period last year. License revenue for the fiscal third quarter was $3.2 million, a decrease of 39% from the $5.2 million in the same period last year. Professional services revenue for the fiscal third quarter was $2.8 million, a decrease of 12% from the $3.2 million in the same period last year.
For the nine months ended March 31, 2016, total GAAP revenue was $51.8 million, a decrease of 12% from the same period last year. Subscription and support revenue was $32.0 million, a decrease of 1% from the same period last year. License revenue was $10.7 million, a decrease of 31% from the same period last year. Professional services revenue was $9.1 million, a decrease of 17% from the same period last year.
Gross profit for the fiscal 2016 third quarter was $10.6 million, compared to $11.7 million in the same period last year. Gross margin for the fiscal third quarter increased to 65%, compared to 61% in the third quarter last year. The subscription and support revenue gross margin for the fiscal third quarter was 70%, compared to 72% in the same period last year.
For the nine months ended March 31, 2016, gross profit was $33.6 million, compared to $36.1 million from the same period last year. Gross margin was 65%, compared to 61% from the same period last year. The subscription and support revenue gross margin for the nine months ended March 31, 2016 was 71%, compared to 72% from the same period last year.
Adjusted EBITDA for the fiscal third quarter was a loss of $280,000, or a loss of $0.01 per share on a basic and diluted basis, compared to an adjusted EBITDA net income of $345,000, or $0.01 per share on a basic and diluted basis for the third quarter of fiscal 2015.
For the nine months ended March 31, 2016, adjusted EBITDA was a loss of $6,000, or no loss per share on a basic and diluted basis compared to an adjusted EBITDA net loss of $1.1 million, or $0.04 per share on a basic and diluted basis, for the same period last year.
GAAP net loss for the fiscal third quarter was $3.0 million, or a loss of $0.11 per share on a basic and diluted basis, compared to a GAAP net loss of $2.4 million, or a loss of $0.09 per share on a basic and diluted basis, for the third quarter of last year. Net loss for the fiscal third quarter includes amortization of acquired intangible assets of $696,000, stock-based compensation expense of $246,000 and interest, net expense of $512,000 and tax expense of $178,000, compared to amortization of acquired intangible assets of $695,000, stock-based compensation expense of $522,000 and interest, net expense of $310,000 and tax benefit of $51,000 in the third quarter last year.
For the nine months ended March 31, 2016, GAAP net loss was $7.6 million, or a loss of $0.28 per share on a basic and diluted basis, compared to net loss of $9.5 million, or $0.36 per share on a basic and diluted basis, for the same period last year. Net loss for the nine months ended March 31, 2016 includes amortization of acquired intangible assets of $2.1 million, stock-based compensation expense of $988,000 and interest, net expense of $1.5 million and tax expense of $625,000, compared to amortization of acquired intangible assets of $1.8 million, stock-based compensation expense of $1.8 million and interest, net expense of $578,000 and tax benefit of $210,000 for the same period last year.
Total cash, cash equivalents and restricted cash was $7.6 million as of March 31, 2016, compared to $9.8 million as of December 31, 2015. In the fiscal third quarter, we repaid $4.8 million of bank borrowings.
Total deferred revenue (which includes both deferred revenue on the balance sheet of $14.5 million and unbilled deferred revenue that remains off balance sheet of $23.0 million, collectively representing contractual commitments that have not been recognized as revenue) was $37.5 million as of March 31, 2016, compared to $41.0 million as of December 31, 2015.
Non-GAAP Financial Measures These reported results include Annual Contract Value (ACV), Gross Bookings, Backlog and Adjusted EBITDA as supplemental information relating to our operating results. Adjusted EBITDA is a non-GAAP financial measure, defined as net 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 (benefit), amortization of acquired intangible assets, acquisition-related expenses and severance and related charges. 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) 278-8465 (U.S./Canada toll free) or (913) 312-0647 (international), and give the participant pass code 4077723. A live webcast of the call can be accessed from the investors section at www.egain.com. An audio replay of the conference call can be accessed via the following link: http://jsp.premiereglobal.com/webrsvp
The replay will be available starting two hours after the call and remain in effect for one week. The required pass code is 4077723. An archive of the webcast will also be available on the investors section at www.egain.com.
About eGain eGain's 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 a multichannel world. To find out more about eGain Corporation, visit http://www.egain.com/company/investors/
Headquartered in Sunnyvale, 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).
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 organizational changes, including a growing business pipeline, particularly around new subscription business, and the Company's belief that it will finish the fiscal year strongly in new subscription 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 11, 2015, and eGain's quarterly reports on Form 10-Q, which are 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.
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. All other company names and products are trademarks or registered trademarks of their respective companies.
eGain Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, June 30,
2016 2015
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 7,541 $ 8,633
Restricted cash 13 676
Accounts receivable, net 6,639 13,118
Deferred commissions 550 633
Prepaid and other current assets 2,010 1,625
----------- -----------
Total current assets 16,753 24,685
Property and equipment, net 2,142 3,136
Deferred commissions, net of current portion 319 297
Intangible assets, net 5,534 7,620
Goodwill 13,186 13,186
Other assets 834 807
----------- -----------
Total assets $ 38,768 $ 49,731
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable $ 2,110 $ 1,779
Accrued compensation 4,515 6,910
Accrued liabilities 2,308 2,664
Deferred revenue 9,948 14,395
Capital lease obligations 351 471
Bank borrowings 826 505
----------- -----------
Total current liabilities 20,058 26,724
Deferred revenue, net of current portion 4,568 1,417
Capital lease obligations, net of current portion 196 295
Bank borrowings, net of current portion 17,595 18,259
Other long term liabilities 1,914 1,937
----------- -----------
Total liabilities 44,331 48,632
----------- -----------
Stockholders' (deficit) equity:
Common stock 27 27
Additional paid-in capital 342,468 341,329
Notes receivable from stockholders (81) (78)
Accumulated other comprehensive loss (1,352) (1,170)
Accumulated deficit (346,625) (339,009)
----------- -----------
Total stockholders' (deficit) equity (5,563) 1,099
----------- -----------
Total liabilities and stockholders' (deficit)
equity $ 38,768 $ 49,731
=========== ===========
eGain Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ----------------------
2016 2015 2016 2015
---------- ---------- ---------- ----------
Revenue:
Subscription and support $ 10,330 $ 10,840 $ 31,955 $ 32,241
License 3,169 5,230 10,659 15,541
Professional services 2,792 3,162 9,139 11,057
---------- ---------- ---------- ----------
Total revenue 16,291 19,232 51,753 58,839
---------- ---------- ---------- ----------
Cost of subscription and
support 3,141 3,021 9,335 9,164
Cost of license 8 4 24 58
Cost of professional
services 2,572 4,525 8,809 13,556
---------- ---------- ---------- ----------
Total cost of revenue 5,721 7,550 18,168 22,778
---------- ---------- ---------- ----------
Gross profit 10,570 11,682 33,585 36,061
---------- ---------- ---------- ----------
Operating expenses:
Research and development 4,208 4,142 12,124 12,043
Sales and marketing 7,126 7,883 21,412 25,987
General and administrative 1,892 1,812 6,031 7,327
---------- ---------- ---------- ----------
Total operating expenses 13,226 13,837 39,567 45,357
---------- ---------- ---------- ----------
Loss from operations (2,656) (2,155) (5,982) (9,296)
Interest expense, net (512) (310) (1,521) (578)
Other income (expense), net 345 15 512 168
---------- ---------- ---------- ----------
Loss before income tax
benefit (provision) (2,823) (2,450) (6,991) (9,706)
Income tax benefit
(provision) (178) 51 (625) 210
---------- ---------- ---------- ----------
Net loss $ (3,001) $ (2,399) $ (7,616) $ (9,496)
========== ========== ========== ==========
Per share information:
Basic and diluted net loss
per common share $ (0.11) $ (0.09) $ (0.28) $ (0.36)
========== ========== ========== ==========
Weighted average shares
used in computing basic
and diluted net loss per
common share 27,070 26,709 27,043 26,516
========== ========== ========== ==========
Summary of amortization of
purchased intangibles from
businesscombinations in the
costs and expenses above:
Cost of revenue $ 67 $ 67 $ 201 $ 175
Research and development $ 437 $ 437 $ 1,311 $ 1,141
Sales and marketing $ 173 $ 172 $ 518 $ 450
General and administrative $ 19 $ 19 $ 56 $ 49
Summary of stock-based
compensation included in the
costs and expenses above:
Cost of revenue $ 44 $ 106 $ 204 $ 409
Research and development $ 104 $ 184 $ 374 $ 594
Sales and marketing $ 46 $ 102 $ 116 $ 421
General and administrative $ 52 $ 130 $ 294 $ 406
eGain Corporation
GAAP to Non-GAAP Reconciliation Table
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ----------------------
2016 2015 2016 2015
---------- ---------- ---------- ----------
Revenue $ 16,291 $ 19,232 $ 51,753 $ 58,839
Add: Purchase accounting
adjustments to deferred
revenue related to
acquisitions 19 71 58 319
---------- ---------- ---------- ----------
Non-GAAP Revenue $ 16,310 $ 19,303 $ 51,811 $ 59,158
---------- ---------- ---------- ----------
Adjusted EBITDA
Net loss $ (3,001) $ (2,399) $ (7,616) $ (9,496)
Add: Purchase accounting
adjustments to deferred
revenue related to
acquisitions 19 71 58 319
Depreciation and
amortization 506 607 1,598 1,898
Stock-based compensation
expense 246 522 988 1,830
Interest expense, net 512 310 1,521 578
Income tax provision
(benefit) 178 (51) 625 (210)
Amortization of acquired
intangible assets 696 695 2,086 1,815
Acquisition-related
expenses - - - 844
Severance and related
charges 564 590 734 1,294
---------- ---------- ---------- ----------
Adjusted EBITDA $ (280) $ 345 $ (6) $ (1,128)
---------- ---------- ---------- ----------
Per share information:
Basic Adjusted EBITDA per
common share $ (0.01) $ 0.01 $ (0.00) $ (0.04)
========== ========== ========== ==========
Diluted Adjusted EBITDA per
common share $ (0.01) $ 0.01 $ (0.00) $ (0.04)
========== ========== ========== ==========
Weighted average shares
used in computing basic
Adjusted EBITDA per common
share 27,070 26,709 27,043 26,516
========== ========== ========== ==========
Weighted average shares
used in computing diluted
Adjusted EBITDA per common
share 27,070 27,430 27,043 26,516
========== ========== ========== ==========
eGain Corporation
Other GAAP to Non-GAAP Supplemental Financial Information
(in thousands)
(unaudited)
March 31,
----------------
Constant
currency
growth
Growth rates
2016 2015 rates [5]
------- -------
Total recurring
revenue ACV[1]:
Subscription $24,215 $21,667 12% 13%
Support 20,459 20,374 0% 3%
------- -------
Total recurring
revenue ACV $44,674 $42,041 6% 8%
======= =======
Backlog [2] $37,502 $38,058 -1% 0%
======= =======
Three Months Nine Months
Ended Ended
March 31, March 31,
---------------- ----------------
Constant Constant
currency currency
growth growth
Growth rates Growth rates
2016 2015 rates [5] 2016 2015 rates [5]
------- ------- ------- -------
New Subscription
ACV [3] $ 1,890 $ 730 159% 160% $ 4,290 $ 1,680 155% 152%
======= ======= ======= =======
Gross bookings
[4] $12,804 $15,603 -18% -12% $46,953 $57,140 -18% -12%
======= ======= ======= =======
Revenue:
GAAP
Subscription
and support $10,330 $10,840 $31,955 $32,241
GAAP License 3,169 5,230 10,659 15,541
GAAP
Professional
services 2,792 3,162 9,139 11,057
------- ------- ------- -------
GAAP total
revenue 16,291 19,232 51,753 58,839
Purchase
accounting
adjustments to
deferred
revenue
related to
acquisitions 19 71 58 319
------- ------- ------- -------
Non-GAAP
revenue $16,310 $19,303 -16% -13% $51,811 $59,158 -12% -10%
======= ======= ======= =======
Cost of revenue:
GAAP
subscription
and support $ 3,141 $ 3,021 $ 9,335 $ 9,164
Add back:
Depreciation
and
amortization (309) (350) (972) (1,103)
Amortization
of acquired
intangible
assets (67) (67) (201) (175)
Severance and
related
charges (36) (3) (36) (2)
------- ------- ------- -------
Non-GAAP
subscription
and support $ 2,729 $ 2,601 $ 8,126 $ 7,884
======= ======= ======= =======
GAAP
professional
services $ 2,572 $ 4,525 $ 8,809 $13,556
Add back:
Depreciation
and
amortization (46) (86) (173) (264)
Stock-based
compensation
expense (44) (106) (204) (409)
Severance and
related
charges (26) (269) (26) (269)
------- ------- ------- -------
Non-GAAP
professional
services $ 2,456 $ 4,064 $ 8,406 $12,614
======= ======= ======= =======
GAAP total cost
of revenue $ 5,721 $ 7,550 $18,168 $22,778
Add back:
Depreciation
and
amortization (355) (436) (1,145) (1,367)
Stock-based
compensation
expense (44) (106) (204) (409)
Amortization
of acquired
intangible
assets (67) (67) (201) (175)
Severance and
related
charges (62) (272) (62) (271)
------- ------- ------- -------
Non-GAAP total
cost of
revenue $ 5,193 $ 6,669 -22% -19% $16,556 $20,556 -19% -16%
======= ======= ======= =======
Gross profit:
Non-GAAP
subscription
and support $ 7,620 $ 8,310 $23,887 $24,676
Non-GAAP
license 3,161 5,226 10,635 15,483
Non-GAAP
professional
services 336 (902) 733 (1,557)
------- ------- ------- -------
Non-GAAP gross
profit $11,117 $12,634 -12% -10% $35,255 $38,602 -9% -6%
======= ======= ======= =======
Operating
expenses:
GAAP research
and
development $ 4,208 $ 4,142 $12,124 $12,043
Add back:
Depreciation
and
amortization (59) (79) (208) (230)
Stock-based
compensation
expense (104) (184) (374) (594)
Amortization
of acquired
intangible
assets (437) (437) (1,311) (1,141)
Severance and
related
charges (5) - (5) (35)
------- ------- ------- -------
Non-GAAP
research and
development $ 3,603 $ 3,442 5% 8% $10,226 $10,043 2% 5%
======= ======= ======= =======
GAAP sales and
marketing $ 7,126 $ 7,883 $21,412 $25,987
Add back:
Depreciation
and
amortization (59) (71) (177) (235)
Stock-based
compensation
expense (46) (102) (116) (421)
Amortization
of acquired
intangible
assets (173) (172) (518) (450)
Severance and
related
charges (406) (314) (576) (843)
------- ------- ------- -------
Non-GAAP sales
and marketing $ 6,442 $ 7,224 -11% -9% $20,025 $24,038 -17% -11%
======= ======= ======= =======
GAAP general
and
administrative $ 1,892 $ 1,812 $ 6,031 $ 7,327
Add back:
Depreciation
and
amortization (33) (21) (68) (66)
Stock-based
compensation
expense (52) (130) (294) (406)
Amortization
of acquired
intangible
assets (19) (19) (56) (49)
Severance and
related
charges (91) (4) (91) (145)
Acquisition-
related
expenses - - - (844)
------- ------- ------- -------
Non-GAAP
general and
administrative $ 1,697 $ 1,638 4% 6% $ 5,522 $ 5,817 -5% -3%
======= ======= ======= =======
GAAP operating
expenses $13,226 $13,837 $39,567 $45,357
Add back:
Depreciation
and
amortization (151) (171) (453) (531)
Stock-based
compensation
expense (202) (416) (784) (1,421)
Amortization
of acquired
intangible
assets (629) (628) (1,885) (1,640)
Severance and
related
charges (502) (318) (672) (1,023)
Acquisition-
related
expenses - - - (844)
------- ------- ------- -------
Non-GAAP
operating
expenses $11,742 $12,304 -5% -2% $35,773 $39,898 -10% -6%
======= ======= ======= =======
Adjusted EBITDA
Net loss $(3,001) $(2,399) $(7,616) $(9,496)
Add: Purchase
accounting
adjustments to
deferred
revenue
related to
acquisitions 19 71 58 319
Depreciation
and
amortization 506 607 1,598 1,898
Stock-based
compensation
expense 246 522 988 1,830
Interest
expense, net 512 310 1,521 578
Income tax
provision
(benefit) 178 (51) 625 (210)
Amortization
of acquired
intangible
assets 696 695 2,086 1,815
Acquisition-
related
expenses - - - 844
Severance and
related
charges 564 590 734 1,294
------- ------- ------- -------
Adjusted EBITDA $ (280) $ 345 $ (6) $(1,128)
------- ------- ------- -------
Per share
information:
Basic Adjusted
EBITDA per
common share $ (0.01) $ 0.01 $ (0.00) $ (0.04)
======= ======= ======= =======
Diluted
Adjusted
EBITDA per
common share $ (0.01) $ 0.01 $ (0.00) $ (0.04)
======= ======= ======= =======
Weighted
average shares
used in
computing
basic Adjusted
EBITDA per
common share 27,070 26,709 27,043 26,516
======= ======= ======= =======
Weighted
average shares
used in
computing
diluted
Adjusted
EBITDA per
common share 27,070 27,430 27,043 26,516
======= ======= ======= =======
[1] Annual Contract Value (ACV) is defined as the annualized value of the
contractual obligations in place at the end of the reporting period.
[2] Backlog presented are derived from the deferred revenue on our balance
sheets plus unbilled and uncollected contractual commitments.
[3] New Subscription ACV is defined as the annualized value of new cloud and
term license contractual obligations signed in the reporting period.
[4] Gross bookings presented are derived from GAAP revenue plus the change
in Backlog from the beginning and the end of the reporting period.
[5] 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.
eGain Charles Messman Phone: 408-636-4500 Email: [email protected]
Source: eGain Corporation