Form 8-K EGAIN Corp For: Feb 08

February 8, 2018 4:07 PM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

Date of Report: February 8, 2018

(Date of earliest event reported)

eGAIN CORPORATION

(Exact name of registrant as specified in its charter)


Delaware	001‑35314	77‑0466366

(State or other jurisdiction	(Commission	(I.R.S. employer
of incorporation)	File Number)	Identification Number)

1252 Borregas Avenue, Sunnyvale, California 94089

(Address of principal executive offices, including zip code)

(Former Name or Former Address, if Changed Since Last Report)

(408) 636‑4500

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)

☐ Pre-commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

☐ Pre-commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b‑2 of the Securities Exchange Act of 1934 (§240.12b‑2 of this chapter). Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Item 2.02.Results of Operations and Financial Condition

The following information in this Item 2.02 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On February 8, 2018, eGain Corporation (“eGain” or the “Company”) issued a press release announcing results for its fiscal second quarter ended December 31, 2017. The press release contains forward-looking statements regarding eGain and includes cautionary statements identifying important factors that may cause actual results to differ materially from those anticipated. A copy of the press release is furnished herewith as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits


EXHIBIT NO.		DESCRIPTION
99.1		Press release, dated February 8, 2018, of eGain Corporation

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

, 2014
Date: February 8, 2018		eGAIN CORPORATION

	By:	/s/ Eric N. Smit
		Eric N. Smit Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

Exhibit 99.1

eGain Reports 24% Growth Year Over Year in SaaS Revenue and

$2.6 Million in Operating Cash Generated in Q2 2018

Sunnyvale, California (February 8, 2018) – eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced financial results for its fiscal 2018 second quarter ended December 31, 2017.

Fiscal 2018 Second Quarter Financial Highlights

SaaS revenue was $7.7 million, up 24% year over year from Q2 2017.

Total revenue, excluding legacy license revenue, was $15.3 million, up 13% year over year from Q2 2017.

Recurring revenue was $12.6 million, up 14% year over year and 82% of total revenue.

Recurring revenue gross margin was 75%, unchanged from Q2 2017.

GAAP operating loss was $396,000, compared to $298,000 in Q2 2017, and non-GAAP operating income was $843,000, compared to non-GAAP operating income of $429,000 in Q2 2017.

GAAP net loss was $788,000, or $(0.03) per share on a basic and diluted basis, compared to a GAAP net loss of $1.0 million, or $(0.04) per share on a basic and diluted basis, for Q2 2017. Non-GAAP net income was $451,000, or $0.02 per share on a basic and diluted basis, compared to a non-GAAP net loss of $322,000 or $(0.01) per share on a basic and diluted basis, for Q2 2017.

Cash provided by operations was $2.6 million, compared to cash used in operations of $3.8 million in Q2 2017.

Non-GAAP total deferred revenue was $68.4 million as of December 31, 2017, up 47% from $46.4 million as of December 31, 2016.

Total cash and cash equivalents as of December 31, 2017, was $10.8 million, compared to $10.6 million as of June 30, 2017. The company paid down approximately $2.6 million in net debt during Q2 2018.

Ashu Roy, eGain CEO, commented, “We continue to execute well under our new SaaS revenue model, generating healthy sequential and year-over-year growth, and $2.6 million in cash from operations. We are pleased with the overall strength of our business and the customer activity we are seeing, which included a mixture of new and expansion opportunities and an increased number of customer migrations to the cloud during the quarter.”

Non-GAAP Financial Measures

These reported results include non-GAAP operating income/(loss) and non-GAAP net income/(loss) as supplemental information relating to our operating results. Non-GAAP operating income/(loss) is defined as operating income/(loss) adjusted for stock-based compensation expense and amortization of acquired intangible assets. Non-GAAP net income/(loss) is defined as net income/(loss) adjusted for stock-based compensation expense and amortization of acquired intangible assets. Recurring revenue is made up of SaaS revenue and legacy support revenue. SaaS revenue includes ratable revenue from cloud subscription, term and ratable licenses and associated support contracts. Legacy support is revenue associated with perpetual license arrangements the Company is no longer selling. Total deferred revenue includes both GAAP deferred revenue and non-GAAP unbilled deferred revenue that remains off balance sheet, collectively representing contractual commitments that have not been recognized as revenue. 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 Daylight Time. To access the live call, please dial (800) 239-9838 (U.S. toll free) or (323) 794-2551 (international), and give the participant pass code 7084382. 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.

About eGain

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 will see benefits to the Company from new product releases and that we will continue to see benefits to the Company from our transition to a SaaS based business, including growth in market share, SaaS and recurring revenue growth, and generating operating cash, 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: risks associated with new product releases; risks that our SaaS based revenue model and lengthy sales cycles may negatively affect our operating results; currency risks; our ability to capitalize on customer engagement; the success of organization changes; 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 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 public filings, including eGain’s annual report on Form 10-K filed on September 26, 2017 and subsequent reports filed with the Securities and Exchange Commission, 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.

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

Phone: 323-468-2300

Email: [email protected]

eGain Corporation

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	December 31,		June 30,
	2017		2017
ASSETS
Current assets:
Cash and cash equivalents	$	10,769	$	10,627
Restricted cash		6		6
Accounts receivable, net		6,464		7,201
Deferred commissions		732		690
Prepaid expenses		1,064		1,737
Other current assets		558		370
Total current assets		19,593		20,631
Property and equipment, net		818		1,059
Deferred commissions, net of current portion		668		694
Intangible assets, net		1,741		2,748
Goodwill		13,186		13,186
Other assets		1,386		1,433
Total assets	$	37,392	$	39,751


LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	2,043	$	2,363
Accrued compensation		4,429		4,339
Accrued liabilities		3,086		2,364
Deferred revenue		22,842		18,332
Capital lease obligations		82		108
Bank borrowings		867		805
Total current liabilities		33,349		28,311
Deferred revenue, net of current portion		6,271		4,887
Capital lease obligations, net of current portion		7		42
Bank borrowings, net of current portion		6,324		14,802
Other long term liabilities		1,284		1,330
Total liabilities		47,235		49,372
Stockholders' deficit:
Common stock		27		27
Additional paid-in capital		344,561		343,367
Notes receivable from stockholders		(84)		(83)
Accumulated other comprehensive loss		(1,722)		(1,663)
Accumulated deficit		(352,625)		(351,269)
Total stockholders' deficit		(9,843)		(9,621)
Total liabilities and stockholders' deficit	$	37,392	$	39,751

eGain Corporation

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2017		2016		2017		2016
Revenue:
Recurring	$	12,565	$	10,982	$	24,207	$	21,845
Legacy license		64	$	1,418		252		3,068
Professional services		2,769	$	2,599		5,514		4,831
Total revenue		15,398		14,999		29,973		29,744
Cost of recurring		3,166		2,800		6,186		5,727
Cost of legacy license		22		4		40		11
Cost of professional services		2,401		2,259		4,789		4,389
Total cost of revenue		5,589		5,063		11,015		10,127
Gross profit		9,809		9,936		18,958		19,617
Operating expenses:
Research and development		3,708		3,231		7,139		6,906
Sales and marketing		4,729		5,541		8,895		10,781
General and administrative		1,768		1,462		3,574		3,493
Total operating expenses		10,205		10,234		19,608		21,180
Loss from operations		(396)		(298)		(650)		(1,563)
Interest expense, net		(239)		(459)		(583)		(881)
Other income (expense), net		(30)		(73)		(161)		35
Loss before income tax benefit (provision)		(665)		(830)		(1,394)		(2,409)
Income tax benefit (provision)		(123)		(219)		38		(1,051)
Net loss	$	(788)	$	(1,049)	$	(1,356)	$	(3,460)

Per share information:
Basic and diluted net loss per common share	$	(0.03)	$	(0.04)	$	(0.05)	$	(0.13)
Weighted average shares used in computing basic and diluted net loss per common share		27,241		27,106		27,213		27,107

Summary of amortization of purchased intangibles from business combinations in the costs and expenses above:
Cost of revenue	$	67	$	67	$	134	$	134
Research and development		436		437		873		874
Sales and marketing		—		—		—		67
General and administrative		—		—		—		8
	$	503	$	504	$	1,007	$	1,083

Summary of stock-based compensation included in the costs and expenses above:
Cost of revenue	$	146	$	34	$	209	$	79
Research and development		275		81		385		169
Sales and marketing		129		58		192		116
General and administrative		186		50		269		95
	$	736	$	223	$	1,055	$	459

eGain Corporation

GAAP to Non-GAAP Reconciliation Table

(in thousands)

(unaudited)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2017		2016		2017		2016
Loss from operations	$	(396)	$	(298)	$	(650)	$	(1,563)
Add:
Stock-based compensation		736	$	223	$	1,055	$	459
Amortization of acquired intangibles		503	$	504	$	1,007	$	1,083
Non-GAAP income (loss) from operations	$	843	$	429	$	1,412	$	(21)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2017		2016		2017		2016
Net loss	$	(788)	$	(1,049)	$	(1,356)	$	(3,460)
Add:
Stock-based compensation		736	$	223	$	1,055	$	459
Amortization of acquired intangibles		503	$	504	$	1,007	$	1,083
Non-GAAP net income (loss)	$	451	$	(322)	$	706	$	(1,918)

eGain Corporation

Other GAAP to Non-GAAP Supplemental Financial Information

(in thousands)

(unaudited)


	December 31,				Growth	Constant currency
	2017		2016		rates	growth rates [1]
Total Deferred Revenue
- GAAP deferred revenue on balance sheet	$	29,113	$	16,908
- Unbilled and uncollected contractual commitments		39,273		29,517
	$	68,386	$	46,425	47%	43%

	Three Months Ended						Six Months Ended
	December 31,				Growth	Constant currency	December 31,				Growth	Constant currency
	2017		2016		rates	growth rates [1]	2017		2016		rates	growth rates [1]

Revenue:
- SaaS Revenue	$	7,683	$	6,204	24%	22%	$	14,439	$	12,006	20%	19%
- Legacy Support		4,882		4,778	2%	-2%		9,768		9,839	-1%	-3%
GAAP Recurring	$	12,565	$	10,982	14%	11%	$	24,207	$	21,845	11%	9%
GAAP License		64		1,418	-95%	-96%		252		3,068	-92%	-92%
GAAP Professional services		2,769		2,599	7%	3%		5,514		4,831	14%	12%
GAAP Total revenue	$	15,398	$	14,999	3%	0%	$	29,973	$	29,744	1%	-1%

Cost of revenue:
GAAP recurring	$	3,166	$	2,800			$	6,186	$	5,727
Add back:
Amortization of acquired intangible assets		(67)		(67)				(134)		(134)
Non-GAAP recurring	$	3,099	$	2,733			$	6,052	$	5,593

GAAP professional services	$	2,401	$	2,259			$	4,789	$	4,389
Add back:
Stock-based compensation expense		(146)		(34)				(209)		(79)
Non-GAAP professional services	$	2,255	$	2,225			$	4,580	$	4,310

GAAP total cost of revenue	$	5,589	$	5,063			$	11,015	$	10,127
Add back:
Stock-based compensation expense		(146)		(34)				(209)		(79)
Amortization of acquired intangible assets		(67)		(67)				(134)		(134)
Non-GAAP total cost of revenue	$	5,376	$	4,962	8%	5%	$	10,672	$	9,914	8%	6%

Gross profit:
Non-GAAP recurring	$	9,466	$	8,249			$	18,155	$	16,252
Non-GAAP license		42		1,414				212		3,057
Non-GAAP professional services		514		374				934		521
Non-GAAP gross profit	$	10,022	$	10,037	0%	-3%	$	19,301	$	19,830	-3%	-4%

Operating expenses:
GAAP research and development	$	3,708	$	3,231			$	7,139	$	6,906
Add back:
Stock-based compensation expense		(275)		(81)				(385)	`	(169)
Amortization of acquired intangible assets		(436)		(437)				(873)		(874)
Non-GAAP research and development	$	2,997	$	2,713	10%	7%	$	5,881	$	5,863	0%	-1%

GAAP sales and marketing	$	4,729	$	5,541			$	8,895	$	10,781
Add back:
Stock-based compensation expense		(129)		(58)				(192)		(116)
Amortization of acquired intangible assets		—		—				—		(67)
Non-GAAP sales and marketing	$	4,600	$	5,483	-16%	-17%	$	8,703	$	10,598	-18%	-19%

GAAP general and administrative	$	1,768	$	1,462			$	3,574	$	3,493
Add back:
Stock-based compensation expense		(186)		(50)				(269)		(95)
Amortization of acquired intangible assets		—		—				—		(8)
Non-GAAP general and administrative	$	1,582	$	1,412	12%	10%	$	3,305	$	3,390	-3%	-3%

GAAP operating expenses	$	10,205	$	10,234			$	19,608	$	21,180
Add back:
Stock-based compensation expense		(590)		(189)				(846)		(380)
Amortization of acquired intangible assets		(436)		(437)				(873)		(949)
Non-GAAP operating expenses	$	9,179	$	9,608	-4%	-6%	$	17,889	$	19,851	-10%	-11%

[1]

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.

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Form 8-K EGAIN Corp For: Feb 08

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