eGain Q4 2026 Earnings Call Transcript

Quartr
Provided by Quartr
September 3, 2026

Key Takeaways

  • Positive Sentiment: AI adoption accelerated: AI customer revenue grew 20% for fiscal 2026, while AI customer ARR increased 13% and reached 72% of total SaaS ARR, up from 63% at midyear.
  • Positive Sentiment: eGain reported strong fiscal-year profitability and cash generation, including adjusted EBITDA of $13.6 million and record operating cash flow of $21.2 million; new-logo wins rose 27% and large pipeline opportunities doubled.
  • Positive Sentiment: Gartner named eGain a leader in its inaugural Magic Quadrant for Customer Service Knowledge Management Systems, while management highlighted growing demand for governed knowledge infrastructure, AI agents, self-service, and evaluation tools.
  • Negative Sentiment: Fiscal 2027 is expected to be a transition year, with total revenue projected at $84.5 million-$86 million and adjusted EBITDA margin falling to 1%-2%; legacy-customer revenue is expected to decline about 40% and legacy ARR 60%.
  • Negative Sentiment: Total SaaS ARR declined 1% in fiscal 2026, dollar-based net retention fell to 104% for AI customers and 93% overall, and management anticipates one to two percentage points of pricing pressure from AI over the next two to three years.
AI Generated. May Contain Errors.
Earnings Conference Call
eGain Q4 2026
00:00 / 00:00

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Operator

Please note this event is being recorded. I would now like to turn the conference over to Jim Byers, Investor Relations. Please go ahead.

Jim Byers
Investor Relations at PondelWilkinson

Thank you, operator, and good afternoon, everyone. Welcome to eGain's fiscal 2026 fourth quarter and full year financial results conference call. On the call today are eGain's Chief Executive Officer, Ashu Roy, and Chief Financial Officer, Eric Smit. Before we begin, I would like to remind everyone that during this conference call, management will make certain forward-looking statements which convey management's expectations, beliefs, plans, and objectives regarding future financial and operational performance. Forward-looking statements are generally preceded by words such as "believe," "plan," "intend," "expect," "anticipate," or similar expressions. Forward-looking statements are protected by Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a wide range of risks and uncertainties that could cause actual results to differ in material respects.

Jim Byers
Investor Relations at PondelWilkinson

Information on various factors that could affect eGain's results are detailed in the company's reports filed with the Securities and Exchange Commission. eGain is making these statements as of today, September 3, 2026, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call. In addition to GAAP results, we will also discuss certain non-GAAP financial measures, such as non-GAAP operating income. The tables included with the earnings press release include reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. eGain's earnings press release can be found by clicking the press releases link on the investor relations page of eGain's website at egain.com.

Jim Byers
Investor Relations at PondelWilkinson

Along with the earnings release, we will post an updated investor presentation to the investor relations page. Lastly, a phone replay of this conference call will be available for one week.

Jim Byers
Investor Relations at PondelWilkinson

Now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.

Ashu Roy
Ashu Roy
CEO at eGain

Thank you, Jim. Good afternoon, everyone. Right at the end of fiscal 2026, the category we have been building toward for years got a name. In July this year, Gartner published its first ever Magic Quadrant for Customer Service Knowledge Management Systems and named eGain a leader, positioned highest for ability to execute and furthest for completeness of vision.

Ashu Roy
Ashu Roy
CEO at eGain

This inaugural Magic Quadrant matters more than just our position in it. This is the first time a top analyst firm has drawn a sharp boundary around this market and explicitly called out knowledge management for customer service as its own category of enterprise infrastructure. They base it on the volume and kind of client inquiries they get in this area. Therefore, they have chosen to invest Magic Quadrant level resources and attention to it. It is a very important signal for the market and the category that is building around it.

Ashu Roy
Ashu Roy
CEO at eGain

As we have said, there is good reason this buying category is emerging now. Generative AI has collapsed the old separation between instruction and data. What an AI agent or agentic workflow does in any live customer or employee assistance conversation is determined entirely by the policies, procedures, and know-how it is fed. When that knowledge is wrong, the AI is confidently wrong. When it is stale, the AI does not know it is out of date. So knowledge is no more documentation just for humans to optionally use. It is instruction for AI. Wrong knowledge equals wrong AI. Engineering that instruction layer, governing it, operating it continuously is what we call AI Knowledge Ops, a term that Gartner reflected in their Magic Quadrant report as something unique and important that eGain brings to this solution.

Ashu Roy
Ashu Roy
CEO at eGain

It is the discipline enterprises are now realizing they cannot skip if they want AI to reliably work in production, not just in pilot. With this market trend and the analyst acknowledgment, let me walk through how fiscal 2026 came together. Before I do that, let me define a term that we will use moving forward, and that is AI customer. An AI customer is an eGain customer who utilizes one or more of our AI offerings. With that said, let us look at full-year fiscal 2026. Our total revenue grew 3% to $91.1 million. Our AI customer revenue grew 20% year-over-year. AI customer ARR grew 13%, one three, and represented 72% of total SaaS ARR at year-end, up from 63% at the midpoint of fiscal 2026. This is an intentional shift in the shape of our customer base.

Ashu Roy
Ashu Roy
CEO at eGain

A growing majority of our SaaS ARR now sits with customers who are using one or more of our AI capabilities. Turning to new business, our momentum continued to build. In the fourth quarter, we won several new logos. A couple of examples here. First, a leading European insurance company. They set out to automate their service operation with AI.

Ashu Roy
Ashu Roy
CEO at eGain

They recognized that they needed to put in place a governance knowledge foundation before they could deploy AI automation at scale. So they selected eGain to modernize their knowledge environment and establish that foundation. Second, a global multi-energy operator serving millions of customers. They faced a familiar barrier to scaling service, fragmented knowledge leading to inconsistent service quality. They are deploying our knowledge platform and AI agent in one contact center. Based on the successful blueprint from that deployment, they will extend to rest of their contact centers.

Ashu Roy
Ashu Roy
CEO at eGain

They also plan to activate self-service channels and leverage the knowledge hub across the entire business. In addition, we added several new paid pilots this quarter. Increasingly, we see buyers wanting to extensively validate our platform in their own environment before committing to a full rollout, and they're willing to pay for it. This is a shift from where we used to be, where we were doing a lot of free, quick trials and pilots as part of our eGain Innovation in 30 Days, the 30-day no-risk pilot that we had. Converting these paid pilots into at-scale production rollouts is a focus for us this fiscal year. I'll give you a couple of examples. One is one of the world's largest pharmaceutical companies.

Ashu Roy
Ashu Roy
CEO at eGain

Their use case is that their experienced scientists and specialists retire or change roles in their R&D teams, and the company risks losing a lot of deep tacit expertise. They're using our AI knowledge hub to capture that tacit knowledge on a continuous basis and turn it into invaluable knowledge for their AI engine. Second, a global leader in testing, inspection, and certification.

Ashu Roy
Ashu Roy
CEO at eGain

They were facing a hard regulatory deadline, and they needed accurate instant guidance in a compliance-heavy environment. Early pilot results of our deployment indicate that the AI agents delivered 95% self-service resolution, and it's enjoying a strong 80% customer user satisfaction surveys. Third, a global leader in gaming technology. They operate in a complex environment where every answer has to be guided and correct. Stepping back to the market, I want to share two trends that we see emerging in the last couple of quarters.

Ashu Roy
Ashu Roy
CEO at eGain

First, businesses are treating knowledge as core AI infrastructure, and their tech and AI teams are actively building on top of this infrastructure, which drives demand for richer platform capabilities like real-time knowledge APIs and stringent service levels. So our growing developer-facing capabilities on our eGain Composer platform are being well received. Second trend we see is growing interest in customer self-service projects. Several new logos in the recent quarters have started out with self-service deployments, something we did not see a year ago when it was more common to start with contact center-based use cases. While contact center productivity is still of great interest, we sense that businesses are increasingly driving for ROI at scale on their AI investments. Moving to business momentum in fiscal 2026. Our new logo wins increased 27% year-over-year.

Ashu Roy
Ashu Roy
CEO at eGain

As I mentioned earlier, several of the new logos we acquired in fiscal 2026 have paid pilots in Global 2000 accounts, and they have significant upside, something we intend to pursue this fiscal year. Our pipeline opportunities, valued at $500,000 ARR or more, doubled in count year-over-year. And our core verticals, which are compliance-heavy, like banking, financial services, insurance, and healthcare, we grew our opportunities in the pipeline by 40% year-over-year, exactly where a trusted knowledge foundation matters the most. Turning to products, our innovation continues to accelerate with focus. Everything we launched in last quarter, which is in Q4, during our London eGain Solve event in May, fueled the cycle of knowledge and AI. First, we increasingly deploying AI in our platform to dramatically automate knowledge management.

Ashu Roy
Ashu Roy
CEO at eGain

The result of that generation and maintenance of trusted knowledge with low effort then drives better instruction to AI that is being used to reliably automate customer service and customer operations. A few of the noteworthy announcements of new capabilities we made in May. The first was the eGain AI Agent IVA, which is an intelligent voice agent.

Ashu Roy
Ashu Roy
CEO at eGain

What is unique about it is that it is using the same trusted knowledge platforms as we use for all our digital self-service. That consistency and quality is something that now we can offer as a complete omni-channel self-service offering. Secondly, our eGain Agentic Studio, which is a zero-code application building environment we have launched so that business users can assemble these service use cases end-to-end, multi-step, complex processes with every step grounded in verified knowledge using assured tools and actions and invoking human oversight when needed.

Ashu Roy
Ashu Roy
CEO at eGain

It is a complete platform for service automation for using agentic capabilities. The third, which we have announced in the past, was the eGain Evaluator, which is our continuous evaluation tool for AI pipelines. We made it generally available, and it is a capability that is getting a lot of interest from our large customers who are looking to drive continuous quality assurance of their agentic pipelines.

Ashu Roy
Ashu Roy
CEO at eGain

Finally, we announced a new vertical for healthcare, which is our eGain AI Knowledge Suite for Healthcare. This is a governed knowledge foundation purpose-built for health plans and health systems. We will build on this momentum at our upcoming eGain Solve event in Chicago on October 13 and 14 this year. We lay out our view of the year ahead, the shift from knowledge management to knowledge automation, and the value of agentic AI assembly on top of trusted knowledge.

Ashu Roy
Ashu Roy
CEO at eGain

Of course, we will announce new capabilities and hear from our customers and partners. In conclusion, our sustained bet on AI knowledge, the market, and products in fiscal 2026 is showing results. We are doubling down, and we intend to lead this market. With that, I will turn it over to Eric Smit, our CFO, to take you through the financial details. Eric?

Eric Smit
Eric Smit
CFO at eGain

Thanks, Ashu, and thanks everyone for joining us today. Before I begin, I would like to note that we are again using slides to support today's call. We believe this provides helpful context and makes it easier to follow our results and outlook. You can access the slides in the investor relations section of our website alongside the webcast. As Ashu noted, fiscal 2026 demonstrated solid financial execution. Total revenue increased 3% to $91.1 million. AI customer revenue grew 20%. Adjusted EBITDA increased to $13.6 million, and cash provided by operating activities reached a record $21.2 million. I will review our fourth quarter and full-year results, explain the transition in more detail to our customer-based AI metrics, and discuss our fiscal 2027 outlook and long-term financial framework. Starting with the fourth quarter results and starting with revenue.

Eric Smit
Eric Smit
CFO at eGain

Total revenue was $22.2 million, exceeding both our guidance and Street consensus, compared with $23.2 million in the prior year quarter. The year-over-year decline in total revenue primarily reflected the lower revenue from our legacy conversation and analytics customers. AI customer revenue grew 11% year-over-year in the fourth quarter. Looking at gross margins, non-GAAP total gross margin for the quarter was 72% compared to 73% a year ago. Non-GAAP SaaS gross margins were 78% compared to 80% a year ago. Turning to operating expenses, non-GAAP operating costs were $14.1 million, up 6% year-over-year and 2% sequentially. Sales and marketing expenses were $5.5 million, up 21% sequentially reflecting our planned investments in go-to-market initiatives, including the eGain Solve event that we held in London.

Eric Smit
Eric Smit
CFO at eGain

Looking at our bottom line, GAAP net income was $1.3 million, or $0.05 per basic and diluted share, compared with GAAP net income of $30.9 million, or $1.13 per basic share and $1.11 per diluted share in the prior year quarter. The prior year results included an approximately $29 million tax benefit from the release of a majority of our valuation allowance. Non-GAAP net income was $2.1 million, or $0.08 per share on a basic and diluted basis, exceeding our guidance and Street consensus. This compares with $2.4 million or $0.09 per share on a basic and diluted basis in the year-ago quarter. Adjusted EBITDA was $2.2 million, representing a 10% margin and exceeding our expectations, compared to $4.5 million and a 19% margin a year ago.

Eric Smit
Eric Smit
CFO at eGain

During the quarter, we repurchased 1.4 million shares for $10.1 million at an average price of $7.32 per share. Turning to our full-year results. Looking at our revenue, total revenue was $91.1 million, exceeding our guidance and up 3% year-over-year. Within total revenue, AI customer revenue grew 20% year-over-year. AI customer ARR grew 13% year-over-year and represented 72% of total SaaS ARR at year-end. Looking at gross margins and operating expenses, non-GAAP total gross margin was 74%, up from 71% in fiscal 2025. Non-GAAP operating costs were $55.3 million compared to $56 million in the prior year.

Eric Smit
Eric Smit
CFO at eGain

Turning to the bottom line, balance sheet, and cash flows, GAAP net income was $8.9 million, or $0.33 per basic share and $0.32 per diluted share, compared with $32.3 million or $1.15 per basic share and $1.13 per diluted share in fiscal 2025.

Eric Smit
Eric Smit
CFO at eGain

As I mentioned, the prior year results included approximately $29 million tax benefits. Non-GAAP net income was $13 million, or $0.48 per share on a basic basis and $0.47 per share on a diluted basis, up from non-GAAP net income of $5.7 million or $0.20 per share on a basic and diluted basis in the prior fiscal year. Adjusted EBITDA increased to $13.6 million, representing a 15% margin up from $8.6 million and a 10% margin in fiscal 2025.

Eric Smit
Eric Smit
CFO at eGain

Cash flow from operations reached a record $21.2 million, representing a 23% operating cash flow margin up from $5.3 million or a 6% operating cash flow margin in fiscal 2025. Cash and cash equivalents totaled $73.3 million at June 30, 2026 compared to $62.9 million at June 30, 2025. During fiscal 2026, we repurchased 1.6 million shares or $11.5 million at an average price of $7.16 per share.

Eric Smit
Eric Smit
CFO at eGain

At year-end, we had $9.7 million remaining available under the $60 million buyback authorization. Turning to our AI customer metrics. As Ashu mentioned, instead of reporting by product hub, going forward, we're now reporting based on whether a customer is actively using one or more of our AI offerings. We call this AI customer ARR and AI customer revenue. We believe it's a cleaner, more forward-looking way to show our AI adoption spreading across our installed base since many customers now use AI capabilities across multiple parts of our platform rather than within a single hub. This is the framework we'll use going forward. The strategic rationale is straightforward. We have found that a customer's overall adoption of our AI capabilities, not the specific product SKU or hub they originally purchased, is the strongest predictor of long-term retention expansion.

Eric Smit
Eric Smit
CFO at eGain

To better measure and ultimately maximize that dynamic, we completed a full review of our customer base this year and segmented it into two groups. AI customers, meaning those actively engaged with our AI platform, and all other customers. This is a meaningful shift in how we think about the business. Our reporting focus is now on growing ARR per account, which we view as a primary measure of success with a specific mix of products a given customer consumes becomes secondary.

Eric Smit
Eric Smit
CFO at eGain

We believe this customer base view better reflects how customers deploy our integrated platform, how we manage these relationships, and the broader retention and expansion opportunity within our AI customer base. It is now our primary lens for measuring the health of our AI business. AI customer ARR is defined as total SaaS ARR from customers who are actively utilizing one or more of our AI offerings.

Eric Smit
Eric Smit
CFO at eGain

This amount includes all offerings associated with the customer and not solely the AI offerings. AI customer revenue is defined as the total revenue generated from customers who actively utilize one or more of our AI offerings, inclusive of their SaaS and professional services revenue. This amount also includes all offerings associated with the customer and not solely the AI offerings. With that context, here are the metrics.

Eric Smit
Eric Smit
CFO at eGain

AI customer ARR increased 13% year-over-year and represented 72% of total SaaS ARR at year-end. Total SaaS ARR declined 1% year-over-year, driven by the decline among our legacy non-AI customers. Turning to our retention rates, trailing 12 months dollar-based net retention for AI customers was 104 compared to 120 a year ago. As a reminder, we have closed a significant expansion deal with JPMC in Q4 of last fiscal year, which drove that increase in net retention.

Eric Smit
Eric Smit
CFO at eGain

Net retention for all customers was 93% compared to 105% a year ago. Total remaining performance obligation or RPO of $87 million was down 5% year-over-year, and short-term RPO of $62 million was down 2% year-over-year. Turning to our outlook, starting with guidance for the fiscal quarter of fiscal 2027. We expect AI customer revenue of between $13.7 million to $14 million and total revenue of between $20.9 million and $21.4 million. Turning to the bottom line for Q1, we expect GAAP net income of $500,000 to $1 million or $0.02 to $0.04 per share, which includes stock-based compensation expense of approximately $900,000. We expect non-GAAP net income of $1.4 million to $2 million or $0.05 to $0.08 per share, and adjusted EBITDA of $1.4 million to $1.9 million or a margin of 7% to 9%.

Eric Smit
Eric Smit
CFO at eGain

For the fiscal year ending June 30, 2027, we expect AI customer revenue of between $59.5 million to $60.5 million, representing growth approximately of 8% to10%. Total revenue to be between $84.5 million and $86 million. Our outlook reflects two different trends within the business. We expect continued growth from AI customers alongside an estimated 40% decline in revenue from our profitable legacy customers. We are using the cash generation from this non-core business to fund investments in the larger AI opportunity. We expect ARR from AI customers to grow approximately 20% in fiscal 2027, while ARR from legacy customers is expected to decline by 60%. On the bottom line, we expect GAAP net loss of $2 million to $3 million, or $0.08 to $0.11 per share. This includes stock-based comp expense of approximately $4 million.

Eric Smit
Eric Smit
CFO at eGain

Non-GAAP net income of $1 million to $2 million or $0.04 to $0.07 per share, and adjusted EBITDA of $650,000 to $1.4 million or a margin of 1% to 2%. We expect weighted average shares outstanding of approximately 26.6 million for the first quarter and 26.8 million for the full fiscal 2027. Today, we are also introducing a long-term financial model that lays out our targets through fiscal 2030. As we complete our transition to a higher growth AI-led business.

Eric Smit
Eric Smit
CFO at eGain

We see fiscal 2027 through fiscal 2029 as a transition period, with total revenue growing, both increasingly converging with AI customer revenue growth, and fiscal 2030 is the year that convergence is largely complete. Now turning to our long-term financial model. For fiscal 2030, relative to fiscal 2026, we are targeting AI customer ARR of between $100 million to $120 million, up from $54 million in fiscal 2026.

Eric Smit
Eric Smit
CFO at eGain

A 17% to 22% CAGR as AI ARR compounds towards scale. Total SaaS ARR of $100 million to $120 million, up from $75 million in fiscal 2026, reflecting substantially complete runoff of non-AI ARR and migration to AI. For AI customer ARR, we expect that is going to represent approximately 100% of total SaaS ARR, up from 72% in fiscal 2026. Effectively a pure play AI ARR base with increasing contribution from our AI business. AI customer revenue of $105 million to $115 million, representing a 17% to 20% CAGR from the $55 million we generated in fiscal 2026, and a 20% plus growth year over year by fiscal 2030, making our underlying AR revenue growth increasingly visible in our total results. Total revenue of $110 million to $120 million, representing approximately 15% to 20% growth year over year by fiscal 2030.

Eric Smit
Eric Smit
CFO at eGain

The total company growth now closely mirroring our AI growth. AI customer revenue representing approximately 95% of total revenue, up from 60% in 2026, supporting a higher quality valuation framework. SaaS gross margins of approximately 80%, maintaining our attractive software margin profile. Adjusted EBITDA margin that remains positive while we fund AI growth, a deliberate balance between growth investments and profitability discipline. We believe our leadership in AI-powered knowledge management, expanding market opportunity and increased go-to-market investment position eGain to pursue durable growth while maintaining an attractive profitability profile.

Eric Smit
Eric Smit
CFO at eGain

To summarize, in closing, AI customer revenue and ARR both grew at double-digit rates in fiscal 2026, and we completed a shift to a customer-level reporting that we believe gives investors a clearer view of the business and strengthens our position following Gartner's naming of eGain a leader in the inaugural Magic Quadrant for Customer Service Knowledge Management Systems.

Eric Smit
Eric Smit
CFO at eGain

We also delivered total revenue growth, strong profitability, and record operating cash flow in fiscal 2026. With our strong balance sheets and cash generation, including the cash we generated from our declining but profitable legacy offerings, we are all in on the AI knowledge opportunity, investing to build on that position and pursue sustainable long-term growth. Lastly, as Ashu mentioned, we will be hosting an Investor Day and Analyst Day in conjunction with our upcoming eGain Solve customer events on October 13 in Chicago.

Eric Smit
Eric Smit
CFO at eGain

Additional information and registration details are available on our website. This event is a great opportunity for prospective investors and analysts to meet with customers and learn more about our business. We hope you can join us. With that, I would like to open the call for questions. Operator?

Operator

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. Our first question comes from Jeff Van Rhee with Craig-Hallum. Please go ahead.

Vijay Homan
Vijay Homan
Analyst at Craig-Hallum

Hey, guys. This is VJ on for Jeff. First one from me. Just in the target model and kind of hearing the prepared remarks, you talked a little about running off the non-AI ARR. Is there a timeline for that in mind, kind of similar to what you had with the messaging business? Then just how does the profitability of those businesses compare to the rest of the business?

Eric Smit
Eric Smit
CFO at eGain

Nope. Good. Thanks for that. Yes. For clarification, as we described in the model, the expectation is the non-AI business should be substantially. The goal, obviously, is to convert some of that into the AI business, but from the modeling standpoint, we would expect that to be to zero as we get to the 2030 timeframe.

Vijay Homan
Vijay Homan
Analyst at Craig-Hallum

Got it. Then you talked a little bit on previous earnings calls about some of the potential impacts of AI more generally on the business, maybe pricing pressure on SaaS products. Are you seeing that show up in the business at all, or is that still kind of expected later down the line?

Ashu Roy
Ashu Roy
CEO at eGain

This is Ashu here. So I would say that we are seeing some pressure of that, but we are also seeing our ability to create new product offerings which layer on additional revenue from these value-added AI capabilities. All in all, the effect has not been as significant as I would have feared. Yet, we are prepared for it. We do think that there may be, my sense is, one or two points pressure over the next two to three years, is how I see it. But Eric, do you have anything more to add?

Eric Smit
Eric Smit
CFO at eGain

Exactly. Yes. I think that is sort of aligned at this stage. I think given the instruction layer that this is building, it is sort of creating opportunities that are different from what we would have seen historically as well, which I think will obviously impact sort of the way the pricing, we approach this.

Vijay Homan
Vijay Homan
Analyst at Craig-Hallum

Yeah. Got it. Just for the target model, obviously I appreciate having that out there. As you look at the growth profile, is there any way you can segment that, as far as if you expect 15% or 20% growth, how much of that will be maybe price, or new customer adds, or adding seats to existing customers, or reducing churn? Just what do you think the biggest drivers there will be?

Eric Smit
Eric Smit
CFO at eGain

I think most of the driver will come from new logo acquisition. I think when we look at the opportunity in front of us, especially with now the backdrop that we're seeing with the Gartner MQ, I think this investment to drive the brand awareness and scale up the customer base will be the primary driver. Obviously, we will work hard to move customers that are in the legacy buckets, but that will not be the primary driver for this growth.

Vijay Homan
Vijay Homan
Analyst at Craig-Hallum

Got it. I'll hop back into queue. Thank you guys for taking my questions.

Operator

Again, if you have a question, please press star then one. Our next question comes from Erik Suppiger with B. Riley. Please go ahead.

Ethan White
Ethan White
Analyst at B. Riley

Hi there. This is Ethan White calling on for Erik. Just one question from me. As companies adopt an ecosystem of AI models rather than just using one of the frontier models, does that dynamic create more demand for a knowledge management solution? Can you maybe speak to that dynamic a little more? Thank you.

Ashu Roy
Ashu Roy
CEO at eGain

Yeah, I'll take that, Eric. Yes, you're right. What we are seeing now is in the last month or so, I'm sure you've seen as well, a lot of talk about people running into token runaway costs, and also just cost of AI as the adoption has been pushed hard in enterprises. What we see with our approach to it is just by being sharper in what you are feeding into these AI tools, you can keep the costs down significantly, sometimes by a factor of 10. So it's a big advantage by being more precise in how you instruct and guide rather than throwing the kitchen sink of content and context into these models. That's one thing we see as a very interesting advantage that we bring to the party.

Ashu Roy
Ashu Roy
CEO at eGain

The second one is that we, even internally inside the platform, tend to be smart about using, if you will, horses for courses, right? The right models for the right need, and we see that as another way of managing the AI token cost for our clients.

Ethan White
Ethan White
Analyst at B. Riley

Thank you. Maybe just one little follow-up. Does that dynamic matter at all in kind of the big frontier models versus open source, or is that irrelevant?

Ashu Roy
Ashu Roy
CEO at eGain

It does matter to some extent when the quality advantages, in terms of benchmarks and stuff, is probably not more than 10%-15% for most of the relevant benchmarks that we are looking at. The cost difference can be more than a factor of 10. Yes, it does matter. What we see is as businesses are doing more and more real-time, continuous operation to ensure that their knowledge and knowhow is always up to date, that is going to drive up token usage, and that will then require smarter routing to the relevant capable models.

Ethan White
Ethan White
Analyst at B. Riley

Understood. Thank you.

Operator

Again, if you have a question, please press star then one. At this time, there are no further questions. I would like to turn the conference back over to eGain management for any closing remarks.

Eric Smit
Eric Smit
CFO at eGain

Thanks, operator, and thanks everyone for joining the call today. Again, encourage all of you out there to look at joining us at the events in Chicago. Again, details on the website. Thank you.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Executives
Analysts
    • Jim Byers
      Investor Relations at PondelWilkinson
    • Vijay Homan
      Analyst at Craig-Hallum
    • Ethan White
      Analyst at B. Riley
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