eGain (NASDAQ:EGAN) Issues Earnings Results, Beats Expectations By $0.03 EPS

Key Points

• eGain reported EPS of $0.09, beating estimates by $0.03, and revenue of $21.87 million, above analyst forecasts of $21.11 million.
• Revenue declined 7% year over year as legacy business revenue fell about 28%, while AI customer revenue grew 7% and AI customer ARR increased 11% to $54.5 million.
• eGain maintained its full-year growth targets for AI revenue and ARR, but expects legacy revenue to keep shrinking and higher sales and marketing spending to weigh on near-term profitability.

eGain (NASDAQ:EGAN - Get Free Report) posted its quarterly earnings results on Thursday. The technology company reported $0.09 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.06 by $0.03, FiscalAI reports. The firm had revenue of $21.87 million during the quarter, compared to analyst estimates of $21.11 million. eGain had a net margin of 9.74% and a return on equity of 11.75%.

Here are the key takeaways from eGain's conference call:

• First-quarter revenue was $21.9 million, above guidance but down 7% year over year as legacy revenue declined. AI customer revenue rose 7% to $14.4 million, while AI customer ARR grew 11% to $54.5 million and reached 74% of SaaS ARR.
• Management highlighted eGain’s recognition as a leader in Gartner’s first Magic Quadrant for customer service knowledge management, and cited customer examples of improved accuracy, fewer escalations, and reduced misrouted contacts.
• The company reported new customer wins and expansions, while Gartner-related marketing and event-sourced leads increased. Management plans to invest more in marketing and sales development to convert that awareness into pipeline.
• Legacy business revenue fell about 28%, and management expects the legacy business to decline approximately 30% for the full year, with the runoff becoming more pronounced in Q2.
• eGain reiterated full-year guidance, including 8% to 10% growth in AI customer revenue and a target of approximately 20% AI customer ARR growth by year-end, but expects higher sales and marketing spending to reduce near-term profitability. Q2 adjusted EBITDA is forecast at break-even to $500,000.

eGain Stock Performance

Shares of NASDAQ EGAN traded up $0.05 during mid-day trading on Friday, hitting $5.95. 120,211 shares of the stock were exchanged, compared to its average volume of 194,522. The company has a market cap of $150.59 million, a P/E ratio of 21.25 and a beta of 0.82. The stock's fifty day simple moving average is $5.79 and its two-hundred day simple moving average is $7.36. eGain has a twelve month low of $5.02 and a twelve month high of $15.95.

Analysts Set New Price Targets

EGAN has been the subject of a number of recent research reports. Roth Capital cut eGain from a "buy" rating to a "neutral" rating and dropped their target price for the stock from $21.00 to $7.00 in a report on Tuesday, September 8th. B. Riley Financial reaffirmed a "neutral" rating on shares of eGain in a research note on Tuesday, September 8th. Finally, Weiss Ratings reiterated a "hold (c)" rating on shares of eGain in a research report on Wednesday. Three investment analysts have rated the stock with a Hold rating. According to MarketBeat.com, the company presently has an average rating of "Hold" and a consensus price target of $6.50.

About eGain

eGain Corporation develops cloud-based software for enterprise knowledge management and customer service operations. Its platform combines artificial intelligence (AI), knowledge management, workflow automation, and analytics to help organizations manage information and support customer interactions.

The company's products and services include knowledge management systems, conversational AI, digital engagement tools, agent-assistance software, and customer service analytics.

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