eGain Announces Fiscal 2014 Third Quarter Financial Results

eGain Announces Fiscal 2014 Third Quarter Financial Results  SUNNYVALE, CA -- (Marketwired) -- 05/06/14 --  eGain (NASDAQ: EGAN)       --  Total quarterly revenue of $18.0 million, up 17% year-over-year --  Quarterly cloud software revenue up 35% year-over-year --  Nine months total revenue of $51.4 million, up 26% year-over-year --  Nine months cloud revenue up 47% year-over year --  eGain reiterates guidance for fiscal 2014 annual cloud revenue growth     of between 35% and 40% year-over-year --  eGain reiterates guidance for fiscal 2014 annual total revenue growth     of between 20% and 25% year-over-year     eGain (NASDAQ: EGAN), a leading provider of cloud customer engagement solutions, today announced results for its fiscal 2014 third quarter ended March 31, 2014.   Ashu Roy, eGain's CEO, commented, "Our partner activity continues to grow, particularly with Cisco. In the quarter, we secured our first seven-figure Cisco SolutionsPlus deal. Also, with Cisco's recent announcement of eGain Cloud through SolutionsPlus, we look forward to tapping cloud-based demand through this channel.    "From a new business standpoint, we saw a number of deals slip into the fourth quarter, several of which have since closed.  To improve forecasting and execution, we have reorganized and strengthened our sales leadership."   Fiscal 2014 Third Quarter Results:   Revenue: Total revenue for the fiscal third quarter was $18.0 million, an increase of 17% on a year-over-year basis. Subscription and support revenue for the fiscal third quarter was $10.6 million, an increase of 27% on a year-over-year basis. The cloud portion of the subscription and support revenue was $7.0 million, an increase of 35% on a year-over-year basis. License revenue for the fiscal third quarter was $2.5 million, a decrease of 39% on a year-over-year basis. Professional services revenue for the fiscal third quarter was $4.9 million, an increase of 62% on a year-over-year basis.   For the nine months ended March 31, 2014, total revenue was $51.4 million, an increase of 26% from the same period last year. Subscription and support revenue was $30.3 million, an increase of 30% from the same period last year. The cloud portion of the subscription and support revenue was $19.8 million, an increase of 47%  from the same period last year. License revenue was $9.4 million, an increase of 14% from the same period last year. Professional services revenue was $11.6 million, an increase of 24% from the same period last year.   Gross Profit: Gross profit for the fiscal third quarter was $12.0 million, compared to $10.9 million for the third quarter of fiscal 2013. Gross margin for the fiscal third quarter was 67%, compared to 70% in the third quarter last year. The subscription and support revenue gross margin for the fiscal third quarter was 79%, compared to 84% in the third quarter last year.   For the nine months ended March 31, 2014, gross profit was $34.0 million, compared to $27.7 million for the same period last year. Gross margin was 66%, compared to 68% for the same period last year. The subscription and support revenue gross margin was 80%, compared to 83% for the same period last year.   Earnings per Share: Net loss for the fiscal third quarter was $1.0 million, or a loss of $0.04 per share on a basic and diluted basis, compared to net income of $1.0 million, or $0.04 per share on a basic and diluted basis, for the third quarter of last year. Net loss for the fiscal third quarter includes stock-based compensation expense of $470,000 and interest and tax expense of $242,000, compared to stock-based compensation expense of $225,000 and interest and tax expense of $137,000 in the third quarter last year.   For the nine months ended March 31, 2014, net loss was $4.2 million, or a loss of $0.17 per share on a basic and diluted basis, compared to net loss of $1.2 million, or $0.05 per share on a basic and diluted basis, for the same period last year. Net loss for the nine months ended March 31, 2014 includes stock-based compensation expense of $1.2 million and interest and tax expense of $519,000, compared to stock-based compensation expense of $810,000 and interest and tax expense of $616,000 for the same period last year.   Cash: Total cash, cash equivalents and restricted cash decreased to $8.8 million as of March 31, 2014, from $17.2 million as of March 31, 2013. Cash used in operations was $2.5 million for the nine months ended March 31, 2014, compared to cash provided by operations of $9.0 million for the same period last year.   Deferred Revenue: Total deferred revenue (which includes both deferred revenue on the balance sheet of $15.8 million and unbilled deferred revenue that remains off balance sheet of $15.7 million, collectively representing contractual commitments that have not been recognized as revenue) was $31.5 million at March 31, 2014, compared to $40.8 million at March 31, 2013.   Fiscal 2014 Guidance: eGain reiterates its fiscal 2014 guidance for annual total revenue growth of between 20% and 25% and annual cloud revenue growth of between 35% and 40%.   Quarterly Conference Call   eGain will discuss its quarterly results today via teleconference at 5:00 p.m. Eastern Daylight Time. To access the live call, please dial (877) 941-1428 (U.S. toll free) or (480) 629-9665 (international), and request the "eGain" call. 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 at (800) 406-7325 (U.S. toll-free) or (303) 590-3030 (international). The replay will be available starting two hours after the call and remain in effect for one week. The required pass code is #4680957. 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 the company's 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, among other matters, statements about the Company's market opportunities, statements pertaining to Company's partnership with Cisco, statements referring to organizational changes, statements about the Company's expected financial results for the fiscal third quarter ended March 31, 2014 with respect to total revenue, subscription and support revenue, license revenue and statements regarding our fiscal 2014 guidance, including sources of revenue and business mix. 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 a re not limited to;  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 23, 2013, 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 Statements of Operations                                   (in thousands, except per share data)                                                     (unaudited)                                                                                                                                                 Three Months Ended     Nine Months Ended                                          March 31,             March 31,                                        --------------------  --------------------                                      2014       2013       2014       2013                                     ---------  ---------  ---------  ---------  Revenue:                                                                       Subscription and support       $  10,608  $   8,346  $  30,320  $  23,326    License                            2,519      4,098      9,422      8,237    Professional services              4,899      3,016     11,631      9,357                                   ---------  ---------  ---------  ---------      Total revenue                   18,026     15,460     51,373     40,920                                   ---------  ---------  ---------  ---------    Cost of subscription and                                                      support                           2,238      1,355      6,160      3,959    Cost of license                       28         34         80        125    Cost of professional services      3,716      3,180     11,111      9,095                                   ---------  ---------  ---------  ---------    Total cost of revenue              5,982      4,569     17,351     13,179                                   ---------  ---------  ---------  ---------      Gross profit                    12,044     10,891     34,022     27,741                                   ---------  ---------  ---------  ---------  Operating expenses:                                                            Research and development           2,668      2,101      7,164      6,193    Sales and marketing                8,628      6,027     24,640     17,522    General and administrative         1,436      1,852      5,572      4,929                                   ---------  ---------  ---------  ---------        Total operating expenses      12,732      9,980     37,376     28,644                                   ---------  ---------  ---------  ---------  Income (loss) from operations         (688)       911     (3,354)      (903) Interest expense, net                  (17)       (99)      (146)      (376) Other income (expense), net            (77)       256       (355)       306                                   ---------  ---------  ---------  ---------  Income (loss) before income tax                                               provision                            (782)     1,068     (3,855)      (973) Income tax provision                  (225)       (38)      (373)      (240)                                  ---------  ---------  ---------  ---------  Net income (loss)                $  (1,007) $   1,030  $  (4,228) $  (1,213)                                  =========  =========  =========  =========                                                                               Per share information:                                                         Basic net income (loss) per                                                   common share                  $   (0.04) $    0.04  $   (0.17) $   (0.05)                                  =========  =========  =========  =========    Diluted net income (loss) per                                                 common share                  $   (0.04) $    0.04  $   (0.17) $   (0.05)                                  =========  =========  =========  =========    Weighted average shares used                                                  in computing basic net income                                                (loss) per common share          25,418     24,889     25,316     24,690                                   =========  =========  =========  =========    Weighted average shares used                                                  in computing diluted net                                                     income (loss) per common                                                     share                            25,418     26,373     25,316     24,690                                   =========  =========  =========  =========                                                                                                                                                                                                                                                                                                                                                   eGain Corporation                                                  Condensed Consolidated Balance Sheets                                                    (in thousands)                                                                                                                                                                                                                                             March 31,     June 30,                                                         2014          2013                                                       ------------  ------------  ASSETS                                            (unaudited)                Current assets:                                                                Cash and cash equivalents                      $      7,769  $     16,206    Restricted cash                                          30            29    Accounts receivable, net                              9,495        12,307    Deferred commissions                                  1,111         1,745    Prepaid and other current assets                      1,583         2,377                                                   ------------  ------------      Total current assets                               19,988        32,664  Property and equipment, net                             4,308         3,544  Deferred commission, net of current portion               336           776  Goodwill                                                4,880         4,880  Restricted cash, net of current portion                 1,000         1,000  Other assets                                              738           672                                                   ------------  ------------      Total assets                                 $     31,250  $     43,536                                                   ============  ============                                                                                                                                                             LIABILITIES AND STOCKHOLDERS' EQUITY                                         Current liabilities:                                                           Accounts payable                               $      2,194  $      2,583    Accrued compensation                                  4,423         4,339    Accrued liabilities                                   1,300         2,478    Deferred revenue                                     14,973        15,679    Capital lease obligation                                176             -    Bank borrowings                                       1,417         2,667    Related party notes payable                               -         2,897                                                   ------------  ------------      Total current liabilities                          24,483        30,643  Deferred revenue, net of current portion                  871         4,057  Capital lease obligation, net of current portion          187             -  Bank borrowings, net of current portion                 1,250         2,000  Other long term liabilities                               761           848                                                   ------------  ------------      Total liabilities                                  27,552        37,548                                                   ------------  ------------  Stockholders' equity:                                                          Common stock                                             25            25    Additional paid-in capital                          330,321       328,552    Notes receivable from stockholders                      (89)          (87)   Accumulated other comprehensive loss                   (997)       (1,168)   Accumulated deficit                                (325,562)     (321,334)                                                  ------------  ------------      Total stockholders' equity                          3,698         5,988                                                   ------------  ------------      Total liabilities and stockholders' equity   $     31,250  $     43,536                                                   ============  ============      eGain Charles Messman VP Finance Phone: 408-636-4500 Email: iregain@egain.com  MKR Group Investor Relations Todd Kehrli or Jim Byers Phone: 323-468-2300 Email: egan@mkr-group.com