Earnings call transcript: eGain beats Q1 2026 EPS forecast significantly

eGain Corporation (NASDAQ:EGAN) reported its first-quarter earnings for fiscal year 2026, significantly surpassing analysts' expectations. The company posted earnings per share (EPS) of $0.17, compared to the forecasted $0.05, marking a surprise of 240%. Revenue came in at $23.5 million, slightly ahead of the $23.47 million forecast. Following the earnings announcement, eGain's stock saw a modest uptick in aftermarket trading, rising by 0.73% to $15.21.

Key Takeaways

• eGain's EPS exceeded expectations by 240%, reflecting strong operational performance.
• Revenue increased by 8% year-over-year, driven by a 10% rise in SaaS revenue.
• Aftermarket stock price rose 0.73%, signaling positive investor sentiment.
• Gross margin improved by 600 basis points to 76%.
• The company announced three major AI product innovations.

Company Performance

eGain demonstrated robust performance in the first quarter of fiscal 2026, with a notable increase in both revenue and profitability. The company's revenue grew by 8% year-over-year, largely due to a 10% increase in SaaS revenue, which now accounts for 93% of total revenue. This growth is supported by eGain's strategic focus on AI-powered solutions, which has positioned the company as a leader in AI knowledge management.

Financial Highlights

• Revenue: $23.5 million, up 8% year-over-year
• Earnings per share: $0.17, up from $0.04 in the previous year
• Gross margin: 76%, an increase of 600 basis points from last year
• Non-GAAP net income: $4.7 million
• Operating cash flow: $10.4 million, representing a 44% margin

Earnings vs. Forecast

eGain's actual EPS of $0.17 significantly surpassed the forecasted $0.05, resulting in a 240% earnings surprise. Revenue slightly exceeded expectations at $23.5 million versus the anticipated $23.47 million. This strong performance highlights the company's successful execution of its growth strategy and operational efficiencies.

Market Reaction

Following the earnings release, eGain's stock price increased by 0.73% in aftermarket trading, reaching $15.21. This movement reflects investor confidence in the company's financial health and growth prospects, particularly in light of its strong EPS performance. The stock remains within its 52-week range, with a high of $15.95 and a low of $4.34.

Outlook & Guidance

eGain provided a positive outlook for fiscal year 2026, with revenue guidance set between $90.5 million and $92 million. The company expects Q2 revenue to range from $22.3 million to $22.8 million. Full-year non-GAAP net income is projected to be between $8.3 million and $9.8 million. eGain plans to increase sales hiring in the second half of the fiscal year to support its growth initiatives.

Executive Commentary

CEO Ashu Roy remarked, "We are off to a good start to our fiscal year with strong first quarter results across the board." CFO Eric Smith added, "Customers and partners are responding enthusiastically to our expanded suite of AI enabling knowledge solutions." These comments underscore the company's confidence in its strategic direction and market positioning.

Risks and Challenges

• Potential market saturation in AI solutions could limit growth.
• Economic uncertainties may impact customer spending.
• Competition from larger tech companies in AI could pose challenges.
• Dependence on SaaS revenue requires continuous innovation.
• Regulatory changes in AI technology may affect operations.

Q&A

During the earnings call, analysts inquired about eGain's sales and marketing strategy, the flexibility of its Composer product, and the progress of its JPMorgan deployment. The company highlighted its focus on expanding the AI agent market and emphasized the potential for significant growth in this area.

Full transcript - eGain Corporation (EGAN) Q1 2026:

Conference Operator: Good day, and welcome to eGain Fiscal twenty twenty six First Quarter Financial Results Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

Unidentified Speaker: I would now like to

Conference Operator: turn the conference over to Jim Byers, Pondell Wilkinson, Investor Relations. Please go ahead.

Jim Byers, Investor Relations, Pondell Wilkinson, Pondell Wilkinson: Thank you, operator, and good afternoon, everyone. Welcome to eGain's Fiscal twenty twenty six First Quarter Financial Results Conference Call. On the call today are eGain's Chief Executive Officer, Ashu Roy and Chief Financial Officer, Eric Smith. 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, 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 the 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. 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, 11/12/2025, 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 a 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 release link on the Investor Relations page of eGain's website at egain.com. Along with the earnings release, we will also post an updated investor presentation to the Investor Relations page of eGain's website. And lastly, a phone replay of this conference call will be available for one week. And now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.

Ashu Roy, Chief Executive Officer, eGain: Thank you, Jim, and good afternoon, everyone. We are off to a good start to our fiscal year with strong first quarter results across the board and ahead of consensus. Our total revenue was up 8% year over year. Our SaaS revenue was up 10% year over year and our AI knowledge line of product business, the ARR for it was up 23% year over year. So we are making progress in the right direction in this exciting space of AI knowledge that we are now firmly leading.

Turning to business highlights, let me share a couple of notable new logo wins in the quarter. So first, we signed up one of New York's largest insurers, health insurers, they serve 2,000,000 members roughly. This company saw the critical gap in their business operation where lack of trusted knowledge that was available to all their employees and clinical staff was hurting compliance. They were struggling with their knowledge content fragmented across silos, some were SharePoint, some were Confluence and then many other repositories. So following an extensive process RFP and so on, they selected us to centralize their knowledge across the business for 8,000 users.

Now what's interesting to us is within one hundred days, they've gone live with our solution with a powerful scalable AI experience that aligns perfectly with their mission to deliver great healthcare to New Yorkers. Another one which is quite interesting is a multinational energy company that we recently won. They serve over 20,000,000 customers across gas and electricity. This company, they have set up an ambitious goal to achieve a top quartile CSAT ranking because that would enable them to compete for millions of pounds of government incentives. A key challenge for them as part of this is replacing their outdated knowledge experience for something that is spread across thousands of different documents, PowerPoint, SharePoints, Word documents.

And so they are replacing that with eGain, a modern solution to support their contact center, their field agents and their service engineers. Again, this client went live within one hundred days. They're already live now with our AI knowledge solution. They internally call it WATT, W A T T, a fitting name for a knowledge tool in an energy company. On the expansion front, we are seeing a nice pattern where existing knowledge clients are increasingly coming to us to add the AI agent products to leverage the trusted knowledge they have in their knowledge base and either going to the contact center to assist the agents or in some cases extended into customer self-service directly.

So for example, one of our branded manufacturing clients last quarter decided to expand their core knowledge implementation now into customer self-service. This is a leading manufacturer of premium bicycles. And what we have been able to now do is reduce a lot of their inbound contact center volume and they can drive a lot more growth without increasing cost of service. So this combination of AI and knowledge is really working for our customers now and we are seeing more and more of them starting to drive that expansion and build out of agentic capabilities on top of trusted knowledge infrastructure from us. The other thing, just looking at exciting stuff we have announced recently is we made a whole bunch of new product announcements at our Solve twenty five event last month.

It was very successful. We held it in Chicago. About half a dozen of our Global 2,000 clients have shared success stories with pretty much a common theme and that was the power of trusted knowledge and agentic AI working hand in hand to deliver both contact center improvements and performance as well as self-service improvements. The three new capabilities that we announced at the event, incidentally that is our biggest product announcement ever, where we have announced three new capabilities. And so that's sort of testimonial to the great work that I've been our team has been doing for the last year and a half in this area of AI knowledge.

So the first product we announced was more a process that we have now translated into a product. And this was our, what used to be called the eGain knowledge method. The knowledge method was our way, our proprietary way of building out and maintaining enterprise knowledge in a very efficient way for our business clients. And what we've been able to do is to apply AI to that and develop what we are now calling the eGain AI knowledge method. This includes comprehensive AI powered knowledge intelligence, content orchestration and answer synthesis capabilities.

All that put together with expert in the loop to ensure that quality and compliance are always front and center. With these automation capabilities, we are confident that we can accelerate most knowledge management tasks by a factor of 10 and also reduce customer implementation time by two to 3x. In fact, when I mentioned the other two clients earlier, they were benefiting from some of the early usage of this capability of AI knowledge methods. Our attendees at the conference were simply delighted with this because for the longest time, knowledge management has been a great ROI, but the investment required has been a lot of manual labor. Now with automating that with our AI capabilities, that just creates a lot of energy around knowledge and the priority businesses are able to put on to knowledge automation, not knowledge management.

The next product we announced was the second version of eGain AI agent. And so we it's a breakthrough approach. We have taken now to enhance the first version to automate conversations in customer service. And what we are doing there is we are combining hybrid AI with in band expert assurance where needed. And by doing that, we can deliver nontrivial use cases, which involve transactions, which involve decisions that are compliance oriented to customers using AI and automation.

And that's something which we have seen as a big gap in the industry, where a lot of agentic solutions that are out there now talk about in automation, but really when we see the automation in practice, it's all around very trivial use cases, because these agentic AI solutions will occasionally make mistakes. And so you need to have a hybrid AI approach where you combine deterministic reasoning with model reasoning and you do that intelligently and with compliance in mind. And that's what we have implemented in AI agent two. Finally, we announced the eGain Composer, which is our

developers. It's a modular AI knowledge platform for developers that leverages trusted knowledge sources to power agentic automation. And so now what we're doing is these developers can now mix and match the components we have on our platform, including the knowledge hub, the retrieval engine, the agentic flows and the user experiences. So they can decide to configure what we already have or they can decide to develop their own components and plug them in to meet specific needs using our extensive APIs and SDKs and connectors that we announced as part of the Composer solution. Over the last couple of years, we've been working with many enterprise AI teams in our clientele.

And what we have seen is a common pattern where these AI teams are looking to deploy the same sort of reliable, trusted, knowledge powered agentic capabilities increasingly that we are doing in the customer service groups and CX groups. They want to do it outside of those groups. But in order to do that, they need more flexibility. They want to use the common knowledge architecture and infrastructure, but they also want the ability to develop their own agentic layer on top of it. And the Composer offering allows them to do just that.

So we're seeing some good interest from our existing customers around Composer and some new partner interest in that in the short period of time that we have announced it, very exciting for us. Looking at the third aspect, which is again very interesting now for us is the team and how we are adding some key talent as we are growing the business and investing on top of this product led growth plan that we have put in place. So a couple of new hires I want to highlight. We did a press release around John Copeland, who is our new VP of Marketing. He comes in from ServiceNow.

And before that, was with Adobe and eBay and McKinsey. He is leading our marketing effort. Our Solve event last month was his public introduction to the eGain stage. The next person that I want to mention and very happy to have him on board is Vikas Taliwal. Vikas has joined as our VP of Product Marketing.

He comes to us from the AWS AI team. And before that, was with Intel and Broadcom and a host of other technology heavy companies. He brings deep experience in the product development, the product management and now leading product marketing. So at eGain, his first mandate is to drive the GTM for our new Composer product. As I mentioned, we are targeting developers and partners who are looking for a composable platform to operationalize their AI solutions built on trusted knowledge.

And finally, we're very happy to have Gautam Garg, who has joined us as the VP of Finance. He has joined Eric's team and comes to us from BTIS, which is a respected investment bank and before that with Oracle in a variety of roles, starting in engineering and moving on to business and product. So Eric, I know, is quite excited about having him on the team, looking to kind of further automate our finance and operations as we drive our growth plans. So with a lot going on, just to conclude, we are pleased with our first quarter financial performance and what I see as growing market momentum. Our recent product introductions are resonating in the marketplace, the three we talked about.

So that's the time we are now investing in building out the team. So we are excited to expand our leadership team with the hires that I just mentioned. With that, I'll hand it over to Eric, our CFO to provide more detail on the financials. Eric? Thanks,

Eric Smith, Chief Financial Officer, eGain: Harshu, and thanks, everyone, for joining us today. Before I begin, I want to mention that we are again using slides to support our earnings call. We believe this will provide helpful context and make it easier for you to follow our results and outlook. In addition to the webcast, you can find the slides in the Investor Relations section of our website and the updated investor presentation. As Ashu noted, we are off to a good start to our fiscal year, with revenue and ARR growth year over year, expanded margins, increased profitability and strong cash flow from operations.

Let me share more details about our financial results for Q1 before discussing our outlook and guidance for Q2 for fiscal twenty twenty six. Looking at our revenue. Total revenue for the first quarter was RMB23.5 million, reaching the high end of our guidance and increasing 8% year over year. SaaS revenue increased by 10% year over year and accounted for 93% of total revenue versus 91% of total revenue in 2025. Looking at non GAAP gross profits and gross margins.

Total gross margin for the quarter was 76%, up 600 basis points from 70% a year ago. SaaS gross margin for the quarter was 81%, up from 77% a year ago. Total gross margin expansion was driven by SaaS gross margin expansion plus a greater shift towards SaaS versus professional services revenue. Notably, SaaS gross margin expansion was primarily driven by our product enhancements that enabled more cost efficient deployments and delivered operational efficiencies within our cloud and customer support teams. Now turning to our operations.

Non GAAP operating costs for the first quarter were million, down 9% year over year as we have streamlined and realigned our business operations because of automation and the continued shift towards a product led sales model. Notably, we have redeployed these cost savings into R and D, which reflects our ongoing focus on growth and product innovation. Looking at our bottom line, our GAAP net income includes a $400,000 warrant expense recorded as a onetime stock based charge during the quarter. As we mentioned on our last call, this expense relates to the warrant we issued to JPMorgan in August as part of the strategic agreement that includes the appointment of a senior JPMC executive as a Board observer. Non GAAP net income was 4,700,000.0 or $0.17 per share, up significantly from non GAAP net income of 1,300,000.0 or $04 per share in the year ago quarter.

Adjusted EBITDA margin for the quarter was 21%, exceeding our guidance and up from 6% in the year ago quarter. Turning to our balance sheet and cash flows. For the first quarter, we generated strong cash flow from operations of $10,400,000 or 44% operating cash flow margin compared to $1,000,000 or 4% operating cash flow margin in the year ago quarter. This was ahead of our internal target due to better than expected cash collection efforts in the quarter. During the quarter, we bought back $1,500,000 in stock at an average price of $6.38 per share.

Our balance sheet remains very strong. Total cash and cash equivalents at the end of the quarter was RMB70.9 million, up from RMB62.9 million as of 06/30/2025. Now turning to our customer metrics. I've broken out the ARR, AI knowledge metrics from the total metrics to highlight the momentum in our AI knowledge business. Looking at ARR, SaaS ARR for knowledge customers increased 23% year over year, while SaaS ARR for all customers increased eight percent year over year.

Turning to our net retention rates. LTM dollar based SaaS net retention for knowledge customers was 104%, up from 103% a year ago, while net retention for all customers was 102%, up from 90 a year ago. Our LTM dollar based SaaS net expansion rate was 119% for our knowledge customers and 110% for all our other customers. Looking at remaining performance obligations, total RPO increased 23% year over year and our short term RPO of R58 million dollars was up 7% year over year. Now turning to our guidance.

For the 2026, we expect total revenue of between 22,300,000.0 to 22,800,000.0. The sequential decline is primarily due to an approximate R600,000 reduction in revenue from our messaging platform business, which, as we had mentioned on our last call, we will be sunsetting over the next year. Furthermore, the recent government shutdown has introduced delays and near term uncertainty for certain professional services engagements with some of our government customers. Turning to the bottom line. For Q2, we expect GAAP net income of $1,200,000 to $1,700,000 or $04 to $06 per share, which includes stock based compensation expense of approximately $700,000 We expect non GAAP net income of $1,900,000 to 2,400,000.0 or $07 to $08 per share and adjusted EBITDA of $2,700,000 to $3,200,000 or a margin of 12% to 14%.

Looking at our full fiscal year ended 06/30/2026, we expect total revenue to be between 90,500,000.0 and $92,000,000 representing a return to growth for the year GAAP net income of $3,500,000 to $5,000,000 or $0.12 to $0.17 per share. This includes stock based comp expense of approximately 3,400,000.0 and the warrant expense of approximately 1,400,000.0. Non GAAP net income of 8,300,000.0 to 9,800,000.0 or $0.29 to $0.34 per share and adjusted EBITDA of 10,400,000.0 to 11,900,000.0 or a margin of 11% to 13%. Looking at our diluted weighted average shares outstanding, with the recent stock price movement, we now expect approximately 28,800,000 shares for both the second quarter and full year. This expected increase in outstanding shares has a 1% impact to our EPS guidance for FY 'twenty six.

In conclusion, we are off to a good start to the year with solid results that beat consensus across the board. Customers and partners are responding enthusiastically to our expanded suite of AI enabling knowledge solutions, and we are well positioned to build on this momentum and drive sustainable growth and profitability going forward. Finally, on the IR front, Yigeng will be meeting with investors at the fourteenth Annual ROTH Technology Conference in New York City on November 19. We look forward to seeing some of you there in person. With that, I'd like to open the call for questions.

Operator?

Conference Operator: Thank you. We will now begin the question and answer session. And your first question today will come from Richard Baldry with ROTH Capital. Please go ahead.

Richard Baldry, Analyst, ROTH Capital: Thanks. It looks like sales trends are sort of firming up and but by contrast to the actual dollar spent on sales and marketing in the quarter stepped down sort of sequentially and year over year. Can you talk about what your strategy is there, whether you think that it might be time to start investing there more aggressively? Or do you feel that you have the capacity you need to address the opportunities that are starting to come?

Ashu Roy, Chief Executive Officer, eGain: Yes. So two things. One, there's just a summer slowdown with marketing spend. So for example, for this current quarter, again, things will go up, right, because the marketing spend is going up. Second, to your point about sort of building out capacity, I think right now, people wise, we have good capacity because we are driving, as we mentioned, sort of a product led sales motion with much more solution expertise oriented pipeline execution.

And so that is working well for us. But we do think that in the second half of this fiscal year, we will step up the sales hiring investment as well.

Richard Baldry, Analyst, ROTH Capital: And it looks like AgenTic, you know, AI agents starting to highly proliferate them, being generous, but none of them you know, because it seems like integrating a GenAI engine with some of that functionality is okay, easy enough, but they don't seem to have access to the data behind it. So do you think that the proliferation of those, I think of as almost dumb agents actually, helps you, or does it commoditize that that segment enough that it will push more people to try to have to work with partners like yourself to make them specifically intelligent on a customer by customer basis?

Ashu Roy, Chief Executive Officer, eGain: I believe so. I think that's what we are seeing. We are seeing people playing with AI, agentic AI, and then we are seeing them talking to us after that, right? And so yes, to your point, if you want to do something serious, you need to make sure that you're not feeding a garbage that you're connecting into really critical data systems to solve nontrivial experiences and use cases. And that's where we are coming in.

And we are seeing that even with our existing customers. They have they are large companies. They have lots of AI teams that are developing cute little prototypes on the side, but they all are coming back to us to say, okay, we need to connect to your knowledge back end. So it's kind of exciting for us.

Richard Baldry, Analyst, ROTH Capital: And last for me, if you look at the Composer product, it's a new set of targets you're going to offer with developers. How complete is that for them to pull in to be able to work with not only the different components that you can bring to the table, but can they integrate with a variety of Gen AI engines? Or is it specific to a few you've tuned it for? And how difficult would it be to sort of pop in different AI engines on top of your

Eric Smith, Chief Financial Officer, eGain: system?

Ashu Roy, Chief Executive Officer, eGain: Yes, great question. So to your point, this is the first version. So by definition, it's not most comprehensive. But what we have going for us, I believe, is two things. One, we have the trusted knowledge back end and making that available very easily for people to plug into whatever agentic solution they are building.

And so that we have made it very easy with our APIs and SDKs. So for example, we will plug into OpenAI's development environment or Azure Copilot development environment. Let's say, if people are building agentic workflows in other places, we are providing a connector into those work environments so that they can use those use our APIs to get the trusted knowledge. So that is point one. And the second is, we are also to your earlier second part of your question, we are enabling it within what we call the bring your own model architecture.

So if an enterprise says, no, we are going to use Plug and not use OpenAI, that's fine. We are making it possible for people to plug in their choice model into our platform to do AI stuff. So those are the two things that we have done to make it easy for people to start consuming right away.

Richard Baldry, Analyst, ROTH Capital: Great. I thought it was my last question, but I'll try to sneak in one more. You've got a pretty big cash balance now and it went up pretty substantially in the quarter despite some buybacks. Can you talk about strategically what you really think that's deployed against? Is it a more aggressive buyback?

Is it tuck in acquisitions to expand your capabilities in this knowledge management, agentic world? So how do we think about that asset?

Ashu Roy, Chief Executive Officer, eGain: Eric, do you want to talk about that?

Eric Smith, Chief Financial Officer, eGain: Sure. I mean, I think we'll obviously continue to look at the buyback. I mean, as we've disclosed in the last call, we had increased that capacity. So that certainly still continues to be one avenue. But I think to your point of sort of exploring tuck in acquisitions or inorganic, it's something that we're always open to, but for sure is not our primary focus.

But I think more importantly, having that ability to continue to invest in the business as well is something that gives us that comfort with that buffer so we don't have any distraction around the viability of the business. So those are the items that I would highlight.

Richard Baldry, Analyst, ROTH Capital: Great. Thanks. Congrats on a good quarter.

Eric Smith, Chief Financial Officer, eGain: Thank you.

Conference Operator: Next question will come from Jeff Van Rhee with Craig Hallum. Please go ahead.

Unidentified Speaker: Hi. This is Vijay Homan on for Jeff Van Rhee. First from me, just last quarter, you talked about a pipeline of several 7 figure knowledge hub opportunities and kind of an increasing pilot conversion rate. I was wondering if you could just give us an update on those opportunities and what you're seeing in those sales cycles.

Ashu Roy, Chief Executive Officer, eGain: Yes. So I think the progress is good. Progress is, I'd say, these large opportunities take time to mature. And so what we are seeing is steady progress. So I'm quite pleased with that because with large opportunities, sometimes they stall along the way.

I'm not seeing that. I'm seeing steady progression. So I'm quite excited. And I also see more engagement on the partner side. We are seeing more interest from partners who are starting to see this area as a viable category to add value.

So those are two things that are quite exciting for us. First, the pipeline progression and second, starting to see some good partner activity.

Unidentified Speaker: Got it. Appreciate that. And then next one, I know the intent was for JPMorgan to deploy by the late fall. I was just wondering how that deployment is going and any other updates on that rollout or learnings would be helpful. Thanks.

Ashu Roy, Chief Executive Officer, eGain: Yes. So yes, I'm happy to report that they have gone live with what the first phase plan was, and we are actively working the next phase. So I think it's gone to plan, which is great. As I think I've mentioned earlier, we deployed their first phase in half the time that we had originally discussed and agreed with them on. So it's pretty exciting for us.

The speed of getting these projects live and used is a, to me, a barometer of the interest and priority that enterprises start to place on these kinds of technologies.

Unidentified Speaker: Got it. Thanks for the color and I'll leave it there.

Ashu Roy, Chief Executive Officer, eGain: You're welcome.

Conference Operator: No further questions, this will conclude our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Eric Smith, Chief Financial Officer, eGain: Thanks, operator, and thanks, everybody, for participating and look forward to updating you with our Q2 results. Thank you.

Conference Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.