Summary
eGain posted total revenue of $24.8 million for the first quarter of fiscal 2023, up 15.4% from the prior-year quarter. Constant currency growth was 20%. Subscription revenue rose 14%, and professional services revenue rose 41%. Legacy revenue fell 69% as the company migrates perpetual license clients to SaaS. SaaS revenue grew 18% year over year, or 23% on a constant currency basis. Gross profit was $18.5 million, up 14.4%, while gross margin slipped to 74.6% from 75.3%, a decline of 0.7 percentage points. Management pointed to high inbound interest for the Knowledge Hub and a growing new business pipeline. The company also announced a $20 million stock repurchase program, funded from existing cash or future cash flows, with a one-year term.
Profits moved the other way. The quarter produced an operating loss of $0.7 million, a swing to a loss from the prior-year quarter, and operating margin was -2.7%, down from 3.2%. Net loss was $16,000, or $0.00 per diluted share, compared with a profit in the prior-year quarter. On a non-GAAP basis, net income was $2.0 million, or $0.06 per share, down from $2.7 million, or $0.08 per share. Stock-based compensation and heavier operating costs drove the gap. Sales and marketing expense rose 28%, and research and development expense rose 23%, both tied to personnel costs, marketing programs and cloud computing costs.
Cash generation slowed sharply. Operating cash flow was $760,000, down 89.4% from $7.17 million in the prior-year quarter, which management tied to the timing of collections for accounts receivable. Capital expenditures were $0.12 million, down 8.4%. Cash and cash equivalents stood at $71.5 million on September 30, 2022. The balance sheet carried deferred revenue of $44.7 million, up 10.0% from a year earlier. Remaining performance obligations reached $94.5 million, up 31.4%, with $67.2 million expected to be recognized within one year and $27.3 million beyond that.
Guidance points to a slower second quarter. For the quarter ending December 31, 2022, eGain guided to total revenue growth of 8% to 10% year over year, or 12% to 13% in constant currency, with non-GAAP net income of $1.1 million to $1.4 million, or $0.03 to $0.04 per share. For the full fiscal year ending June 30, 2023, it guided to total revenue growth of 9% to 11%, or 11% to 13% in constant currency, with non-GAAP net income of $5.3 million to $6.3 million, or $0.16 to $0.19 per share. The outlook assumes roughly 32.0 million weighted average shares outstanding for both periods. Management said sales cycles are lengthening in the current economic environment and that it is optimizing growth and profitability targets for fiscal 2023.
The 10-Q lists familiar risks: reliance on a relatively small number of customers for a substantial portion of revenue, intense competition in customer engagement software, lengthy sales cycles, international operations and currency swings, and the COVID-19 pandemic. Currency was a real drag this quarter. Foreign exchange rate fluctuation cut $909,000 from total revenue, and North America revenue rose 26% while Europe, Middle East and Africa revenue fell 9%. RPO is up 31.4% while operating cash flow is down 89.4%, a pairing that shows contracted demand building even as near-term cash conversion and margins come under pressure. The buyback does not obligate the company to buy a set number of shares and may be suspended at any time.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $24.8M | $23.5M | +5.4% | $21.5M | +15.4% |
| Gross profit | $18.5M | $16.9M | +9.3% | $16.2M | +14.4% |
| Gross margin | 74.6% | 71.9% | +2.7 pp | 75.3% | -0.7 pp |
| Research & development | $6.9M | $6.4M | +7.4% | $5.6M | +22.6% |
| Sales & marketing | $9.5M | $9.5M | -0.4% | $7.4M | +27.8% |
| General & administrative | $2.8M | $2.7M | +3.1% | $2.4M | +15.1% |
| Total operating expenses | $19.2M | $18.6M | +2.8% | $15.5M | +23.9% |
| Operating income (loss) | -$670.0K | -$1.7M | +61.1% | $691.0K | -197.0% |
| Operating margin | -2.7% | -7.3% | +4.6 pp | 3.2% | -5.9 pp |
| Net income (loss) | -$16.0K | -$1.6M | +99.0% | $551.0K | -102.9% |
| Net margin | -0.1% | -6.6% | +6.5 pp | 2.6% | -2.6 pp |
| Diluted EPS | $0.00 | -$0.05 | +$0.05 | $0.02 | -$0.02 |
Risks
Operating income swung to a loss of $0.67 million in FY2023 Q1 from income of $0.69 million in FY2022 Q1, and operating margin declined 5.9 percentage points to -2.7%. MD&A attributes the loss to operating expense growth, and net income also swung to a loss of $0.02 million in FY2023 Q1 from income of $0.55 million in FY2022 Q1.
Operating cash flow decreased 89.4% to $0.76 million in FY2023 Q1 from $7.17 million in FY2022 Q1. MD&A states the decrease was driven primarily by the timing of collections for accounts receivable, and risk factors note reserves may be insufficient if customer payment delays or failures exceed reserves.
As of September 30, 2022, approximately 43% of the workforce was employed in India, with 51% of India employees allocated to research and development. The filing states increased competition for skilled workers in India has caused increased compensation costs and expects these costs to increase in the future.
MD&A states foreign exchange rate fluctuation decreased total revenue in FY2023 Q1, and EMEA revenue decreased 9% from the prior-year quarter. The company derived 23% of revenue from EMEA in FY2023 Q1 compared with 29% in FY2022 Q1, exposing results to currency and regional demand swings.
The filing states the sales cycle for products can be six months or more and has further increased because customer corporate decision-making and approval processes have become more complicated. This has in some cases prevented closure of sales that the company believed were likely to close, contributing to revenue timing uncertainty.
The market for customer engagement software is intensely competitive, with named competitors including Genesys, LivePerson, NICE, Verint, and larger software companies such as Microsoft, Oracle, Salesforce.com, and ServiceNow. Many competitors have greater financial, marketing, and other resources, which could pressure pricing and demand.
The risk factors state that employees or contractors have introduced vulnerabilities in, and enabled the exploitation of, the company's IT environments in the past and may do so in the future. A successful attack could result in theft of customer data, regulatory fines, litigation, and reputational harm.
SaaS KPIs
All quarters →Remaining Performance Obligations
SaaS Revenue
Operating Cash Flow Margin
Current Remaining Performance Obligations
SaaS Revenue as % of Total Revenue
Total SaaS and Professional Services Revenue
Non-GAAP Operating Income
Remaining Performance Obligations (beyond one year)
Summary, forecast, risks and KPIs are extracted from EGAIN Corp's SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.