Summary
eGain reported fiscal 2026 first quarter revenue of $23.51 million, up 7.8% year over year. Gross profit rose 16.8% to $17.68 million. Gross margin was 75.2%, up 5.8 percentage points. Operating income was $2.83 million, up 456.6%, and operating margin was 12.1%, up 9.7 percentage points. Net income was $2.82 million, up 332.5%. Diluted EPS was $0.10, up 400%. The quarter showed a sharp improvement in profitability on modest revenue growth. SaaS revenue grew while professional services revenue declined, but total revenue still advanced.
The AI Knowledge Hub remained the main growth engine. Its annual recurring revenue grew 23% year over year to $45.9 million, and it contributed 60% of total SaaS ARR. At the Solve25 event, eGain unveiled three new AI products. Customers and partners are showing significant interest in the expanded suite of AI knowledge solutions. Remaining performance obligations were $86.90 million, up 23.4% year over year. Deferred revenue was $47.41 million, up 8.0%. These metrics suggest a healthy backlog and growing subscription commitments. Management expects SaaS revenue to continue to increase steadily.
Cash generation was strong. Operating cash flow was $10.43 million, up 993.5% year over year. Capital expenditures were $0.22 million, up 105.5%. Adjusted EBITDA was $5.0 million, a 21% margin, compared to $1.4 million, a 6% margin, in the prior-year quarter. Non-GAAP net income was $4.7 million, or $0.17 per share, compared to $1.3 million, or $0.04 per share. Non-GAAP gross margin was 76%, compared to 70% in the prior-year quarter. Operating cash flow margin was 44%. The company repurchased approximately 231,000 shares at an average price of $6.38 per share, totaling $1.5 million.
Management issued guidance for the second quarter and full fiscal year. For the second quarter, adjusted EBITDA is expected between $2.7 million and $3.2 million, a 12% to 14% margin, and non-GAAP net income between $1.9 million and $2.4 million, or $0.07 to $0.08 per share. For the full fiscal year 2026, adjusted EBITDA guidance is $10.4 million to $11.9 million, an 11% to 13% margin, and non-GAAP net income is $8.3 million to $9.8 million, or $0.29 to $0.34 per share. Weighted average shares are expected to be approximately 28.8 million for the second quarter and the full year. The company also provided revenue guidance for both periods.
Risks remain. eGain faces lengthy sales cycles and difficulty predicting the timing of sales. The company depends on a relatively small number of customers for a substantial portion of revenue. Competition in customer engagement software, including generative AI offerings, is intense. Rapid technological change, international operations, privacy and data protection laws, tariffs, cybersecurity threats, and reliance on third-party data centers could affect results. Revenue and operating results have fluctuated in the past and may continue to fluctuate. Foreign exchange rate fluctuations also affect reported revenue. The company's SaaS business model is subject to certain risks, and revenue recognition over time means downturns may not be immediately reflected. The company cannot accurately predict subscription renewal rates. Difficulties and delays in customer implementations could harm revenue and margins. The company relies on strategic and third-party distribution channels. Unplanned system interruptions or delays in service could impair cloud operations. Software errors could be costly. Service level agreements may increase costs or liabilities. The company may be unable to increase profitability of SaaS revenue or may experience customer attrition. The company depends on broad market acceptance of its applications and business model. It may be unable to respond to rapid technological change. It employs third-party technologies. Offshore product development and support may be difficult to manage. Cybersecurity breaches could harm the business. Privacy and data protection laws could expose the company to noncompliance risks. Changes in trade policies, including tariffs, could adversely impact the business.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $23.5M | $23.2M | +1.2% | $21.8M | +7.8% |
| Gross profit | $17.7M | $16.9M | +4.7% | $15.1M | +16.8% |
| Gross margin | 75.2% | 72.7% | +2.5 pp | 69.4% | +5.8 pp |
| Research & development | $7.3M | $7.0M | +5.1% | $7.4M | -1.4% |
| Sales & marketing | $4.0M | $4.6M | -13.2% | $4.8M | -15.4% |
| General & administrative | $3.5M | $2.0M | +72.3% | $2.4M | +43.3% |
| Total operating expenses | $14.8M | $13.6M | +8.9% | $14.6M | +1.5% |
| Operating income (loss) | $2.8M | $3.2M | -12.8% | $509.0K | +456.6% |
| Operating margin | 12.1% | 14.0% | -1.9 pp | 2.3% | +9.7 pp |
| Net income (loss) | $2.8M | $30.9M | -90.9% | $652.0K | +332.5% |
| Net margin | 12.0% | 132.8% | -120.8 pp | 3.0% | +9.0 pp |
| Diluted EPS | $0.10 | $1.08 | -$0.98 | $0.02 | +$0.08 |
Risks
eGain is investing in generative AI across its offerings and faces intense competition from larger vendors such as Microsoft, Oracle, Salesforce, ServiceNow, Genesys, LivePerson, NICE and Verint. The filing notes customers are still assessing their AI utilization strategy, making it difficult to estimate the impact of generative AI offerings on future revenue, and that reliance on third-party AI providers like OpenAI could be impaired if those partners face disruptions or restrict access.
As of September 30, 2025, approximately 64% of eGain's workforce was employed in India, with 48% of those allocated to research and development. The filing cites the U.S. administration's imposition of a 50% tariff on Indian goods effective August 27, 2025, which has strained U.S.-India relations and introduced significant uncertainties, alongside increased competition for skilled workers in India that has already raised compensation costs.
EMEA sales fell to 19% of revenue in the three months ended September 30, 2025, from 25% in the prior-year period, with EMEA revenue decreasing 15% to $4.5 million. The company remains exposed to foreign currency fluctuations, GDPR and emerging AI-related regulations, and geopolitical conflicts in the regions where it operates.
The sales cycle for eGain's products can be six months or more and varies substantially by customer, and the filing states that corporate decision-making and approval processes have become more complicated, further increasing the average sales cycle and in some cases preventing closure of sales believed likely to close. A large amount of quarterly business also tends to come in the last few weeks or days of each quarter.
eGain has in the past and expects in the future to derive a substantial portion of its revenue from sales to a relatively small number of customers, and the loss of any significant customer or a decline in business with one would materially and adversely affect financial condition and results of operations.
The filing cites a general tightening in credit markets, lower liquidity, increases in default and bankruptcy rates, and extreme volatility in credit, equity and fixed income markets, which have negatively affected and could continue to negatively affect the business. Curtailment in government or corporate spending could cause customers to delay, decrease or cancel purchases or fail to pay for previously purchased products and services.
eGain is subject to a growing number of privacy and AI regulations, including the GDPR, CCPA/CPRA, India's DPDP, the EU AI Act, the Digital Services Act and the Digital Operational Resilience Act. Cross-border data transfer mechanisms such as the EU-U.S. DPF remain subject to legal challenges, and the filing notes these developments have created uncertainty and increased the risk around international operations.
Growth depends on expanding the sales force and retaining sales and marketing personnel, and the filing warns that workforce reductions and turnover may limit the ability to develop product awareness and hinder adoption. The company also faces substantial competition for highly skilled personnel and increased compensation costs that may not be offset by improved productivity or higher sales.
SaaS KPIs
All quarters →Remaining Performance Obligations
Operating Cash Flow Margin
Current Remaining Performance Obligations
Adjusted EBITDA
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from EGAIN Corp's SEC filings for Q1 FY2026 (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 1, 2026.