Summary
eGain reported record revenue for its fiscal 2022 second quarter ended December 31, 2021. Total revenue was $23.1 million, up 20.1% from the prior-year quarter. SaaS revenue rose 26% to $20.5 million and accounted for 88% of the total. Legacy revenue, the maintenance and support fees tied to perpetual licenses the company no longer sells, fell 44% to $855,000 as customers move to the cloud model. Professional services revenue rose 16% to $1.8 million. North America revenue climbed 27% to $16.8 million, while international revenue grew 4% to $6.3 million. For the first six months of fiscal 2022, total revenue was $44.5 million, up 16.3% year over year.
Profitability moved the other way. Gross profit rose 17.0% to $17.0 million, but gross margin slipped to 73.6% from 75.5% in the prior-year quarter. The operating result swung to a loss of $630,000 after operating income a year earlier, and the operating margin was -2.7%, down from the prior-year quarter. The quarter's net loss was $826,000, and diluted loss per share was $0.03. Expenses drove the swing. Stock-based compensation reached $3.8 million, research and development expense rose 37% to $6.2 million, sales and marketing rose 30% to $8.2 million, and general and administrative rose 77% to $3.3 million. Non-GAAP net income, which excludes stock-based compensation and amortization of acquired intangibles, was $3.0 million, or $0.10 per diluted share.
Cash generation softened. Operating cash flow was negative $2.49 million for the quarter, against positive operating cash flow a year earlier. For the first six months of fiscal 2022, operating cash flow was $4.68 million, down 21.3% from the prior-year period. Capital expenditures were $145,000, down from the prior-year quarter. Cash and cash equivalents totaled $68.5 million, up from $54.2 million a year earlier. Deferred revenue was $39.01 million, up 15.7%, and remaining performance obligations were $89.8 million, up 32.4%. Management expects to recognize $58.7 million of that balance within one year and $31.1 million beyond one year.
Guidance points to continued top-line growth and deeper losses. For the fiscal 2022 third quarter ending March 31, 2022, eGain expects revenue growth of 16% to 19% year over year along with a GAAP net loss, and non-GAAP results between breakeven and a small loss. For the full fiscal year 2022 ending June 30, 2022, the company raised its revenue guidance range and now points to growth of 16% to 18% year over year. The full-year GAAP outlook is for a net loss, while non-GAAP net income is expected to stay positive.
The quarter carried familiar risks. eGain depends on a relatively small number of customers for a substantial portion of revenue, and lengthy sales cycles make the timing of deals hard to predict. Management also flagged the COVID-19 pandemic, foreign currency swings, intense competition in customer engagement software, and reliance on third-party data centers. Foreign exchange added $121,000 to total revenue in the quarter. The shift away from perpetual licenses keeps pressuring legacy revenue, which management expects to keep declining. The company also cited risks from new product releases, its reliance on third-party distribution channels, and regulatory changes around data privacy and cross-border data transfers.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $23.1M | $21.5M | +7.7% | $19.2M | +20.1% |
| Gross profit | $17.0M | $16.2M | +5.2% | $14.5M | +17.0% |
| Gross margin | 73.6% | 75.3% | -1.7 pp | 75.5% | -1.9 pp |
| Research & development | $6.2M | $5.6M | +10.3% | $4.5M | +37.2% |
| Sales & marketing | $8.2M | $7.4M | +10.1% | $6.3M | +30.1% |
| General & administrative | $3.3M | $2.4M | +34.0% | $1.9M | +77.2% |
| Total operating expenses | $17.6M | $15.5M | +14.0% | $12.6M | +39.6% |
| Operating income (loss) | -$630.0K | $691.0K | -191.2% | $1.9M | -133.2% |
| Operating margin | -2.7% | 3.2% | -6.0 pp | 9.9% | -12.6 pp |
| Net income (loss) | -$826.0K | $551.0K | -249.9% | $1.6M | -151.4% |
| Net margin | -3.6% | 2.6% | -6.2 pp | 8.3% | -11.9 pp |
| Diluted EPS | -$0.03 | $0.02 | -$0.05 | $0.05 | -$0.08 |
Risks
Operating income swung to a loss of $0.63 million in FY2022 Q2, down 133.2% from operating income of $1.90 million in FY2021 Q2, even as revenue rose 20.1% to $23.09 million. MD&A points to higher operating expenses, including a 77% increase in general and administrative expense and a 37% increase in research and development expense, with stock-based compensation a major driver.
Stock-based compensation expense was $3.8 million in FY2022 Q2 and $5.9 million in FY2022 year to date, contributing to the operating loss despite SaaS revenue growth of 26% in the quarter. The MD&A notes that stock-based compensation drove increases across cost of professional services, research and development, sales and marketing, and general and administrative expenses.
eGain depends on a relatively small number of customers for a substantial portion of revenue, and the loss of any significant customer or a decline in business with one would materially and adversely affect financial condition and results. This risk is re-emphasized in the filing's summary risk factors.
Gross margin declined to 73.6% in FY2022 Q2 from 75.5% in FY2021 Q2, down 1.9 percentage points, as total cost of revenue rose 30%. Cost of professional services increased 76%, primarily from personnel-related costs including stock-based compensation.
Operating cash flow was negative $2.49 million in FY2022 Q2, down 1268.5% from positive $0.21 million in FY2021 Q2, and FY2022 year-to-date operating cash flow decreased 21.3% to $4.68 million. Although the company believes existing capital resources will fund at least 12 months, the quarterly cash burn may limit funding for product development or acquisitions.
The company warns that lengthy sales cycles for its complex customer engagement platform, often six months or more, make the timing of license and subscription revenue difficult to predict and can cause operating results to fluctuate significantly. MD&A and the summary risk factors re-emphasize difficulty in predicting sales timing.
The customer engagement software market is intensely competitive, with eGain naming Genesys, LivePerson, NICE, Verint, Microsoft, Oracle, salesforce.com, and ServiceNow as competitors. Many competitors have longer operating histories, larger customer bases, and greater financial resources, which could enable aggressive pricing and marketing.
International sales were 27% of revenue in FY2022 Q2, down from 32% in FY2021 Q2, and the company has significant operations in India, where 44% of its workforce is employed and competition for skilled workers has increased compensation costs. Foreign exchange fluctuations increased total revenue by $121,000 in the quarter, but these operations expose eGain to regulatory, political, and infrastructure risks.
Changes in European data protection regulations, including GDPR and the invalidation of the Privacy Shield framework, require eGain to rely on alternative transfer mechanisms such as standard contractual clauses and may require significant repapering. Noncompliance or customer reluctance could lead to enforcement actions, litigation, and substantial compliance costs.
Directors and executive officers beneficially owned approximately 31% of outstanding capital stock as of December 31, 2021, with CEO Ashutosh Roy owning approximately 27%. This concentration gives them significant control over stockholder votes and corporate transactions, which may conflict with other stockholders.
As eGain migrates remaining perpetual license clients to SaaS, legacy revenue declined 44% in FY2022 Q2 to $855,000, and the company expects it to continue to decline. The transition may cause revenue and margin variability and depends on successful migration and SaaS adoption.
SaaS KPIs
All quarters →Remaining Performance Obligations
SaaS Revenue
Total SaaS and Professional Services Revenue
Non-GAAP Income from Operations
Remaining Performance Obligations (beyond one year)
Remaining Performance Obligations (within one year)
Subscription non-GAAP gross margin
Total non-GAAP gross margin
Summary, forecast, risks and KPIs are extracted from EGAIN Corp's SEC filings for Q2 FY2022 (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.