Summary
eGain reported fiscal 2026 second-quarter revenue of $22.98 million, up 2.6% from the prior-year quarter. Year-to-date revenue was $46.49 million, up 5.2%. Gross profit was $16.81 million in the quarter, up 7.0%, and $34.48 million year to date, up 11.8%. Gross margin was 73.1%, up 3.0 percentage points from the prior-year quarter, and 74.2% year to date, up 4.4 percentage points. The revenue mix continued to tilt toward SaaS, and professional services revenue declined.
Operating income was $2.05 million in the quarter, up 214.8%, and $4.88 million year to date, up 321.0%. Operating margin was 8.9%, up 6.0 percentage points, and 10.5% year to date, up 7.9 percentage points. Net income was $2.34 million, up 248.1%, and $5.16 million year to date, up 289.7%. Diluted EPS was $0.08, up 300.0%, and $0.19 year to date, up 280.0%. Management attributed the operating improvement mainly to the higher gross margin.
Cash generation improved. Operating cash flow was $10.11 million in the quarter, up 57.3%, and $20.54 million year to date, up 178.4%. Capital expenditures were $0.23 million in the quarter, up 68.3%, and $0.46 million year to date, up 84.7%. Deferred revenue was $44.45 million, up 10.1% from the prior-year quarter. Remaining performance obligations were $84.9 million, up 15.4%. The company said it expects to recognize $53.0 million of that within one year and $31.9 million beyond one year.
Non-GAAP results also improved. Non-GAAP operating income was $2.7 million, compared to $1.3 million in the prior-year quarter. Non-GAAP net income was $3.0 million, or $0.11 per share, compared to $1.3 million, or $0.04 per share, in the prior-year quarter. Adjusted EBITDA was $3.3 million, a 14% margin, compared to $1.6 million, a 7% margin, in the prior-year quarter. Non-GAAP gross margin was 74%, up from 71% in the prior-year quarter.
Operational momentum centered on the AI Knowledge Hub. AI Knowledge Hub annual recurring revenue grew 27% year over year to $48.4 million, contributing 64% of total SaaS annual recurring revenue. eGain added Achmea, a European insurance and financial services group, which selected eGain to support 21,000 users across its contact center and enterprise teams.
Guidance for the third quarter of fiscal 2026 calls for non-GAAP net income of $1.8 million to $2.3 million, or $0.06 to $0.08 per share, and adjusted EBITDA of $2.6 million to $3.1 million, a 12% to 14% margin. For the full fiscal year 2026, eGain expects non-GAAP net income of $8.8 million to $10.3 million, or $0.31 to $0.36 per share, and adjusted EBITDA of $10.9 million to $12.4 million, a 12% to 13% margin.
Risks remain familiar. The company cites lengthy sales cycles and difficulty predicting the timing of sales or delays. It depends on a relatively small number of customers for a substantial portion of revenue. The market for customer engagement software, including generative AI offerings, is competitive, and rapid technological change could pressure the business. eGain also points to reliance on third-party data centers and a third-party Platform-as-a-Service provider, cybersecurity and privacy regulation including GDPR, foreign exchange fluctuations, tariffs, and international operations. Revenue and operating results have fluctuated in the past and are likely to fluctuate in the future. Because eGain recognizes subscription revenue over time, downturns in revenue may not be immediately reflected in operating results.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $23.0M | $23.5M | -2.3% | $22.4M | +2.6% |
| Gross profit | $16.8M | $17.7M | -4.9% | $15.7M | +7.0% |
| Gross margin | 73.1% | 75.2% | -2.1 pp | 70.2% | +3.0 pp |
| Research & development | $7.3M | $7.3M | -0.5% | $7.7M | -5.6% |
| Sales & marketing | $5.2M | $4.0M | +28.4% | $5.3M | -1.5% |
| General & administrative | $2.3M | $3.5M | -34.0% | $2.1M | +10.0% |
| Total operating expenses | $14.8M | $14.8M | -0.6% | $15.1M | -2.0% |
| Operating income (loss) | $2.0M | $2.8M | -27.8% | $650.0K | +214.8% |
| Operating margin | 8.9% | 12.1% | -3.2 pp | 2.9% | +6.0 pp |
| Net income (loss) | $2.3M | $2.8M | -17.2% | $671.0K | +248.1% |
| Net margin | 10.2% | 12.0% | -1.8 pp | 3.0% | +7.2 pp |
| Diluted EPS | $0.08 | $0.10 | -$0.02 | $0.02 | +$0.06 |
Risks
eGain is integrating generative AI across its offerings while competing with larger vendors such as Microsoft, Oracle, Salesforce, and ServiceNow. The filing says customers are assessing AI utilization strategies, creating uncertainty about future revenue and possible displacement of existing offerings, and AI development will require significant costs that could pressure margins.
As of December 31, 2025, approximately 44% of eGain's workforce was in India, with 61% of those employees in R&D. The filing cites the U.S. administration's 50% tariff on Indian goods effective August 27, 2025, strained U.S.-India relations, and increased competition for skilled workers that has already raised compensation costs.
The sales cycle for eGain's products can be six months or more, and corporate decision-making has become more complicated. The filing says this has caused the average sales cycle to further increase and in some cases prevented closure of sales that were believed likely to close.
eGain has derived and expects to continue deriving a substantial portion of revenue from a relatively small number of customers. The loss of any significant customer or a decline in business with one would materially and adversely affect financial condition and results of operations.
EMEA sales were 20% of total revenue in the three months ended December 31, 2025 versus 23% in the prior-year period, and 20% year to date versus 24% prior-year. MD&A reports EMEA revenue decreased 9% in the quarter and 12% year to date, exposing eGain to regional economic, privacy, trade, and geopolitical risks.
eGain faces growing U.S. and international privacy and AI regulation, including GDPR, CCPA/CPRA, India's DPDP, the EU AI Act, and EU digital regulations. The filing says these can increase compliance costs, lead to fines or liability, and limit use or adoption of its solutions.
The filing cites general tightening in credit markets, lower liquidity, higher default and bankruptcy rates, and volatility in credit, equity, and fixed income markets. It warns that weakening corporate confidence or curtailment in government or corporate spending could cause customers to delay, decrease, or cancel purchases.
Because eGain recognizes subscription revenue over time, most revenue each quarter comes from deferred revenue signed in prior quarters. Declines in new or renewed subscription agreements may not be immediately reflected and could be felt in future quarters, while operating costs may be difficult to adjust.
The filing says security incidents are increasingly prevalent and techniques are evolving; employees or contractors have introduced vulnerabilities in eGain's IT environments in the past and may do so again. A successful breach could cause customer attrition, litigation, regulatory fines, and reputational harm.
MD&A reports professional services revenue decreased 23% in the quarter and 21% year to date. The risk factors note that implementation difficulties, customization, or delayed customer deployments can delay revenue recognition and increase costs.
SaaS KPIs
All quarters →Remaining Performance Obligations
Current Remaining Performance Obligations
Summary, forecast, risks and KPIs are extracted from EGAIN Corp's SEC filings for Q2 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.