Summary
eGain reported total revenue of $21.0 million for its fiscal 2025 third quarter, down 6.0% from $22.35 million in the prior-year quarter. Gross profit was $14.29 million, down 7.8% from $15.49 million, and gross margin was 68.0%, down 1.3 percentage points from 69.3%. Operating income was $27,000, down 97.1% from $938,000. Operating margin was 0.1%, down 4.1 percentage points from 4.2%. GAAP net income was $66,000, down 95.6% from $1.49 million. Diluted EPS was $0.00, down $0.05 from $0.05.
The nine-month picture was similarly soft. Revenue for the first nine months of fiscal 2025 was $65.20 million, down 7.3% from $70.34 million. Gross profit was $45.13 million, down 9.1% from $49.66 million. Operating income was $1.19 million, down 75.2% from $4.78 million. Net income was $1.39 million, down 77.9% from $6.27 million, and diluted EPS was $0.05, down $0.15 from $0.20.
Cash generation held up better than earnings in the quarter. Cash provided by operating activities was $2.21 million, up 26.4% from $1.75 million a year earlier. For the nine months, operating cash flow was $9.59 million, down 45.4% from $17.57 million. Capital expenditures were $104,000 in the quarter, up 642.9% from $14,000, and $352,000 for the nine months, up 136.2% from $149,000. Management attributed the nine-month drop in operating cash flow to the change in net income, stock-based compensation expense and the timing of collections. Backlog metrics slipped as well. Deferred revenue was $36.76 million at March 31, 2025, down 2.0% from $37.50 million a year earlier. Remaining performance obligations were $66.50 million, down 1.8% from $67.70 million.
The company is still pushing product and pipeline while the top line shrinks. eGain launched its AI Agent for Contact Center during the quarter, a solution that guides agents in real time using trusted knowledge and reasoning. Shortly after the quarter closed, it secured one of its largest expansion deals ever with a U.S. megabank. Gartner also recognized the company as an emerging leader in its Emerging Market Quadrant for Generative AI Technologies. For the fourth quarter of fiscal 2025, ending June 30, 2025, guidance calls for non-GAAP net income of $1.7 million to $2.2 million, or $0.06 to $0.08 per share. For the full fiscal year 2025, ending June 30, 2025, the company lowered its revenue guidance range and raised its GAAP net income guidance range, while lifting non-GAAP net income guidance to $5.1 million to $5.6 million, or $0.18 to $0.20 per share. Guidance assumes weighted average shares outstanding of about 27.8 million for the fourth quarter and 28.6 million for the full fiscal year.
The risk profile has not changed much. eGain leans on a relatively small number of customers for a substantial portion of revenue, so losing a large account would hurt. Lengthy sales cycles make the timing of deals hard to predict, and the softer deferred revenue and remaining performance obligations balances show that renewals and new contracts can slip between quarters. The market for customer engagement software and generative AI offerings is competitive, and the company has to keep pace with rapid technological change. It also depends on strategic and third-party distribution channels, carries foreign exchange and international operating exposure, and faces cybersecurity and data privacy risk. Management said a full valuation allowance on U.S. deferred tax assets remains in place. On capital allocation, eGain repurchased approximately 895,000 shares at an average cost of $5.61 per share, for a total of $5.0 million.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $21.0M | $22.4M | -6.2% | $22.4M | -6.0% |
| Gross profit | $14.3M | $15.7M | -9.1% | $15.5M | -7.8% |
| Gross margin | 68.0% | 70.2% | -2.2 pp | 69.3% | -1.3 pp |
| Research & development | $7.5M | $7.7M | -2.5% | $6.7M | +12.9% |
| Sales & marketing | $4.7M | $5.3M | -10.4% | $5.4M | -13.7% |
| General & administrative | $2.0M | $2.1M | -2.8% | $2.5M | -16.7% |
| Total operating expenses | $14.3M | $15.1M | -5.3% | $14.6M | -2.0% |
| Operating income (loss) | $27.0K | $650.0K | -95.8% | $938.0K | -97.1% |
| Operating margin | 0.1% | 2.9% | -2.8 pp | 4.2% | -4.1 pp |
| Net income (loss) | $66.0K | $671.0K | -90.2% | $1.5M | -95.6% |
| Net margin | 0.3% | 3.0% | -2.7 pp | 6.7% | -6.4 pp |
| Diluted EPS | $0.00 | $0.02 | -$0.02 | $0.05 | -$0.05 |
Risks
Global economic conditions, including tightening credit markets, lower liquidity, defaults, and volatility, have negatively affected and could continue to negatively affect eGain. Curtailment in government or corporate spending could cause customers to delay, decrease, or cancel purchases, or delay paying.
The customer engagement software market is intensely competitive, with direct rivals such as Genesys, LivePerson, NICE, and Verint, and larger software companies such as Microsoft, Oracle, Salesforce, and ServiceNow. eGain is investing in generative AI and expects significant development and operational costs, while customers are still assessing AI utilization, making future revenue and demand hard to estimate.
eGain's lengthy sales cycle can be six months or more and has further increased due to more complicated customer decision-making and approval processes, in some cases preventing closure of sales believed likely. This contributes to difficulty predicting the quarter in which expected sales occur and to revenue fluctuations.
eGain has in the past and expects in the future to derive a substantial portion of revenue from a relatively small number of customers. Loss of any significant customer or decline in business with one would materially and adversely affect financial condition and results of operations.
eGain cannot accurately predict subscription renewal rates, and some customers have elected not to renew, may renew fewer subscriptions, or may renew for shorter contract lengths. If renewals decline or customers reduce paying subscriptions, revenue will decline, and deferred revenue and RPO were down 2.0% and 1.8%, respectively, versus the prior-year quarter.
Most revenue each quarter comes from recognition of deferred revenue from agreements entered in previous quarters, so declines in new or renewed subscription and maintenance agreements in one quarter are largely felt in future quarters. eGain may be unable to adjust operating costs and capital expenditures quickly enough, and deferred revenue was down 2.0% versus the prior-year quarter.
Income from operations decreased 97.1% for the quarter ended March 31, 2025 and 75.2% for the nine months ended March 31, 2025, which MD&A attributes primarily to a reduction in gross margin. Gross margin decreased 1.3 percentage points for the quarter and 1.4 percentage points year to date.
eGain's systems and third-party data center facilities face evolving cyberattacks, and employees or contractors have introduced vulnerabilities in and enabled exploitation of its IT environments in the past. A successful breach could cause data loss, service interruptions, litigation, regulatory action, and customer attrition.
eGain is integrating AI into offerings developed internally or with OpenAI and anticipates significant growth, but flawed algorithms, biased datasets, harmful content, or lack of human oversight could cause products to malfunction. These issues could expose eGain to competitive harm, EU AI regulation, legal liability, and reputational damage.
As of March 31, 2025, approximately 43% of eGain's workforce was in India, with 49% of those employees allocated to research and development. Increased competition for skilled workers there has raised compensation costs, and research and development expense increased 13% for the quarter and 14% for the nine months ended March 31, 2025.
European and other privacy and data protection rules, including GDPR and the EU-U.S. Data Privacy Framework, remain subject to legal challenge and possible suspension, amendment, or repeal, creating uncertainty and compliance costs. eGain may need additional contractual and technical safeguards, and customers may hesitate to use its services.
U.S. trade policy changes, including increased tariffs and retaliatory actions, are dynamic and uncertain. Higher tariffs or trade restrictions could increase costs for eGain's customers, vendors, partners, and suppliers, reduce demand, pressure margins, and adversely affect financial condition.
SaaS KPIs
All quarters →Remaining Performance Obligations
SaaS Revenue
Operating Cash Flow Margin
Adjusted EBITDA
Non-GAAP Income from Operations
Remaining Performance Obligations (beyond one year)
Remaining Performance Obligations (within one year)
Summary, forecast, risks and KPIs are extracted from EGAIN Corp's SEC filings for Q3 FY2025 (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.