EGAIN Corp Q2 FY2025 earnings call

• Closed new enterprise logos for AI knowledge hub offering, including a major US airline, a leading interactive entertainment company, and a global money transfer company.
• Knowledge centralization in enterprises is a continuing trend, relevant to AI projects. Knowledge management projects are adding enterprise-facing use cases, but bigger deals take more time to close.
• Successful eGain Solve 2024 event in Chicago, with clients sharing success stories about AI capabilities. Announced eGain AI Agent, an omnichannel conversational product, with strong customer interest. On track to launch in current quarter.
• Adjusted PS revenue targets for fiscal 2025 by approximately $2 million due to product improvements leading to faster deployment and quicker time to value for clients.

Total revenue for the second quarter was $22.4 million, down 6% year over year. SaaS revenue accounted for 93% of total revenue. AI knowledge hub ARR increased 17% year over year. SaaS ARR for AI knowledge customers was 55% of total SaaS ARR at the end of the quarter, up from 46% a year ago. LTM dollar-based SaaS net retention for AI knowledge customers was 99%, while net retention for all customers was 89%. LTM dollar-based SaaS net expansion rate was 104% for AI knowledge customers and 105% for all customers.

• Fiscal 2025 full year total revenue guidance lowered to $88.5 million to $90 million from $92 million to $93 million. SaaS revenue expected to be approximately 93%.
• Non-GAAP net income guidance lowered to $4.1 million to $4.7 million or $0.14 to $0.16 per share from $5 million to $6 million or $0.17 to $0.20 per share.
• GAAP net income guidance raised to $1.1 million to $1.7 million or $0.04 to $0.06 per share from breakeven to $1 million or $0.00 to $0.03 per share.
• Third quarter 2025 total revenue expected to be between $21 million to $21.5 million. Q3 GAAP net loss expected to be $300,000 to $800,000 or $0.01 to $0.03 per share, non-GAAP net income expected to be breakeven to $500,000 or $0.02 per share.

• Bigger deals in the sales pipeline face increased review cycles and extended timelines for final decisions and implementation, leading to longer sales cycles.

Q: Talk about the evolution of professional services reduction and staffing adjustments.

A: Primary driver is product improvements to reduce custom integration effort and build out out-of-the-box templates. Also developing partnerships for third-party implementations. Resources can be reallocated or reduced to align with revised numbers.

Q: Talk about the US Airline deal, operating environment, what was displaced, and competitive landscape.

A: They had multiple knowledge systems including a legacy solution, CRM platform with knowledge capability, and SharePoint. It was a replacement and consolidation play, details of competitive landscape not gone into in depth but it was a win over existing setups