eGain Corporation Q4 FY2025 earnings call

• Business highlights: Signed large clients like a NJ non-healthcare network with 18 hospitals, a major credit union, and a global workforce services leader. Partnership with JPMorgan Chase, including issuing warrants and a board observer. Sunsetting of non-core messaging products in fiscal 2026. R&D spend to grow ~6% year over year in fiscal 2026. Upcoming eGain Solve customer events in Chicago and London.
• Financials: Q4 2025 GAAP net income was $30.9 million or $1.13 per share basic. Adjusted EBITDA margin for Q4 was 19%. Full year 2025 R&D spend up 15% year over year. Share repurchase program increased to $60 million.

For the fourth quarter of fiscal 2025, total revenue was $23.2 million, up 11% sequentially and 3% year over year. This was the first year-over-year revenue increase in eight quarters. Full year 2025 total revenue was $88.4 million, down 5% year over year, primarily due to churn in the messaging business. SaaS revenue accounted for 93% of total revenue in fiscal 2025. Non-GAAP gross margin for Q4 2025 was 73%, with SaaS gross margin at 80%. For the full year, SaaS gross margin was 78%, up from 77% in fiscal 2024. AI knowledge SaaS ARR grew 25% year over year.

• FY2026 total revenue expected between $23 million to $23.5 million. Q1 2026 GAAP net income expected $0.9 million to $1.6 million. Full year FY2026 revenue expected $90.5 million to $92 million. Non-GAAP net income expected $8.3 million to $9.8 million. Adjusted EBITDA expected $10.4 million to $11.9 million. ARR from core AI knowledge expected to grow 20% plus.

• Risks associated with forward-looking statements and market uncertainties affecting AI ROI. Impact on revenue from sunsetting of non-core messaging products. Execution risks in product development and partnerships.

Q: Curious about the timing on the sunsetting of the messaging products and pacing of the headwind versus offset from other sides.

A: Ashu Roy mentioned focus on AI knowledge will have bigger ROI, Eric Smith said impact to begin in Q2 with run rate reduction by ~50% and go to zero by 2026.

Q: On JPMorgan side, thoughts on structures and warrant compensation.

A: Ashu Roy stated JPMorgan is a great client and design partner, strengthening the relationship to get an unfair advantage in financial services vertical.

Q: On AI-type solutions betas and conversion to paid deals.

A: Ashu Roy said AI pilot to conversion to deal rate is improving, with two out of three conversions now.

Q: On P&L, OpEx, COGS one-off vs sustainable nature.

A: Ashu Roy mentioned migration to new cloud architecture and automation of cloud operations as sustainable COGS improvements.

Q: On ARR breakdown, conversation hub, pipeline, and service margins.

A: Eric Smith said ARR from AI knowledge is ~60% of total, Ashu Roy was optimistic about conversation hub with AI knowledge growth, and Eric Smith said goal to get service margins closer to breakeven or slightly positive.