eGain (EGAN) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 total revenue was $21.8 million, down 10% year-over-year, mainly due to two large client losses in the conversation and analytics segment, but AI Knowledge Hub ARR grew 16% year-over-year, reflecting positive business momentum and expansion into new enterprise functions and industries.

• Profitability exceeded consensus estimates, with net income for the quarter at $652,000 and non-GAAP net income at $1.3 million, though both declined from the prior year.

• Major brands across financial services, healthcare, retail, telecom, and government sectors use the AI Knowledge Hub, with notable success stories and strong client testimonials.

• Continued investment in AI product innovation and client partnerships, with new AI agent expected to go GA in Q1 calendar 2025.

• Hosted Solve 24 event, highlighting client success stories and product innovation in AI and knowledge management.

Financial highlights

• Q1 total revenue was $21.8 million, with SaaS revenue at $19.8 million (91% of total, down 11% year-over-year) and professional services revenue at $2.0 million (up 7%).

• Non-GAAP gross profit was $15.4 million, with a gross margin of 70% (down from 73% a year ago); GAAP gross margin was 69%.

• Non-GAAP net income was $1.3 million ($0.04 per share), and GAAP net income was $652,000 ($0.02 per share), both down from the prior year.

• Adjusted EBITDA margin was 6%, down from 12% in the prior year; adjusted EBITDA was $1.4 million.

• Cash and cash equivalents totaled $67.2 million at quarter end, with no significant debt.

Outlook and guidance

• Q2 revenue expected between $22.2 million and $22.6 million; GAAP net loss forecasted at $400,000–$900,000; non-GAAP net income expected to be break-even to $500,000.

• Fiscal 2025 revenue guidance reiterated at $92–$93 million, with SaaS revenue projected to be 90% of total; non-GAAP net income expected at $5–$6 million ($0.17–$0.20 per share).

• Management expects continued volatility in revenue and operating results due to customer concentration, competitive pressures, and macroeconomic factors.

• Remaining performance obligations were $70.4 million, with $54.5 million expected to be recognized as revenue within one year.

• The company believes existing capital resources are sufficient for at least the next 12 months.