eGain Q3 Earnings Call Highlights
eGain (NASDAQ:EGAN) reported fiscal third-quarter revenue growth and stronger profitability, while management said demand for its AI Knowledge offerings is increasing as enterprises look to improve the data and content foundations behind artificial intelligence projects.
Chief Executive Officer Ashu Roy said the company delivered “a strong third quarter with continued momentum” in its AI Knowledge business, citing customer expansion, partner engagement and new product introductions. He said year-to-date AI Knowledge annual recurring revenue, or ARR, grew 26%, while operating cash flow totaled $18.7 million through the first nine months of the fiscal year, representing a 27% margin.
“Knowledge management, we see, is being increasingly seen as a core AI infrastructure, a must-have, not a nice-to-have,” Roy said.
Revenue Rises 7% as SaaS Remains Core of Business
Chief Financial Officer Eric Smit said total revenue for the fiscal third quarter was $22.5 million, up 7% from a year earlier. SaaS revenue also grew 7% year-over-year and represented 93% of total revenue.
Smit said revenue growth would have been higher excluding the impact of non-core messaging products the company is sunsetting. On that basis, total revenue would have increased 13% year-over-year, while SaaS revenue would have grown 14%. He also noted that revenue was affected by about $450,000 because the quarter had two fewer days than the prior quarter.
Non-GAAP total gross margin was 74%, up from 69% in the year-ago period. SaaS gross margin was 78%, up 100 basis points year-over-year. Smit attributed the improvement to continued gains in SaaS margins and a greater mix of higher-margin SaaS revenue relative to professional services.
Non-GAAP operating costs were $13.9 million, up 1% year-over-year and down 3% sequentially. Smit said the company continues to streamline operations and benefit from automation and a shift toward a product-led sales model. Research and development expense rose 3% sequentially, reflecting investments in engineering talent and leadership.
Non-GAAP net income was $3.2 million, compared with $765,000 a year earlier. Adjusted EBITDA margin was 14%, at the high end of the company’s guidance range and up from 6% in the prior-year quarter.
AI Knowledge ARR Growth Highlights Business Shift
eGain said SaaS ARR for Knowledge customers increased 26% year-over-year, while SaaS ARR for all customers rose 7%. Excluding the non-core messaging products, SaaS ARR for all customers would have increased 11%.
Smit said one on-premise subscription customer in EMEA chose not to migrate to eGain’s cloud product suite and terminated its agreement. That reduced total SaaS ARR by about $1.6 million, including roughly $900,000 related to AI Knowledge. He described the event as a one-off, tied to restrictions in the customer’s country of origin on the use of cloud-based services.
Customer retention metrics improved. Last-12-months dollar-based SaaS net retention for Knowledge customers was 116%, up from 97% a year ago. Net retention for all customers was 101%, up from 88%. The company reported a SaaS net expansion rate of 120% for Knowledge customers and 107% for all customers.
Total remaining performance obligations increased 11% year-over-year, and short-term RPO was $48.5 million, up 9%.
Management Cites RFP Surge and Customer Expansions
Roy said eGain has seen a meaningful increase in U.S. request-for-proposal activity over the past 60 days, much of it from Fortune 1,000 banking, insurance and healthcare enterprises. He said those RFPs generally focus on AI readiness of knowledge, open architecture for APIs and MCPs, and integration into customer service and customer experience technology stacks.
During the question-and-answer portion of the call, Roy said the number of RFPs the company responded to in the last 60 days was “probably about double” its average 60-day rate. He said most of those processes likely involve a two- to four-month decision timeline.
Roy also said partner-sourced opportunities were up 67% year-to-date.
Management highlighted several customer expansion examples, including:
- A top 10 U.S. insurance company, which expanded from about 3,000 licenses in one business unit to an additional 5,600 licenses in another major business unit.
- A top 10 global airline, which added licenses to support growth in its customer care department.
- A European financial services conglomerate, which is expanding use of eGain beyond customer service and contact centers into self-service options across additional touchpoints.
- A global engineering services company, which initially deployed eGain for field service knowledge and is now expanding to contact centers and partners.
Roy said these examples show a pattern in which eGain often enters through a customer service or contact center use case and then expands into a centralized enterprise knowledge platform for both AI and human users.
New Products Target Banking, Contact Centers and AI Workflows
During the quarter, eGain introduced several products and integrations, including the eGain AI Knowledge Suite for Retail Banking, which Roy said is designed for banks and credit unions to unify knowledge and support AI-driven service and guided selling.
The company also introduced an AI Agent for Cisco Webex Contact Center, connectors for Microsoft Teams, Slack and Zoom Team Chat, and enterprise AI connectors to agentic development environments including Copilot, Claude, Gemini and Cursor.
Roy said the connectors allow developers to use trusted knowledge managed in the eGain platform through APIs and MCP protocols from their preferred development environments.
At the company’s Solve 26 event in London, eGain announced additional products intended to help customers consume knowledge in agentic workflows, evaluate AI Knowledge pipelines and bring conversational self-service to the voice channel. The company also announced AI Agent for Salesforce v2, which Roy described as a pluggable solution for Salesforce Service Cloud.
Guidance Calls for Full-Year Revenue Growth
For the fiscal fourth quarter, eGain expects total revenue of $21.5 million to $22 million. The company forecast GAAP results ranging from a net loss of $300,000 to net income of $400,000, or a loss of $0.01 per share to earnings of $0.01 per share, including about $900,000 of stock-based compensation expense.
For the full fiscal year ending June 30, 2026, eGain expects total revenue of $90.5 million to $91 million, which Smit said would represent a return to growth for the year. The company forecast GAAP net income of $7 million to $7.8 million, or $0.25 to $0.28 per share, including approximately $2.9 million of stock-based compensation expense and about $1.4 million of warrant expense.
Non-GAAP net income is expected to range from $11.3 million to $12.1 million, or $0.39 to $0.42 per share. Adjusted EBITDA is expected to be $11.9 million to $12.4 million, representing a margin of about 13%.
eGain ended the quarter with $80.5 million in cash, up from $62.9 million at the end of fiscal 2025, and no debt. Smit said the company remains focused on core execution, while also considering opportunistic uses of cash, including potential inorganic customer acquisition and its share repurchase program, which has about $20 million available.
About eGain (NASDAQ:EGAN)
eGain Incorporated (NASDAQ: EGAN) is a software company specializing in cloud-based customer engagement solutions. Its platform integrates knowledge management, analytics, and artificial intelligence to help organizations streamline customer service across digital channels. By centralizing information and automating routine interactions, eGain aims to improve agent productivity, reduce response times, and deliver consistent customer experiences.
The company's product suite includes tools for knowledge authoring and delivery, AI-powered chatbots, case management, and predictive analytics.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
Source MarketBeat
