EGAIN Corp 10-Q for FY2020 Q2

EGAIN Corp (EGAN)

10-Q 2020-02-10 For: 2019-12-31

Added on April 11, 2026

About this 10-Q

EGAIN Corp filed this 10-Q on February 10, 2020, covering the quarter ended December 31, 2019 (FY2020 Q2).

Headline figures

Quarter ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $18.16M; up 2.5% from $17.7M a year earlier
Net income: $1.97M; down 1.4% from net income of $2M a year earlier
Diluted EPS: $0.06; down 14.3% from $0.07 a year earlier

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Delaware		77-0466366
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1252 Borregas Avenue, Sunnyvale, CA		94089
(Address of principal executive offices)		(Zip Code)


Large Accelerated Filer	◻	Accelerated Filer	☒

Non-accelerated Filer	◻	Smaller Reporting Company	☒
		Emerging Growth Company	◻


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $0.001 par value	EGAN	The Nasdaq Stock Market LLC

		Page

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019	2
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2019 and 2018	3
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended December 31, 2019 and 2018	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended December 31, 2019 and 2018	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2019 and 2018	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	53
	Signatures	54


	December 31,		June 30,
	2019		2019
ASSETS
Current assets:
Cash and cash equivalents	$	40,314	$	31,860
Restricted cash		7		7
Accounts receivable, less allowance for doubtful accounts of $447 and $320 as of December 31, 2019 and June 30, 2019, respectively		14,204		20,411
Costs capitalized to obtain revenue contracts, net		858		740
Prepaid expenses		1,645		2,517
Other current assets		688		1,054
Total current assets		57,716		56,589
Property and equipment, net		528		525
Operating lease right-of-use assets (Note 6)		3,733		—
Costs capitalized to obtain revenue contracts, net of current portion		1,857		1,777
Intangible assets, net		160		294
Goodwill		13,186		13,186
Other assets		1,578		1,383
Total assets	$	78,758	$	73,754

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,357	$	4,173
Accrued compensation		4,835		5,480
Accrued liabilities		2,619		2,353
Operating lease liabilities (Note 6)		1,700		—
Deferred revenue		30,335		30,688
Total current liabilities		40,846		42,694
Deferred revenue, net of current portion		6,080		5,801
Operating lease liabilities, net of current portion (Note 6)		2,259		—
Other long-term liabilities		691		952
Total liabilities		49,876		49,447
Commitments and contingencies (Note 6 and 7)
Stockholders' equity:
Common stock, $0.001 par value - authorized: 50,000 shares; outstanding: 30,637 shares as of December 31, 2019 and 30,478 shares as of June 30, 2019		31		31
Additional paid-in capital		372,676		371,099
Notes receivable from stockholders		(89)		(88)
Accumulated other comprehensive loss		(1,650)		(1,459)
Accumulated deficit		(342,086)		(345,276)
Total stockholders' equity		28,882		24,307
Total liabilities and stockholders' equity	$	78,758	$	73,754


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Revenue:
Subscription	$	16,343	$	15,823	$	31,914	$	29,550
Professional services		1,812		1,881		3,430		3,855
Total revenue		18,155		17,704		35,344		33,405
Cost of revenue:
Cost of subscription		3,557		3,692		7,307		7,087
Cost of professional services		1,687		1,850		3,251		3,690
Total cost of revenue		5,244		5,542		10,558		10,777
Gross profit		12,911		12,162		24,786		22,628
Operating expenses:
Research and development		4,052		3,596		8,050		7,155
Sales and marketing		4,821		4,391		9,559		8,385
General and administrative		2,036		2,046		4,081		4,206
Total operating expenses		10,909		10,033		21,690		19,746
Income from operations		2,002		2,129		3,096		2,882
Interest income (expense), net		124		(139)		271		(329)
Other income (expense), net		(186)		(6)		(21)		11
Income before income tax (provision) benefit		1,940		1,984		3,346		2,564
Income tax (provision) benefit		33		16		(156)		40
Net income	$	1,973	$	2,000	$	3,190	$	2,604
Per share information:
Earnings per share:
Basic	$	0.06	$	0.07	$	0.10	$	0.09
Diluted	$	0.06	$	0.07	$	0.10	$	0.09
Weighted-average shares used in computation:
Basic		30,571		27,875		30,539		27,781
Diluted		31,880		29,420		31,858		29,687


	Three Months Ended December 31, 2019
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity (Deficit)
Balances as of September 30, 2019	30,536	$	31	$	371,665	$	(88)	$	(1,616)	$	(344,059)	$	25,933
Interest on stockholder notes	—		—		—		(1)		—		—		(1)
Issuance of common stock upon exercise of stock options	32		—		81		—		—		—		81
Issuance of common stock in connection with employee stock purchase plan	69		—		448		—		—		—		448
Stock-based compensation	—		—		482		—		—		—		482
Foreign currency translation adjustments	—		—		—		—		(34)		—		(34)
Net income	—		—		—		—		—		1,973		1,973
Balances as of December 31, 2019	30,637	$	31	$	372,676	$	(89)	$	(1,650)	$	(342,086)	$	28,882


	Three Months Ended December 31, 2018
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity (Deficit)
Balances as of September 30, 2018	27,868	$	28	$	346,801	$	(86)	$	(1,664)	$	(348,840)	$	(3,761)
Interest on stockholder notes	—		—		—		(1)		—		—		(1)
Issuance of common stock upon exercise of stock options	15		—		45		—		—		—		45
Stock-based compensation	—		—		336		—		—		—		336
Foreign currency translation adjustments	—		—		—		—		44		—		44
Net income	—		—		—		—		—		2,000		2,000
Balances as of December 31, 2018	27,883	$	28	$	347,182	$	(87)	$	(1,620)	$	(346,840)	$	(1,337)


	Six Months Ended December 31, 2019
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity (Deficit)
Balances as of June 30, 2019	30,478	$	31	$	371,099	$	(88)	$	(1,459)	$	(345,276)	$	24,307
Interest on stockholder notes	—		—		—		(1)		—		—		(1)
Issuance of common stock upon exercise of stock options	90		—		167		—		—		—		167
Issuance of common stock in connection with employee stock purchase plan	69		—		448		—		—		—		448
True up of issuance costs related to public offering	—		—		29		—		—		—		29
Stock-based compensation	—		—		933		—		—		—		933
Foreign currency translation adjustments	—		—		—		—		(191)		—		(191)
Net income	—		—		—		—		—		3,190		3,190
Balances as of December 31, 2019	30,637	$	31	$	372,676	$	(89)	$	(1,650)	$	(342,086)	$	28,882


	Six Months Ended December 31, 2018
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity (Deficit)
Balances as of June 30, 2018	27,667	$	28	$	346,222	$	(85)	$	(1,618)	$	(353,260)	$	(8,713)
Cumulative-effect adjustment upon the modified retrospective adoption of ASU No. 2016-16	—		—		—		—		—		3,816		3,816
Interest on stockholder notes	—		—		—		(2)		—		—		(2)
Issuance of common stock upon exercise of stock options	216		—		262		—		—		—		262
Stock-based compensation	—		—		698		—		—		—		698
Foreign currency translation adjustments	—		—		—		—		(2)		—		(2)
Net income	—		—		—		—		—		2,604		2,604
Balances as of December 31, 2018	27,883	$	28	$	347,182	$	(87)	$	(1,620)	$	(346,840)	$	(1,337)


	Balance at June 30, 2019		Adjustments due to ASC 842			Balance at July 1, 2019
Balance sheet captions:
Prepaid expenses		2,517		(114)	1		2,403
Total current assets		56,589		(114)	1		56,475
Operating lease right-of-use assets (Note 6)		—		4,494	1,2,3		4,494
Total assets		73,754		4,380	1,2,3		78,134
Accrued liabilities		2,353		(143)	3		2,210
Operating lease liabilities		—		1,653	4		1,653
Total current liabilities		42,694		1,510	3, 4		44,204
Operating lease liabilities, net of current portion		—		3,104	4		3,104
Other long-term liabilities		952		(234)	4		718
Total liabilities		49,447		4,380	3,4		53,827
Total liabilities and stockholders' equity		73,754		4,380	3,4		78,134


	Three and Six Months Ended
	December 31, 2019
Expected term (in years)		0.50
Volatility		64	%
Expected dividend		—
Risk-free interest rate		2.04	%
Estimated forfeiture rate		—


	Balance as of June 30, 2019 ($)		Additions ($)		Deductions ($)		Balance as of December 31, 2019 ($)
Contract liabilities:
Deferred revenue		30,688		34,654		(35,007)		30,335
Deferred revenue, net of current portion		5,801		279		—		6,080


	As of December 31, 2019
Assets:
Operating lease right-of-use assets	$	3,733
Liabilities:
Operating lease liabilities		1,700
Operating lease liabilities, net of current portion		2,259


	As of December 31, 2019
Weighted average remaining lease term (in years)		2.47
Weighted average discount rate		4.82	%


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Revenue:
North America	$	10,973	$	10,065	$	20,564	$	18,540
Europe, Middle East, & Africa		7,182		7,639		14,780		14,865
Total revenue	$	18,155	$	17,704	$	35,344	$	33,405
Income (loss) from operations:
North America	$	249	$	964	$	(635)	$	949
Europe, Middle East, & Africa		3,110		2,405		6,484		4,361
Asia Pacific		(1,357)		(1,240)		(2,753)		(2,428)
Income from operations	$	2,002	$	2,129	$	3,096	$	2,882


	December 31,		June 30,
	2019		2019
Long-lived Assets:
North America	$	2,676	$	206
Europe, Middle East, & Africa		847		112
Asia Pacific		738		207
Long-lived Assets	$	4,261	$	525


Fiscal Period:
Remaining six months of fiscal year 2020	$	924
Fiscal 2021		1,846
Fiscal 2022		1,139
Fiscal 2023		206
Fiscal 2024		69
Thereafter		—
Total minimum lease payments		4,184
Less: Imputed interest		(225)
Total	$	3,959


Intangible Asset	Gross Carrying Amount		Accumulated Amortization		Net Balance December 31, 2019		Life	Income Statement Category
Customer relationships - maintenance contracts	$	1,610	$	(1,450)	$	160	6	Cost of sales

Intangible Asset	Gross Carrying Amount		Accumulated Amortization		Net Balance June 30, 2019		Life	Income Statement Category
Customer relationships - maintenance contracts	$	1,610	$	(1,316)	$	294	6	Cost of sales


Year Ending June 30,
2020		134
2021		26
Total future amortization expense	$	160


Exhibits No.		Description of Exhibits

31.1		Rule 13a-15(e)/15d-15(e) Certification of Chief Executive Officer.

31.2		Rule 13a-15(e)/15d-15(e) Certification of Chief Financial Officer.

32.1*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 of Ashutosh Roy, Chief Executive Officer.

32.2*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 of Eric Smit, Chief Financial Officer.

101		Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019, (ii) Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2019 and 2018, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2019 and 2018, (iv) Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended December 31, 2019 and 2018 (v) Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2019 and 2018 and (vi) Notes to Condensed Consolidated Financial Statements.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document


Dated: February 10, 2020	eGain Corporation

	By	/s/ Eric N. Smit
		Eric N. Smit
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial and Accounting Officer)


Date: February 10, 2020

By:	/s/ Ashutosh Roy
	Ashutosh Roy
	Chief Executive Officer