EGAIN Corp 10-Q for FY2020 Q3

EGAIN Corp (EGAN)

10-Q 2020-05-11 For: 2020-03-31

Added on April 11, 2026

About this 10-Q

EGAIN Corp filed this 10-Q on May 11, 2020, covering the quarter ended March 31, 2020 (FY2020 Q3).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $18.35M; up 7.9% from $17M a year earlier
Net income: $1.87M; up 33.5% from net income of $1.4M a year earlier
Diluted EPS: $0.06; up 20.0% from $0.05 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 March 31, 2020 and June 30, 2019	2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2020 and 2019	3
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended March 31, 2020 and 2019	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2020 and 2019	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	36
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION	38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 6.	Exhibits	55
	Signatures	56


	March 31,		June 30,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	40,658	$	31,860
Restricted cash		6		7
Accounts receivable, less allowance for doubtful accounts of $429 and $320 as of March 31, 2020 and June 30, 2019, respectively		13,369		20,411
Costs capitalized to obtain revenue contracts, net		919		740
Prepaid expenses		1,822		2,517
Other current assets		585		1,054
Total current assets		57,359		56,589
Property and equipment, net		629		525
Operating lease right-of-use assets (Note 6)		3,363		—
Costs capitalized to obtain revenue contracts, net of current portion		1,976		1,777
Intangible assets, net		93		294
Goodwill		13,186		13,186
Other assets		1,369		1,383
Total assets	$	77,975	$	73,754

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,797	$	4,173
Accrued compensation		6,191		5,480
Accrued liabilities		3,067		2,353
Operating lease liabilities (Note 6)		1,726		—
Deferred revenue		25,960		30,688
Total current liabilities		38,741		42,694
Deferred revenue, net of current portion		5,261		5,801
Operating lease liabilities, net of current portion (Note 6)		1,837		—
Other long-term liabilities		668		952
Total liabilities		46,507		49,447
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock, $0.001 par value - authorized: 50,000 shares; outstanding: 30,689 shares as of March 31, 2020 and 30,478 shares as of June 30, 2019		31		31
Additional paid-in capital		373,303		371,099
Notes receivable from stockholders		(89)		(88)
Accumulated other comprehensive loss		(1,558)		(1,459)
Accumulated deficit		(340,219)		(345,276)
Total stockholders' equity		31,468		24,307
Total liabilities and stockholders' equity	$	77,975	$	73,754


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2020		2019		2020		2019
Revenue:
Subscription	$	16,919	$	15,318	$	48,834	$	44,868
Professional services		1,435		1,686		4,865		5,540
Total revenue		18,354		17,004		53,699		50,408
Cost of revenue:
Cost of subscription		3,739		3,625		11,046		10,711
Cost of professional services		1,761		1,672		5,012		5,362
Total cost of revenue		5,500		5,297		16,058		16,073
Gross profit		12,854		11,707		37,641		34,335
Operating expenses:
Research and development		4,205		3,622		12,255		10,777
Sales and marketing		5,064		4,320		14,622		12,706
General and administrative		1,828		1,976		5,911		6,180
Total operating expenses		11,097		9,918		32,788		29,663
Income from operations		1,757		1,789		4,853		4,672
Interest income (expense), net		113		(120)		384		(449)
Other income (expense), net		65		(199)		44		(189)
Income before income tax provision		1,935		1,470		5,281		4,034
Income tax provision		(68)		(72)		(224)		(32)
Net income	$	1,867	$	1,398	$	5,057	$	4,002
Per share information:
Earnings per share:
Basic	$	0.06	$	0.05	$	0.17	$	0.14
Diluted	$	0.06	$	0.05	$	0.16	$	0.13
Weighted-average shares used in computation:
Basic		30,662		28,426		30,580		27,993
Diluted		31,987		30,229		31,935		29,909


	Three Months Ended March 31, 2020
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity
Balances as of December 31, 2019	30,637	$	31	$	372,676	$	(89)	$	(1,650)	$	(342,086)	$	28,882
Issuance of common stock upon exercise of stock options	52		—		167		—		—		—		167
Stock-based compensation	—		—		460		—		—		—		460
Foreign currency translation adjustments	—		—		—		—		92		—		92
Net income	—		—		—		—		—		1,867		1,867
Balances as of March 31, 2020	30,689	$	31	$	373,303	$	(89)	$	(1,558)	$	(340,219)	$	31,468


	Three Months Ended March 31, 2019
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity
Balances as of December 31, 2018	27,883	$	28	$	347,182	$	(87)	$	(1,620)	$	(346,840)	$	(1,337)
Issuance of common stock upon exercise of stock options	276		—		713		—		—		—		713
Issuance of common stock from public offering, net of issuance costs	2,000		2		20,205		—		—		—		20,207	*
Stock-based compensation	—		—		499		—		—		—		499
Foreign currency translation adjustments	—		—		—		—		36		—		36
Net income	—		—		—		—		—		1,398		1,398
Balances as of March 31, 2019	30,159	$	30	$	368,599	$	(87)	$	(1,584)	$	(345,442)	$	21,516


	Nine Months Ended March 31, 2020
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity
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	142		—		334		—		—		—		334
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	—		—		1,393		—		—		—		1,393
Foreign currency translation adjustments	—		—		—		—		(99)		—		(99)
Net income	—		—		—		—		—		5,057		5,057
Balances as of March 31, 2020	30,689	$	31	$	373,303	$	(89)	$	(1,558)	$	(340,219)	$	31,468


	Nine Months Ended March 31, 2019
	Common Stock			Additional Paid-in		Notes Receivable From		Accumulated Other Comprehensive		Accumulated		Total Stockholders'
	Shares	Amount		Capital		Stockholders		Income (Loss)		Deficit		Equity
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	492		—		975		—		—		—		975
Issuance of common stock from public offering, net of issuance costs	2,000		2		20,205		—		—		—		20,207	*
Stock-based compensation	—		—		1,197		—		—		—		1,197
Foreign currency translation adjustments	—		—		—		—		34		—		34
Net income	—		—		—		—		—		4,002		4,002
Balances as of March 31, 2019	30,159	$	30	$	368,599	$	(87)	$	(1,584)	$	(345,442)	$	21,516


	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 (Note 6)		—		1,653	4		1,653
Total current liabilities		42,694		1,510	3, 4		44,204
Operating lease liabilities, net of current portion (Note 6)		—		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 Nine Months Ended
	March 31, 2020
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 ($)		Balance as of March 31, 2020 ($)
Contract liabilities:
Deferred revenue		30,688		48,755		(53,483)		25,960
Deferred revenue, net of current portion		5,801		—		(540)		5,261


	As of March 31, 2020
Assets:
Operating lease right-of-use assets	$	3,363
Liabilities:
Operating lease liabilities		1,726
Operating lease liabilities, net of current portion		1,837


	As of March 31, 2020
Weighted average remaining lease term (in years)		2.23
Weighted average discount rate		4.82	%


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2020		2019		2020		2019
Revenue:
North America	$	11,485	$	9,669	$	32,049	$	28,209
Europe, Middle East, & Africa		6,869		7,335		21,650		22,199
Total revenue	$	18,354	$	17,004	$	53,699	$	50,408
Income from operations:
North America	$	167	$	1,270	$	(468)	$	2,219
Europe, Middle East, & Africa		2,952		1,740		9,436		6,101
Asia Pacific		(1,362)		(1,221)		(4,115)		(3,648)
Income from operations	$	1,757	$	1,789	$	4,853	$	4,672


	March 31,		June 30,
	2020		2019
Long-lived Assets:
North America	$	2,611	$	206
Europe, Middle East, & Africa		756		112
Asia Pacific		625		207
Long-lived Assets	$	3,992	$	525


Fiscal Period:
Remaining three months of fiscal year 2020	$	460
Fiscal 2021		1,861
Fiscal 2022		1,165
Fiscal 2023		194
Fiscal 2024		65
Thereafter		—
Total minimum lease payments		3,745
Less: Imputed interest		(182)
Total	$	3,563


Intangible Asset	Gross Carrying Amount		Accumulated Amortization		Net Balance March 31, 2020		Life	Income Statement Category
Customer relationships - maintenance contracts	$	1,610	$	(1,517)	$	93	6	Cost of revenue

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 revenue


Year Ending June 30,
2020		67
2021		26
Total future amortization expense	$	93


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 March 31, 2020 and June 30, 2019, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2020 and 2019, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2020 and 2019, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2020 and 2019, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and 2019 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: May 11, 2020	eGain Corporation

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


Date: May 11, 2020

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