EGain expects $90.5M–$92M revenue for FY 2026 as AI knowledge ARR grows 23%

Earnings Call Insights: eGain Corporation (EGAN) Q1 2026

MANAGEMENT VIEW

* CEO Ashutosh Roy opened by stating, "We are off to a good start to our fiscal year with strong first quarter results across the board and ahead of consensus. Our total revenue was up 8% year-over-year. Our SaaS revenue was up 10% year-over-year. And our AI knowledge line of product business, the ARR for it was up 23% year-over-year."
* Roy highlighted notable new wins, including "one of New York's largest health insurers" and a "multinational energy company"—both went live with eGain's AI knowledge solutions within 100 days. He described, "This combination of AI and knowledge is really working for our customers now, and we are seeing more and more of them starting to drive that expansion and build-out of agentic capabilities on top of a trusted knowledge infrastructure from us."
* Roy announced three major new product capabilities from the recent Solve 25 event: "the eGain AI knowledge method," which automates knowledge management; the second version of "eGain AI Agent," which enables hybrid AI with expert assurance; and "eGain Composer," a modular AI knowledge platform for developers with "extensive APIs and SDKs and connectors."
* Management introduced new leadership hires: "John Copeland, our new VP of Marketing" (formerly ServiceNow, Adobe, eBay), "Vikas Paliwal as our VP of Product Marketing" (formerly AWS AI), and "Gautam Garg... as the VP of Finance."
* CFO Eric Smit stated, "total revenue for the first quarter was $23.5 million, reaching the high end of our guidance and increasing 8% year-over-year," and "non-GAAP net income was $4.7 million or $0.17 per share up significantly from non-GAAP net income of $1.3 million or $0.04 per share in the year ago quarter."

OUTLOOK

* Smit provided guidance: "For the second quarter of fiscal 2026, we expect total revenue of between $22.3 million to $22.8 million." He noted the "sequential decline is primarily due to an approximate $600,000 reduction in revenue from our messaging platform business, which, as we had mentioned on our last call, we will be sunsetting over the next year."
* For the full fiscal year ended June 30, 2026, "we expect total revenue to be between $90.5 million and $92 million, representing a return to growth for the year."
* Non-GAAP net income for Q2 is expected to be "$1.9 million to $2.4 million or $0.07 to $0.08 per share and adjusted EBITDA of $2.7 million to $3.2 million or a margin of 12% to 14%."
* For the fiscal year, "non-GAAP net income of $8.3 million to $9.8 million or $0.29 to $0.34 per share and adjusted EBITDA of $10.4 million to $11.9 million or a margin of 11% to 13%."

FINANCIAL RESULTS

* SaaS revenue "accounted for 93% of total revenue versus 91% of total revenue in Q1 of '25."
* Total gross margin for the quarter was "76%, up 600 basis points from 70% a year ago. SaaS gross margin for the quarter was 81%, up from 77% a year ago."
* Non-GAAP operating costs for the first quarter were "$18.8 million, down 9% year-over-year."
* Cash and cash equivalents at quarter-end were "$70.9 million, up from $62.9 million as of June 30, 2025."
* SaaS ARR for Knowledge customers increased 23% year-over-year. Net retention rates for Knowledge customers reached 112%, and dollar-based SaaS net expansion rate for Knowledge customers was 119%.
* Total remaining performance obligations increased 23% year-over-year.
* The company bought back $1.5 million in stock at an average price of $6.38 per share.

Q&A

* Richard Baldry, ROTH Capital: Asked about lower sales and marketing spend despite firmer sales trends. Roy explained the "summer slowdown with marketing spend" and asserted "we do think that in the second half of this fiscal year, we will step up the sales hiring investment as well."
* Baldry: Queried proliferation of agentic AI agents and whether "dumb agents" drive customers to eGain. Roy responded, "We are seeing people playing with AI, agentic AI, and then we are seeing them talking to us after that... you need to make sure that you're not feeding a garbage... and that's where we are coming in."
* Baldry: Questioned the Composer product's flexibility around AI engines. Roy stated, "We are making it possible for people to plug in their choice model into our platform to do AI stuff."
* Baldry: Asked about strategic use of increasing cash. Smit said, "we'll obviously continue to look at the buyback... exploring tuck-in acquisitions or inorganic, it's something that we're always open to, but for sure, it is not our primary focus."
* Vijay Homan (for Jeff Van Rhee): Asked for updates on large Knowledge Hub opportunities and pipeline conversion. Roy described "steady progress" and increased "partner activity."
* Homan: Asked about JPMorgan deployment. Roy replied, "I'm happy to report that they have gone live with what the first phase plan was, and we are actively working the next phase."

SENTIMENT ANALYSIS

* Analysts' tone was neutral to slightly positive, focusing on operational execution, product differentiation, and cash deployment, with specific interest in sales strategy and product integration.
* Management's tone was confident during prepared remarks and Q&A, with repeated emphasis on product momentum, customer wins, and operational efficiency. Phrases like "we are confident" and "I'm quite excited" were used.
* Compared to the previous quarter, management's sentiment remains confident but more focused on execution and product launches, while analysts continue to probe on sales pipeline and financial deployment.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full-year revenue remains $90.5 million to $92 million, unchanged from last quarter, but Q2 revenue guidance was introduced as $22.3 million to $22.8 million, reflecting the messaging business sunset.
* Product development announcements were more prominent this quarter, with three new AI-driven products introduced, compared to last quarter's focus on large client wins and initial AI Agent launch.
* Key metric changes: SaaS gross margin increased to 81% from 80% last quarter; Knowledge ARR growth, while still strong, was slightly lower at 23% vs. 25% last quarter.
* Analysts' questions shifted toward sales strategy and product integration, compared to prior focus on margin sustainability and pipeline.
* Management continued to show high confidence but highlighted new hires and go-to-market strategy more this quarter.

RISKS AND CONCERNS

* Smit highlighted a "sequential decline" in Q2 revenue guidance due to "an approximate $600,000 reduction in revenue from our messaging platform business" and cited "recent government shutdown" as causing "delays and near-term uncertainty for certain professional services engagements with some of our government customers."
* The sunsetting of the messaging business is expected to impact revenue sequentially through the year.

FINAL TAKEAWAY

Management emphasized that eGain started fiscal 2026 with strong revenue growth, expanded gross margins, and significant new product introductions in AI knowledge and agentic solutions. The company is focused on scaling its new product capabilities, leveraging recent customer and partner momentum, and executing a disciplined approach to cost management and strategic team expansion. The outlook for fiscal 2026 remains positive, with revenue projected between $90.5 million and $92 million, and continued investment in AI-driven growth initiatives supported by a strong balance sheet.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/egan/earnings/transcripts]

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