eGain 2025 Q3 Earnings Misses Targets as Net Income Declines 95.6%

eGain (EGAN) reported its fiscal 2025 Q3 earnings on May 14th, 2025. eGain's performance missed expectations, with both net income and revenue showing declines compared to the previous year. The company faced extended sales cycles impacting bookings, but managed to secure a significant deal with a major U.S. bank. For Q4 fiscal 2025, eGain provided guidance reflecting a mixed outlook, with revenue expectations lowered but net income projections raised, indicating improved cost management.

Revenue
In the third quarter of fiscal 2025, eGain's total revenue fell by 6% year-over-year, settling at $21.01 million. This downturn was led by the SaaS segment, which contributed $19.56 million, while the Professional Services division added $1.45 million to the total revenue. Despite the decrease, the company remains focused on its AI-driven offerings.

Earnings/Net Income
eGain reported a stable EPS of $0.00 for Q3 2025, mirroring the previous year's performance. However, net income saw a sharp decline, plummeting 95.6% to $66,000 from $1.49 million in Q3 2024. This reflects challenges in maintaining profitability amid revenue pressures.

Post Earnings Price Action Review
The strategy of buying eGain when its revenue surpasses expectations and holding the stock for 30 days has proven effective historically. A revenue beat signals potential growth, attracting market attention and boosting investor confidence, which can lead to a rise in stock prices. Holding the stock for a short-term period allows investors to capitalize on price appreciation post-earnings release. However, backtesting results highlight the necessity of considering broader market conditions and industry-specific factors, as these can affect the strategy's effectiveness. Risk management remains crucial, with techniques such as setting stop-loss orders to limit potential losses and adjusting the holding period based on market dynamics. Overall, while promising, the strategy requires continuous evaluation and adjustments across different market environments to optimize returns.

CEO Commentary
Ashutosh Roy, Chief Executive Officer, expressed that in Q3, eGain exceeded profitability projections and delivered solid operating cash flow, despite extended sales cycles impacting bookings. He highlighted a significant deal secured with a major U.S. bank, expanding their AI knowledge platform to over 100,000 users, which exemplifies eGain's vision of a unified knowledge foundation. Roy noted the launch of the eGain AI Agent for Contact Center, receiving positive customer interest, and emphasized that Gartner recognized eGain as a leader in the emerging generative AI knowledge management market. He concluded that while macro uncertainties affected deal timing, strong customer interest and ongoing R&D investments position eGain for future success.

Guidance
For Q4 fiscal 2025, eGain expects total revenue between $22.8 million and $23.3 million and GAAP net income of $1.1 million to $1.6 million, translating to $0.04 to $0.06 per share. Non-GAAP net income is projected at $1.7 million to $2.2 million or $0.06 to $0.08 per share. For fiscal 2025, total revenue guidance is revised to $88 million to $88.5 million, with GAAP net income expected between $2.5 million and $3 million, or $0.09 to $0.10 per share, and non-GAAP net income of $5.1 million to $5.6 million or $0.18 to $0.20 per share.

Additional News
In recent developments, eGain announced an increase in its stock repurchase program by $20 million, showcasing a commitment to returning capital to shareholders. The company secured three significant CRM wins, including onboarding one of the world's largest airlines, reflecting strong momentum in acquiring new clients. Furthermore, TELUS International partnered with eGain to enhance its Contact Center as a Service (CCaaS) offering with modern knowledge management and AI functionalities, underscoring eGain's growing influence in the AI-driven service sector.