eGain Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenue: $23 million, up 3% year-over-year, exceeding guidance and consensus.

SaaS Revenue: Increased by 5% year-over-year, accounting for 95% of total revenue.

Non-GAAP Gross Margin: 74%, up from 71% a year ago; SaaS gross margin at 80%, up from 78%.

Non-GAAP Net Income: $3 million ($0.11 per share), compared to $1.3 million ($0.05 per share) in the prior year.

Adjusted EBITDA Margin: 14%, up from 7% year-over-year.

Operating Cash Flow: $10.1 million, representing a 44% margin, compared to $6.4 million (29% margin) in the prior year.

AI Knowledge ARR Growth: 27% year-over-year, now representing 64% of total SaaS ARR.

Net Retention Rate: 116% for AI Knowledge customers, up from 99% a year ago; 101% for all customers, up from 89%.

2Strategic Updates and Business Highlights

Strong bookings included significant wins with major clients, including a large software provider and Achmea, a major insurance group.

Partner-sourced new logos increased by 80% year-over-year, with 25% of new logos sourced through partners.

The launch of eGain Composer is driving product sales and attracting new partners.

eGain was recognized in the Gartner Emerging MQ for generative AI knowledge apps and received the KM World's Readers' Choice Award.

3Forward Guidance and Outlook

Q3 Revenue Guidance: Expected between $22.2 million and $22.7 million, reflecting a seasonal decline due to fewer billing days.

Q3 GAAP Net Income Guidance: $1 million to $1.5 million ($0.04 to $0.05 per share).

Full Year Revenue Guidance: Expected between $90.5 million and $92 million, maintaining prior guidance.

Full Year GAAP Net Income Guidance: $4.5 million to $6 million ($0.16 to $0.21 per share).

4Bad News, Challenges, or Points of Concern

Professional Services (PS) revenue was lower than expected due to timing of bookings and the impact of a government shutdown, leading to negative PS margins in Q2.

The company is sunsetting non-core messaging products, which will continue to impact revenue in the near term.

Competitive pressures exist, particularly from existing solutions that may not be AI-ready, which could hinder growth if not addressed.

5Notable Q&A Insights

The large software deal took 1.5 years to close, indicating a lengthy sales cycle and competitive landscape.

The deployment at JPMorgan is not fully rolled out yet, with completion expected later in the year.

Customers are increasingly replacing outdated knowledge management solutions, often due to dissatisfaction with existing CRM platforms like Salesforce or SharePoint.

eGain is focusing on hiring in product and marketing, reallocating resources to enhance capabilities while reducing headcount in other areas due to automation. Overall, eGain demonstrated strong financial performance and strategic growth in Q2 2026, with a positive outlook despite some challenges in professional services and competitive pressures.