eGain Corp (EGAN) 2009 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the eGain second fiscal quarter end of December 31, 2008 conference call. Announcing your moderator for today, Chief Financial Officer, Eric Smit.

Thank you, operator. Good afternoon, ladies and gentlemen, and thank you for joining us for eGain's conference call. Today eGain will discuss the results for the second fiscal quarter ended December 31, 2008. Please note this call is being recorded and will be available for replay from the investor relations section of our website at www.egain.com for seven days following this call.

I will start by reading a safe harbor statement. All statements on this call that involve eGain's plans, forecasts, beliefs, projections, expectations, strategies, and intentions including but not limited to our plan to focus on well-developed opportunities this year, our Cisco OEM partnership, our investments in global customer care infrastructure, our projected growth, our target customer growth, our management of costs and expenses, and the mix of our business and revenues, are forward-looking statements with the meaning of the Safe Harbor Provisions of the Private securities Litigation Reform Act of 1995.

These forward-looking statements, which are based on information available to eGain at the time of this call, are not guarantees of future results. Rather they are subject risks and uncertainties that may cause actual results to differ materially from those set forth in this call. These risks include but are not limited to the uncertainty of demand for eGain products; the actual mix of new business between hosting and license transactions when compared with management's projections; volatility of the value of certain currencies in relation to the US dollar, particularly the UK pound, Indian rupee, and a euro; the increased complexity of certain transactions and the timing of revenue recognition on such transactions; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including the Company's annual reports on Form 10-K filed on September 29, 2008 and the Company's quarterly reports on Form 10-Q. eGain assumes no obligation to update these forward-looking statements.

With me today is Ashu Roy, Chairman and Chief Executive Officer of eGain Communications. To begin management's discussion, I would now like to turn the call over to Ashu Roy.

Thank you, Eric, and good afternoon, everyone. We performed well this quarter. New hosting and license bookings for the second quarter of fiscal year 2009 were $4.5 million, an increase of 47% from the comparable year ago quarter. Of the total new hosting and license bookings in the quarter, 15% was from new hosting bookings and 85% was from new license bookings. Given our enterprise focus, which increases our dependence on a small number of relatively larger deals, the ratio of licensed and hosted bookings on a quarterly basis can vary significantly.

This quarter we closed three large license deals that skewed the ratio in favor of licensed bookings. On the product front, we released eGain Service 8.0 at our North American Customer Summit in Las Vegas in November 2008. eGain Service 8.0 is the latest version of our unified customer interaction hub suite built on a robust common platform. eGain Service 8.0 has been highly rated by top analysts including Forrester and Gartner. Its unified yet modular capabilities are being well received by our clients as they look to eGain as their preferred long-term supplier of customer interaction hub solutions.

On the market front, we have released the findings of our state of customer service research focused on communications and retail sector in North America. This study included a holistic measurement of single channel and cross channel customer service offered by leading North American companies in these sectors and further validated the need for eGain's solutions for unified multichannel customer service.

Next, eGain was included in the Software 500 list for the sixth year in a row. The Software 500 is a revenue-based ranking of the world's largest software and service providers. And finally, our client, Replacements Ltd., was selected as a finalist for the 2008 Stevie Awards. Replacements received accolades in the best use of technology in customer service category for its implementation and business value creation using the eGain solutions.

Turning to our business outlook, given the macroeconomic environment, we continue to focus on specific well-developed opportunities while closely managing our costs. We also continue to invest in our fiscal OEM partnership to expand our global market reach. Finally, we continue to invest in our partner ecosystem, which is showing positive results especially outside the US.

On that note, I would like to ask Eric Smit, our Chief Financial Officer, to discuss in more details our financial performance for the quarter.

Thank you, Ashu. I will walk through the key financial details. As a reminder, we define new hosting and license bookings as new contractual commitments excluding renewals received by the Company for the purchase of products licenses and hosting services. Such contracts are not cancelable for convenience but may be subject to termination by our customers for cause or breach of contract by us.

Total new bookings for the quarter were $4.5 million, an increase of $1.4 million or 47% from the comparable year-ago quarter. Of the total new hosting and license bookings for the quarter, 15% was from new hosting bookings and 85% from new license bookings compared to 18% new hosting bookings and 82% new license bookings in the comparable year-ago quarter. Total new bookings for the six months were $9.2 million, an increase of $3.1 million or 52% from the same period last year. New hosting contracts for the six months accounted for approximately 25% of new bookings compared to 40% in the same period last year.

Now turning to our financial results, total revenue for the quarter was $9.6 million, an increase of $1.5 million or 18% from the comparable year-ago quarter. Total revenue for the six months was $17.7 million, an increase of $3.1 million or 21% from the same period last year. The strengthening of the US dollar compared to foreign currencies had a negative impact of approximately $2 million on total revenue in the quarter.

License revenue for the quarter was $3.5 million, an increase of $1.3 million or 61% from the comparable year-ago quarter. This represents 37% of total revenue, up from 27% in the comparable year-ago quarter. License revenue for the six months was $5.1 million, an increase of $1.5 million or 42% from the same period last year. This represents 29% of total revenue, up from 25% in the same period last year.

Support and services revenue was $6.1 million for the quarter, an increase of $127,000 or 2% from the comparable year-ago quarter. This represents 63% of total revenue, down from 73% in the comparable year-ago quarter. Support and services revenue for the six months was $12.6 million, an increase of $1.6 million or 15% from the same period last year. This represents 71% of total revenue, down from 75% in the same period last year.

Looking at our gross profits and gross margins, gross profit for the quarter was $7 million or a gross margin of 73% compared to $5.2 million or a gross margin of 64% in the comparable year-ago quarter. Gross profit for the six months was $12.3 million or a gross margin of 69% compared to $9 million or a gross margin of 61% in the same period last year.

Turning to our operating costs, research and development expense for the quarter was $1.4 million, an increase of $145,000 or 12% from the comparable year-ago quarter. Total research and development expense as a percentage of total revenues was 15%, unchanged from the comparable year-ago quarter. Research and development expense for the six months was $2.9 million, an increase of $526,000 or 22% from the same period last year. This represents 17% of total revenue compared to 16% for the same period last year.

Sales and marketing expense for the quarter was $2.9 million, a decrease of $149,000 or 5% from the comparable year-ago quarter. Total sales and marketing expense as a percentage of total revenues with 30% compared to 37% in the comparable year-ago quarter. Sales and marketing expense for the six months was $5.6 million, a decrease of $508,000 or 8% from the same period last year. This represents 32% of total revenue compared to 42% for the same period last year.

General and administrative expense for the quarter was $873,000, a decrease of $90,000 or 9% from the comparable year-ago quarter. Total general and administrative expenses as a percentage of total revenues was 9% compared to 12% in the comparable year-ago quarter. General and administrative expense for the six months was $1.9 million, a decrease of $466,000 or 20% from the same period last year. This represents 11% of total revenue compared to 16% for the same period last year.

Included in the total costs and expenses were stock-based compensation expense for the quarter of $89,000, up slightly from $74,000 in the comparable year-ago quarter. Stock-based compensation expense for the six months was $172,000 compared to $127,000 in the same period last year. The strengthening of the US dollar compared to foreign currencies had a positive impact of approximately $900,000 on total costs and expenses in the quarter.

Looking at other income and expense, other income for the quarter was $341,000, which included approximately $300,000 foreign exchange gain compared to other income of $7,000 in the comparable year-ago quarter. Other income for the six months was $365,000 compared to other income of $35,000 in the same period last year.

Interest expense for the quarter was $335,000, a decrease of $67,000 or 17% from the comparable year-ago quarter. Interest expense for the six months was $820,000, an increase of $14,000 or 2% from the same period last year.

GAAP income from operations for the quarter, that is before interest, taxes, and other nonoperating income and expenses, was $1.9 million compared to a loss from operations of $33,000 in the comparable year-ago quarter. GAAP income from operations for the six months was $1.8 million compared to a loss from operations of $2 million in the same period last year. The strengthening of the US dollar compared to foreign currencies had a negative impact of approximately $1.1 million on operating income in the quarter.

Net income for the quarter was $2 million or $0.09 per share compared to a net loss of $432,000 or $0.03 per share in the comparable year-ago quarter. Net income for the six months was $1.4 million or $0.08 per share compared to a net loss of $2.8 million or $0.18 per share in the same period last year.

I would now like to turn to our balance sheet. Total cash and cash equivalents were $3.8 million on December 31, 2008, unchanged from June 30, 2008 and up from $2.2 million at September 30, 2008. Total net accounts receivables were $5.5 million on December 31, 2008, compared to $2.7 million on June 30, 2008. Days Sales Outstanding in receivables for the quarter were 52 days compared to 40 days for the comparable year-ago quarter.

Adjusted working capital, that is current assets less current liabilities excluding deferred revenue, was $4.9 million at December 31, 2008, up from $2.2 million at June 30, 2008. Total stockholders deficit was down to $4.9 million on December 31, 2008 compared to the deficit of $13 million on June 30, 2008.

This ends the conference call for eGain's second quarter of fiscal 2009 financial results.