eGain Corp (EGAN) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen and thank you for standing by. Welcome to the eGain fourth quarter and fiscal year ending June 30, 2009, earnings conference call. As a reminder, this con presence is being recorded for replay. I would now like to turn the conference over to our speaker, Eric Smit, CFO. Sir, please go ahead.

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 fourth quarter and fiscal year ended June 30th, 2009. Please note that the call is being recorded and will be available for replay from the Investor Relations section of our Web site at www.eGain.com for seven days following this call.

I will start by reading the Safe Harbor statements. All statements on this call that involve eGain's plans, forecasts, beliefs, projections, expectations, strategies and intentions including but not limited to our enterprise focused business models affect on our bookings, our Cisco OEM partnership, our investments in global customer care infrastructure, our projected growth and our targeted customer growth are management of our business goals, implementation methods and investments and the mix of our hosting and license business on our revenues. Our forward-looking statements within 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 to 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 in new business between hosting and license transactions when compared with management projections, volatility of the value of certain currencies and relations in the US dollar particularly the UK pound, Indian rupee and 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 report on Form 10-K filed on September 29th, 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 Ashutosh Roy, Chairman and Chief Executive Officer of eGain Communications. To begin management discussion I would like to turn the call over Ashutosh Roy.

Thank you, Eric. And good afternoon, everyone. We are pleased to be one of the few companies posting positive performance year-over-year in this challenging economic environment. Thanks go to the hard work, commitment and persistence of our team. Our performance has been a result of the sustained execution over the years. We began this investment in fiscal 2007 which resulted in revenue growth in fiscal 2008 and now profit in fiscal 2009.

Financial highlights for fiscal 2009 include total revenue of $33.2 million up 10% from the prior year, operating income of $3.3 million, up from operating loss of $2.6 million in the prior year, cash flow from operations of $3.7 million compared to cash used in operations of $2.8 million in the prior year. Excluding the foreign currency fluctuations which were unfavorable, our performance was even more impressive. On a constant currency basis , revenue was approximately $37 million and operating income was $4.5 million.

Turning to new products and industry recognition in fiscal 2009, eGain was selected by Forester Research as a leader in interaction centric customer software solutions in the October 2008 report. EGain was also positioned in the leader's quadrant by Gartner Inc. and the Magic Quadrant For eServices Suites 2008 support. We relieved the eGain Service 8 Suite, the Company's most advanced customer interaction hub solution with rich functional enhancement and significant platform improvement in late 2008.

And finally, eGain introduced a unique solution of the service offering called eGain SLaaS. This offering was considered a unique combination of value-based pricing with hosted software and bundled services on top. By Johan Jacobs , Research Director at Gartner, he went on to say that SLaaS has the potential to transform enterprise software adoption in a tough economic climate. On the partner front, our steady investment in partnerships is beginning to show results. For fiscal 2009, new hosting and license bookings through partners grew to 45% of total new hostings and license bookings. We also extended our multi-year relationship with Cisco to be the OEM supplier for e-mail management and web collaboration products, as part of the Cisco Contact Center Suite.

We continue to target and acquire key enterprise clients in fiscal 2009. Notable customer acquisitions included a Fortune 100 personal lines insurer, a Fortune 100 leader in networking for the internet, one of the nation's top 10 financial holding company, one of the world's foremost nutrition company, and multinational insurance group, multiple subsidiaries of a world leading mobile telecommunications company and a leading European entertainment and communications company. Looking ahead to fiscal 2010, the market for customer interaction solutions according to analysts continues to grow based on the need for improved efficiency and better customer experience.

Businesses are looking for integrated solutions for multi-channel service that are scalable, quick to deploy and cost effective. In response, we are investing our, in product leadership by leveraging our proven platform architecture and our rapid innovation capability to deliver unified feature rich solutions for demanding enterprise class. On that note, I would like to ask Eric Smit, our CFO, to discuss in more detail our financial performance for the quarter. Eric?

Thank you, Ashutosh. Before I walk you through the key financial details, I'd like to briefly discuss the stock repurchase program we announced today. eGain's Board of Directors has approved a repurchase program under which we may begin purchasing up to one million shares of our common stock. The duration of the repurchase program is open ended and under the program we are able to purchase shares of common stock from time to time through open market and privately negotiated transactions at prices deemed appropriate by management. On June 30, 2009, the Company had 22.2 million shares of common stock outstanding. We qualified for this program based upon our positive financial performance in fiscal year 2009 and believe that the repurchase of our stock is an attractive investment opportunity. The repurchase will be funded by cash on hand.

Now turning to our financial results. As a reminder, we define new hosting and license bookings as new contractual commitments excluding renewals received by the Company for purchase of product licenses and hosting services. Such contracts are not cancelable for convenience but may be subject to termination by our customers for cause or breech of contract by us. Total new hosting and license bookings for the quarter were $4.5 million, an increase of $3.2 million or 261% from the comparable year ago quarter. Of the total new hosting and license bookings in the quarter, 28% was from new hosting bookings and 72% was from new license bookings compared to 19% from new hosting bookings, and 81% from new license bookings in the comparable year ago quarter. The currency exchange rates had remained constant from June 30, 2008, the last day of our prior fiscal year, through June 30th, 2009, bookings for the fourth quarter of fiscal year 2009 would have been up approximately 328% rather than up 261% when compared to the same period last year.

Total new hosting and license bookings for the fiscal year were $15.2 million an increase of $6 million or 65% from the same period last year. Of the total new hosting and license bookings for the fiscal year, 29% was from new hosting bookings and 71% was from new license bookings compared to 38% from new hosting bookings and 62% from new licensing bookings last fiscal year. The currency exchange rates had remained constant from June 30th, 2008 through June 30th, 2009. Bookings for the fiscal year would have been up approximately 92% rather than up 65% when compared to the prior year. Now, turning to our revenue numbers. Total revenue for the quarter was $8.9 million an increase of $2.2 million or 33% from the comparable year ago quarter. Total revenue for the fiscal year was $33.2 million an increase of $3.1 million or 10% from last fiscal year.

eGain's revenues for the fiscal year were negatively impacted by the reduced value of foreign currency when compared to US dollars. If currency exchange rates had remain constant from June 30th, 2008 from June 30th, 2009 revenues for the fiscal year would have been up approximately 24% rather than up 10% when compared to last fiscal year. License revenue for the quarter was $3 million, an increase of $2.3 million or 319% from the comparable year ago quarter. This represents 34% of total revenue for the quarter up from 11% in the comparable year ago quarter. License revenue for the fiscal year was $8.6 million an increase of $2 million or 31% from last fiscal year. This represents 26% of total revenue, up from 22% in the last fiscal year. Support and services revenue for the quarter was $5.9 million, a decrease of $83,000 or 1% from the comparable year ago quarter. This represents 66% of total revenue for the quarter, down from 89% in the comparable year ago quarter.

Support and services revenue for the fiscal year was $24.6 million an increase of $1.1 million or 5% from last fiscal year. This represents 74% of total revenue down from 78% last fiscal year. Looking at our gross profits and gross margins, gross profits for the quarter was $6.1 million or a gross margin of 68% compared to $3.8 million or a gross margin of 57% in the comparable year ago quarter. Gross profit for the fiscal year of $22.5 million, or a gross margin of 68%, compared to $18.5 million for a gross margin of 61% last fiscal year. The currency exchange rates have remained constant throughout the fiscal year. Gross profits for the fiscal year would have been up approximately 35% rather than up 22% when compared to last fiscal year.

Turning to our operating costs. Research and development expense for the quarter was $1.2 million a decrease of $255,000 or 18% from the comparable year ago quarter. Total research and development expense as a percentage of total revenue was 13%, down from 21% in the comparable year ago quarter. Research and development expense for the fiscal year was $5. 5 million an increase of $383,000 or 8% from last fiscal year. This represents 16% of total revenue compared to 17% for last fiscal year. Sales and marking expense for the quarter was $2.7 million, a decrease of $112,000 or 4% from the comparable year ago quarter.

Total sales and marketing expense as a percentage of total revenues was 31% compared to 42% in the comparable year ago quarter. Sales and marketing expense for the fiscal year was $10.5 million a decrease of $1.3 million or 11% from last fiscal year. This represents 32% of total revenue compared to 39% for last fiscal year. General and administrative expense for the quarter was $735,000, a decrease of $177,000 or 19% from the comparable year ago quarter. Total general and administrative expenses as a percentage of total revenues was 8% compared to 14% in the comparable year ago quarter. General and administrative expense for the fiscal year were $3.3 million a decrease of $969,000 or 23% from last fiscal year. This represents 10% of total revenue compared to 14% last fiscal year. Included in the total cost and expenses, was stock-based compensation expense for the quarter of $19,000, down from $77,000 in the comparable year ago quarter.

Stock-based compensation expense for the fiscal year was $241,000 compared to $318,000 last fiscal year. If currency exchange rate had remained constant throughout fiscal 2009, total cost and expenses for the fiscal year would have been down approximately 1% rather than down 9% when compared to last fiscal year. Looking at other income and expense, other expense for the quarter was $265,000 compared to other income of $75,000 in the comparable year ago quarter. Other income for the fiscal year was $230,000 compared to other income of $332,000 last fiscal year. Interest expense for the quarter was $297,000, a decrease of $135,000 or 31% from the comparable year ago quarter. Interest expense for the fiscal year was $1.4 million, a decrease of $224,000 or 14% from last fiscal year.

GAAP income from operations for the quarter taxes before interest, taxes, and nonoperating income expenses was $1.4 million compared to a loss from operations of $1.4 million in the comparable year ago quarter. GAAP income from operations for the fiscal year were $3.3 million compared to a loss from operations of $2.6 million last fiscal year. The strengthening of the US dollar compared to foreign currencies had a negative impact, on our operating income. On a constant currency basis operating income would have been approximately$1.8 million for the quarter and $4.5 million for the fiscal year. Net income for the quarter was $929,000, or $0.04 per share on a basic and diluted basis, compared to a net loss of $1.9 million or $0.12 per share for the comparable year ago quarter. Net income for the fiscal year was $2.2 million or $0.11 per share on a basic and diluted basis compared to a net loss of $4.2 million or $0.27 per share last fiscal year.

I would now like to turn to our balance sheet and cash flows. Total cash and cash equivalents were $7.5 million at June 30th, 2009, up from $3.8 million at June 39th, 2008. Cash provided by operations was $3.7 million for the fiscal year compared to cash used in operations of $2.8 million last fiscal year. Total net accounts receivable was $4.3 million at June 30th, 2009 compared to $2.7 million on June 30th, 2008. Day sales outstanding and receivables or DSOs for the quarter were 44 days compared to 37 days for the comparable year ago quarter. Adjusted working capital, that is current assets less current liabilities excluding deferred revenue was $3.5 million at June 30th, 2009 up from $2.2 million at June 30th, 2008. Total stock holders deficit was $4.1 million at June 30th, 2009 compared to a deficit of $13.3 million at June 30th, 2008. I will now turn the call back to Ashutosh for his closing comment.

Thank you, Eric. In closing, even though the economic environment seems to be stabilizing, we believe that businesses will continue to be cautious in the near future. So in fiscal year 2010, we will remain prudent in our sales and marketing investment. Choosing selective growth opportunities in new geographies and specific verticals . Further, a mix of on-premise, that is one-time license deals and on demand deployment, that is a steady subscription revenue. In the enterprise, will be difficult to predict.

Therefore, instead of fixating on the short-term revenue impact of license versus hosted bookings on our business, we will measure our progress in terms of new bookings growth and operating cash flow. For fiscal year 2010 we currently expect an increase in new license and hosting bookings when compared to fiscal 2009. In addition we currently expect to generate positive cash flows from operations in fiscal year 2010. Thank you for listening. We look forward to our next call where we will provide an update on our first quarter fiscal year 2010 results. This ends the conference call for the fourth quarter and fiscal year ended 2009 financial results.

Ladies and gentlemen, thank you for your participation. This does conclude today's program and you may now all disconnect. Attendee you may log off at this time.