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eGain (EGAN) Q4 Earnings Lag Estimates, SaaS Revenues Up Y/Y

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eGain (EGAN - Free Report) reported fourth-quarter fiscal 2019 adjusted earnings of 2 cents per share, which missed the Zacks Consensus Estimate by a couple of cents. However, the figure jumped 50% year over year.

Revenues of $16.8 million increased 7.9% from the year-ago quarter (per revenue recognition standard 606) but missed the consensus mark. At constant currency (cc), revenues increased 10%.

The company witnessed strong demand for AI-powered customer engagement capabilities, particularly within its partner base, which includes the likes of Cisco, Deloitte, Avaya and Amazon. eGain also won several new customers throughout fiscal 2019.

Top-Line Details

Subscription revenues (90% of total revenues) increased 11.9% year over year (14% at cc) to $15.1 million. SaaS revenues grew 26% year over year at cc to $11.6 million. Legacy support revenues declined 12% year over year at cc to $3.6 million.

 

eGain Corporation Price, Consensus and EPS Surprise

 

Professional services revenues (10% of total revenues) decreased 18.5% year over year to $1.68 million.

eGain’s customer retention rate was closed to 90%.

Remaining performance obligation (RPO), as of Jun 30, was $61.9 million, of which short-term RPO was $42.4 million.

Operating Details

Gross profit rose 13.9% year over year to $11.1 million. Gross margin expanded 350 basis points (bps) to 65.7%. The increase was due to growth in high-margin SaaS revenues and improvement in scale and efficiency of eGain’s cloud operations.

Research & development and general & administration expenses declined 8.6% and 5.3% year over year to $3.6 million and $2 million, respectively.

However, sales & marketing expenses increased 3.8% year over year to $4.6 million.

Operating income was $0.9 million in the reported quarter, while operating loss was $0.8 million in the year-ago quarter.

Guidance

For fiscal 2020, eGain expects SaaS revenues between $53.8 million and $55.4 million, indicating growth of 20-24% at cc. Total revenues are expected between $72 million and $73.6 million, implying year-over-year growth of 7-10% at cc.

Moreover, eGain expects earnings between break-even and 6 cents per share.

For the first quarter of fiscal 2020, eGain expects SaaS revenues between $11.8 million and $12.1 million, suggesting growth of 23-26% at cc. Total revenues are expected between $16.8 million and $17.2 million, indicating an increase of 7-10% year over year at cc.

eGain projects earnings between 2 cents and 3 cents for the fiscal first quarter.

Zacks Rank & Key Picks

eGain currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Computer Technology sector are Alphabet (GOOGL - Free Report) , Cognizant Technology (CTSH - Free Report) and CDW Corporation (CDW - Free Report) , each having a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alphabet, Cognizant and CDW is currently pegged at 17.5%, 10.1% and 13.1%, respectively.

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