Executive Summary

Strong start to FY26: revenue at high end of guide ($23.5M, +8% y/y), non-GAAP EPS $0.17, and 21% EBITDA margin; AI Knowledge Hub ARR grew 23% y/y to $45.9M and now 60% of SaaS ARR .
Broad-based beat vs S&P Global consensus: revenue $23.51M vs $23.22M (+1.2%); non-GAAP EPS $0.17 vs $0.105 (+$0.065); EBITDA above internal guide (21% vs 16–19% outlook); estimates from S&P Global marked with asterisks below (Values retrieved from S&P Global).*
Margin expansion was the key driver: GAAP gross margin 75% (from 69% y/y) and non-GAAP 76% (from 70%) on product/cost efficiencies and mix shift toward SaaS; adjusted EBITDA $5.0M (21% margin) vs $1.4M (6%) y/y .
FY26 guidance maintained on revenue and profitability ranges but EPS ranges trimmed by 1 cent on higher expected diluted shares (~~28.8M vs prior 27.5M), while Q2 guide shows a sequential revenue dip from sunsetting the legacy messaging platform (~~$0.6M headwind) and government-shutdown-related PS delays .

What Went Well and What Went Wrong

What Went Well

AI-led growth and mix: AI Knowledge Hub ARR +23% y/y to $45.9M; now 60% of SaaS ARR, supporting higher SaaS gross margins (81% vs 77% y/y) and total gross margin (76% vs 70%) .
Profitability and cash: Adjusted EBITDA $5.0M (21% margin) vs $1.4M (6%) y/y; operating cash flow $10.4M (44% margin) with strong collections; cash rose to $70.9M despite $1.5M buybacks .
New products and adoption: Launched three AI capabilities (AI Knowledge Method, AI Agent 2, and modular eGain Composer) with positive customer/partner interest; management emphasized “trusted knowledge + agentic AI” as differentiation .
- Quote: “We unveiled three new AI products… customers and partners are showing significant interest… drives superior CX operations at scale and delivers strong AI ROI.” — CEO Ashu Roy .

What Went Wrong

Legacy drag and near-term headwinds: Q2 guide down sequentially (to $22.3–$22.8M) due to ~$(0.6)M messaging sunset impact and government shutdown delays on PS engagements .
Professional services contraction: PS revenue declined y/y (Q1: $1.61M vs $1.98M), reflecting lower attach by design but still a topline headwind; services margins a continued focus to trend toward breakeven .
Non-GAAP reliance and adjustments: Non-GAAP adds back warrant-related expense (press release reconciliation shows $1.35M “issuance of common stock warrant for services”) and SBC; investors should track recurring vs one-time adjustments .

Financial Results

Headline metrics (chronological: oldest → newest)

Metric	Q1 2025	Q3 2025	Q4 2025	Q1 2026
Total Revenue ($M)	$21.80	$21.01	$23.23	$23.51
GAAP Diluted EPS ($)	$0.02	$0.00	$1.11 (tax benefit)	$0.10
Non-GAAP Diluted EPS ($)	$0.04	$0.03	$0.09	$0.17
GAAP Gross Margin (%)	69%	69%	73%	75%
Non-GAAP Gross Margin (%)	70%	69%	73% (total; per call)	76%
Adjusted EBITDA ($M)	$1.36	$1.17	$4.47	$5.02
Adjusted EBITDA Margin (%)	6%	6%	19%	21%

Note: Q4 2025 GAAP EPS includes a ~$29M tax benefit from releasing valuation allowance; non-GAAP EPS excludes it .

Revenue mix

Revenue ($M)	Q1 2025	Q3 2025	Q4 2025	Q1 2026
SaaS	$19.82	$19.56	$21.69	$21.90
Professional Services	$1.98	$1.45	$1.54	$1.61
Total	$21.80	$21.01	$23.23	$23.51

KPIs and balance/cash

KPI	Prior/Comparative	Current (Q1 2026)
AI Knowledge Hub ARR ($M)	—	$45.9; 60% of SaaS ARR
LTM DbNR (Knowledge)	103% prior year	104%
LTM DbNR (All customers)	90% prior year	102%
LTM Net Expansion (Knowledge)	—	119%
LTM Net Expansion (All)	—	110%
Total RPO y/y	+17% (Q4 ref)	+23%
Short-term RPO ($M)	$63 (Q4 ref)	$58
Cash & Equivalents ($M)	$62.9 (6/30/25)	$70.9 (9/30/25)
Cash from Ops ($M)	$5.3 FY25 (6%)	$10.4 Q1; 44% margin

Actuals vs S&P Global Consensus (Q1 2026)

Revenue: $23.51M actual vs $23.22M estimate (+$0.29M, +1.2%)* .
EPS (Non-GAAP/Primary): $0.17 actual vs $0.105 estimate (+$0.065, ~+62%)* .
EBITDA: Actual $5.02M; consensus not available.*

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance (9/4/25)	Current Guidance (11/12/25)	Change
Total Revenue ($M)	FY26	$90.5–$92.0	$90.5–$92.0	Maintained
GAAP EPS ($)	FY26	$0.13–$0.18	$0.12–$0.17	Lowered (share count)
Non-GAAP EPS ($)	FY26	$0.30–$0.36	$0.29–$0.34	Lowered (share count)
Adjusted EBITDA ($M, %)	FY26	$10.4–$11.9 (11–13%)	$10.4–$11.9 (11–13%)	Maintained
Diluted Wtd Avg Shares (M)	FY26	~27.5	~28.8 (also Q2)	Raised
Total Revenue ($M)	Q2 FY26	N/A	$22.3–$22.8	New
GAAP EPS ($)	Q2 FY26	N/A	$0.04–$0.06	New
Non-GAAP EPS ($)	Q2 FY26	N/A	$0.07–$0.08	New
Adjusted EBITDA ($M, %)	Q2 FY26	N/A	$2.7–$3.2 (12–14%)	New

Management attributed a ~1% FY26 EPS impact to higher shares (~~28.8M) and cited Q2 sequential revenue headwinds from messaging sunset (~~$0.6M) and U.S. government shutdown delays in PS .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2025, Q4 2025)	Current Period (Q1 2026)	Trend
AI strategy and products	Launched AI Agent for Contact Center; recognized by Gartner; large megabank expansion; emphasis on trusted knowledge as AI foundation	Introduced AI Knowledge Method, AI Agent 2 with hybrid AI and expert assurance, and eGain Composer (modular, BYOM)	Accelerating product cadence and developer ecosystem enablement
Key logos/rollouts	JPMorgan expansion (“one of our largest”); deployment by late fall, ramp from start	JPMorgan Phase 1 live; next phases underway	Execution milestone achieved
Go-to-market	Product-led sales motion; sales cycles stable at ~9–12 months	Maintain product-led motion; marketing spend to step up in 2H FY26; consider sales hiring in 2H	Investing behind pipeline conversion
Revenue mix & services	Decreasing PS attach by design; services margins targeted toward breakeven over time	PS down y/y; Q2 PS delays from government shutdown noted	Less PS reliance; transient PS headwinds
Legacy portfolio	Messaging churn impacted FY25; announced sunset in FY26	Q2 FY26 revenue headwind ~$(0.6)M from messaging; run-rate halves in Q2 and goes to zero by early FY27 (prior color)	De-risking non-core, short-term headwind
Margin drivers	Cloud/platform migration and automation lowered COGS; SaaS GM up; total GM expansion	SaaS GM 81% (77% y/y); total GM 76% (70% y/y); EBITDA beat	Sustainable efficiency gains

Management Commentary

Strategic message: “We are off to a good start… ahead of consensus… AI knowledge ARR up 23%… we are firmly leading” — CEO Ashu Roy .
Product vision: “AI Agent 2… combines hybrid AI with in-band expert assurance… to deliver nontrivial, compliance-oriented use cases” — CEO Ashu Roy .
Developer platform: “Composer… modular AI knowledge platform… bring-your-own-model architecture… extensive APIs/SDKs/connectors” — CEO Ashu Roy .
Margin drivers: “SaaS gross margin expansion… driven by product enhancements enabling cost-efficient deployments and operational efficiencies in cloud and support” — CFO Eric Smit .
Capital allocation: “We’ll continue to look at buybacks… open to tuck-in M&A but not a primary focus” — CFO Eric Smit .

Q&A Highlights

Sales & marketing cadence: Seasonal step-down in Q1 marketing; expect higher spend in current quarter; contemplating sales hiring in 2H FY26 alongside product-led motion .
Differentiation vs generic “agents”: Proliferation of agents lacking trusted data often leads prospects back to eGain for knowledge-backed, compliance-grade solutions .
Composer flexibility: API-first, BYOM architecture integrates with OpenAI/Azure Copilot and others; designed for enterprise AI teams to build atop trusted knowledge .
JPMorgan rollout: Phase 1 live (earlier than plan); speed-to-value cited as interest barometer; next phases active .
Q2 outlook clarity: Sequential revenue lower on planned messaging sunset (~$0.6M) and government PS delays; FY26 revenue/EITDA ranges unchanged; EPS impacted by higher shares (~28.8M) .

Estimates Context

Q1 FY26 vs S&P Global consensus: Revenue $23.51M vs $23.22M estimate (+$0.29M, +1.2%); Primary/Non-GAAP EPS $0.17 vs $0.105 estimate (+$0.065, ~+62%); EBITDA actual $5.02M; consensus not available.*
Implications: Estimate revisions likely bias positive on profitability (gross margin/EBITDA) given structural efficiency commentary and mix shift; revenue guide unchanged for FY26, but higher share count trims EPS ranges modestly .
Values retrieved from S&P Global.*

Key Takeaways for Investors

The beat was quality-driven: SaaS mix and structural cost efficiencies expanded gross margins to 76% non-GAAP and pushed EBITDA margin to 21% despite only +8% revenue growth .
AI Knowledge Hub is scaling: ARR +23% and now 60% of SaaS ARR; NRR improving (knowledge 104%, all 102%), validating cross-sell and price/seat expansion dynamics .
Product flywheel strengthening: Three new AI capabilities (Knowledge Method/Agent 2/Composer) deepen moat around “trusted knowledge + agentic AI” and open developer-led adoption vectors .
Near-term caution on Q2 revenue: Expect sequential dip from messaging sunset and PS delays; this is transitory and aligned with the strategy to exit non-core .
EPS optics: FY26 EPS ranges edged lower due to higher diluted shares (~28.8M); underlying EBITDA outlook unchanged; consider focusing on EBITDA/CFO as truer run-rate measures .
Execution milestones: JPMorgan Phase 1 live; additional enterprise wins (large NY health insurer; multinational energy co.) support pipeline conversion narrative .
Capital returns: Ongoing buybacks ($1.5M in Q1) with strong cash generation ($10.4M CFO) provide support while management prioritizes organic R&D; tuck-in M&A opportunistic .

Appendix: Source Documents

Q1 FY26 8-K and Exhibit 99.1 (press release): results, guidance, reconciliations .
Q1 FY26 press release (duplicate of Exhibit 99.1 content) .
Q1 FY26 earnings call transcript: strategy, drivers, Q&A .
Other relevant PR: OCCU selects eGain AI Knowledge Hub/Agent .
Prior quarters for trend: Q4 FY25 press release and call ; Q3 FY25 press release/8-K/call .

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