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EGAIN Corp (EGAN)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 returned to YoY growth for the first time in eight quarters: revenue $23.23M (+3% YoY, +11% QoQ), non-GAAP EPS $0.09 vs $0.065 consensus (beat), and adjusted EBITDA margin expanded to 19% (from 11% YoY); GAAP EPS $1.11 included a ~$29M one-time tax valuation allowance release . Consensus values marked with * are from S&P Global.*
  • FY26 outlook signals a return to growth: revenue $90.5–$92.0M, non-GAAP EPS $0.30–$0.36, adjusted EBITDA margin 11–13%, and gross margin guided to 74–75%; Q1 FY26 revenue $23.0–$23.5M and non-GAAP EPS $0.11–$0.14 .
  • Strategic pivot intensifies around AI Knowledge: marquee JPMorgan Chase expansion, issuance of warrants and a board observer to deepen the design partnership; messaging products to be sunset in FY26, creating a known ARR headwind (~$4.7M) .
  • Capital allocation supportive: buyback authorization raised by $20M (to $60M total); FY25 repurchases totaled ~$15.8M including ~$3.8M in Q4 .

What Went Well and What Went Wrong

  • What Went Well

    • Re-acceleration and profitability: Q4 revenue grew YoY after eight quarters of declines; adjusted EBITDA margin expanded to 19% (from 11% YoY), with total gross margin at 73% (vs 71% YoY). “We finished fiscal 2025 with... improved profitability in the fourth quarter” .
    • AI Knowledge momentum: AI Knowledge ARR +25% YoY (22% cc); LTM sales net retention improved to 115% for knowledge customers (from 98% a year ago), and total RPO +17% YoY .
    • Strategic wins: Large JPMorgan Chase expansion and deepening partnership (warrants, board observer) validate the platform and strengthen product co-design in financial services .

  • What Went Wrong

    • Full-year top-line still down: FY25 revenue fell 5% YoY, reflecting prior messaging churn; FY25 adjusted EBITDA margin compressed to 10% (from 12%) .
    • Services pressure: Professional services revenue declined YoY in Q4; non-GAAP services gross profit was negative in Q4, though management targets breakeven/slightly positive services margins through FY26 .
    • Messaging sunset headwind: Sunsetting non-core messaging will reduce ARR by ~$4.7M, with run-rate impact starting in Q2 FY26 (about 50% reduction) and going to zero by early FY27, partially offsetting AI Knowledge growth .

Financial Results

MetricQ4 2024Q3 2025Q4 2025Q4 2025 Consensus*
Revenue ($M)$22.462 $21.009 $23.234 $23.039*
Gross Margin %71% 68.0% (calc. from $14.286M/$21.009M) 73% N/A
Adjusted EBITDA ($M)$2.403 $1.172 $4.468 N/A
Adjusted EBITDA Margin %11% 5.6% (calc.) 19% N/A
GAAP Diluted EPS$0.05 $0.00 $1.11 N/A
Non-GAAP Diluted EPS$0.08 $0.03 $0.09 $0.065*

Segment Revenue ($M)

SegmentQ4 2024Q3 2025Q4 2025
SaaS$20.439 $19.563 $21.691
Professional Services$2.023 $1.446 $1.543
Total$22.462 $21.009 $23.234

Key KPIs

KPIQ2 2025Q3 2025Q4 2025
AI Knowledge ARR Growth (YoY)+17% YoY; +5% seq. N/A+25% YoY (22% cc)
All-Customer ARR Growth (YoY)N/AN/A+11% YoY (9% cc)
LTM Dollar-Based Sales Net Retention (Knowledge)N/AN/A115% (104% cc), up from 98% a year ago
LTM Dollar-Based Sales Net Retention (All)N/AN/A105% (103% cc), up from 88% a year ago
LTM Net Expansion (Knowledge / All)N/AN/A121% / 114% (118% / 111% cc)
Total RPO (YoY)N/AN/A+17% YoY; short-term RPO $63M (+4% YoY)

Notes: Gross margin and EBITDA margin for Q3 are calculated from reported revenue, gross profit, and EBITDA. cc = constant currency .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 FY26N/A$23.0–$23.5M Introduced
GAAP Net IncomeQ1 FY26N/A$0.9–$1.6M; includes ~$0.8M SBC and ~$1.4M warrant expense Introduced
Non-GAAP Net Income / EPSQ1 FY26N/A$3.1–$3.8M; $0.11–$0.14 Introduced
Adjusted EBITDA / MarginQ1 FY26N/A$3.7–$4.4M; 16%–19% Introduced
RevenueFY26N/A$90.5–$92.0M Introduced
GAAP EPSFY26N/A$0.13–$0.18 Introduced
Non-GAAP EPSFY26N/A$0.30–$0.36 Introduced
Adjusted EBITDA / MarginFY26N/A$10.4–$11.9M; 11%–13% Introduced
Gross Margin %FY26N/A74%–75% Introduced
R&D SpendFY26N/A+6% YoY Introduced
Messaging ARR HeadwindFY26N/A~$4.7M ARR; run-rate impact begins Q2 FY26 Introduced
FY25 Revenue vs GuideFY25$88.0–$88.5M (set in Q3) Actual $88.431M Beat
FY25 Non-GAAP NI / EPS vs GuideFY25$5.1–$5.6M; $0.18–$0.20 (Q3) Actual $5.739M; $0.20 Beat
FY25 GAAP NI vs GuideFY25$2.5–$3.0M (Q3) Actual $32.254M (incl. tax allowance release) Beat (one-time)

Earnings Call Themes & Trends

TopicQ2 FY25 (Dec Q)Q3 FY25 (Mar Q)Q4 FY25 (Jun Q)Trend
AI/Technology InitiativesAI Knowledge ARR +17% YoY; pipeline of seven-figure deals Launched AI Agent for Contact Center; noted large bank expansion win post-quarter AI Knowledge ARR +25% YoY; new deep connectors (SharePoint, Genesys, Salesforce) Improving momentum
Flagship CustomersNew enterprise logos Secured one of largest expansions with U.S. megabank Named JPMorgan Chase; warrants issued; board observer Strengthening partnerships
Product Portfolio Strategy——Sunsetting messaging in FY26; focus on AI Knowledge Portfolio rationalization
Margins/Costs——Gross margin 73% (cloud platform migration, AI ops); target services margin ≈ breakeven Margin expansion
Sales Metrics——Knowledge DNR 115% (vs 98% LY); All DNR 105% (vs 88% LY); RPO +17% YoY Strengthening metrics
Guidance/ToneQ3 guide: Q4 rev $22.8–$23.3M Raised FY25 non-GAAP NI in Q3 FY26 guide: revenue growth, GM 74–75%, R&D +6% Constructive

Management Commentary

  • CEO Ashu Roy: “We are pleased to close fiscal 2025 with solid bookings and strong profitability… well-positioned to capture the compelling opportunity in AI CX automation powered by trusted knowledge” . “AI is… moving down from the hype peak… 95% of AI investments are not showing significant ROI. We know one big reason why. Without trusted knowledge, generative AI is stuck in the rut of garbage in, garbage out” .
  • On JPMorgan: “Our eGain AI Knowledge Hub will now serve all bank employees in their U.S. Chase business… we issued warrants to JPMorgan Chase in August, and they agreed to nominate a Senior Executive to join our eGain board as an observer” .
  • CFO Eric Smit: “Total revenue for the fourth quarter was $23.2 million… first year-over-year increase in revenue in eight quarters… total gross margin for the quarter was 73%” . FY26 target includes “gross margin expansion… 74% to 75%… targeting 20%+ growth in ARR from our core AI knowledge offering,” partially offset by sunsetting messaging (~$4.7M ARR) .

Q&A Highlights

  • Messaging sunset cadence: impact begins Q2 FY26 (run-rate down ~50%), trending to zero by Q1 FY27; choice driven by ROI focus on AI Knowledge amid rising competitive pressure in messaging .
  • JPMorgan warrant/observer: designed to cement a strategic design partnership while remaining a vendor; ~$1.4M warrant expense embedded in Q1 FY26 guide .
  • AI pilots conversion: management cites ~2/3 conversion rate currently as pilots have matured and expectations are better managed .
  • COGS/margin drivers: completed migration to new cloud architecture and greater automation/efficiency in operating the cloud environment, supporting sustainable gross margin gains .
  • ARR mix: ~60% of total ARR now from AI Knowledge; remainder split across Analytics Hub and Conversation Hub (with Analytics a cash cow expected to decline slowly) .

Estimates Context

  • Q4 FY25 vs S&P Global consensus: revenue $23.234M vs $23.039M* (beat); non-GAAP EPS $0.09 vs $0.065* (beat). GAAP EPS $1.11 reflects ~$29M one-time tax benefit . Consensus values marked with * are from S&P Global.*
  • Q1 FY26 guide vs consensus: revenue guide $23.0–$23.5M vs $23.219M* (in line at midpoint); company guided non-GAAP EPS $0.11–$0.14 vs “Primary EPS” consensus $0.105*, which may not be strictly comparable to company’s non-GAAP definition . Consensus values marked with * are from S&P Global.*

Key Takeaways for Investors

  • Beat and turn: Q4 delivered a clean revenue inflection, margin expansion, and a non-GAAP EPS beat vs consensus, with underlying profitability improving even before the one-time tax item .*
  • FY26 setup: Guidance implies modest top-line growth with mix shift to higher-margin AI Knowledge, aided by structural gross margin tailwinds (cloud migration, AI ops), though partially offset by sunsetting messaging .
  • Strategic partnership: JPMorgan engagement and warrant/observer deepen product-market fit in large financial services, likely enhancing credibility and pipeline for seven-figure opportunities .
  • KPIs improving: Knowledge ARR growth (+25% YoY), net retention uplift (115% knowledge; 105% all), and RPO strength (+17% YoY) support sustained growth into FY26 .
  • Capital returns: Expanded $60M buyback authorization and active repurchases provide downside support while management signals shares are undervalued .
  • Watch services/integration: Professional services remains an execution watch item (negative non-GAAP gross profit in Q4), though management targets breakeven over FY26 .
  • Near-term trading lens: Expect focus on AI Knowledge momentum, JPMorgan proof points, and FY26 gross margin trajectory (74–75% guide) vs quarterly delivery, with the messaging headwind cadence an important model input .

Tables and figures footnote: Consensus/estimates marked with * are values retrieved from S&P Global. [GetEstimates outputs]