eGain Corporation

eGain Corporation (NASDAQ: EGAN) is a software-as-a service (SaaS) provider of customer engagement with digital, artificial intelligence (AI) and knowledge capabilities. The Company operates in the development, license, implementation, and customer service infrastructure software solutions. The Company offers digital-first, omnichannel interaction management within a modern, purpose-built desktop.

Recent Financial and Business Updates:

• Fourth Quarter Financial Highlights for Fiscal 2023
  • Revenue Growth: In the fourth quarter of fiscal 2023, eGain achieved total revenue of USD 24.6 million, representing a notable 5% increase compared to the same period in the previous year.
  • SaaS Performance: SaaS revenue displayed remarkable growth, reaching USD 22.7 million, a substantial 10% increase year over year.
  • Improved GAAP Net Income: eGain reported a GAAP net income of USD 2.6 million, equivalent to USD 0.08 per share on both a basic and diluted basis. This marks a significant turnaround from a GAAP net loss of USD 1.6 million, or USD 0.05 per share on both basic and diluted bases, recorded in Q4 2022.
  • Strong Non-GAAP Net Income: Non-GAAP net income for the same quarter amounted to USD 3.6 million, or USD 0.11 per share on both basic and diluted bases, in contrast to the previous year's Q4 figures of USD 893,000, or USD 0.03 per share on a basic basis and diluted basis.
  • Impressive Adjusted EBITDA: The company's Adjusted EBITDA surged to USD 4.0 million, demonstrating substantial growth compared to the USD 857,000 reported in Q4 2022.
  • Share Repurchase Program: eGain conducted a successful share repurchase program, acquiring approximately 640,000 shares at an average cost of USD 7.28 per share, amounting to a total of USD 4.7 million.

• Full Year Financial Highlights for Fiscal 2023
  • Annual Revenue Growth: For fiscal 2023, eGain's total revenue reached USD 98.0 million, showcasing a commendable 7% year-over-year increase (or 9% growth in constant currency).
  • SaaS Revenue Growth: SaaS revenue for the fiscal year amounted to USD 89.6 million, reflecting an impressive 11% year-over-year growth (or 13% growth in constant currency).
  • Positive GAAP Net Income: eGain reported a GAAP net income of USD 2.1 million, translating to USD 0.07 per share on a basic basis and USD 0.06 on a diluted basis. This marks a substantial improvement compared to the previous fiscal year, which saw a GAAP net loss of USD 2.4 million, or USD 0.08 per share on both basic and diluted bases.
  • Robust Non-GAAP Net Income: Non-GAAP net income for fiscal 2023 amounted to USD 8.4 million, or USD 0.26 per share on a basic basis and USD 0.25 per share on a diluted basis, compared to non-GAAP net income of USD 8.9 million, or USD 0.28 per share on a basic basis and USD 0.27 per share on a diluted basis, in fiscal 2022.
  • Steady Adjusted EBITDA: eGain's Adjusted EBITDA for the year totaled USD 8.9 million, showcasing resilience in comparison to the USD 9.9 million recorded in fiscal 2022.
  • Healthy Cash Flow: The company generated USD 4.6 million in cash from operations for fiscal 2023, with an operating cash flow margin of 5%.
  • Solid Cash Position: As of June 30, 2023, eGain maintained a healthy cash and cash equivalents balance of USD 73.2 million, an increase from the USD 72.2 million reported as of June 30, 2022.
  • Share Repurchase Program: eGain continued its share repurchase program, acquiring approximately 786,000 shares at an average cost of USD 7.33 per share, totaling USD 5.8 million.

• First Quarter and Full Year Financial Guidance for Fiscal 2024
  • First Quarter Outlook: For the first quarter of fiscal 2024, ending on September 30, 2023, eGain anticipates total revenue in the range of USD 23.5 million to USD 24.0 million. GAAP net income is expected to be between USD 500,000 to USD 1.0 million, or USD 0.02 to USD 0.03 per share. Non-GAAP net income is projected to be in the range of USD 1.7 million to USD 2.2 million, equivalent to USD 0.05 to USD 0.07 per share.
  • Full Year Projection: For the entire fiscal year 2024, ending on June 30, 2024, eGain provides a revenue outlook of USD 96.0 million to USD 98.0 million. GAAP net income is forecasted to range from USD 6.6 million to USD 7.1 million, translating to USD 0.20 to USD 0.22 per share. Non-GAAP net income is expected to fall within USD 10.8 million to USD 11.3 million, or USD 0.33 to USD 0.35 per share. These projections account for stock-based compensation expense and depreciation and amortization expenses.

Technical Observation (on the daily chart)

Presently, the stock has corrected by approximately 43.71% since reaching its highest point in the past 52 weeks, which occurred on February 09, 2023. The Relative Strength Index (RSI) over a 14-day period stands at 33.74, nearing oversold zone with expectations of some consolidation or a short-term upward momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a “SPECULATIVE BUY” rating is recommended for eGain Corporation (NASDAQ: EGAN) at its current market price of USD 5.81 as on September 15, 2023, at 8:01 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 15, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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