What changed in this filing

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Item 1A. Risk Factors

2025-11-12 compared with 2025-05-14 · 119 added, 139 removed, 363 unchanged (42% of the section changed)

7 unchanged sentences

● the overall demand for enterprise software and services;

● customer acceptance of cloud-based solutions;

● customer acceptance of cloud-based and AI-enabled solutions;

● governmental budgetary constraints or shifts in government spending priorities;

● general political developments.

● general political and regulatory developments.

The global economic climate continues to influence our business.

This includes items such as a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets.

This includes factors such as a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets.

These macroeconomic developments negatively affected, and could continue to negatively affect, our business, operating results or financial condition which, in turn, could adversely affect our stock price.

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Because we recognize revenue when we have satisfied performance obligations to customers in connection with our sales contracts, most of our revenue each quarter results from recognition of deferred revenue related to agreements entered into during previous quarters.

Consequently, declines in new or renewed subscription agreements and maintenance agreements that occur in one quarter will largely be felt in future quarters, both because we may be unable to generate sufficient new revenue to offset the decline and because we may be unable to adjust our operating costs and capital expenditures to align

with the changes in revenue.

Consequently, declines in new or renewed subscription agreements that occur in one quarter will

largely be felt in future quarters, both because we may be unable to generate sufficient new revenue to offset the decline and because we may be unable to adjust our operating costs and capital expenditures to align with the changes in revenue.

In addition, our subscription model makes it more difficult for us to increase our revenue rapidly in any period, because revenue from new customers must be recognized over the applicable subscription term.

It is difficult to forecast the expediency of the transition of our license customers to our cloud delivery model.

Accordingly, we believe that period-to-period comparisons of our results of operations should not be relied upon as definitive indicators of future performance.

Other factors that may cause our revenue and operating results to fluctuate include:

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In addition, our customers may choose to renew for fewer subscriptions (in quantity or products) or renew for shorter contract lengths.

We cannot accurately predict renewal rates given our varied customer base of enterprise and small and medium size business customers and the number of multiyear subscription contracts.

We cannot accurately predict renewal rates given our varied customer base of enterprise and the number of multiyear

subscription contracts.

Our renewal rates may decline or fluctuate as a result of a number of factors, including customer dissatisfaction with our service, decreases in customers’ spending levels, decreases in the number of users at our customers, pricing changes and general economic conditions.

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Our lengthy sales cycles and the difficulty in predicting timing of sales or delays may impair our operating results.

The long sales cycle for our products may cause license and SaaS revenue and operating results to vary significantly from period to period.

The long sales cycle for our products may cause SaaS revenue and operating results to vary significantly from period to period.

The sales cycle for our products can be six months or more and varies substantially from customer to customer.

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We believe that competition will continue to be fierce as current competitors increase the sophistication of their offerings and as new participants enter the market.

Many of our current and potential competitors have longer operating histories,

larger customer bases, broader brand recognition, and significantly greater financial, marketing and other resources.

Many of our current and potential competitors have longer operating histories, larger customer bases, broader brand recognition, and significantly greater financial, marketing and other resources.

With more established and better-financed competitors, these companies may be able to undertake more extensive marketing campaigns, adopt more aggressive pricing policies, and make more attractive offers to businesses to induce them to use their products or services.

If we are unable to compete successfully, our business will be adversely affected.

We are also investing in AI across the entire company and infusing generative AI capabilities into our product and service offerings.

We are also investing in AI across the entire company and integrating generative AI capabilities into our product and service offerings.

We expect AI technology and services to be a highly competitive and rapidly evolving market.

We will bear significant development and operational costs to build and support the generative AI capabilities, products, and services necessary to meet the needs of our customers.

We will bear significant development and operational costs to build and support the generative AI capabilities, products, and

services necessary to meet the needs of our customers.

To compete effectively, we must also be responsive to technological change, potential regulatory developments, and public scrutiny.

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This may lead to lower revenue, gross margins, and operating income.

In addition, customers are currently assessing their AI utilization strategy, so it is difficult to estimate with any reasonable degree of precision the impact of generative AI product offerings on our future revenue, the expected timing or demand for our products and services, and the extent to which customer investment in AI-enabled solutions may displace or accelerate purchases of our existing offerings.

If we fail to expand and improve our sales performance and marketing activities, or retain our sales and marketing personnel, we may be unable to grow our business, which could negatively impact our operating results and financial condition.

Expansion and growth of our business is dependent on our ability to expand our sales force and on the ability of our sales force to increase sales.

If we are not able to effectively develop and maintain awareness of our products in a cost-effective manner, we may not achieve widespread acceptance of our existing and future products.

For example, workforce reductions and turnover may limit our capacity to develop and maintain awareness of our products in a cost-effective manner, which could hinder widespread adoption of our existing and future products.

This may result in a failure to expand and attract new customers and enhance relationships with existing customers.

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If an arrangement requires significant customization or implementation services from us, recognition of the associated subscription and service revenue could be delayed.

The timing of the commencement and completion of these services is subject to factors that may be beyond our control, as this process may require access to the customers’ facilities and coordination with the customer’s personnel after delivery of the software obligations.

The timing of the commencement and completion of these services is subject to factors that may

be beyond our control, as this process may require access to the customers’ facilities and coordination with the customer’s personnel after delivery of the software obligations.

In addition, customers could cancel or delay product implementations.

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These risks in turn could cause our operating results and financial condition to suffer.

Revenue from EMEA sales remained consistent at 22% of our total revenue during the three months ended March 31, 2025 and 2024.

Revenue from EMEA sales was 23% during the nine months ended March 31, 2025 of our total revenue compared to 21% during the nine months ended March 31, 2024.

We derived 19% and 25% of our revenue from EMEA sales during the three months ended September 30, 2025 and 2024.

In addition to those discussed elsewhere in this section, our EMEA sales operations are subject to a number of specific risks, such as:

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● foreign currency fluctuations and imposition of exchange controls;

● changes in data privacy laws including European Union’s General Data Protection Regulation (GDPR);

● changes in data privacy laws including European Union’s General Data Protection Regulation (GDPR) and other emerging privacy or AI-related regulations;

● difficulty and costs in staffing and managing our international operations;

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● various international trade restrictions and tax consequences;

● hostilities in various parts of the world, such as the conflict between Russia and Ukraine and the evolving events in Israel and Gaza;

● hostilities or geopolitical conflicts in various parts of the world, such as the ongoing conflict between Russia and Ukraine and the evolving events in Israel and Gaza;

● reduced intellectual property protections in some countries.

Any of the above risks could adversely affect our international operations, reduce our revenue from customers outside of the U.S.

or increase our operating costs, each of which could adversely affect our business, results of operations, financial condition, and growth prospects.

As of March 31, 2025, approximately 43% of our workforce was employed in India.

Any of the above risks could adversely affect our international operations, reduce our revenue from customers outside of the United States or increase our operating costs, each of which could adversely affect our business, results of operations, financial condition, and growth prospects.

As of September 30, 2025, approximately 64% of our workforce was employed in India.

Of our employees in India, 48% are allocated to research and development.

Although the movement of certain operations internationally was principally

motivated by cost cutting, the continued management of these remote operations requires significant management attention and financial resources that could adversely affect our operating performance.

Although the movement of certain operations internationally was principally motivated by cost cutting, the continued management of these remote operations requires significant management attention and financial resources that could adversely affect our operating performance.

In addition, with the significant increase in the numbers of foreign businesses that have established operations in India, the competition to attract and retain employees there has increased significantly.

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Our reliance on our workforce in India makes us particularly susceptible to disruptions in the business environment in that region.

In particular, sophisticated telecommunications links, high-speed data communications with other eGain offices and customers, and overall consistency and stability of our business infrastructure are vital to our day-to-day operations, and any impairment of such infrastructure will cause our financial condition and results to suffer.

In particular, sophisticated

telecommunications links, high-speed data communications with other eGain offices and customers, and overall consistency and stability of our business infrastructure are vital to our day-to-day operations, and any impairment of such infrastructure will cause our financial condition and results to suffer.

In addition, the maintenance of stable political relations between the U.S., the European Union (EU) and India are also of great importance to our operations.

Recent developments, such as the U.S.

administration's imposition of a 50% tariff on Indian goods effective August 27, 2025, have introduced significant uncertainties.

This tariff escalation has strained U.S.-India relations.

Any of these risks could have a significant impact on our product development, customer support, or professional services.

To the extent the benefit of maintaining these operations abroad does not exceed the expense of establishing and maintaining such activities, our operating results and financial condition will suffer.

Unplanned system interruptions, delays in service or inability to increase capacity, including internationally, at our third-party data center facilities could impair the use or functionality of our cloud operations and harm our business.

Unplanned system interruptions, delays in service or inability to increase capacity, including internationally, at our third-party data center facilities or third-party Platform-as-a-Service (PaaS) providers could impair the use or functionality of our cloud operations and harm our business.

Our customers have in the past experienced some interruptions with our cloud operations.

We believe that these interruptions will continue to occur from time to time.

These interruptions could be due to hardware and operating system failures.

These interruptions could be due to hardware and operating system failures, issues with third-party PaaS platforms, or other operational disruptions.

As a result, our business will suffer if we experience frequent or long system interruptions that result in the unavailability or reduced performance of our hosted operations or reduce our ability to provide remote management services.

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If this were to continue to happen, our business and reputation could be seriously harmed.

Our success largely depends on the efficient and uninterrupted operation of our computer and communications hardware and network systems.

We currently serve our customers from third-party data center facilities operated by third parties in the U.S.

Our success largely depends on the efficient and uninterrupted operation of our computer and communications hardware network systems, and third-party cloud platforms.

We currently serve our customers from third-party data center facilities and third-party PaaS providers operated in the U.S.

and other international locations.

Any damage to, or failure of, our systems generally could interrupt service or impair the use or functionality of our cloud operations.

In addition, as we continue to increase the number of customers and users on our cloud operations, we will need to increase the capacity of our data center infrastructure.

Any damage to, or failure of, our systems or those of our third-party providers generally could interrupt service or impair the use or functionality of our cloud operations.

In addition, as we continue to increase the number of customers and users on our cloud operations, we will need to increase the capacity of our data center and PaaS infrastructure.

If we do not increase our capacity in a timely manner, customers could experience interruptions or delays in access to our cloud operations.

Customer data that we store in third-party data centers may also be vulnerable to damage or interruption from floods, fires, earthquake, power loss, telecommunications failures and similar events.

Any damage to, or failure of, our systems, or those of our third-party data centers, could result in impairment of or interruptions in our service.

Impairment or interruptions in our service may reduce our revenue, cause us to issue credits, or pay penalties, or cause customers to terminate their subscriptions and adversely affect our renewal rate and our ability to attract new customers.

Any damage to, or failure of, our systems, or those of our third-party providers, could result in impairment of, or interruptions in, our service.

Impairment or interruptions in our service may reduce our revenue, cause us to issue credits, pay penalties, or cause customers to terminate their subscriptions and adversely affect our renewal rate and our ability to attract new customers.

Our business will also be harmed if our customers and potential customers believe our cloud operations are unreliable .

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We have entered into support obligations with our customers that require minimum performance standards, including standards regarding the response time of our support services.

If we fail to meet these standards, our customers could terminate their relationships with us, and we could be subject to contractual refunds, and exposure to claims for losses by customers.

If we fail to meet these standards, our customers could terminate their relationships with us, and we could be subject to contractual refunds, and exposure to claims for losses from our customers.

Software errors could be costly and time-consuming for us to correct, and could harm our reputation and impair our ability to sell our solutions.

Our solutions are based on complex software that may contain errors, or “bugs,” that could be costly to correct, harm our reputation, and impair our ability to sell our solutions to new customers.

Moreover, customers relying on our solutions may be more sensitive to such errors, and potential security vulnerabilities and business interruptions for these applications.

Moreover, customers relying on our solutions

may be more sensitive to such errors and potential security vulnerabilities and business interruptions for these applications.

If we incur substantial costs to correct any errors of this nature, our operating margins could be adversely affected.

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If our expectations regarding the market for our applications are not met, our business could be seriously harmed.

We depend on the widespread acceptance and use of our applications as an effective solution for businesses seeking to manage high volumes of customer interactions across multiple channels, including Web, phone, email, print and in-person.

While we believe the potential to be very large, we cannot accurately estimate the size or growth rate of the potential market for such product and service offerings generally, and we do not know whether our products and services in particular will achieve broad market acceptance.

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Furthermore, our business model is premised on business assumptions that are still evolving.

Our business model assumes that both customers and companies will increasingly elect to communicate through multiple channels, as well as demand integration of the online channels into the traditional telephone-based call center.

If any of these assumptions are incorrect or if customers and companies do not adopt digital technology in a timely manner, our business will be seriously harmed and our stock price will decline.

We may be unable to respond to the rapid technological change and changing customer preferences in the online sales, marketing, customer service, and/or online consumer services industries and this may cause our business to suffer.

Our business model assumes that customers will increasingly elect to communicate through multiple channels, including AI-enabled digital channels, as well as demand integration of these channels into the traditional telephone-based call center.

If any of these assumptions are incorrect or if customers and companies do not adopt digital and AI-enabled technologies in a timely manner, our business will be seriously harmed and our stock price will decline.

We may be unable to respond to the rapid technological change and changing customer preferences in digital customer engagement, marketing, and service and this may cause our business to suffer.

If we are unable, for technological, legal, financial or other reasons, to adapt in a timely manner to changing market conditions in the online sales, marketing, customer service and/or e-commerce industry or our customers’ or Internet users’ requirements or preferences, our business, results of operations and financial condition would be materially and adversely affected.

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To the extent we need to license third-party technologies, we may be unable to do so on commercially reasonable terms or at all.

Third-party licenses may expose us to increased risks, including risks associated with the integration of new technology, the diversion of resources from the development of our own proprietary technology, and our inability to generate revenue

from new technology sufficient to offset associated acquisition and maintenance costs.

In the event that we are not able to maintain our licenses to third-party software, or cannot obtain licenses to new software as needed, or in the event third-party software used in conjunction with our platform contains errors or defects, our business, operating results, and financial condition may be adversely affected.

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We assume a certain level of credit risk with our customers in order to do business.

Conditions affecting any of our customers could cause them to become unable or unwilling to pay us in a timely manner, or at all, for products or services we have already provided them.

Conditions affecting any of our customers could cause them to become unable or unwilling to pay us in a timely manner, or at all, for products or services we have already provided.

In the past, we have experienced collection delays from certain customers, and we cannot predict whether we will continue to experience similar or more severe delays in the future.

Although we have established a provision to cover losses due to delays or inability to pay, there can be no assurance that such reserves will be sufficient to cover our losses.

Although we have established a

provision to cover losses due to delays or inability to pay, there can be no assurance that such reserves will be sufficient to cover our losses.

If losses due to delays or inability to pay are greater than our reserves, it could harm our business, operating results and financial condition.

If we acquire companies or technologies, we may not realize the expected business benefits, the acquisitions could prove difficult to integrate, disrupt our business and adversely affect our operations.

As part of our business strategy, we periodically make investments in, or acquisitions of, complementary businesses, joint ventures, services and technologies and intellectual property rights, and we expect that we will continue to make such investments and acquisitions in the future.

As part of our business strategy, we may periodically make investments in, or acquisitions of, if any, complementary businesses, joint ventures, services and technologies and intellectual property rights, and we expect that we will continue to evaluate such investments and acquisitions in the future.

Acquisitions and investments involve numerous risks, including:

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Our technology platforms enable representatives of our customers as well as individual service providers to communicate with consumers and other persons seeking information or advice on the Internet.

The law relating to the liability of online

platform providers such as us for the activities of users of their online platforms is often challenged in the U.S.

The law relating to the liability of online platform providers such as us for the activities of users of their online platforms is often challenged in the U.S.

and internationally.

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If we are not covered by a safe harbor, for any reason, we could be exposed to claims, which could be costly and time-consuming to defend.

If our cybersecurity systems or the systems of our vendors, partners and suppliers are breached and unauthorized access is obtained to a customer’s data or our data or IT systems, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.

If our cybersecurity systems or the systems of our vendors, partners and suppliers are breached and unauthorized access is obtained to a customer’s data, our data or IT systems, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.

Security incidents have become more prevalent across industries and the methods and techniques used by threat actors continue to evolve at a rapid pace.

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While we have security measures in place that are designed to protect customer information and prevent data loss and other security breaches, these security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers (which may involve nation states and individuals sponsored by them), employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information, or our IT systems.

Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information in order to gain access to our customers’ data or our data or IT systems.

Additionally, third-parties may attempt, through phishing, social engineering or otherwise, to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information in order to gain access to our customers’ data or our data or IT systems.

Employees or contractors have introduced vulnerabilities in, and enabled the exploitation of, our IT environments in the past and may do so in the future.

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If these attacks are successful, they could result in the theft of proprietary, personally identifiable, confidential and sensitive information of ours, our employees, our customers and our business partners, and could materially disrupt business for us, our customers and our business partners.

A successful cybersecurity attack involving our data center, network or software products could also negatively impact the market perception of the effectiveness of our products or lead to contractual disputes, litigation or government regulatory action against us, any of which could materially adversely affect our business, reputation and resulting operations.

A successful cybersecurity attack involving our data center, network or software

products could also negatively impact the market perception of the effectiveness of our products or lead to contractual disputes, litigation or government regulatory action against us, any of which could materially adversely affect our business, reputation and resulting operations.

We may also experience disruptions, outages, and other performance problems on our systems due to service attacks, unauthorized access, or other security-related incidents.

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Any successful denial of service attack could result in a loss of customer confidence in the security of our platform and damage to our brand.

Our platform involves the storage and transmission of our customers’ information, which may include their business and financial data.

As a result, unauthorized access to customer data or security breaches could result in the loss, or unauthorized dissemination, of such data, which could seriously harm our or our customers’ businesses and reputations.

Any of these security incidents could negatively affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions, result in reputational damage or subject us to third-party lawsuits, regulatory fines, or other action or liability, which could adversely affect our operating results.

Any security incidents could negatively affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions, result in reputational damage or subject us to third-party lawsuits, regulatory fines, or other action or liability, which could adversely affect our operating results.

Any insurance coverage we may have related to security and privacy damages may not be adequate for liabilities actually incurred and we cannot be certain that insurance will continue to be available to us on economically reasonable terms, or at all.

These risks are likely to increase as we continue to grow the scale and functionality of our platform and process, store, and transmit increasingly large amounts of our customers’ information and data, which may include proprietary or confidential data or personal or identifying information.

Changes in the European regulatory environment regarding privacy and data protection regulations, such as the GDPR, could expose us to risks of noncompliance and costs associated with compliance.

We have in the past relied on adherence to the U.S.

Department of Commerce’s Safe Harbor Privacy Principles, the U.S.- EU and U.S.-Swiss Safe Harbor Frameworks, and their successors, the EU-U.S.

Changes in privacy and data protection laws and regulations, including the European Union (such as the GDPR), the United Kingdom, and other jurisdictions in which we operate, could expose us to risks of noncompliance and costs associated with compliance.

We transfer personal data from the European Economic Area (EEA), the United Kingdom, and Switzerland to the U.S.

Historically, these transfers relied on the U.S.-EU and U.S.-Swiss Safe Harbor Frameworks and their successors, the EU-U.S.

and Swiss-U.S.

Privacy Shield Frameworks, as agreed to and set forth by the U.S.

Department of Commerce, and the EU and Switzerland, which established a means for legitimating the transfer of personally identifiable information (PII) by U.S.

companies doing business in Europe from the European Economic Area (EEA) and Switzerland to the U.S.

However, as a result of the October 6, 2015 EU Court of Justice (ECJ), opinion in Case C-362/14 (Schrems v.

Data Protection Commissioner) regarding the adequacy of the U.S.-EU Safe Harbor Framework, and the July 16, 2020 ECJ judgment in Case C-311/18 (Data Protection Commissioner v Facebook Ireland Limited and Maximillian Schrems) regarding the adequacy of the Privacy Shield Framework, both frameworks are no longer deemed to constitute a valid method of compliance with restrictions set forth in European law regarding the transfer of data outside of the EEA.

The EJC also noted that standard contractual clauses (approved by the European Commission as an adequate personal data transfer mechanism) may not necessarily be relied upon in all circumstances.

Privacy Shield Frameworks.

However, EU Court of Justice (ECJ) rulings in 2015 (Schrems 1) and 2020 (Schrems II) invalidated both frameworks and standard contractual clauses (approved by the European Commission as an adequate personal data transfer mechanism) may not necessarily be relied upon in all circumstances.

In addition to other mechanisms, in limited circumstances we may rely on Privacy Shield certifications of third parties (for example, vendors and partners).

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DPF) was created as a successor to the Privacy Shield.

Following an adequacy decision issued by the European Commission on July 10, 2023, the DPF, along with a UK extension to the EU-U.S.

Following an adequacy decision issued by the European Commission on July 10, 2023, the EU-U.S.

DPF is available for companies as a lawful transfer mechanism for personal data transfers to the U.S.

from the EEA.

Further, following an adequacy regulation that came into force in the UK in October 2023 and an amendment to the Swiss Data Protection Ordinance that came into force in Switzerland in September 2024, a UK extension to the EU-U.S.

DPF that allows the transfer of personal data from the UK to the U.S.

(UK DPF Extension), is available for companies as a lawful transfer mechanism for personal data transfers to the U.S.

from the EEA and UK.

(the UK DPF Extension) and a Swiss framework that allows for the transfer of personal data from Switzerland to the U.S.

(the Swiss-U.S.

Data Privacy Framework (Swiss-U.S.

DPF) also has been established, but has not yet been granted an adequacy decision by the Swiss Federal Data Protection and Information Commissioner.

DPF) are currently available.

We have self-certified to the EU-U.S.

DPF, the UK DPF Extension, and the Swiss-U.S.

DPF already has been the subject of legal challenge, however, and more generally, these frameworks may be subject to legal challenges from privacy advocacy groups or others.

Additionally, the European Commission's adequacy decision regarding the DPF provides that the DPF will be subject to future reviews and may be subject to suspension, amendment, repeal, or limitations in scope by the European Commission.

These mechanisms remain subject to legal challenges and future review, and the European Commission may suspend, amend, or limit their scope.

These developments regarding cross-border data transfers have created uncertainty and increased the risk around our international operations and may require us to review and amend the legal mechanisms by which we make or receive personal data transfers to the U.S.

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We may, among other things, be required to implement additional contractual and technical safeguards for any personal data transferred out of the EEA, Switzerland, the United Kingdom or other regions which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual negotiations, and may adversely impact our business, financial condition and operating results.

We may also experience hesitancy, reluctance, or refusal by European or multi-national customers to continue to use our services due to the potential risk exposure to such customers as a result of the international legal developments.

We and our customers are at risk of enforcement actions taken by an EU or UK data protection authority until such point in time that we ensure that all data transfers to us from the EEA and UK are legitimized.

We may find it necessary to establish systems to maintain EU/UK-origin data in the EEA or UK, which may involve substantial expense and distraction from other aspects of our business.

We publicly post our privacy policies and practices concerning our processing, use and disclosure of PII.

Our publication of our privacy policy and other public statements that provide promises and assurances about privacy and security can subject us to potential governmental action if they are found to be deceptive or misrepresentative of our practices.

Further, the costs of compliance with, and other burdens imposed by, such laws, regulations and policies that are applicable to us may limit the use and adoption of our products and solutions and could have a material adverse impact on our results of operations.

Privacy concerns and laws, evolving regulation of cloud computing and other domestic or foreign regulations may limit the use and adoption of our solutions and adversely affect our business.

Further to the above, regulation related to the provision of services on the Internet is increasing, as federal, state and foreign governments continue to adopt new laws and regulations addressing data privacy and the collection, processing, storage and use of personal information.

Further, laws are increasingly aimed at the use of personal information for marketing

purposes, such as the EU’s e-Privacy Directive (which is set to be replaced by a new EU e-Privacy Regulation which will have a “direct effect” in each EU Member State), and the country-specific regulations that implement that directive.

These and other requirements could reduce demand for our solutions or restrict our ability to store and process data or, in some cases, impact our ability to offer our services and solutions in certain locations.

We may also experience hesitancy, reluctance, or refusal by European or multi-national customers to use our services due to the potential risk exposure to such customers as a result of international legal developments, and we may need to maintain EU/UK-origin data locally, which may involve substantial expense and distraction from other aspects of our business.

We publicly post our privacy policies and practices concerning our processing, use and disclosure of personal information.

Our publication of our privacy policy and other public statements that provide promises and assurances about privacy and security can subject us to potential governmental action or reputational harm if they are found to be deceptive or misrepresentative of our practices.

Further, the costs of compliance with, and other burdens imposed by, such laws,

regulations and policies that are applicable to us may limit the use and adoption of our products and solutions and could have a material adverse impact on our results of operations .

Privacy concerns and laws, evolving regulation of cloud computing, AI and other domestic or foreign regulations may limit the use, functionality and adoption of our solutions and adversely affect our business.

We are subject to a growing number of federal, state and foreign laws, regulations and standards governing data privacy, cybersecurity and the collection, processing, storage, use and transfer of personal information.

Regulatory requirements continue to expand globally, and unfavorable laws, regulations, or interpretations could limit demand for our services, increase compliance costs, or restrict our ability to offer our services and solutions in certain locations.

Although we have implemented contracts, diligence programs, policies and procedures designed to address compliance with applicable laws and regulations, there can be no assurance that our employees, contractors, partners, suppliers, data providers or agents will not violate such laws and regulations or our contracts, policies and procedures.

Additionally, public perception and standards related to the privacy of personal information can shift rapidly, in ways that may affect our reputation or influence regulators to enact regulations and laws that may limit our ability to provide certain products and services.

For example, numerous jurisdictions, including the EU, are considering laws and regulations that would impose additional data privacy and other compliance requirements on the use of AI and could require us to adjust or limit our product offerings in such jurisdictions.

In the U.S., California enacted the California Consumer Privacy Act (CCPA) on June 28, 2018, which went into effect on January 1, 2020.

The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

On November 3, 2020, California passed the California Privacy Rights Act (CPRA), which became effective on January 1, 2023 and amends and expands the CCPA, including the introduction of sensitive personal information as a new regulated dataset in California that is subject to new disclosure and purpose limitation requirements.

Additionally, by July 2024, additional states had enacted numerous comprehensive state data privacy laws, requiring businesses to evaluate each law individually for specific compliance requirements and consumer rights, including the following:

● The Virginia Consumer Data Protection Act (VCDPA) became effective on January 1, 2023;

● The Colorado Privacy Act and the Connecticut Data Privacy Act both become effective on July 1, 2023;

● The Utah Consumer Privacy Act became effective on December 31, 2023;

● Florida's Digital Bill of Rights, Oregon's Consumer Privacy Act, and Texas' Data Privacy and Security Act went into effect on July 1, 2024;

● Montana's Consumer Data Privacy Act will come into effect on October 1, 2024;

● Delaware’s Personal Data Privacy Act, Iowa’s Consumer Data Protection Act, Nebraska’s Online Data Privacy Act and New Hampshire’s Privacy Act will come into effect on January 1, 2025;

● New Jersey’s Privacy Act will come into effect on January 15, 2025;

● Tennessee’s Information Protection Act will come into effect on July 1, 2025;

● Minnesota’s Consumer Privacy Act will come into effect on July 31, 2025;

● Maryland’s Online Data Privacy Act will come into effect on October 1, 2025;

● Indiana’s Consumer Data Protection Act and Kentucky’s Consumer Data Protection Act will come into effect on January 1, 2026.

Furthermore, New York enacted the Stop Hacks and Improve Electronic Data Security Act (SHIELD Act), which became effective March 2020 and requires companies with data relating to New Yorkers to adopt comprehensive cybersecurity programs.

Aspects of the CCPA, CPRA and other states’ privacy laws remain unclear and we may be required to modify our practices further in an effort to comply with them.

These statutes may increase our compliance costs and potential liability.

Furthermore, on August 11, 2023, India’s Digital Personal Data Protection Bill (DPDP) received presidential assent after passing both houses of India’s legislature but there has been no official slated implementation date.

DPDP applies to personal data processed within India and personal data outside the territory of India if such processing is in connection with any activity related to offering of goods or services to data subjects.

We will continue to monitor developments related to new privacy laws which will require us to incur additional costs and expenses in an effort to monitor and comply with such laws.

Additionally, public perception and standards related to the privacy of personal information can shift rapidly, in ways that may affect our reputation or influence legislator to enact regulations and laws, or regulators to enforce such laws or issue guidance, in each case that may limit our ability to provide certain products and services.

In the U.S., the California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act (CPRA) provides California residents with expanded rights to regarding personal information and impose significant compliance obligations.

In addition, numerous other states have adopted comprehensive privacy laws with varying requirements and enforcement mechanisms, including obligations related to sensitive personal information, data subject rights, and cybersecurity programs.

Compliance with these laws increases operational complexity and costs, and failure to comply could result in investigations, fines, litigation, contractual liability, or reputational harm.

Internationally, global “digital” regulations continue to develop and evolve, including the EU’s GDPR, ePrivacy Directive, Network and Information Systems 2 Directive, Digital Operational Resiliance Act, Data Act, and Digital Services Act.

In addition, India’s Digital Personal Data Protection Bill (DPDP), published in 2023, but with an implementation timeline that remains uncertain, applies broadly to personal data processed within India and personal data outside the territory of India if such processing is in connection with any activity related to offering of goods or services to data subjects.

We will continue to monitor developments related to existing and new “digital” laws which will require us to incur additional costs and expenses in an effort to monitor and comply with such laws.

In addition to costs involved in monitoring and analyzing such laws to determine to what extent they apply, and costs involved in any compliance measures, there are also financial risks in the event of enforcement action, with many imposing obligations and penalties for noncompliance.

Further, to the extent that any new laws may limit our ability to provide our solutions to customers .

In addition to government activity, privacy advocacy and other industry groups have established or may establish new self-regulatory standards that may place additional burdens on us.

Our customers expect us to meet voluntary certification or other standards established by third parties, such as TRUSTe.

If we are unable to maintain these certifications or meet

these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business.

If we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business.

The costs of compliance with and other burdens imposed by laws, regulations and standards may limit the use and adoption of our service and reduce overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance.

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Issues in the development and use of AI may result in reputational or competitive harm or liability.

We are integrating AI into several of our offerings, developed either by us or in collaboration with our strategic partner, OpenAI.

We anticipate significant growth in this area.

We are integrating AI into several of our offerings and anticipate significant growth in this area.

However, like many innovations, AI comes with risks and challenges that could impact its adoption and our business.

Potential issues include flawed algorithms or training methods, inadequate or biased datasets, and harmful or illegal content generated by AI systems.

Poor AI development or deployment practices could lead to incidents that hinder AI acceptance, cause harm, or result in our products not functioning as intended.

Human oversight may be necessary for certain outputs.

These challenges, along with other issues related to innovative technologies, could expose us to competitive harm, regulatory actions, legal liabilities (including under new AI regulations in the EU), and reputational damage.

These may include flawed algorithms or training methods, inadequate or biased datasets, concept drift, and harmful, misleading, or unlawful content that may be generated by AI systems.

While eGain does not control or assume responsibility for such AI-generated outputs, their use by customers could nonetheless result in disputes, regulatory scrutiny, legal liability, or reputational harm that may indirectly affect us.

In addition, poor development or deployment practices could undermine customer confidence, hinder AI acceptance, cause harm, or result in products not performing as intended.

The regulatory environment for AI is evolving rapidly.

Emerging laws and regulations, including the EU AI Act, U.S.

federal and state initiatives, and other international measures, may require transparency, documentation, risk assessment, monitoring, and mitigation.

Such regulatory scrutiny could increase compliance costs, and any failure to comply may harm our reputation, customer trust, operations, and financial condition.

Further, a number of countries and states are still considering their legislative approach to AI and the law in this area, creating uncertainty.

These challenges, along with other issues related to innovative technologies, could expose us to increased compliance costs, competitive harm, regulatory actions, legal liabilities, and reputational damage.

Some AI applications raise ethical concerns or have broad societal impacts.

If our AI solutions lead to unintended consequences, misuse, or controversy due to their effects on human rights, privacy, employment, or other social, economic, or political issues, we may face reputational harm, negatively affecting our business and financial performance.

We also rely in part on third-party AI technologies, such as those provided by OpenAI and other partners.

If these partners experience disruptions, errors, restrictions on training data, regulatory challenges, or cease to provide access on commercially reasonable terms, our ability to offer AI-enabled solutions could be impaired.

The inherent uncertainty of AI technologies, combined with evolving legal, ethical, and societal expectations, could materially and adversely affect our business, financial condition, operating results, and prospects.

Anti-corruption, anti-bribery, and similar laws, and failure to comply with these laws, could subject us to criminal penalties or significant fines and harm our business and reputation.

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Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations or interpretive positions could limit our ability to provide services and harm our business .

Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare and telecommunications.

Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing and other outsourced services.

Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare, telecommunications and other highly regulated industries.

Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing, AI and other outsourced services.

The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit customers’ use and adoption of our services and reduce overall demand for our services.

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If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our service where required, our business may be harmed.

In addition, an inability to satisfy the standards of certain voluntary third-

party certification bodies that our customers may expect, such as an attestation of compliance with the PCI Data Security Standards, may have an adverse impact on our business.

Our business may also be affected by evolving regulatory frameworks, including those focused on AI, cybersecurity, outsourcing, and data governance, such as the AI

Act, Digital Services Act, Network and Information Systems 2 Directive, and Digital Operational Resiliance Act in the EU, as well as U.S.

and international initiatives incorporating the NIST AI Risk Management Framework.

We may be faced with questions and additional requirements from customers, and compliance may require us to implement additional controls, transparency measures, or monitoring obligations.

In addition, an inability to satisfy the standards of certain voluntary third-party certification bodies that our customers may expect, such as an attestation of compliance with the PCI Data Security Standards, HIPAA, FEDRAMP or similar frameworks, may adversely affect our ability to provide services to certain customers.

If we are unable to achieve or maintain these industry-specific certifications or other requirements or standards relevant to our customers, it could adversely affect our ability to provide our services to certain customers and harm our business.

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We cannot predict whether, and to what degree, our sales, operations and financial results could in the future be affected by the pandemic and preventative measures.

● Risks presented by pandemics and other public health emergencies include, but are not limited to the rate of information technology spending and the ability of our customers to purchase our offerings could be adversely impacted.

Further, the impact of a pandemic or public health emergency could delay prospective customers’ purchasing decisions and cause them to become less inclined to trade-up from existing solutions, impact customers’ pricing expectations for our offerings, lengthen payment terms, reduce the value or duration of their subscription contracts, or adversely impact renewal rates;

● increased cyber incidents during a pandemic or public health emergency and our increased reliance on a remote workforce could increase our exposure to potential cybersecurity breaches and attacks;

● our results of operations are subject to fluctuations in foreign currency exchange rates, which risks may be heightened due to increased volatility of foreign currency exchange rates as a result of a pandemic or public health emergency.

Further, our forecasted revenue, operating results and cash flows could vary materially from those we provide as guidance or from those anticipated by investors and analysts if the assumptions on which we base our financial projections are inaccurate as a result of the unpredictability of the impact that a pandemic or public health emergency will have on our businesses, our customers’ and partners’ businesses and the global markets and economy or we make changes to our licensing programs or payment terms in connection with a pandemic or public health emergency.

Risks presented by pandemics and other public health emergencies include, but are not limited to:

reduced or delayed IT spending by customers, slower purchasing decisions, pressure on pricing and payment terms, lower subscription values or renewal rates, lengthened sales cycles, increased cybersecurity threats due to remote work and heightened reliance on digital operations, and greater volatility in foreign currency exchange rate.

Our forecasted revenue, operating results and cash flows could vary materially from those we provide as guidance or from those anticipated by investors and analysts if the assumptions on which we base our financial projections are inaccurate as a result of the unpredictability of the impact that a pandemic or public health emergency will have on our businesses, our customers’ and partners’ businesses and the global markets and economy or we make changes to our licensing programs or payment terms in connection with a pandemic or public health emergency.

We cannot reasonably predict the ultimate impact of any pandemic or public health emergency, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread of the pandemic or public health emergency, the impact of governmental regulations that have been, and may continue to be, imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions.

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Changes to current accounting policies could have a significant effect on our reported financial results or the way in which we conduct our business.

Generally accepted accounting principles and the related accounting pronouncements, implementation guidelines and interpretations for some of our significant accounting policies are highly complex and require subjective judgments and

Some of our more significant accounting policies that could be affected by changes in the accounting rules and the related implementation guidelines and interpretations include:

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Changes in domestic and foreign trade policies, including the imposition of tariffs and retaliatory tariffs, and other factors beyond our control may adversely impact our business, financial condition, and results of operations.

government recently announced changes to its trade policies, including increasing tariffs on imports, in some cases significantly, and potentially negotiating or terminating existing trade agreements.

The current tariff environment is dynamic and uncertain, as the U.S.

government has announced widespread tariff reform, with the effectiveness delayed in many cases.

Changes to tariffs and other trade restrictions can be announced at any time with little or no notice.

We cannot predict with certainty the future trade policies of the U.S.

or other countries.

Additionally, potential tariffs or other U.S.

trade policy measures have triggered retaliatory actions by other countries.

Increased tariffs and trade restrictions may cause the prices of our customers, vendors, partners and suppliers’ products to increase, which could reduce demand for such products, or reduce our customers, vendors, partners and suppliers’ margins, and adversely impact their revenues, financial results, and ability to service debt.

government recently implemented changes to its trade policies, including significant tariff increases on imports and potential changes to existing trade agreements, creating a dynamic and uncertain trade environment.

Such measures can be adopted with little or no notice, and retaliatory actions by other countries may further increase costs and disrupt global supply chains.

Higher tariffs or trade restrictions may raise the cost of products sold by our customers, vendors, partners, and suppliers, reducing demand, compressing margins, and impairing their financial performance and ability to meet obligations.

This, in turn, could adversely impact our financial condition and results of operations.

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We have been and may in the future be sued by third parties for various claims including alleged infringement of proprietary rights that can be time-consuming, incur substantial costs, and divert the attention of management, which could adversely affect our operations and cash flow.

We are involved in various legal matters arising from the normal course of business activities.

These may include claims, suits, and other proceedings involving alleged infringement of third-party patents and other intellectual property rights, and commercial, labor and employment, and other matters.

We are, and may in the future be, subject to claims, lawsuits, and other proceedings in the ordinary course of business, including those involving alleged infringement of third-party patents and other intellectual property rights, and commercial, labor and employment, and other matters.

The software and Internet industries are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights.

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Our technologies and those of our customers may be subject to injunction if they are found to infringe the rights of a third-party or we may be required to pay damages, or both.

Many of our agreements require us to indemnify our customers for third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim.

Many of our customer agreements require us to indemnify our customers against third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim.

The outcome of any litigation, regardless of its merits, is inherently uncertain.

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In addition, defending our intellectual property rights might entail significant expense.

Any of our trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation.

Any of our trademarks or other intellectual property rights may be challenged by others or invalidated through administrative

process or litigation.

While we have some U.S.

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We may be subject to legal proceedings and claims from time to time in the ordinary course of our business, including claims of alleged infringement of the patents and other intellectual property rights of third parties.

Our products may infringe on issued patents that may relate to our products because patent applications in the U.S.

Our products may inadvertently infringe on issued patents that may relate to our products because patent applications in the U.S.

are not publicly disclosed until the patent is issued, and hence applications may have been filed which relate to our software products.

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● concerns related to liquidity of our stock;

● actual or anticipated fluctuations in our operating results, our ability to meet announced or anticipated profitability goals and changes in or failure to meet securities analysts’ expectations;

● actual or anticipated fluctuations in our operating results, our ability to meet announced or anticipated revenue and/or profitability goals and changes in or failure to meet securities analysts’ expectations;

● announcements of technological innovations and/or the introduction of new services by us or our competitors;

● developments with respect to intellectual property rights and litigation, regulatory scrutiny and new legislation;

● conditions and trends in the Internet and other technology industries;

● market conditions and trends in customer engagement platforms, AI solution and the broader technology industries;

● general market and economic conditions.

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Our insiders who are significant stockholders have the ability to exercise significant control over matters requiring stockholder approval, including the election of our board of directors, and may have interests that conflict with those of other stockholders.

Our directors and executive officers, together with their affiliates and members of their immediate families, beneficially owned, in the aggregate, approximately 35% of our outstanding capital stock as of March 31, 2025, of which our Chief Executive Officer, Ashutosh Roy, beneficially owned approximately 32% as of such date.

Our directors and executive officers, together with their affiliates and members of their immediate families, beneficially owned, in the aggregate, approximately 39% of our outstanding capital stock as of September 30, 2025, of which our Chief

Executive Officer, Ashutosh Roy, beneficially owned approximately 34% as of such date.

As a result of these concentrated holdings, Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors