What changed in this filing

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Item 1. Financial Statements

2021-05-14 compared with 2021-02-12 · 75 added, 74 removed, 438 unchanged (25% of the section changed)

6 unchanged sentences

Restricted cash

Accounts receivable, less allowance for doubtful accounts of $621 and $384 as of December 31, 2020 and June 30, 2020, respectively

Accounts receivable, less allowance for doubtful accounts of $742 and $384 as of March 31, 2021 and June 30, 2020, respectively

Costs capitalized to obtain revenue contracts, net

22 unchanged sentences

50,000 shares;

31,048 shares as of December 31, 2020 and 30,821 shares as of June 30, 2020

31,092 shares as of March 31, 2021 and 30,821 shares as of June 30, 2020

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Professional services

11 unchanged sentences

Interest income, net

Other expense, net

Other income (expense), net

Income before income tax (provision) benefit

8 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income, net of taxes:

Nine Months Ended

Other comprehensive income (loss), net of taxes:

Foreign currency translation adjustments

4 unchanged sentences

(in thousands)

Three Months Ended December 31, 2020

Three Months Ended March 31, 2021

Additional Paid-in

3 unchanged sentences

Income (Loss)

Balances as of September 30, 2020

Balances as of December 31, 2020

Interest on stockholder notes

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Stock-based compensation

Foreign currency translation adjustments

Balances as of December 31, 2020

Three Months Ended December 31, 2019

Balances as of March 31, 2021

Three Months Ended March 31, 2020

Additional Paid-in

3 unchanged sentences

Income (Loss)

Balances as of September 30, 2019

Interest on stockholder notes

Balances as of December 31, 2019

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Stock-based compensation

Foreign currency translation adjustments

Balances as of December 31, 2019

Balances as of March 31, 2020

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended December 31, 2020

Nine Months Ended March 31, 2021

Additional Paid-in

9 unchanged sentences

Foreign currency translation adjustments

Balances as of December 31, 2020

Six Months Ended December 31, 2019

Balances as of March 31, 2021

Nine Months Ended March 31, 2020

Additional Paid-in

10 unchanged sentences

Foreign currency translation adjustments

Balances as of December 31, 2019

Balances as of March 31, 2020

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

6 unchanged sentences

Stock-based compensation

Loss on disposal of property and equipment

Gain on disposal of property and equipment

Changes in operating assets and liabilities:

27 unchanged sentences

Cash paid for taxes, net of tax refunds

Non-cash items:

Purchases of equipment through trade accounts payable

ROU assets and lease liabilities recognized from lease modification

See accompanying notes to condensed consolidated financial statements.

EGAIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

eGain Corporation (“eGain”, the “Company”, “our”, “we” or “us”) is a leading provider of cloud-based customer engagement software with operations in the United States, United Kingdom and India.

We help business-to-consumer (B2C) brands operationalize digital customer engagement strategy.

Our suite includes rich applications for digital interaction, knowledge management, and AI-based process guidance.

We also provide advanced, integrated analytics for contact centers and digital properties to holistically measure, manage and optimize resources.

We believe the benefits of our products include reduced customer effort, customer satisfaction, connected service processes, converted upsell opportunities, and improved compliance—across mobile, social, web, and phone.

Hundreds of global enterprises rely on eGain to transform fragmented customer service systems into unified Customer Engagement Hubs.

eGain Corporation (“eGain”, the “Company”, “our”, “we” or “us”) automates customer engagement with an innovative Software as a service (SaaS) platform, powered by deep digital, Artificial intelligence (AI), and knowledge capabilities.

We are headquartered in the United States.

We also operate in United Kingdom and India.

We sell mostly to large enterprises across financial services, telecommunications, retail, government, healthcare, and utilities.

With our mantra of AX + BX + CX = DX™ , we guide clients to effortless Digital experience (DX) by holistically optimizing Agent experience (AX), Business experience (BX), and Customer experience (CX).

Approximately one hundred seventy-five leading brands use eGain cloud software to improve customer satisfaction, empower agents, reduce service cost and boost sales.

Our fiscal year ends on June 30.

1 unchanged sentence

Basis of Presentation

The accompanying condensed consolidated balance sheet as of December 31, 2020 and the condensed consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three and six months ended December 31, 2020 and 2019, are unaudited.

The accompanying condensed consolidated balance sheet as of March 31, 2021 and the condensed consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three and nine months ended March 31, 2021 and 2020, are unaudited.

The consolidated balance sheet as of June 30, 2020 included herein was derived from the audited financial statements as of that date.

28 unchanged sentences

In August 2018, FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) .

This update requires a customer in a cloud computing service arrangement to follow the internal-use software guidance to determine which implementation costs to recognize and defer as an asset.

This update requires customers in a cloud computing service arrangement to follow the internal-use software guidance to determine which implementation costs to recognize and defer as an asset.

We adopted this guidance as of our first quarter of fiscal year 2021 with no impact on our consolidated financial statements.

54 unchanged sentences

Amortization of costs to obtain revenue contracts is included as a component of sales and marketing expenses in our condensed consolidated statements of operations.

During the three and six months ended December 31, 2020, we capitalized $343,000 and $370,000 of costs to obtain revenue contracts, respectively, and amortized $305,000 and $562,000 to sales and marketing expense, respectively.

During the three and six months ended December 31, 2019, we capitalized $261,000 and $561,000 of costs to obtain revenue contracts, respectively, and amortized $207,000 and $407,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $3.4 million as of December 31, 2020 and June 30, 2020, respectively.

During the three and nine months ended March 31, 2021, we capitalized $677,000 and $1.1 million of costs to obtain revenue contracts, respectively, and amortized $309,000 and $872,000 to sales and marketing expense, respectively.

During the three and nine months ended March 31, 2020, we capitalized $459,000 and $1.0 million of costs to obtain revenue contracts, respectively, and amortized $210,000 and $607,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $3.8 million and $3.4 million as of March 31, 2021 and June 30, 2020, respectively.

Deferred Revenue

11 unchanged sentences

The Company operates in one operating segment and all required financial segment information can be found in the condensed consolidated financial statements.

Results for Asia Pacific represent costs and long-lived assets of our operations in India.

The following table presents our operating income among our three operating regions (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

Income from operations:

12 unchanged sentences

Receivables are written off against the allowance when we have exhausted collection efforts without success.

Two customers, who are also our partners, accounted for 19% and 13%, respectively, of total revenue during the three months ended December 31, 2020 and 19% and 12%, respectively for the six months ended December 31, 2020.

The same partners, accounted for 18% and 10%, respectively, of total revenue during the three months ended December 31, 2019 and 18% and 10%, respectively, for the six months ended December 31, 2019.

Two customers, who are also our partners, accounted for 23% and 13%, respectively, of total revenue during the three months ended March 31, 2021 and 20% and 12%, respectively for the nine months ended March 31, 2021.

The same partners, accounted for 18% and 10%, respectively, of total revenue during the three months ended March 31, 2020 and 18% and 10%, respectively, for the nine months ended March 31, 2020.

Accounts Receivable and Allowance for Doubtful Accounts

8 unchanged sentences

Unbilled accounts receivables are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable upon certain criteria being met.

Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $1.1 million and $1.7 million as of December 31, 2020, and June 30, 2020, respectively, and are included in the accounts receivable balance.

Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $855,000 and $1.7 million as of March 31, 2021, and June 30, 2020, respectively, and are included in the accounts receivable balance.

Stock-Based Compensation

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Stock-Based Compensation Expense:

4 unchanged sentences

Total stock-based compensation expense

Total stock-based compensation includes expense related to non-employee awards of an expense reversal of $17,000 and expense of $33,000 during the three and six months ended December 31, 2020, respectively.

Total stock-based compensation includes expense related to non-employee awards of $20,000 and $43,000 during the three and six months ended December 31, 2019, respectively.

Total stock-based compensation includes expense related to the ESPP of $115,000 and $217,000 for the three and six months ended December 31, 2020, respectively.

Total stock-based compensation includes expense related to the ESPP of $96,000 and $124,000 for the three and six months ended December 31, 2019, respectively.

Total stock-based compensation includes expense related to non-employee awards of an expense reversal of $12,000 and expense of $21,000 during the three and nine months ended March 31, 2021, respectively.

Total stock-based compensation includes expense related to non-employee awards of $14,000 and $57,000 during the three and nine months ended March 31, 2020, respectively.

Total stock-based compensation includes expense related to the ESPP of $137,000 and $354,000 for the three and nine months ended March 31, 2021, respectively.

Total stock-based compensation includes expense related to the ESPP of $87,000 and $211,000 for the three and nine months ended March 31, 2020, respectively.

We utilize the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted.

All shares of our common stock issued pursuant to our stock option plans are only issued out of an authorized reserve of shares of common stock which were previously registered with the SEC on Registration Statements on Form S-8.

During the three months ended December 31, 2020 and 2019, we granted options to purchase 75,375 and 46,225 shares of common stock with a weighted-average fair value of $7.69 and $4.15 per share, respectively.

During the six months ended December 31, 2020 and 2019, we granted options to purchase 116,575 and 248,325 shares of common stock with a weighted-average fair value of $7.21 and $4.28 per share, respectively.

During the three months ended March 31, 2021 and 2020, we granted options to purchase 47,050 and 46,550 shares of common stock with a weighted-average fair value of $5.98 and $5.12 per share, respectively.

During the nine months ended March 31, 2021 and 2020, we granted options to purchase 163,625 and 294,875 shares of common stock with a weighted-average fair value of $6.86 and $4.42 per share, respectively.

We used the following assumptions:

Three Months Ended

Six Months Ended

Nine Months Ended

Expected volatility

6 unchanged sentences

Treasury Strips rate with maturities approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant.

On December 1, 2020, employees were granted the right to purchase an aggregate of 74,752 shares under the ESPP, and compensation expense related to those purchase rights for the three and six months ended December 31, 2020 was $48,000.

On December 1, 2019, employees were granted the right to purchase an aggregate of 69,368 shares under the ESPP, and compensation expense related to those purchase rights for the three and six months ended December 31, 2019 was $29,000.

As of December 31, 2020, there were 716,122 shares of common stock available for issuance under the ESPP.

On June 1, 2020, employees were granted the right to purchase an aggregate of 58,096 shares under the ESPP, and compensation expense related to those purchase rights for the nine months ended March 31, 2021 was $169,000.

As of March 31, 2021, there were 716,122 shares of common stock available for issuance under the ESPP.

We base our estimate of expected life of a stock option on the historical exercise behavior and cancellations of all past option grants made by the Company during the time period which its equity shares have been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options.

1 unchanged sentence

Improvements to Employee Share-Based Accounting , we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense.

As of December 31, 2020 there was approximately $1.3 million of total unrecognized compensation cost related to nonvested stock options, which is expected to be recognized over the weighted-average period of 1.1 years.

There were 67,149 and 31,165 options exercised during the three months ended December 31, 2020 and 2019 , respectively.

There were 170,054 and 89,635 options exercised during the six months ended December 31, 2020 and 2019, respectively.

As of March 31, 2021 there was approximately $1.2 million of total unrecognized compensation cost related to nonvested stock options, which is expected to be recognized over the weighted-average period of 1.2 years.

There were 43,796 and 52,004 options exercised during the three months ended March 31, 2021 and 2020 , respectively.

There were 213,850 and 141,639 options exercised during the nine months ended March 31, 2021 and 2020, respectively.

Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases .

13 unchanged sentences

Lease expense is recognized on a straight-line basis over the lease term.

The Company has elected not to recognize right-of-use assets and obligations for leases with an initial term of twelve months or less, and has applied a capitalization threshold to recognize a lease on the balance sheet.

the balance sheet.

The expense associated with short-term leases and leases that do not meet the Company’s capitalization threshold are recorded to lease expense in the period it is incurred.

1 unchanged sentence

Disaggregation of Revenue

The following table presents our subscription and professional services revenue during the three and six months ended December 31, 2020 and 2019, respectively:

The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2021 and 2020, respectively:

Three Months Ended

Six Months Ended

Nine Months Ended

Legacy revenue

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

North America

5 unchanged sentences

Once the obligations are fulfilled, then deferred revenue is recognized to revenue in the respective period.

There were no contract assets for the period ended December 31, 2020 and 2019.

There were no contract assets for the period ended March 31, 2021 and 2020.

The following table presents the changes in contract liabilities (in thousands):

Balance as of June 30, 2020

Balance as of December 31, 2020

Balance as of March 31, 2021

Contract liabilities:

1 unchanged sentence

Deferred revenue, net of current portion

With respect to deferred revenue balances as of June 30, 2020, $10.6 million and $24.5 million was recognized to revenue during the three and six months ended December 31, 2020, respectively.

With respect to deferred revenue balances as of June 30, 2020, $8.3 million and $32.9 million was recognized to revenue during the three and nine months ended March 31, 2021, respectively.

Remaining Performance Obligations

1 unchanged sentence

The transaction price allocated to the remaining performance obligation is influenced by a variety of factors, including seasonality, timing of renewals, average contract terms and foreign currency exchange rates.

As of December 31, 2020, our remaining performance obligations were $67.8 million of which we expect to recognize $53.5 million and $14.3 million as revenue within one year and beyond one year, respectively.

As of March 31, 2021, our remaining performance obligations were $62.3 million of which we expect to recognize $50.1 million and $12.2 million as revenue within one year and beyond one year, respectively.

NET INCOME PER COMMON SHARE

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Per share information:

2 unchanged sentences

Effect of dilutive options

Weighted-average shares of stock options to purchase 160,077 and 631,140 shares of common stock for the three months ended December 31, 2020 and 2019, respectively, and weighted-average shares of stock options to purchase 223,235 and 593,450 shares of common stock for the six months ended December 31, 2020 and 2019, respectively, were not included in the computation of diluted net income per common share due to their anti-dilutive effect.

Weighted-average shares of stock options to purchase 322,088 and 663,821 shares of common stock for the three months ended March 31, 2021 and 2020, respectively, and weighted-average shares of stock options to purchase 283,600 and 615,649 shares of common stock for the nine months ended March 31, 2021 and 2020, respectively, were not included in the computation of diluted net income per common share due to their anti-dilutive effect.

Such securities could have a dilutive effect in future periods.

11 unchanged sentences

We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.

As of June 30, 2020, we have completed a study under Section 382 of the Internal Revenue Code, and have determined there was no loss of NOLs as a result of any ownership changes since eGain’s formation.

As of June 30, 2020, we completed a study under Section 382 of the Internal Revenue Code of 1986, and have determined there was no reduction in net operating losses (NOL) as a result of any ownership changes since eGain’s formation.

Utilization of the NOL or tax credit carryforwards to offset future taxable income and taxes, respectively, are subject to an annual limitation under the Internal Revenue Code of 1986 and similar state provisions, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments such as built in gain or built in loss, as required.

1 unchanged sentence

The 2017 Tax Cuts and Jobs Act includes a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries.

As of December 31, 2020, we estimate $2.6 million of GILTI income inclusion and used our net operating losses to offset our taxable income.

As of March 31, 2021, we estimate $2.1 million of GILTI income inclusion and used our net operating losses to offset our taxable income.

We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2024.

3 unchanged sentences

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments.

Total operating lease costs were $452,000 and $441,000 for the three months ended December 31, 2020 and 2019, respectively.

Total operating lease costs were $895,000 and $879,000 for the six months ended December 31, 2020 and 2019, respectively.

Total operating lease costs were $437,000 and $436,000 for the three months ended March 31, 2021 and 2020, respectively.

Total operating lease costs were $1.3 million for the nine months ended March 31, 2021 and 2020, respectively.

Operating lease amounts above do not include sublease income.

The Company secured a sublease agreement with a third party and recognized sublease income of $154,000 for the three months ended December 31, 2020 and 2019, and $309,000 for the six months ended December 31, 2020 and 2019.

For the three and six months ended December 31, 2020, operating cash outflows for operating leases were $552,000 and $1.0 million, respectively.

For the three and six months ended December 31, 2019, operating cash outflows for operating leases were $457,000 and $907,000, respectively.

The Company secured a sublease agreement with a third party and recognized sublease income of $154,000 for the three months ended March 31, 2021 and 2020, and $463,000 for the nine months ended March 31, 2021 and 2020.

For the three and nine months ended March 31, 2021, operating cash outflows for operating leases were $461,000 and $1.5 million, respectively.

For the three and nine months ended March 31, 2020, operating cash outflows for operating leases were $457,000 and $1.4 million, respectively.

During the nine months ended March 31, 2021, the Company modified two of its existing operating leases which resulted in an increase to operating lease right-of-use assets and operating lease liabilities in the amount of $779,000.

The following tables present information about leases on our consolidated balance sheet (in thousands):

3 unchanged sentences

The following table presents information about the weighted average lease term and discount rate as follows:

As of December 31, 2020

As of March 31, 2021

As of June 30, 2020

1 unchanged sentence

Weighted average discount rate

As of December 31, 2020, remaining maturities of lease liabilities are as follows (in thousands):

As of March 31, 2021, remaining maturities of lease liabilities are as follows (in thousands):

Fiscal Period:

Remaining six months of fiscal 2021

Remaining three months of fiscal 2021

Total minimum lease payments

35 unchanged sentences

Our money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy.

As of December 31, 2020 and June 30, 2020, cash equivalents classified as level 1 instruments were measured at $43.1 million and $41.8 million, respectively.

As of March 31, 2021 and June 30, 2020, cash equivalents classified as level 1 instruments were measured at $42.5 million and $41.8 million, respectively.

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 1. Financial Statements