What changed in this filing

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Item 1. Financial Statements

2022-05-09 compared with 2022-02-07 · 86 added, 78 removed, 469 unchanged (26% of the section changed)

6 unchanged sentences

Restricted cash

Accounts receivable, less allowance for doubtful accounts of $ 227 and $ 384 as of December 31, 2021 and June 30, 2021, respectively

Accounts receivable, less allowance for doubtful accounts of $ 83 and $ 384 as of March 31, 2022 and June 30, 2021, respectively

Costs capitalized to obtain revenue contracts, net

22 unchanged sentences

60,000 and 50,000 shares;

31,493 and 31,231 shares as of December 31, 2021 and June 30, 2021, respectively

31,821 and 31,231 shares as of March 31, 2022 and June 30, 2021, respectively

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Professional services

10 unchanged sentences

(Loss) Income from operations

Interest income, net

Other expense, net

(Loss) Income before income tax provision

Income tax provision

Interest income

Other income (expense), net

(Loss) Income before income tax (provision) benefit

Income tax (provision) benefit

Net (loss) income

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net (loss) income

6 unchanged sentences

(in thousands)

Three Months Ended December 31, 2021

Three Months Ended March 31, 2022

Additional Paid-in

2 unchanged sentences

Total Stockholders'

Balances as of September 30, 2021

Balances as of December 31, 2021

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, 2021

Three Months Ended December 31, 2020

Balances as of March 31, 2022

Three Months Ended March 31, 2021

Additional Paid-in

2 unchanged sentences

Total Stockholders'

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

Balances as of March 31, 2021

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended December 31, 2021

Nine Months Ended March 31, 2022

Additional Paid-in

8 unchanged sentences

Foreign currency translation adjustments

Balances as of December 31, 2021

Six Months Ended December 31, 2020

Balances as of March 31, 2022

Nine Months Ended March 31, 2021

Additional Paid-in

8 unchanged sentences

Foreign currency translation adjustments

Balances as of December 31, 2020

Balances as of March 31, 2021

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

47 unchanged sentences

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).

More than one hundred eighty leading brands use eGain cloud software to improve customer satisfaction, empower agents, reduce service cost and boost sales.

Approximately one hundred seventy 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, 2021 and the condensed consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for the three and six months ended December 31, 2021 and 2020, are unaudited.

The accompanying condensed consolidated balance sheet as of March 31, 2022 and the condensed consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for the three and nine months ended March 31, 2022 and 2021, are unaudited.

The condensed consolidated balance sheet as of June 30, 2021 was derived from audited consolidated financial statements as of that date but does not include all the information and footnotes required by GAAP for complete financial statements.

61 unchanged sentences

Additionally, significant judgment is required to determine the timing of revenue recognition.

We allocate the transaction price to each performance obligation on a relative SSP.

We allocate the transaction price to each performance obligation based on relative SSP.

The SSP is the price at which we would sell a promised service separately to one of our customers.

24 unchanged sentences

The Company does not adjust transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less.

The Company assessed its revenue contracts in order to determine whether a significant financing component exists, and determined its contracts did not include a significant financing component for the periods ended December 31, 2021 and 2020.

Professional Services Revenue

3 unchanged sentences

Our consulting and implementation service contracts are bid either on a time-and-materials basis or on a fixed-fee basis.

Fixed fees are generally paid upon milestone billing or acceptance at pre-determined points in the contract.

Fixed fees are generally paid upon milestone billing or customer acceptance at pre-determined points in the contract.

Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred.

4 unchanged sentences

Costs Capitalized to Obtain Revenue Contracts, Net

Under Topic 606, we capitalize incremental costs of obtaining a non-cancelable subscription and support revenue contracts.

Under Topic 606, we capitalize incremental costs of obtaining non-cancelable subscription and support revenue contracts.

The capitalized amounts consist primarily of sales commissions paid to our direct sales force.

5 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, 2021, we capitalized $ 769,000 and $ 1.4 million of costs to obtain revenue contracts, respectively, and amortized $ 376,000 and $ 732,000 to sales and marketing expense, respectively.

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.

Capitalized costs to obtain revenue contracts, net were $ 4.6 million and $ 3.9 million as of December 31, 2021 and June 30, 2021, respectively.

During the three and nine months ended March 31, 2022, we capitalized $ 604,000 and $ 2.0 million of costs to obtain revenue contracts, respectively, and amortized $ 392,000 and $ 1.1 million to sales and marketing expense, 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.

Capitalized costs to obtain revenue contracts, net were $ 4.7 million and $ 3.9 million as of March 31, 2022 and June 30, 2021, respectively, on our condensed consolidated balance sheets.

Deferred Revenue

13 unchanged sentences

However, we incur operating expenses in the North America, Europe, Middle East, Africa and Asia Pacific regions.

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

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

Three Months Ended

Six Months Ended

Nine Months Ended

(Loss) Income from operations:

10 unchanged sentences

Our financial instruments that are exposed to concentrations of credit risk include cash and cash equivalents and accounts receivable.

Two customers, who are also our partners, accounted for 23 % and 12 %, respectively, of total revenue during both the three and six months ended December 31, 2021.

The same partners, accounted for 19 % and 13 %, respectively, of total revenue during the three months ended December 31, 2020 and 18 % and 10 %, respectively, for the six months ended December 31, 2020.

Two customers, who are also our partners, accounted for 20 % and 10 %, respectively, of total revenue during the three months ended March 31, 2022 and 22 % and 12 %, respectively, during the nine months ended March 31, 2022.

The same 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.

Three different customers accounted for more than 10% of our gross accounts receivable balance as of March 31, 2022 and 2021, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

8 unchanged sentences

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

In certain Company contracts, contractual billings do not coincide with revenue recognized on the contract.

Recovered written off receivables are recorded as they occur.

In certain revenue contracts, contractual billings do not coincide with revenue recognized on the contract.

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 $ 689,000 and $ 719,000 as of December 31, 2021, and June 30, 2021, respectively, and are included in the accounts receivable balance on the accompanying condensed consolidated balance sheets.

Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $ 913,000 and $ 719,000 as of March 31, 2022, and June 30, 2021, respectively, and are included in the accounts receivable balance on the accompanying condensed consolidated balance sheets.

Stock-Based Compensation

1 unchanged sentence

Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period.

Stock-based compensation expense consists of expenses for stock options granted under our Amended and Restated 2005 Management Stock Option Plan, and our Amended and Restated 2005 Stock Incentive Plan and our 2017 employee stock purchase plan (ESPP).

Stock-based compensation expense consists of expenses for stock options granted under our Amended and Restated 2005 Management Stock Option Plan, our Amended and Restated 2005 Stock Incentive Plan, and our 2017 employee stock purchase plan (ESPP).

The ESPP provides that eligible employees may purchase the Company’s common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value at the entry date of the applicable offering period or at the end of each applicable purchasing period.

The offering period, meaning a period with respect to which the right to purchase shares of our common stock may be granted under the ESPP, will not exceed twenty-seven months and consist of a series of six-month purchase periods.

month purchase periods.

Eligible employees may join the ESPP at the beginning of any six-month purchase period.

3 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 $ 75,000 and $ 130,000 during the three and six months ended December 31, 2021, respectively.

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

Total stock-based compensation includes expense related to the ESPP of $ 93,000 and $ 225,000 for the three and six months ended December 31, 2021, 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 non-employee awards of $ 49,000 and $ 179,000 during the three and nine months ended March 31, 2022, respectively.

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

Total stock-based compensation includes expense related to the ESPP of $ 138,000 and $ 363,000 for the three and nine months ended March 31, 2022, 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.

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, 2021 and 2020, we granted options to purchase 241,379 and 75,375 shares of common stock with a weighted-average fair value of $ 5.78 and $ 7.69 per share, respectively.

During the six months ended December 31, 2021 and 2020, we granted options to purchase 3,191,939 and 116,575 shares of common stock with a weighted-average fair value of $ 7.19 and $ 7.21 per share, respectively.

During the three months ended March 31, 2022 and 2021, we granted options to purchase 197,365 and 47,050 shares of common stock with a weighted-average fair value of $ 6.31 and $ 5.98 per share, respectively.

During the nine months ended March 31, 2022 and 2021, we granted options to purchase 3,390,004 and 163,625 shares of common stock with a weighted-average fair value of $ 7.14 and $ 6.86 per share, respectively.

We used the following assumptions:

Three Months Ended

Six Months Ended

Nine Months Ended

Expected volatility

5 unchanged sentences

The risk-free interest rate is derived from the average U.S.

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, 2021, employees were granted the right to purchase an aggregate of 86,928 shares under the ESPP, and compensation expense related to those purchase rights for the three and six months ended December 31, 2021 was $ 47,000

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

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.

Employees purchased an aggregate of 57,361 shares under the ESPP for the nine months ended March 31, 2021.

Employees purchased an aggregate of 64,666 shares under the ESPP for nine months ended March 31, 2022.

On December 17, 2021, our board of directors authorized an additional 600,000 shares of common stock to be available for issuance under ESPP.

As of December 31, 2021, there were 1,178,409 shares of common stock available for issuance under the ESPP.

As of March 31, 2022, there were 1,178,409 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, 2021 there was approximately $ 15.8 million of total unrecognized compensation cost, net of expected forefeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 1.8 years.

There were 41,309 and 67,149 options exercised during the three months ended December 31, 2021 and 2020 , respectively.

There were 197,479 and 170,054 options exercised during the six months ended December 31, 2021 and 2020, respectively.

As of March 31, 2022 there was approximately $ 13.6 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 1.8 years.

There were 327,738 and 43,796 options exercised during the three months ended March 31, 2022 and 2021 , respectively.

There were 525,217 and 213,850 options exercised during the nine months ended March 31, 2022 and 2021, respectively.

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

20 unchanged sentences

We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company.

We had no impairment during the three and six months ended December 31, 2021.

We had no indicators of impairment during the three and nine months ended March 31, 2022.

REVENUE RECOGNITION

Disaggregation of Revenue

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

The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2022 and 2021, 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

4 unchanged sentences

Contract liabilities consist of deferred revenue for which we have an obligation to transfer services to customers and have received consideration in advance or the amount is due from customers.

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

There were contract assets of unbilled accounts receivable of $ 689,000 as of December 31, 2021 and none as of December 31, 2020.

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

respective period.

There were contract assets of unbilled accounts receivable of $ 913,000 as of March 31, 2022 and $ 719,000 as of June 30, 2021, on our condensed consolidated balance sheets.

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

Balance as of June 30, 2021

Balance as of December 31, 2021

Balance as of March 31, 2022

Contract liabilities:

1 unchanged sentence

Deferred revenue, net of current portion

*Deductions include revenue recognized from beginning of period and impact of foreign currency translation.

$ 11.8 million and $ 26.8 million of deferred revenue as of June 30, 2021 was recognized to revenue during the three and six months ended December 31, 2021.

$ 8.9 million and $ 35.8 million of deferred revenue as of June 30, 2021 was recognized to revenue during the three and nine months ended March 31, 2022.

Total deferred revenue includes additions of $ 60,415 and deductions of $ 68,917 for the nine months ended March 31, 2022.

Deductions consist of revenue recognized from beginning of period and impact of foreign currency translation.

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, 2021, our remaining performance obligations were $ 89.8 million of which we expect to recognize $ 58.7 million and $ 31.1 million as revenue within one year and beyond one year, respectively.

As of March 31, 2022, our remaining performance obligations were $ 84.2 million of which we expect to recognize $ 53.4 million and $ 30.8 million as revenue within one year and beyond one year, respectively.

NET (LOSS) INCOME PER COMMON SHARE

Basic net (loss) income per common share is computed using the weighted-average number of shares of common stock outstanding.

In periods where net (loss) income is reported, the weighted-average number of shares is increased by warrants and options in the money to calculate diluted net (loss) income per common share.

In periods where net income is reported, the weighted-average number of shares is increased by stock options in the money to calculate diluted net income per common share.

The following table represents the calculation of basic and diluted net (loss) income per common share (unaudited, in thousands, except per share data):

Three Months Ended

Six Months Ended

Nine Months Ended

Net (loss) income

3 unchanged sentences

Effect of dilutive options

Weighted-average shares of stock options to purchase 3,326,313 and 160,077 shares of common stock for the three months ended December 31, 2021 and 2020, respectively, and weighted-average shares of stock options to purchase 2,349,356 and 223,235 shares of common stock for the six months ended December 31, 2021 and 2020, respectively, were not included in the computation of diluted net (loss) income per common share due to their anti-dilutive effect.

Weighted-average shares of stock options to purchase 3,421,485 and 322,088 shares of common stock for the three months ended March 31, 2022 and 2021, respectively, and weighted-average shares of stock options to purchase 2,717,101 and 283,600 shares of common stock for the nine months ended March 31, 2022 and 2021, respectively, were not included in

the computation of diluted net (loss) income per common share due to their anti-dilutive effect.

Such securities could have a dilutive effect in future periods.

15 unchanged sentences

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, 2021, we estimate $ 365,000 of GILTI income inclusion and used our net operating losses to offset our taxable income.

As of March 31, 2022, we estimate no GILTI income or deduction for fiscal year 2022.

We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2027.

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 $ 331,000 and $ 452,000 for the three months ended December 31, 2021 and 2020, respectively.

Total operating lease costs were $ 698,000 and $ 895,000 for the six months ended December 31, 2021 and 2020, respectively.

Total operating lease costs were $ 329,000 and $ 437,000 for the three months ended March 31, 2022 and 2021, respectively.

Total operating lease costs were $ 1.0 million and $ 1.3 million for the nine months ended March 31, 2022 and 2021, 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, 2021 and 2020, and $ 309,000 for the six months ended December 31, 2021 and 2020.

For the three and six months ended December 31, 2021, operating cash outflows for operating leases were $ 460,000 and $ 918,000 , respectively.

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

During the six months ended December 31, 2021, the Company modified one of its existing operating leases by extending it to 2027, which resulted in an increase to operating lease right-of-use assets and operating lease liabilities in the amount of $ 2.8 million.

The Company secured a sublease agreement with a third party and recognized sublease income of $ 154,000 for the three months ended March 31, 2022 and 2021, and $ 463,000 for the nine months ended March 31, 2022 and 2021.

For the three and nine months ended March 31, 2022, operating cash outflows for operating leases were $ 468,000 and $ 1.4 million, respectively.

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

In August 2021, the Company modified one of its existing operating leases by extending it to 2027, which resulted in an increase to operating lease right-of-use assets and operating lease liabilities in the amount of $ 2.8 million.

The following tables present information about leases on our condensed 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, 2021

As of March 31, 2022

As of June 30, 2021

1 unchanged sentence

Weighted average discount rate

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

As of March 31, 2022, remaining maturities of lease liabilities are as follows (in thousands):

Fiscal Period:

Remaining six months of fiscal 2022

Remaining three months of fiscal 2022

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, 2021 and June 30, 2021, cash equivalents classified as level 1 instruments were measured at $ 55.9 million and $ 55.4 million, respectively.

As of March 31, 2022 and June 30, 2021, cash equivalents classified as level 1 instruments were measured at $ 57.9 million and $ 55.4 million, respectively.

STOCKHOLDERS’ EQUITY

On December 17, 2021, our board of directors authorized the amended and restated Certificate of Incorporation which increased the total authorized shares of common stock from 50,000,000 to 60,000,000 shares.

As of December 31, 2021, and June 30, 2021, the Company had 31,493,000 and 31,231,000 shares of common stock issued and outstanding , respectively.

As of March 31, 2022, and June 30, 2021, the Company had 31,821,000 and 31,231,000 shares of common stock issued and outstanding , 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