What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-09-13 compared with 2021-09-10 · 88 added, 104 removed, 299 unchanged (39% of the section changed)

3 unchanged sentences

These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements.

eGain 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.

eGain automates customer engagement with an innovative knowledge hub, powered by conversational AI and analytics.

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

That is, organizations seeking to better serve customers at scale while coping with content silos, process complexity, and regulatory compliance.

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).

One hundred fifty leading brands use eGain’s cloud software to improve customer satisfaction, empower agents, reduce service cost and boost sales.

Leading brands use eGain’s cloud software to improve customer satisfaction, empower agents, reduce service cost, and boost sales.

We are headquartered in the United States.

We also operate in United Kingdom and India.

We have transitioned from a hybrid model, where we sold both SaaS and perpetual license solutions, to a SaaS only business model.

6 unchanged sentences

The impact of COVID-19 and the related disruptions caused to the global economy and our business did not have a material adverse impact on our business during the year ended June 30, 2022.

However, the spread of the COVID-19 virus caused us to modify our business practices, including implementing work-from-home policies and restricting travel by our employees, among other things.

In response to the outbreak of COVID-19, we have taken the following measures to date:

● Implemented work-from-home and social distancing policies throughout our organization;

● Suspended all employee travel;

However, the ongoing spread of the COVID-19 virus, including new variants, current availability of COVID-19 vaccinations, and recent lockdown orders in China, caused us to adapt and modify our business practices, including implementing hybrid work model policies and limiting travel by our employees, among other things.

In response to the ongoing spread of COVID-19, we have taken the following measures to date:

● Implemented hybrid work model and social distancing policies throughout our organization ;

● Limited employee travel ;

● Cancelled certain sales and marketing events;

1 unchanged sentence

The effect of the COVID-19 pandemic, may not be fully reflective in our results of operations and overall financial performance until further periods, if at all.

The impact, if any, of operational changes we may implement is uncertain, but changes we have implemented as of the filing date have not affected and are not expected to affect our ability to maintain operations.

The impact, if any, of operational changes we may implement is uncertain,

but changes we have implemented as of the filing date have not affected and are not expected to affect our ability to maintain operations.

We will continuously monitor the situation to determine what actions may be necessary or appropriate to address the impact of the COVID-19 pandemic, which may include actions mandated or recommended by federal, state or local government authorities.

See our “Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on or business.

See our “Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business.

Key Financial Measures

19 unchanged sentences

Non-GAAP Operating Income

Non-GAAP operating income is defined as operating income, adjusted for the impact of stock-based compensation expense and amortization of acquired intangible assets.

Non-GAAP operating income is defined as (loss) income from operations, adjusted for the impact of stock-based compensation expense and amortization of acquired intangible assets.

Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations;

1 unchanged sentence

The presentation of the non-GAAP financial measures is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in the United States of America (GAAP).

The following table presents a reconciliation of GAAP income from operations to non-GAAP income from operations for each of the following periods:

The following table presents a reconciliation of GAAP (loss) income from operations to non-GAAP income from operations for each of the following periods:

Fiscal Year Ended June 30

Income from operations

(Loss) Income from operations

Stock-based compensation

13 unchanged sentences

Legacy revenue is associated with license, maintenance and support contracts on perpetual license arrangements that we no longer sell.

Professional services include consulting, implementation and training.

Professional services include consulting, implementation, training, and managed services.

Subscription Revenue

6 unchanged sentences

These embedded OEM royalties are included as subscription revenue.

Under Topic 606-10-55-65 revenue guidance (Topic 606), since these arrangements are for sales-based licenses of intellectual property, we recognize revenue only as the subsequent sale occurs.

Under revenue guidance, since these arrangements are for sales-based licenses of intellectual property, we recognize revenue only as the subsequent sale occurs.

However, since such sales are reported by the customer with a quarter in arrears, such revenue is recognized at the time it is reported and paid by the customer given that any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimate and the unavoidable risk that it may lead to significant revenue reversals.

Professional Services Revenue

Professional services revenue includes system implementation, consulting and training.

Professional services revenue includes system implementation, consulting, training, and managed services.

The transaction price is allocated to various performance obligations based on their stand-alone selling prices.

13 unchanged sentences

Costs Capitalized to Obtain Revenue Contracts

Under Topic 606, we capitalize incremental costs to obtain non-cancelable subscription and maintenance and support revenue contracts with amortization periods that may extend longer than the non-cancelable subscription and maintenance and support revenue contract terms.

We capitalize incremental costs to obtain non-cancelable subscription and maintenance and support revenue contracts with amortization periods that may extend longer than the non-cancelable subscription and maintenance and support revenue contract terms.

We capitalize incremental costs of obtaining a non-cancelable subscription and maintenance and support revenue contract with amortization periods of one year or more.

31 unchanged sentences

Tax Legislation

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act).

The Tax Act revised the taxation of U.S.

and multinational corporations which significantly reduced the statutory corporate U.S.

federal income tax rate from 35% to 21%, imposed limitations on the ability of corporations to deduct interest expense and made taxation changes on U.S.

multinational corporation’s foreign operations.

The provisions of the Tax Act are complex and likely will be subject to regulatory and administrative guidance.

The Tax Act includes a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries and a base erosion anti-abuse tax (BEAT) measure that taxes certain payments between a U.S.

corporation and its foreign subsidiaries.

fiscal year ended June 30, 2021, we have $923,000 of GILTI income inclusion and used our net operating losses to offset our taxable income.

For the fiscal year ended June 30, 2021, we did not incur any BEAT tax.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L.

7 unchanged sentences

The COVID-related Tax Relief Act of 2020 (COVIDTRA) and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTR), both part of the CAA, contains numerous provisions related to businesses.

We continue to examine the elements of the CARES Act and CAA and the impact they may have on our future business.

Fiscal Year 2022 Compared with Fiscal Year 2021

Our effective tax rate for fiscal years 2021 and 2020 was a tax benefit of 2.4% and a tax provision of 9.7%, respectively.

The change in our effective tax rate for fiscal year 2021 as compared to fiscal year 2020 was primarily due to the expiration of tax attributes, the change in valuation allowance, foreign rate differential, GILTI inclusion, stock-based compensation and the research and development tax credit.

Our effective tax rate for fiscal years 2022 and 2021 was a tax provision of $1.2 million and a tax benefit of $166,000, respectively.

The change in our effective tax rate for fiscal year 2022 as compared to fiscal year 2021 was primarily due to the expiration of tax attributes, the change in valuation allowance, foreign rate differential, stock-based compensation and the research and development tax credit.

The income before income tax provision between the U.S.

1 unchanged sentence

In fiscal year 2022, our U.S.

and foreign income before our income tax provision was $5.0 million and $1.8 million, respectively.

and foreign income before our income tax provision was a loss of $4.2 million and income of $3.0 million, respectively.

In fiscal year 2021, our U.S.

and foreign income before our income tax provision was $5.3 million and $2.7 million, respectively.

and foreign income before our income tax benefit was $5.0 million and $1.8 million, respectively.

Deferred Tax Valuation Allowance

12 unchanged sentences

subsidiaries to be indefinitely invested outside the United States, on the basis of estimates, that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestments of those subsidiary earnings.

We have not recorded a deferred tax liability related to the U.S.

state income taxes and foreign withholding taxes on approximately $18.7 million of undistributed earnings of foreign

subsidiaries indefinitely invested outside the United States.

We have not recorded a deferred tax liability related to state income taxes and foreign withholding taxes on approximately $21.3 million of undistributed earnings of foreign subsidiaries indefinitely invested outside the United States.

If we decide to repatriate the foreign earnings, we would need to adjust our income tax provision in the period we determined that the earnings will no longer be indefinitely invested outside the United States.

16 unchanged sentences

Total operating expenses

Income from operations

(Loss) Income from operations

We classify our revenue into two categories;

7 unchanged sentences

Total Revenue

Total revenue increased $5.6 million during the fiscal year ended June 30, 2021, from the comparable period in 2020, largely due to increased revenues from SaaS of $10.1 million in fiscal year 2021.

This increase was partially offset by a decline in our legacy revenue as we continue to migrate legacy perpetual license customers to our SaaS model and a decline

in professional service revenue as we continue to see a reduction in time required for an average implementation project, as a result of the improvements to our product deployment process.

Total revenue increased $13.7 million during the fiscal year ended June 30, 2022, from the comparable period in 2021, largely due to increased revenues from SaaS of $14.0 million and professional service revenue of $1.5 million in fiscal year 2022.

This increase was partially offset by a decline in our legacy revenue of $1.8 million as we continue to migrate legacy perpetual license customers to our SaaS model.

Our revenue was impacted by foreign exchange rate fluctuation between the U.S.

1 unchanged sentence

We recalculate our current period results using the comparable prior period exchange rates to exclude the impact of foreign exchange rate fluctuation.

Foreign exchange rate fluctuation resulted in an increase of $2.0 million and a decrease of $722,000 in total revenue during the fiscal years ended June 30, 2021 and 2020, respectively.

Foreign exchange rate fluctuation resulted in a decrease of $354,000 and an increase of $2.0 million in total revenue during the fiscal years ended June 30, 2022 and 2021, respectively.

Subscription Revenue

6 unchanged sentences

SaaS revenue represents 88% and 85% of total revenue for the fiscal years ended June 30, 2022 and 2021, respectively.

Excluding an increase of $1.3 million due to foreign exchange rate fluctuation, SaaS revenue increased by $8.8 million during the fiscal year ended June 30, 2021, as compared to the comparable period in 2020.

Excluding a decrease of $317,000 due to foreign exchange rate fluctuation, SaaS revenue increased by $14.3 million during the fiscal year ended June 30, 2022, as compared to the comparable period in 2021.

In connection with our SaaS transition, we are actively migrating our remaining perpetual license clients to SaaS and continue to sell SaaS to new customers.

11 unchanged sentences

Legacy revenue represents 4% and 7% of total revenue for the fiscal years ended June 30, 2022 and 2021, respectively.

Excluding an increase of $433,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $4.3 million during the fiscal year ended June 30, 2021, as compared to the comparable period in 2020.

Excluding a decrease of $5,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $1.8 million during the fiscal year ended June 30, 2022, as compared to the comparable period in 2021.

Professional Services Revenue

3 unchanged sentences

Percentage of total revenue

Professional services revenue includes consulting, implementation and training.

Revenues from professional services decreased by $684,000 during the fiscal year ended June 30, 2021.

These decreases were primarily due to continued improvements in our product deployment process resulting in a reduction in the time required for an average implementation project.

Professional services revenue includes consulting, implementation, training, and managed services.

Revenues from professional services increased by $1.5 million during the fiscal year ended June 30, 2022.

These increases were primarily

due to growth of managed services.

We expect continued improvements in our product deployment process resulting in a reduction in the time required for an average implementation projects.

As we continue to onboard new customers and migrate legacy customers to SaaS, we expect the time required for product deployment and implementation projects to decrease further.

Professional services revenue was $5.9 million during the fiscal year ended June 30, 2021, which represented a decrease of 10% or $684,000.

Professional services revenue represents 8% and 9% of total revenue for the fiscal years ended June 30, 2021 and 2020, respectively.

Excluding an increase of $204,000 due to foreign exchange rate fluctuation, professional services revenues decreased by $888,000 during the fiscal year ended June 30, 2021, as compared to the comparable period in 2020.

Professional services revenue was $7.4 million during the fiscal year ended June 30, 2022, which represented an increase of 25% or $1.5 million.

Professional services revenue represents 8% of total revenue for both fiscal years ended June 30, 2022 and 2021.

Excluding a decrease of $32,000 due to foreign exchange rate fluctuation, professional services revenues increased by $1.5 million during the fiscal year ended June 30, 2022, as compared to the comparable period in 2021.

Revenue by Geography

1 unchanged sentence

(in thousands, except percentages)

International

North America

Europe, Middle East, & Africa

Total revenue

Revenue from domestic sales increased by 21% from $44.8 million during the fiscal year ended June 30, 2020 to $54.4 million during the fiscal year ended June 30, 2021 due to increases of (i) $8.4 million in SaaS revenue, (ii) $885,000 in legacy revenue, and (iii) $322,000 in professional service revenue.

Revenue from international sales decreased by 14% from $27.9 million during the fiscal year ended June 30, 2020 to $23.9 million during the fiscal year ended June 30, 2021 due to decreases of (i) $4.8 million in legacy revenue and (ii) $1.0 million in professional services revenue;

offset by an increase of $1.8 million in SaaS revenue.

Revenue from North America sales increased by 23% from $54.4 million during the fiscal year ended June 30, 2021 to $66.8 million during the fiscal year ended June 30, 2022 due to an increase of (i) $12.6 million in SaaS revenue, and (ii) $1.3 million in professional service revenue;

offset by a decrease of (i) $1.5 million in legacy revenue.

Revenue from Europe, Middle East, and Africa sales increased by 5% from $23.9 million during the fiscal year ended June 30, 2021 to $25.2 million during the fiscal year ended June 30, 2022 due to an increase of (i) $1.4 million in SaaS revenue and (ii) $208,000 in professional services revenue;

offset by a decrease of $287,000 in legacy revenue.

Cost of Revenue

7 unchanged sentences

These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead.

Cost of subscription revenues decreased by $891,000 during the fiscal year ended June 30, 2021.

The decrease is primarily due to a decrease in (i) personnel related costs of $609,000, (ii) cloud computing cost of $344,000 and (iii) intangible asset amortization of $242,000, partially offset with an increase in outside consulting cost of $173,000 during the fiscal year ended June 30, 2021, from the comparable period in 2020.

Excluding an increase of $131,000 due to foreign exchange rate fluctuation, cost of subscription revenues decreased by $1.0 million during the fiscal year ended June 30, 2021, from the comparable period in 2020.

Cost of subscription revenues increased by $1.3 million during the fiscal year ended June 30, 2022.

The increase is primarily due to an increase in (i) cloud computing cost of $951,000, (ii) personnel related costs of $529,000;

partially offset with a decrease in (i) outside consulting cost of $138,000 and (ii) intangible asset amortization of $26,000 during the fiscal year ended June 30, 2022, from the comparable period in 2021.

Excluding a decrease of $43,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, cost of subscription revenues increased by $1.3 million during the fiscal year ended June 30, 2022, from the comparable period in 2021.

Excluding any future foreign exchange rate fluctuation, we expect our cost of subscription revenue to increase in absolute dollar terms as revenues increase but expect subscription revenue gross margins to improve or remain relatively consistent.

1 unchanged sentence

Cost of professional services consists primarily of personnel-related costs directly associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation and allocated overhead.

Cost of professional services decreased $923,000 during the fiscal year ended June 30, 2021 from the comparable period in 2020.

This decrease is primarily due to a decrease in personnel-related costs of $902,000 and outside consulting costs of $158,000 for the fiscal year ended June 30, 2021.

Excluding an increase of $137,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $1.1 million for the fiscal year ended June 30, 2021, from the comparable period in 2020.

Cost of professional services increased $4.0 million during the fiscal year ended June 30, 2022 from the comparable period in 2021.

This increase is primarily due to an increase in personnel-related costs of $4.0 million, of which $3.1 million is associated with stock-based compensation cost;

partially offset by a decrease in outside consulting costs of $18,000 for the fiscal year ended June 30, 2022.

Excluding a decrease of $39,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, cost of professional services revenue increased by $3.9 million for the fiscal year ended June 30, 2022, from the comparable period in 2021.

Operating Expenses

8 unchanged sentences

Research and development expense increased 36% to $24.4 million during the fiscal year ended June 30, 2022, from $17.9 million in the comparable period in 2021.

Excluding an increase of $195,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, research and development expense increased primarily due to an increase of $1.4 million in personnel-related costs;

partially offset by a decrease of $277,000 in outside consulting costs.

Excluding a decrease of $105,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, research and development expense increased by $6.6 million primarily due to increases of (i) $6.3 million in personnel-related costs, of which $2.9 million is associated with stock-based compensation cost, and (ii) $258,000 in outside consulting costs.

Excluding any future foreign exchange rate fluctuation, we expect our research and development expense to increase in future periods based on our product development plans.

5 unchanged sentences

Sales and marketing expense primarily consists of personnel-related expenses directly associated with our sales, marketing, and business development staff.

Included in these costs are salaries, benefits, bonuses, and stock-based compensation and allocated overhead.

Included in these costs are salaries, benefits, bonuses, and stock-based compensation and

allocated overhead.

Sales and marketing expenses also include amortization of commissions paid to our sales staff, lead generation activities, advertising, trade show and other promotional costs and, to a lesser extent, occupancy costs and related overhead.

Sales and marketing expenses increased 30% to $33.7 million during the fiscal year ended June 30, 2022, from $26.0 million in the comparable period in 2021.

Excluding an increase of $423,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, sales and marketing expense increased primarily due to increases of (i) $6.2 million in personnel-related costs and (ii) $16,000 outside consulting services;

partially offset by a decrease of $257,000 in marketing program costs.

Excluding a decrease of $120,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, sales and marketing expense increased by $7.9 million primarily due to increases of (i) $6.8 million in personnel-related costs, of which $2.4 million is associated with stock-based compensation cost, and (ii) $1.1 million in marketing program costs;

partially offset by a decrease of $4,000 in outside consulting costs.

Excluding any future foreign exchange rate fluctuation, we expect our sales and marketing expense to increase as a percentage of total revenue in future quarters based on our current business plan.

7 unchanged sentences

General and administrative expenses also include fees for professional services, provision for doubtful accounts and, to a lesser extent, occupancy costs and related overhead.

General and administrative expense decreased 3% to $7.7 million during the fiscal year ended June 30, 2021, from $8.0 million in the comparable period in 2020.

Excluding an increase of $131,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, general and administrative expense decreased primarily due to decreases of (i) $349,000 in personnel-related expenses;

(ii) $108,000 in accounting, audit, and administrative expenses;

(iii) $106,000 in legal expenses;

partially offset by increases of (a) $90,000 in outside consulting costs;

(b) $69,000 in bad debt expenses;

and (c) $42,000 in investor relations expense.

General and administrative expense increased 47% to $11.4 million during the fiscal year ended June 30, 2022, from $7.7 million in the comparable period in 2021.

Excluding a decrease of $39,000 due to foreign exchange rate fluctuation between the U.S.

Dollar, Euro, British Pound and Indian Rupee, general and administrative expense increased by $3.7 million primarily due to increases of (i) $3.7 million in personnel-related expenses, of which $3.0 million is associated with stock-based compensation cost, (ii) $147,000 in legal expenses, (iii) $146,000 in accounting, audit, and administrative expenses, (iv) $12,000 in investor relations expense, and (v) $3,000 in outside consulting cost;

partially offset by a decrease of $319,000 in bad debt expense.

Excluding any future foreign exchange rate fluctuation, we expect our general and administrative expense to increase or remain relatively consistent as a percentage of total revenue in future periods based on our current business plan.

19 unchanged sentences

The increase in our stock-based compensation expense in fiscal year 2022 compared to fiscal year 2021 was primarily due to an increase in option grant activity.

We expect our stock-based compensation expense to increase in fiscal year 2022.

Income from Operations

We expect our stock-based compensation expense to decrease in fiscal year 2023.

(Loss) Income from Operations

Fiscal Year Ended June 30,

(in thousands, except percentages)

Income from operations

Operating margin

Results from operations was income of $7.3 million in fiscal year 2021, compared to $7.4 million in fiscal year 2020.

We recorded a positive operating margin of 9% in fiscal year 2021, and 10% in fiscal year 2020.

The increase in operating income in fiscal year 2021 was primarily due to the growth of our cloud delivery business and improvement in our gross margins.

During the fiscal year ended June 30, 2021, SaaS revenue increased by $10.1 million to $66.9 million compared to $56.8 million in fiscal year 2020.

Excluding a decrease from foreign exchange fluctuation of $1.0 million the increase in total costs and operating expenses in fiscal year 2021 was primarily due to increases of (i) $5.7 million in personnel-related expenses;

(ii) $69,000 in bad debt expenses;

and (iii) $42,000 in investor relations cost;

partially offset by a decrease of (a) $344,000 in cloud computing costs;

(b) $258,000 in marketing costs;

(d) $156,000 in outside consulting costs;

(e) $108,000 in accounting, audit and administrative services and;

(f) $106,000 in legal expenses.

Interest Income, Net

Interest income, net consists primarily of interest earned on money market funds.

Interest income, net was income of $13,000 and $395,000 in the fiscal years ended June 30, 2021 and 2020, respectively.

We expect interest income to remain relatively constant in future periods.

Other (Expense) Income, Net

Other (expense) income, net was expense of $559,000 and income of $185,000 for the fiscal years ended June 30, 2021 and 2020, respectively.

Other (expense) income, net primarily included foreign exchange rate fluctuations on international trade receivables.

(Loss) Income from operations

Operating (loss) margin

Results from operations was loss of $2.1 million in fiscal year 2022, compared to income of $7.3 million in fiscal year 2021.

We recorded a negative operating margin of 2% in fiscal year 2022, and a positive operating margin of 9% in fiscal year 2021.

During the fiscal year ended June 30, 2022, SaaS revenue increased by $14.0 million to $80.9 million compared to $66.9 million in fiscal year 2021 due to the continued growth of our cloud delivery business.

Excluding a decrease from foreign exchange fluctuation of $346,000 between the U.S.

Dollar, Euro, British Pound and Indian Rupee, the increase in total costs and operating expenses in fiscal year 2022 was $23.5 million primarily due to increases of (i) $21.4 million in personnel-related expenses, of which $11.4 million is associated with stock-based compensation cost, (ii) $1.1 million in marketing costs, (iii) $951,000 in cloud computing costs, (iv) $147,000 in legal expenses, (v) $146,000 in accounting and administrative services, (vi) $101,000 in outside consulting costs, and (vii) $12,000 in investor relations cost;

partially offset by a decrease of (i) $319,000 in bad debt expenses and (ii) $26,000 in intangible asset amortization.

Interest Income

Interest income consists primarily of interest earned on money market funds.

Interest income was $94,000 and $13,000 for the fiscal years ended June 30, 2022 and 2021, respectively.

Other Income (Expense), Net

Other income (expense), net primarily included foreign exchange rate fluctuations on international trade receivables.

Other income (expense), net was income of $838,000 and expense of $559,000 for the fiscal years ended June 30, 2022 and 2021, respectively.

Income Tax Provision

4 unchanged sentences

We consider all available evidence, both positive and negative, including but not limited to earnings history, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets.

We recorded an income tax benefit of $166,000 and an income tax provision of $778,000 in the fiscal years ended June 30, 2021 and 2020, respectively.

We recorded an income tax provision of $1.2 million and tax benefit of $166,000 in the fiscal years ended June 30, 2022 and 2021, respectively.

New Accounting Pronouncements

1 unchanged sentence

Liquidity and Capital Resources

At June 30, 2021, our principal sources of liquidity were cash and cash equivalents, and accounts receivable totaling $89.5 million.

As of June 30, 2022, our principal sources of liquidity were cash and cash equivalents, and accounts receivable totaling $99.1 million.

Our cash, cash equivalents and restricted cash were $72.2 million and $63.2 million as of June 30, 2022 and 2021, respectively.

Our working capital was $31.1 million as of June 30, 2021 compared to $21.4 million as of June 30, 2020.

As of June 30, 2022, our working capital was $42.1 million compared to $31.1 million as of June 30, 2021.

As of June 30, 2022, our deferred revenue was $49.4 million as compared to $49.5 million as of June 30, 2021.

8 unchanged sentences

Net cash provided by financing activities

Cash provided by operating activities mainly consists of net income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including costs capitalized to obtain revenue contracts, amortization of right-of-use assets, and changes in operating assets and liabilities during the year.

Cash provided by operating activities decreased by $196,000 during the fiscal year ended June 30, 2021, driven primarily by the timing of prepayments received from customers for new cloud arrangements and the renewal of existing cloud and support arrangements, which is our largest source of operating cash flows, as well as higher net income.

Net cash used in investing activities increased by $112,000 during the fiscal year ended June 30, 2021, driven primarily by activities related to the purchase of equipment for new employees and facility expenditures.

Cash provided by operating activities mainly consists of net (loss) income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including

costs capitalized to obtain revenue contracts, amortization of right-of-use assets, and changes in operating assets and liabilities during the year.

Cash provided by operating activities decreased by $5.7 million during the fiscal year ended June 30, 2022, driven primarily by the change in our net loss, stock-based compensation, the timing of prepayments received from customers for new cloud arrangements, and the renewal of existing cloud and support arrangements, which is a significant source of operating cash flows.

Net cash used in investing activities decreased by $226,000 during the fiscal year ended June 30, 2022, driven primarily by activities related to the purchase of equipment for new employees and facility expenditures.

Historically, cash used in investing activities has been used to purchase equipment and software to support our business and growth.

10 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis