What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-02-14 compared with 2022-11-14 · 101 added, 95 removed, 266 unchanged (42% of the section changed)

10 unchanged sentences

● our lengthy sales cycles and the difficulty in predicting timing of sales or delays;

● our expectations regarding innovation in cloud and growing API economy;

● our expectations with respect to revenue, cost of revenue, expenses and other financial metrics;

● our business plan and growth strategies;

● our expectations related to our product development plan;

● competition in the markets in which we do business and our competitive advantages;

63 unchanged sentences

● Our offshore product development, support and professional services may prove difficult to manage or may not allow us to realize our cost reduction goals, produce effective new solutions and provide professional services to drive growth.

eGain automates customer engagement with an innovative Software as a Service (SaaS) platform, powered by deep digital, Artificial Intelligence (AI), and knowledge capabilities.

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.

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 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).

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We are headquartered in the United States.

We also operate in United Kingdom and India.

We also operate in the 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.

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We believe SaaS clients enjoy up to 50% faster time to value from their eGain investment.

Since early 2020, several public health organizations have recommended, and many local governments have implemented, certain measures to slow and limit the transmission of COVID-19, including shelter-in-place and social distancing orders, which has resulted in a significant deterioration of economic conditions in the countries in which we operate.

The impact of COVID-19 and the related disruptions caused to the global economy and our business has not had a material adverse impact on our business.

However, the ongoing spread of the COVID-19 virus, including new variants, current availability of COVID-19 vaccinations, and lockdown orders in China from 2022, 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;

● Looked to our customer’s needs to best support their operations during this crisis.

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.

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.

Key Financial Measures

We monitor the key financial performance measures set forth below as well as cash and cash equivalents and available debt capacity, which are discussed in “Liquidity and Capital Resources,” to help us evaluate trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational effectiveness and efficiencies.

SaaS Revenues

With our transition to a SaaS only business model, we believe SaaS revenue better reflects our business momentum, and, to analyze progress, we disaggregate our subscription revenue growth between:

● SaaS revenue, which is defined as revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support;

● Legacy revenue, which is defined as revenue from maintenance and support contracts on perpetual license arrangements that we no longer offer.

● Legacy revenue, which is defined as revenue from maintenance and support contracts on perpetual license arrangements that we no longer sell.

The following table presents a break out of subscription revenue between SaaS and legacy revenue for each of the following periods:

Three Months Ended

September 30,

Six Months Ended

(in thousands)

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Three Months Ended

September 30,

Six Months Ended

(in thousands)

2 unchanged sentences

Non-GAAP Operating Income

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

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

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;

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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 (loss) income from operations to non-GAAP income from operations for each of the following periods:

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

Three Months Ended

September 30,

(Loss) income from operations

Six Months Ended

Income (loss) from operations

Stock-based compensation

11 unchanged sentences

SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.

Legacy revenue is associated with license, maintenance and support contracts on perpetual

license arrangements that we no longer sell.

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

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

22 unchanged sentences

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 September 30, 2022, our remaining performance obligations were $94.5 million, of which we expect to recognize $67.2 million and $27.3 million as revenue within one year and beyond one year, respectively.

As of December 31, 2022, our remaining performance obligations were $92.1 million, of which we expect to recognize $56.5 million and $35.6 million as revenue within one year and beyond one year, respectively.

We expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign exchange rate fluctuation.

13 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

Professional services

9 unchanged sentences

Total operating expenses

(Loss) income from operations

Income (Loss) from operations

We classify our revenue into two categories:

1 unchanged sentence

We further break down subscription revenue into SaaS revenue and legacy revenue, with SaaS revenue being a key metric.

The following table presents our subscription and professional services revenue during the three months ended September 30, 2022 and 2021, respectively:

The following table presents our subscription and professional services revenue during the three and six months ended December 31, 2022 and 2021, respectively:

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

1 unchanged sentence

Total revenue

Total revenue increased approximately $3.3 million during the three months ended September 30, 2022, compared to the same periods in 2021, respectively, due to an increase in SaaS revenue of $3.4 million during the three months ended September 30, 2022, compared to the same periods in 2021.

The increase for the three months ended September 30, 2022 was primarily due to an increase in SaaS revenue that was partially offset by a decline in our legacy revenue as we continue to migrate legacy perpetual license customers to our SaaS model.

Total revenue increased approximately $2.5 million and $5.8 million during the three and six months ended December 31, 2022, compared to the same periods in fiscal year 2022, respectively, due to an increase in SaaS revenue of $3.0 million and $6.4 million during the three and six months ended December 31, 2022, compared to the same periods in fiscal year 2022.

The increase for the three and six months ended December 31, 2022 was partially offset by a decline in our legacy revenue 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.

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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 a decrease of $909,000 and an increase of $356,000 in total revenue during the three months ended September 30, 2022 and 2021, respectively.

Foreign exchange rate fluctuation resulted in a decrease of $863,000 and $121,000 in total revenue during the three months ended December 31, 2022 and 2021, respectively.

Foreign exchange rate fluctuation

resulted in a decrease of $1.7 million and an increase of $479,000 for the six months ended December 31, 2022 and 2021, respectively.

Subscription Revenue

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

1 unchanged sentence

SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.

Revenue from SaaS increased by $3.4 million during the three months ended September 30, 2022, respectively, compared to the same periods in 2021.

Revenue from SaaS increased by $3.0 million and $6.4 million during the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

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.

We expect our SaaS revenue to increase on a year over year basis.

SaaS revenue represents 91% of total revenue for the three months ended September 30, 2022, compared to 89%, during the same period in 2021.

This represented an increase in SaaS revenue of 18% for the three months ended September 30, 2022, compared to the same periods in 2021.

Excluding a decrease of $802,000 due to foreign exchange rate fluctuation, SaaS revenue increased by $4.2 million during the three months ended September 30, 2022, compared to the same periods in 2021.

SaaS revenue represents 91% of total revenue for the three and six months ended December 31, 2022, compared to 88% and 89%, respectively, during the same periods in fiscal year 2022.

This represented an increase in SaaS revenue of 15% and 16% for the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

Excluding a decrease of $789,000 and a decrease of $1.5 million due to foreign exchange rate fluctuation, SaaS revenue increased by $3.8 million and $7.9 million during the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

Legacy Revenue

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

2 unchanged sentences

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

We experienced a decrease of $656,000 during the three months ended September 30, 2022, compared to the same periods in 2021.

We experienced decreases of $670,000 and $1.3 million during the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

This decrease was primarily due to our focus in migrating our legacy customers to SaaS.

We expect these legacy fees to continue to decline in future quarters.

Excluding a decrease of $49,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $607,000 during the three months ended September 30, 2022, compared to the same periods in 2021.

Excluding decreases of $17,000 and $84,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $653,000 and $1.2 million during the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

Professional Services Revenue

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

1 unchanged sentence

Percentage of total revenue

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

Revenue from professional services increased by $534,000 during the three months ended September 30, 2022, compared to the same periods in 2021.

The increase for three months ended September 30, 2022 compared to the prior year was primarily due to customer implementations and an increase in managed services.

Excluding a decrease of $58,000 due to foreign exchange rate fluctuation, professional services revenue increased by $592,000 during the three months ended September 30, 2022, compared to the same period in 2021.

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

Revenue from professional services increased by $199,000 and $734,000 during the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

The increase for three and six months ended December 31, 2022 compared to the prior year was primarily due to new customer implementations and an increase in managed services.

Excluding a decrease of $56,000 and $124,000 due to foreign exchange rate fluctuation, professional services revenue increased by $255,000 and $858,000 during the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

Revenue by Geography

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

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Total revenue

Revenue from North America sales increased by 26% from $15.2 million during the three months ended September 30, 2021 to $19.1 million during the three months ended September 30, 2022 due to increases of (i) $3.6 million in SaaS revenue and (ii) $619,000 in professional services revenue;

Revenue from North America sales increased by 18% from $16.8 million during the three months ended December 31, 2021 to $19.8 million during the three months ended December 31, 2022 due to increases of (i) $3.2 million in SaaS revenue and (ii) $334,000 in professional services revenue;

partially offset by a decrease of $516,000 in legacy revenue.

Revenue from Europe, Middle East, and Africa sales decreased by 9% from $6.2 million for the three months ended September 30, 2021 to $5.6 million during the three months ended September 30, 2022, due to decreases of (i) $309,000 in legacy revenue, (ii) $185,000 in SaaS revenue, and (iii) $85,000 in professional services revenue.

Revenue from North America sales increased by 22% from $32.0 million during the six months ended December 31, 2021 to $38.9 million during the six months ended December 31, 2022 due to increases of (i) $6.8 million in SaaS revenue, and (ii) $953,000 in professional services revenue;

partially offset by a decrease of $862,000 in legacy revenue.

Revenue from combined Europe, Middle East, and Africa sales decreased by 8% from $6.3 million for the three months ended December 31, 2021 to $5.8 million during the three months ended December 31, 2022, due to decreases of (i) $242,000 in SaaS revenue, (ii) $153,000 in legacy revenue, and (iii) $135,000 in professional services revenue.

Revenue from combined Europe, Middle East, and Africa sales decreased by 9% from $12.6 million for the six months ended December 31, 2021 to $11.4 million during the six months ended December 31, 2022, due to decreases of (i) $463,000 in legacy revenue, (ii) $427,000 in SaaS revenue, and (iii) $220,000 in professional services revenue.

Cost of Revenue

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

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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 revenue increased by $491,000 during the three months ended September 30, 2022, from the same period in fiscal year 2021.

This increase was primarily due to increases of (i) $568,000 in cloud-computing costs and (ii) $47,000 in outside consulting costs;

partially offset by a decrease of $22,000 in personnel-related costs.

Excluding a decrease of $102,000 due to foreign exchange rate fluctuation, cost of subscription revenue increased by $593,000 during the three months ended September 30, 2022, from the same periods in 2021.

Cost of subscription revenue increased by $903,000 during the three months ended December 31, 2022, from the same period in fiscal year 2022.

This increase was primarily due to increases of (i) $862,000 in cloud-computing costs, (ii) $112,000 in personnel-related costs, and (iii) $15,000 in outside consulting costs.

Cost of subscription revenue increased by $1.4 million during the six months ended December 31, 2022, from the same period in fiscal year 2022.

This increase was primarily due to increases of (i) $1.4 million in cloud-computing costs and (ii) $99,000 in personnel related costs, and (iii) $62,000 in outside consulting costs.

Excluding a decrease of $86,000 and $197,000 due to foreign exchange rate fluctuation, cost of subscription revenue increased by $989,000 and $1.6 million during the three and six months ended December 31, 2022, respectively, from the same periods in fiscal year 2022.

Professional Services

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 increased $493,000 during the three months ended September 30, 2022, from the same period in 2021.

This increase was primarily due to increases of $502,000 in personnel-related costs and $49,000 in outside consulting costs.

Excluding a decrease of $58,000 due to foreign exchange rate fluctuation, cost of professional services revenue increased by $551,000 during the three months ended September 30, 2022, compared to the same periods in 2021.

Cost of professional services decreased $252,000 during the three months ended December 31, 2022, from the same period in fiscal year 2022.

This decrease was primarily due to decrease of $318,000 in personnel-related costs;

partially offset by an increase of $153,000 in outside consulting costs.

Cost of professional services increased by $240,000 during the six months ended December 31, 2022, from the same period in fiscal year 2022.

This increase was primarily due to increases of $195,000 in outside consulting costs and $187,000 in personnel-related costs.

Excluding a decrease of $87,000 and $141,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $165,000 and increased by $381,000 during the three and six months ended December 31, 2022, respectively, compared to the same periods in fiscal year 2022.

Operating Expenses

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Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

4 unchanged sentences

Research and development expense also includes outside consulting services contracted for research and development.

Research and development expense increased by 23% to $6.9 million for the three months ended September 30, 2022, from $5.6 million in the same period in 2021.

Excluding a decrease of $203,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of (i) $1.4 million in personnel-related costs and (ii) $78,000 in outside consulting costs.

Research and development expense increased 16% to $7.2 million for the three months ended December 31, 2022, from $6.2 million in the same period in fiscal year 2022.

Excluding a decrease of $197,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of $1.1 million in personnel-related costs and $117,000 from outside consulting costs.

Research and development expense increased 19% to $14.1 million for the six months ended December 31, 2022, from $11.8 million in the same period in fiscal year 2022.

Excluding a decrease of $396,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of $2.5 million in personnel-related costs and $195,000 from outside consulting costs.

Excluding any future foreign exchange rate fluctuation, we expect our research and development expense to remain relatively consistent as a percentage of total revenue in future quarters based on our product development plans.

Sales and Marketing

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

4 unchanged sentences

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 by 28% to $9.5 million for the three months ended September 30, 2022, from $7.4 million in the same period in fiscal year 2021.

Excluding a decrease of $283,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $1.6 million in personnel-related expenses and (ii) $858,000 in marketing program expenses;

offset by a decrease of $128,000 in outside consulting expenses.

Sales and marketing expenses increased 9% to $8.9 million for the three months ended December 31, 2022, from $8.2 million in the same period in fiscal year 2022.

Excluding a decrease of $308,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $979,000 in marketing program expenses and (ii) $151,000 in outside consulting expenses;

offset by a decrease of $81,000 in personnel-related expenses.

Sales and marketing expenses increased 18% to $18.4 million for the six months ended December 31, 2022, from $15.6 million in the same period in fiscal year 2022.

Excluding a decrease of $531,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $1.8 million in marketing program expenses, (ii) $1.5 million in personnel-related expenses, and (iii) $30,000 in outside consulting expenses.

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.

General and Administrative

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

4 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 expenses increased 15% to $2.8 million for the three months ended September 30, 2022, from $2.4 million in the same period in 2021.

Excluding a decrease of $46,000 due to foreign exchange rate fluctuation, general and administrative expense increased primarily due to increases of (i) $227,000 in bad debt expenses, (ii) $165,000 in personnel-related expenses, (iii) $63,000 in outside-consulting costs, and (iv) $63,000 in legal related expenses;

partially offset by decreases of (i) $91,000 in accounting, audit, and administrative expenses and (ii) $12,000 in investor relations expenses.

(Loss) Income from Operations

General and administrative expenses decreased 22% to $2.6 million for the three months ended December 31, 2022, from $3.3 million in the same period in fiscal year 2022.

Excluding a decrease of $52,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to a decreases of (i) $554,000 in personnel-related expenses, (ii) $76,000 in bad debt expenses, (iii) $39,000 in legal related expenses, (iv) $37,000 in accounting, audit, and administrative expenses, and (v) $5,000 in investor relations expenses;

partially offset by increase $34,000 in outside-consulting expenses.

General and administrative expenses decreased 6% to $5.4 million for the six months ended December 31, 2022, from $5.7 million in the same period in fiscal year 2022.

Excluding a decrease of $109,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to decreases of (i) $390,000 in personnel-related expenses, (ii) $127,000 in accounting, audit, and administrative expenses, and (iii) $17,000 in investor relations expenses;

partially offset by increases of (i) $161,000 in bad debt expenses, (ii) $99,000 in outside consulting expense, and (iii) $24,000 in legal related expenses.

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

Income (Loss) from Operations

Three Months Ended

September 30,

Six Months Ended

(in thousands, except percentages)

(Loss) income from operations

Income (loss) from operations

Operating margin

Loss from operations was $670,000 with an operating loss margin of 3% during the three months ended September 30, 2022.

Loss from operations during the three months ended September 30, 2022 included $2.1 million of stock-based compensation and $375,000 of amortization of costs capitalized to obtain revenue contracts.

Income from operations was $213,000 with an operating income margin of 1% during the three months ended December 31, 2022.

Income from operations during the three months ended December 31, 2022 included $1.8 million of stock-based compensation and $395,000 of amortization of costs capitalized to obtain revenue contracts.

Loss from operations was $457,000 with an operating loss margin of 1% during the six months ended December 31, 2022.

Loss from operations during the six months ended December 31, 2022 included $3.8 million of stock-based compensation and $770,000 of amortization of costs capitalized to obtain revenue contracts.

Interest Income

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

Interest income was income of $286,000 and $2,000 during the three months ended September 30, 2022 and 2021, respectively.

Other Income, Net

Other income, net was income of $810,000 and $10,000 during the three months ended September 30, 2022 and 2021, respectively.

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

Interest income was income of $529,000 and $2,000 during the three months ended December 31, 2022 and 2021, respectively.

Interest income was income of $815,000 and $4,000 during the six months ended December 31, 2022 and 2021, respectively.

Other Income (Expense), Net

Other income (expense), net was expense of $545,000 and $29,000 during the three months ended December 31, 2022 and 2021, respectively.

Other income (expense), net was income of $265,000 and expense of $19,000 during the six months ended December 31, 2022 and 2021, respectively.

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

Income Tax Provision

Provision for income taxes consists of state and foreign income taxes.

Provision for income taxes consists of federal, state, and foreign income taxes.

Due to cumulative losses, we maintain a valuation allowance against U.S.

deferred tax assets as of September 30, 2022.

deferred tax assets as of December 31, 2022.

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 income tax provision of $442,000 and $152,000 for the three months ended September 30, 2022, and 2021, respectively.

We recorded income tax provision of $301,000 and $743,000 for the three and six months ended December 31, 2022, respectively.

We recorded income tax provision of $169,000 and $320,000 for the three and six months ended December 31, 2021, respectively.

Liquidity and Capital Resources

As of September 30, 2022 and June 30, 2022, our principal sources of liquidity were cash and cash equivalents, and accounts receivable totaling $96.1 million and $99.1 million, respectively.

Our cash, cash equivalents and restricted cash were $71.5 million and $72.2 million as of September 30, 2022 and June 30, 2022, respectively.

As of December 31, 2022 and June 30, 2022, our principal sources of liquidity were cash and cash equivalents, and accounts receivable totaling $97.3 million and $99.1 million, respectively.

Our cash, cash equivalents and restricted cash were $80.9 million and $72.2 million as of December 31, 2022 and June 30, 2022, respectively.

Based upon our current business plan, we believe that existing capital resources will enable us to maintain current and planned operations for at least the next 12 months.

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Our expectations as to our future cash flows and our future cash balances are subject to a number of assumptions, including assumptions regarding anticipated increases in our revenue, our ability to retain existing customers and customer purchasing and payment patterns, many of which are beyond our control.

For the three months ended September 30, 2022 and 2021, our cash flows were as follows (in thousands):

Three Months Ended

September 30,

For the six months ended December 31, 2022 and 2021, our cash flows were as follows (in thousands):

Six Months Ended

Net cash provided by operating activities

1 unchanged sentence

Net cash provided by financing activities

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 commissions and bonus payments, and changes in operating assets and liabilities during the year.

Net cash provided by operating activities decreased by $6.4 million during the three months ended September 30, 2022, from the same period in 2021, driven primarily by the timing of collections for accounts receivable.

Net cash used in investing activities decreased by $11,000 during the three months ended September 30, 2022, from the same period in 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 adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including commissions and bonus payments, and changes in operating assets and liabilities during the year.

Net cash provided by operating activities increased by $3.5 million during the six months ended December 31, 2022, from the same period in fiscal year 2022, driven primarily by the timing of payments for accounts payable and accrued liabilities.

Net cash used in investing activities decreased by $17,000 during the six months ended December 31, 2022, from the same period in fiscal year 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.

Net cash provided by financing activities decreased by $381,000 during the three months ended September 30, 2022, from the same period in 2021.

Net cash provided by financing activities decreased by $83,000 during the six months ended December 31, 2022, from the same period in fiscal year 2022.

Our current proceeds consist primarily of proceeds from the exercise of employee stock options and our employee stock purchase plan.

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

As of September 30, 2022, the future non-cancelable minimum payments under these commitments were approximately $3.6 million.

As December 31, 2022, the future non-cancelable minimum payments under these commitments were approximately $3.3 million.

Off-Balance Sheet Arrangements

As of September 30, 2022, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

As of December 31, 2022, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

New Accounting Pronouncements

1 unchanged sentence

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 2. Management’s Discussion and Analysis