What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-11 compared with 2023-02-14 · 104 added, 99 removed, 268 unchanged (43% of the section changed)

25 unchanged sentences

● the adequacy of our capital resources and our ability to raise additional financing;

● the effect of our international operations;

● the risks related to our international operations;

● the potential impact of foreign currency fluctuations;

10 unchanged sentences

● the impact of accounting pronouncements and our critical accounting policies, judgments, estimates, models and assumptions on our financial results;

● our ability to compete against third parties with greater resources than ours ;

● our ability to compete;

● the success of our partnerships;

10 unchanged sentences

All references to “eGain”, the “Company”, “our”, “we” or “us” mean eGain Corporation and its subsidiaries, except where it is clear from the context that such terms mean only eGain and exclude its subsidiaries.

eGain and the eGain® are trademarks of eGain Corporation.

eGain and eGain® are trademarks of eGain Corporation.

We also refer to trademarks of other corporations and organizations in this report.

4 unchanged sentences

● Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting.

● We face risks related to health epidemics, including the COVID-19 pandemic, which could have a material adverse effect on our business, financial condition and results of operations.

● Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future, and because we recognize revenue from subscriptions over a period of time, downturns in revenue may not be immediately reflected in our operating results.

17 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 knowledge hub, powered by conversational AI and analytics.

eGain automates customer engagement with an innovative knowledge hub, powered by conversational artificial intelligence (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.

16 unchanged sentences

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(in thousands)

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Three Months Ended

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Income (loss) from operations

Nine Months Ended

(in thousands)

Loss from operations

Stock-based compensation

22 unchanged sentences

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.

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, training, and managed services.

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

The transaction price is allocated to various performance obligations based on their SSP.

Revenue allocated to each performance obligation is recognized as work is performed.

8 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 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.

As of March 31, 2023, our remaining performance obligations were $87.3 million, of which we expect to recognize $52.1 million and $35.2 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

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Professional services

9 unchanged sentences

Total operating expenses

Income (Loss) from operations

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 and six months ended December 31, 2022 and 2021, respectively:

The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2023 and 2022, respectively:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands, except percentages)

1 unchanged sentence

Total revenue

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.

Total revenue for the three months ended March 31, 2023 decreased by $891,000, compared to the same period in fiscal year 2022, primarily due to the decline in legacy revenue.

Total revenue for the nine months ended March 31, 2023 increased by $4.9 million, while SaaS revenue increased by $6.6 million, compared to the same period in fiscal year 2022.

The increase for the nine months ended March 31, 2023 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 $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.

Foreign exchange rate fluctuation resulted in a decrease of $534,000 and $181,000 in total revenue during the three months ended March 31, 2023 and 2022, respectively.

Foreign exchange rate fluctuation resulted in a decrease of $2.4 million and an increase of $310,000 for the nine months ended March 31, 2023 and 2022, respectively.

Subscription Revenue

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

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.

Revenue from SaaS increased by $168,000 and $6.6 million during the three and nine months ended March 31, 2023, 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.

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.

SaaS revenue represents 91% of total revenue for the three and nine months ended March 31, 2023, compared to 87% and 88%, respectively, during the same periods in fiscal year 2022.

This represented an increase in SaaS revenue of 1% and 11% for the three and nine months ended March 31, 2023, respectively, compared to the same periods in fiscal year 2022.

Excluding a decrease of $490,000 and $2.0 million due to foreign exchange rate fluctuation, SaaS revenue increased by $658,000 and $8.6 million during the three and nine months ended March 31, 2023, respectively, compared to the same periods in fiscal year 2022.

Legacy Revenue

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

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.

We experienced decreases of $916,000 and $2.2 million during the three and nine months ended March 31, 2023, 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.

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.

Excluding decreases of $10,000 and $132,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $906,000 and $2.1 million during the three and nine months ended March 31, 2023, respectively, compared to the same periods in fiscal year 2022.

Professional Services Revenue

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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 from professional services decreased by $143,000 during the three months ended March 31, 2023 and increased by $591,000 during the nine months ended March 31, 2023, respectively, compared to the same periods in fiscal year 2022.

The decrease for three months ended March 31, 2023, compared to the prior year was primarily due to a reduction in time and effort

required for an average project.

The increase for the nine months ended March 31, 2023, compared to the same period in fiscal year 2022, was primarily due to new and ongoing customer implementations and an increase in managed services.

Excluding a decrease of $34,000 and $183,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $109,000 and increased by $774,000 during the three and nine months ended March 31, 2023, respectively, compared to the same periods in fiscal year 2022.

Revenue by Geography

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2 unchanged sentences

Total 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 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;

Revenue from North America sales increased by 2% from $17.5 million during the three months ended March 31, 2022 to $17.9 million during the three months ended March 31, 2023 due to increases of (i) $800,000 in SaaS revenue and (ii) $114,000 in professional services revenue;

partially offset by a decrease of $538,000 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.

Revenue from North America sales increased by 15% from $49.5 million during the nine months ended March 31, 2022 to $56.8 million during the nine months ended March 31, 2023 due to increases of (i) $7.6 million in SaaS revenue, and (ii) $1.1 million in professional services revenue;

partially offset by a decrease of $1.4 million in legacy revenue.

Revenue from combined Europe, Middle East, and Africa sales decreased by 20% from $6.4 million for the three months ended March 31, 2022 to $5.2 million during the three months ended March 31, 2023, due to decreases of (i) $631,000 in SaaS revenue, (ii) $379,000 in legacy revenue, and (iii) $257,000 in professional services revenue.

Revenue from combined Europe, Middle East, and Africa sales decreased by 13% from $19.0 million for the nine months ended March 31, 2022 to $16.6 million during the nine months ended March 31, 2023, due to decreases of (i) $1.1 million in SaaS revenue, (ii) $841,000 in legacy revenue, and (iii) $477,000 in professional services revenue.

Cost of Revenue

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4 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 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.

Cost of subscription revenue increased by $1.6 million during the three months ended March 31, 2023, from the same period in fiscal year 2022.

This increase was primarily due to increases of (i) $1.8 million in cloud-computing costs and (ii) $15,000 in outside consulting cost;

partially offset by a decrease of $149,000 in personnel-related costs.

Cost of subscription revenue increased by $3.0 million during the nine months ended March 31, 2023, from the same period in fiscal year 2022.

This increase was primarily due to increases of (i) $3.2 million in cloud-computing costs and (ii) $78,000 in outside consulting costs;

partially offset by a decrease of $40,000 in personnel related costs.

Excluding a decrease of $68,000 and $276,000 due to foreign exchange rate fluctuation, cost of subscription revenue increased by $1.7 million and $3.3 million during the three and nine months ended March 31, 2023, 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 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;

Cost of professional services decreased by $532,000 during the three months ended March 31, 2023, from the same period in fiscal year 2022.

This decrease was primarily due to a decrease of $556,000 in personnel-related costs;

partially offset by an increase of $87,000 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.

Cost of professional services decreased by $291,000 during the nine months ended March 31, 2023, from the same period in fiscal year 2022.

This decrease was primarily due to a decrease of $363,000 in personnel-related costs;

partially offset by an increase of $276,000 in outside consulting costs.

Excluding a decrease of $62,000 and $205,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $470,000 and $87,000 during the three and nine months ended March 31, 2023, respectively, compared to the same periods in fiscal year 2022.

Operating Expenses

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

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.

Research and development expense increased by 8% to $6.7 million for the three months ended March 31, 2023, from $6.2 million in the same period in fiscal year 2022.

Excluding a decrease of $147,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to an increase of $726,000 in personnel-related costs;

partially offset by a decrease of $85,000 from outside consulting costs.

Research and development expense increased by 15% to $20.7 million for the nine months ended March 31, 2023, from $18.0 million in the same period in fiscal year 2022.

Excluding a decrease of $557,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to increases of (i) $3.2 million in personnel-related costs and (ii) $109,000 from outside consulting costs.

Sales and Marketing

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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 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.

Sales and marketing expenses decreased by 21% to $6.8 million for the three months ended March 31, 2023, from $8.7 million in the same period in fiscal year 2022.

Excluding a decrease of $211,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased primarily due to decreases of (i) $1.4 million in personnel-related costs and (ii) $240,000 in lead generation costs;

offset by an increase of $32,000 in outside consulting costs.

Sales and marketing expenses increased by 4% to $25.2 million for the nine months ended March 31, 2023, from $24.3 million in the same period in fiscal year 2022.

Excluding a decrease of $724,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $1.6 million in lead generation costs, (ii) $65,000 in outside consulting costs and (iii) $7,000 in personnel-related costs.

General and Administrative

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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 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

General and administrative expenses decreased by 19% to $2.4 million for the three months ended March 31, 2023, from $3.0 million in the same period in fiscal year 2022.

Excluding a decrease of $57,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to decreases of (i) $636,000 in personnel-related costs, (ii) $55,000 in legal related costs, (iii) $8,000 in outside-consulting costs, and (iv) $7,000 in investor relations costs;

partially offset by increases of (i) $193,000 in accounting, audit, and administrative costs and (ii) $19,000 in bad debt costs.

General and administrative expenses decreased by 10% to $7.8 million for the nine months ended March 31, 2023, from $8.7 million in the same period in fiscal year 2022.

Excluding a decrease of $162,000 due to foreign exchange rate fluctuation, general and administrative expense decreased primarily due to decreases of (i) $1.0 million in personnel-related costs, (ii) $30,000 in legal related costs, and (iii) $24,000 in investor relations costs;

partially offset by increases of (i) $170,000 in bad debt costs, (ii) $92,000 in outside consulting costs, and (iii) $64,000 in accounting, audit, and administrative costs.

Loss from Operations

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Income (loss) from operations

Loss from operations

Operating margin

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.

Loss from operations was $512,000 with an operating loss margin of 2% during the three months ended March 31, 2023.

Loss from operations during the three months ended March 31, 2023 included $1.4 million of stock-based compensation and $381,000 of amortization of costs capitalized to obtain revenue contracts.

Loss from operations was $969,000 with an operating loss margin of 1% during the nine months ended March 31, 2023.

Loss from operations during the nine months ended March 31, 2023 included $5.3 million of stock-based compensation and $1.2 million 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 $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.

Interest income primarily consists of interest earned on money market accounts which have increased rates compared to prior years.

Interest income was income of $818,000 and $3,000 during the three months ended March 31, 2023 and 2022, respectively.

Interest income was income of $1.6 million and $7,000 during the nine months ended March 31, 2023 and 2022, 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 was expense of $245,000 and income $200,000 during the three months ended March 31, 2023 and 2022, respectively.

Other income (expense), net was income of $20,000 and $182,000 during the nine months ended March 31, 2023 and 2022, respectively.

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

Income Tax Provision

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 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 $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.

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

Due to recent U.S.

book losses, we maintain a valuation allowance against U.S.

deferred tax assets as of March 31, 2023.

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

We recorded income tax provision of $433,000 and $1.2 million for the three and nine months ended March 31, 2023, respectively.

We recorded income tax provision of $342,000 and $663,000 for the three and nine months ended March 31, 2022, respectively.

Liquidity and Capital Resources

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.

As of March 31, 2023 and June 30, 2022, our principal sources of liquidity were cash and cash equivalents, and accounts receivable totaling $91.5 million and $99.1 million, respectively.

Our cash, cash equivalents and restricted cash were $81.3 million and $72.2 million as of March 31, 2023 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 six months ended December 31, 2022 and 2021, our cash flows were as follows (in thousands):

Six Months Ended

For the nine months ended March 31, 2023 and 2022, our cash flows were as follows (in thousands):

Nine Months Ended

Net cash provided by operating activities

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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.

Net cash provided by operating activities increased by $3.2 million during the nine months ended March 31, 2023, from the same period in fiscal year 2022, driven primarily by the timing of accounts receivable collections and deferred revenue recognitions.

Net cash used in investing activities decreased by $324,000 during the nine months ended March 31, 2023, from the same period in fiscal year 2022, driven primarily by less 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 $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.

Net cash provided by financing activities decreased by $2.6 million during the nine months ended March 31, 2023, from the same period in fiscal year 2022.

The changes consist primarily of proceeds from the exercise of employee stock options, our employee stock purchase plan, and funds used with repurchases of our common stock of approximately $1.1 million.

Our principal commitments consist of obligations under leases for office space.

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

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

As of March 31, 2023, the future non-cancelable minimum payments under these commitments were approximately $3.1 million.

Off-Balance Sheet Arrangements

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

As of March 31, 2023, 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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis