EGAIN Corp 10-Q

Item 1. Financial Statements EGAIN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ June 30, ​ 2024 2024 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 67,205 ​ $ 70,003 Restricted cash ​ 8 ​ 8 Accounts receivable, less provision for credit losses of $ 125 and $ 59 as of September 30, 2024 and June 30, 2024, respectively ​ 23,045 ​ 31,731 Costs capitalized to obtain revenue contracts, net ​ 1,276 ​ 1,272 Prepaid expenses ​ ​ 2,331 ​ ​ 2,915 Other current assets ​ 857 ​ 1,195 Total current assets ​ 94,722 ​ 107,124 Property and equipment, net ​ 461 ​ 441 Operating lease right-of-use assets ​ ​ 3,621 ​ ​ 3,811 Costs capitalized to obtain revenue contracts, net of current portion ​ 1,684 ​ 1,779 Goodwill ​ 13,186 ​ 13,186 Other assets, net ​ 1,247 ​ 1,511 Total assets ​ $ 114,921 ​ $ 127,852 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 1,906 ​ $ 2,725 Accrued compensation ​ 6,280 ​ 7,642 Accrued liabilities ​ 2,513 ​ 5,078 Operating lease liabilities ​ ​ 1,173 ​ ​ 1,179 Deferred revenue ​ 41,033 ​ 45,989 Total current liabilities ​ 52,905 ​ 62,613 Deferred revenue, net of current portion ​ 2,875 ​ 3,280 Operating lease liabilities, net of current portion ​ ​ 2,455 ​ ​ 2,592 Other long-term liabilities ​ 938 ​ 871 Total liabilities ​ 59,173 ​ 69,356 Commitments and contingencies (Note 6) ​ ​ ​ ​ ​ ​ Stockholders' equity: ​ ​ ​ ​ ​ ​ Common stock, par value $ 0.001 - authorized: 60,000 shares; issued: 32,730 and 32,698 shares; outstanding: 28,522 and 29,160 shares as of September 30, 2024 and June 30, 2024, respectively ​ 33 ​ 33 Additional paid-in capital ​ 408,211 ​ 407,416 Treasury stock, at cost: 4,208 and 3,538 common shares as of September 30, 2024 and June 30, 2024, respectively ​ ​ ( 27,616 ) ​ ​ ( 23,031 ) Notes receivable from stockholders ​ ( 21 ) ​ ( 21 ) Accumulated other comprehensive loss ​ ( 1,850 ) ​ ( 2,240 ) Accumulated deficit ​ ( 323,009 ) ​ ( 323,661 ) Total stockholders' equity ​ 55,748 ​ 58,496 Total liabilities and stockholders' equity ​ $ 114,921 ​ $ 127,852 ​ See accompanying notes to condensed consolidated financial statements ​ 2 Table of Contents ​ ​ EGAIN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 Revenue: ​ ​ ​ ​ ​ ​ SaaS ​ $ 19,820 ​ $ 22,323 Professional services ​ 1,979 ​ 1,853 Total revenue ​ 21,799 ​ 24,176 Cost of revenue: ​ ​ ​ ​ ​ ​ Cost of SaaS ​ 4,522 ​ 5,047 Cost of professional services ​ 2,144 ​ 1,791 Total cost of revenue ​ 6,666 ​ 6,838 Gross profit ​ 15,133 ​ 17,338 ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ 7,421 ​ 6,632 Sales and marketing ​ 4,760 ​ 6,104 General and administrative ​ 2,443 ​ 3,186 Total operating expenses ​ 14,624 ​ 15,922 Income from operations ​ 509 ​ 1,416 Interest income ​ 771 ​ 949 Other (expense) income, net ​ ( 140 ) ​ 610 Income before income tax provision ​ 1,140 ​ 2,975 Income tax provision ​ ( 488 ) ​ ( 379 ) Net income ​ $ 652 ​ $ 2,596 ​ ​ ​ ​ ​ ​ ​ Per share information: ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.02 ​ $ 0.08 Diluted ​ $ 0.02 ​ $ 0.08 Weighted-average shares used in computation: ​ ​ ​ ​ ​ ​ Basic ​ 28,671 ​ 31,479 Diluted ​ 29,292 ​ 32,136 ​ See accompanying notes to condensed consolidated financial statements . ​ ​ ​ ​ ​ ​ ​ ​ 3 Table of Contents ​ EGAIN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 Net income ​ $ 652 ​ $ 2,596 Other comprehensive income, net of taxes: ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ 390 ​ ( 755 ) Total comprehensive income ​ $ 1,042 ​ $ 1,841 ​ See accompanying notes to condensed consolidated financial statements. ​ 4 Table of Contents ​ EGAIN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2024 ​ Common Stock ​ Additional Paid-in ​ Treasury Stock ​ Notes Receivable From ​ Accumulated Other Comprehensive ​ Accumulated ​ Total Stockholders' ​ Shares Amount Capital Shares Amount Stockholders Loss Deficit Equity Balances as of June 30, 2024 29,160 ​ $ 33 ​ $ 407,416 ​ ​ 3,538 ​ $ ( 23,031 ) ​ $ ( 21 ) ​ $ ( 2,240 ) ​ $ ( 323,661 ) ​ $ 58,496 Issuance of common stock upon exercise of stock options 32 ​ ​ — ​ ​ 163 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 163 Repurchase of common stock ( 670 ) ​ ​ — ​ ​ — ​ ​ 670 ​ ​ ( 4,585 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 4,585 ) Stock-based compensation — ​ ​ — ​ ​ 632 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 632 Foreign currency translation adjustments — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 390 ​ ​ — ​ ​ 390 Net income — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 652 ​ ​ 652 Balances as of September 30, 2024 28,522 ​ $ 33 ​ $ 408,211 ​ ​ 4,208 ​ $ ( 27,616 ) ​ $ ( 21 ) ​ $ ( 1,850 ) ​ $ ( 323,009 ) ​ $ 55,748 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2023 ​ Common Stock ​ Additional Paid-in ​ Treasury Stock ​ Notes Receivable From ​ Accumulated Other Comprehensive ​ Accumulated ​ Total Stockholders' ​ Shares Amount Capital Shares Amount ​ Stockholders Loss Deficit Equity Balances as of June 30, 2023 31,482 ​ $ 32 ​ $ 401,087 ​ ​ 786 ​ $ ( 5,763 ) ​ $ ( 97 ) ​ $ ( 2,122 ) ​ $ ( 331,441 ) ​ $ 61,696 Repayment of notes receivable from stockholders — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 33 ​ ​ — ​ ​ — ​ ​ 33 Issuance of common stock upon exercise of stock options 1 ​ ​ — ​ ​ 4 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 4 Repurchase of common stock ( 83 ) ​ ​ — ​ ​ — ​ ​ 83 ​ ​ ( 517 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 517 ) Stock-based compensation — ​ ​ — ​ ​ 1,208 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,208 Foreign currency translation adjustments — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 755 ) ​ ​ — ​ ​ ( 755 ) Net income — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,596 ​ ​ 2,596 Balances as of September 30, 2023 31,400 ​ $ 32 ​ $ 402,299 ​ ​ 869 ​ ​ ( 6,280 ) ​ $ ( 64 ) ​ $ ( 2,877 ) ​ $ ( 328,845 ) ​ $ 64,265 ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 5 Table of Contents EGAIN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net income ​ $ 652 ​ $ 2,596 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Amortization of costs capitalized to obtain revenue contracts ​ 354 ​ 500 Amortization of right-of-use assets ​ ​ 274 ​ ​ 294 Depreciation and amortization ​ 93 ​ 107 Provision for (recovery of) credit losses ​ 71 ​ ( 110 ) Deferred income taxes ​ ​ 219 ​ ​ ( 45 ) Stock-based compensation ​ 632 ​ 1,208 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ 8,938 ​ 13,100 Costs capitalized to obtain revenue contracts ​ ( 189 ) ​ ( 89 ) Prepaid expenses ​ ​ 597 ​ ​ ( 131 ) Other current assets ​ 343 ​ ( 44 ) Other non-current assets ​ ​ 43 ​ ​ ( 31 ) Accounts payable ​ ( 830 ) ​ ( 1,182 ) Accrued compensation ​ ( 1,439 ) ​ ( 1,706 ) Accrued liabilities ​ ( 2,657 ) ​ ( 944 ) Deferred revenue ​ ( 5,964 ) ​ ( 5,124 ) Operating lease liabilities ​ ​ ( 230 ) ​ ​ ( 284 ) Other long-term liabilities ​ 47 ​ 16 Net cash provided by operating activities ​ 954 ​ 8,131 ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ ​ ( 109 ) ​ ( 32 ) Net cash used in investing activities ​ ( 109 ) ​ ( 32 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Proceeds from exercise of stock options ​ 163 ​ 4 Repurchases of common stock ​ ​ ( 4,585 ) ​ ​ ( 517 ) Repayment of stockholder notes ​ ​ — ​ ​ 33 Net cash used in financing activities ​ ( 4,422 ) ​ ( 480 ) Effect of change in exchange rates on cash and cash equivalents ​ 779 ​ ( 993 ) Net (decrease) increase in cash, cash equivalents and restricted cash ​ ( 2,798 ) ​ 6,626 Cash, cash equivalents and restricted cash at beginning of period ​ 70,011 ​ 73,208 Cash, cash equivalents and restricted cash at end of period ​ $ 67,213 ​ $ 79,834 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow disclosures: ​ ​ ​ ​ ​ ​ Cash paid for taxes ​ $ 586 ​ $ 863 ​ ​ ​ ​ ​ ​ ​ Non-cash items: ​ ​ ​ ​ ​ ​ Purchases of equipment through trade accounts payable ​ $ — ​ $ 18 ​ ​ See accompanying notes to condensed consolidated financial statements. ​ ​ ​ ​ ​ ​ 6 Table of Contents ​ ​ ​ EGAIN CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES ​ Organization and Nature of Business ​ eGain Corporation (eGain, the Company, our, we or us) automates customer engagement with an AI knowledge hub SaaS solution. We sell to enterprises who want to better serve customers at scale by delivering trusted answers across self-service, contact centers, and field staff. True to our mantra of AX + BX + CX = DX™ , our AI knowledge hub orchestrates effortless Digital eXperience (DX) as it assists Agent eXperience (AX), empowers Business eXperience (BX) and assures Customer eXperience (CX). Many global brands use eGain to improve experience and reduce costs. We are headquartered in the Sunnyvale, California, United States. We also operate in the United Kingdom and India. ​ Fiscal Year ​ The Company fiscal year ends on June 30. References to fiscal year 2025 refers to the Company’s fiscal year ending June 30, 2025. References to fiscal year 2024 refers to the Company’s fiscal year ending June 30, 2024. ​ Basis of Presentation ​ The accompanying condensed consolidated balance sheet as of September 30, 2024 and the condensed consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three months ended September 30, 2024 and 2023, are unaudited. The condensed consolidated balance sheet as of June 30, 2024 was derived from audited consolidated financial statements as of that date but does not include all the information and footnotes required by generally accepted accounting principles (GAAP) for complete financial statements. ​ Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with GAAP, have been condensed or omitted pursuant to such rules and regulations although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations, and cash flows for the periods presented. ​ These condensed consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and accompanying notes for the fiscal year ended June 30, 2024, included in our Annual Report on Form 10-K. The results of our operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending June 30, 2025. ​ Principles of Consolidation ​ We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and included the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. ​ Use of Estimates ​ The preparation of financial statements requires us to make estimates and assumptions in the condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from estimates. We make estimates 7 Table of Contents that we believe to be reasonable based on historical experience and other assumptions. Significant estimates and assumptions made by management include the following: ​ ● Standalone selling price (SSP) of performance obligations for contracts with multiple performance obligations; ● Estimate of variable consideration for performance obligations in connection with Topic 606; ● Period of benefit associated with capitalized costs to obtain revenue contracts; ● Valuation, measurement and recognition of current and deferred income taxes; ● Fair value of stock-based awards; and ● Lease term and incremental borrowing rate for lease liabilities. ​ Recent Accounting Pronouncements ​ Pronouncements Not Yet Adopted ​ In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosures on expanded information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. The ASU is effective within fiscal years beginning after December 15, 2024 (our fiscal year 2025), with early adoption permitted. The ASU is required to be applied retrospectively to all prior periods presented in the financial statements once adopted. We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures. ​ In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which requires fair value measurement of certain crypto assets each reporting period with the changes in fair value reflected in net income. The amendments also requires disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The ASU is effective within fiscal years beginning after December 15, 2024 (our fiscal year 2025), with early adoption permitted. The ASU is required to be applied retrospectively to all prior periods presented in the financial statements once adopted. We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures. ​ Revenue Recognition Revenue Recognition Policy ​ Our revenue is comprised of two categories including SaaS and professional services. SaaS revenue includes cloud delivery arrangements, term licenses, embedded original equipment manufacturer (OEM) royalties, and associated support. An immaterial amount of SaaS revenue is comprised of our legacy revenue which 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. ​ Significant Judgment Applied in the Determination of Revenue Recognition ​ We enter into contractual arrangements with customers that may include promises to transfer multiple services, such as subscription, support, and professional services. With respect to our business, a performance obligation is a promise to transfer a service to a customer that is distinct. Significant judgment is required to determine whether services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting. Additionally, significant judgment is required to determine the timing of revenue recognition. ​ We allocate the transaction price to each performance obligation based on relative SSP. The SSP is the price at which we would sell a promised service separately to one of our customers. Judgment is required to determine the SSP for each distinct performance obligation. ​ We determine the SSP by considering our pricing objectives in relation to market demand. Consideration is placed based on our history of discounting prices, size and volume of transactions involved, customer demographics and geographic locations, price lists, contract prices, and our market strategy. 8 Table of Contents ​ Determination of Revenue Recognition ​ Under Topic 606, we recognize revenue upon the transfer of control of promised services to our customers in the amount that is commensurate with the consideration that we expect to receive in exchange for those services. If consideration includes a variable amount in the arrangement, such as service level credits or contingent fees, then we include an estimate of the amount that we expect to receive for the total transaction price. ​ The amount of revenue that we recognize is based on (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract on a relative SSP basis; and (v) recognizing revenue when, or as, we satisfy each performance obligation in the contract typically through delivery or when control is transferred to the customer. ​ SaaS Revenue ​ The following customer arrangements are recognized ratably over the contract term as the performance obligations are delivered: ● Cloud delivery arrangements; ● Maintenance and support arrangements; and ● Term licenses which incorporate on-premise software licenses and a subscription to substantial cloud functionalities. ​ For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer. We typically invoice our customers in advance upon execution of the contract or subsequent renewals with payment terms between 30 and 45 days . Invoiced amounts are recorded in accounts receivable, deferred revenue or revenue, depending if control transferred to our customers based on each arrangement. ​ The Company has a royalty revenue agreement with a customer related to the Company’s embedded intellectual property. Under the terms of the agreement, the customer is to provide to the Company a combination of fixed fee, per agent fee, for each software license sold containing the embedded software. These embedded OEM royalties are included as SaaS revenue. Under Topic 606 revenue guidance, since these arrangements are for usage-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company estimates revenue recognized only as the performance obligation of the OEM royalties has been satisfied or partially satisfied. Differences between actual results and estimated amounts are adjusted in the following period as such sales are reported by the customer with a quarter in arrears. ​ 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 SSP. Revenue allocated to each performance obligation is recognized at the earlier of satisfaction of discrete performance obligations, or as work is performed on a time and material basis. Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company. Our consulting and implementation service contracts are bid either on a time-and-material basis or on a fixed-fee basis. Managed services contracts are bid on a time-and-material basis. Fixed fees are generally paid upon milestone billing or customer acceptance at pre-determined points in the contract. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred. Training revenue that meets the criteria to be accounted for separately is recognized when training is provided. 9 Table of Contents Contracts with Multiple Performance Obligations ​ The Company enters into contracts that can include various combinations of subscriptions, professional services, and maintenance and support, which are generally distinct and accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the respective SSP for each performance obligation. Costs Capitalized to Obtain Revenue Contracts, Net ​ Under Topic 606, we capitalize incremental costs of obtaining non-cancelable subscription and support revenue contracts. The capitalized amounts consist primarily of sales commissions paid to our direct sales force. Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees. ​ Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years . We determine the period of benefit by taking into consideration the historical and expected durations of our customer contracts, the expected useful lives of our technologies, and other factors. Commissions for renewal contracts relating to our cloud-based arrangements are expensed when incurred, as we do not consider renewal contracts to be commensurate with initial customer contracts. Historically, any commission associated with renewals have been immaterial. Amortization of costs to obtain revenue contracts is included as a component of sales and marketing expenses in our condensed consolidated statements of operations. ​ During the three months ended September 30, 2024 and 2023, we capitalized $ 189,000 and $ 89,000 of costs to obtain revenue contracts, respectively, and amortized $ 354,000 and $ 500,000 to sales and marketing expense, respectively. ​ Capitalized costs to obtain revenue contracts, net were $ 3.0 million and $ 3.1 million as of September 30, 2024 and June 30, 2024, respectively, on our condensed consolidated balance sheets. ​ Deferred Revenue Deferred revenue primarily consists of payments received in advance of revenue recognition from cloud, term and ratable licenses, and maintenance and support services and is recognized as the revenue recognition criteria are met. We generally invoice customers in annual or quarterly installments. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable cloud or maintenance and support agreements. Deferred revenue is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing and new business linearity within the financial reporting period. ​ Segment Information We operate in one segment - the development, license, implementation, and support of our customer service infrastructure software solutions. Operating segments are identified as components of an enterprise for which discrete financial information is available and regularly reviewed by our chief operating decision-maker in order to make decisions about resources to be allocated to the segment and assess its performance. Our chief operating decision-makers under ASC 280, Segment Reporting, are our executive management team. Our chief operating decision-makers review financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. ​ Our revenue is derived from North America and combined Europe, Middle East, and Africa (EMEA) and is disclosed in Note 2. However, we incur operating expenses in the North America, EMEA, and Asia Pacific regions. ​ 10 Table of Contents The following table presents our income from operations among our three operating regions (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ ​ 2024 2023 Income from operations ​ ​ ​ ​ ​ ​ North America ​ $ ( 93 ) ​ $ 1,655 Europe, Middle East, & Africa ​ 2,288 ​ 1,373 Asia Pacific ​ ( 1,686 ) ​ ( 1,612 ) Income from operations ​ $ 509 ​ $ 1,416 ​ The following table presents our long-lived assets, corresponding to our geographic areas are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ June 30, ​ 2024 2024 Long-lived assets: ​ ​ ​ ​ ​ ​ North America ​ $ 242 ​ $ 216 Europe, Middle East, & Africa ​ 78 ​ 81 Asia Pacific ​ 141 ​ 144 Long-lived assets ​ $ 461 ​ $ 441 ​ For the purposes of entity-wide geographic area disclosures, long-lived assets consist of computers and equipment, furniture and fixtures, and leasehold improvements, net of accumulated depreciation and amortization. These items are included in property and equipment, net, on the accompanying Company’s condensed consolidated balance sheets. ​ Concentration of Credit Risk and Significant Customers ​ Our financial instruments that are exposed to concentrations of credit risk include cash and cash equivalents, restricted cash, and accounts receivable. We complement direct sales with resell partnerships based on product connectors into cloud contact center platforms. We also partner with system integrators and managed service providers. Two customers, including one of our partners, accounted for 15 % and 10 %, respectively, of total revenue during the three months ended September 30, 2024. The same customers and including one of our partner accounted for 17 % and 11 % of total revenue during the three months ended September 30, 2023. Three and two customers accounted for more than 10% of our gross accounts receivable, less provision for credit losses balance as of September 30, 2024 and 2023, respectively. ​ Accounts Receivable and Provision for Credit Losses ​ We extend unsecured credit to our customers on a regular basis. Our accounts receivable are derived from revenue earned from customers and are not interest bearing. We also maintain provision for credit losses to reserve for potential uncollectible trade receivables. We review our trade receivables by aging category to identify specific customers with known disputes or collectability issues. We exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the U.S. and internationally, and changes in customer financial conditions. We write off a receivable after collection efforts have been exhausted and the amount is deemed uncollectible. Recovered written off receivables are recorded as they occur. ​ In certain revenue contracts, contractual billings do not coincide with revenue recognized on the contract. Unbilled accounts receivables are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable upon certain criteria being met. Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $ 1.5 million and $ 3.6 million as of September 30, 2024, and June 30, 2024, respectively, and are included in the accounts receivable, provision for credit losses, balance on the accompanying condensed consolidated balance sheets. ​ 11 Table of Contents Stock-Based Compensation ​ We account for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period, net of expected forfeitures. Stock-based compensation expense consists of expenses for stock options, restricted stock units (RSUs), and discounted employee common stock granted under our Amended and Restated 2005 Management Stock Option Plan, our Amended and Restated 2005 Stock Incentive Plan, and our 2017 Employee Stock Purchase Plan (ESPP). ​ The ESPP provides that eligible employees may purchase the Company’s common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value at the entry date of the applicable offering period or at the end of each applicable purchasing period. The offering period, meaning a period with respect to which the right to purchase shares of our common stock may be granted under the ESPP, will not exceed twenty-seven months and consist of a series of six-month purchase periods. Eligible employees may join the ESPP at the beginning of any six-month purchase period. Under the terms of the ESPP, employees can choose to have between 1 % and 15 % of their base earnings withheld to purchase the Company’s common stock. ​ Determining the fair value of the stock-based awards at the grant date requires significant judgment and the use of estimates, particularly surrounding Black-Scholes valuation assumptions such as stock price volatility and expected option term. ​ Below is a summary of stock-based compensation included in the costs and expenses (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 Stock-Based Compensation Expense: ​ ​ ​ ​ ​ ​ Cost of revenue ​ $ 230 ​ $ 297 Research and development ​ 177 ​ 397 Sales and marketing ​ 65 ​ 159 General and administrative ​ 160 ​ 355 Total stock-based compensation expense ​ $ 632 ​ $ 1,208 ​ Total stock-based compensation includes expense related to non-employee awards of $ 20,000 and $ 26,000 during the three months ended September 30, 2024 and 2023, respectively. ​ Total stock-based compensation includes expense related to the ESPP of $ 80,000 and $ 79,000 for the three months ended September 30, 2024 and 2023, respectively. ​ We utilize the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted and ESPP stock purchase rights. All shares of our common stock issued pursuant to our stock option, RSUs, and ESPP plans are only issued out of an authorized reserve of shares of common stock which were previously registered with the SEC on Registration Statements on Form S-8. ​ During the three months ended September 30, 2024 and 2023, we granted options to purchase 26,700 and 29,100 shares of common stock with a weighted-average fair value of $ 3.52 and $ 3.39 per share, respectively. ​ ​ 12 Table of Contents We used the following weighted-average assumptions as inputs into the Black-Scholes valuation model to estimate the fair value of the options granted: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ September 30, ​ ​ 2024 2023 Expected volatility ​ 55 % 54 % Average risk-free interest rate ​ 3.79 % 4.31 % Expected life (in years) ​ 4.56 ​ 4.54 ​ Dividend yield ​ — ​ — ​ ​ ​ The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. We determined the appropriate measure of expected volatility by reviewing historic volatility in the share price of our common stock, as adjusted for certain events that management deemed to be non-recurring and non-indicative of future events. The risk-free interest rate is derived from the average U.S. Treasury Strips rate with maturities approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant. ​ On June 1, 2024 and 2023, employees were granted the right to purchase an aggregate of 90,792 and 77,057 shares under the ESPP, respectively. During each of the three months ended September 30, 2024 and 2023, no ESPP grants or purchase occurred. ​ As of September 30, 2024, there were 768,297 shares of common stock available for issuance under the ESPP. ​ We base our estimate of expected life of a stock option on the historical exercise behavior and cancellations of all past option grants made by the Company during the time period which its equity shares have been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options. ​ In accordance with ASU 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Accounting, we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense. ​ As of September 30, 2024, there was approximately $ 952,000 of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 0.8 years. There were 32,317 and 1,000 options exercised during the three months ended September 30, 2024 and 2023 , respectively. ​ As of September 30, 2024, there was approximately $ 167,000 of total unrecognized compensation cost, net of expected forfeitures, related to unvested RSUs, which is expected to be recognized over the weighted-average period of 0.1 years. There were no RSUs granted during the three months ended September 30, 2024 and 2023. ​ Leases ​ Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases. ​ Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the condensed consolidated financial statements. ROU assets represent the Company’s right to use leased assets over the agreed upon term. Lease liabilities represent the Company’s contractual obligation to make lease payments over the lease term. ​ For operating leases, ROU assets and lease liabilities are recognized at the commencement date of the lease. The lease liability is measured as the present value of the lease payments over the lease term, using the rate implicit in the lease if readily determinable. If the rate implicit in the lease cannot be readily determined, the Company uses its incremental 13 Table of Contents borrowing rate at lease commencement. The operating lease ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and any prepayments, less unamortized lease incentives received. ​ Operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease ROU assets and liabilities, to the extent that they are fixed. Non-lease component payments that are not fixed are expensed as incurred as variable lease payments. ​ Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option were not exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and obligations for leases with an initial term of twelve months or less, and has applied a capitalization threshold to recognize a lease on the condensed consolidated balance sheet. The expense associated with short-term leases and leases that do not meet the Company’s capitalization threshold are recorded to lease expense in the period it is incurred. ​ Goodwill ​ We review goodwill annually for impairment or sooner whenever events or changes in circumstances indicate that it may be impaired. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company. We had no indicators of impairment during the three months ended September 30, 2024. 14 Table of Contents 2. REVENUE RECOGNITION ​ Disaggregation of Revenue ​ The following table presents our SaaS and professional services revenue during the three months ended September 30, 2024 and 2023, respectively (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 Revenue: ​ ​ ​ ​ ​ SaaS revenue $ 19,820 ​ $ 22,323 Professional services revenue 1,979 ​ 1,853 Total revenue $ 21,799 ​ $ 24,176 ​ The following table presents our revenue recognized over-time and at a point-in-time during the three months ended September 30, 2024 and 2023, respectively (in thousands): ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ 2024 ​ 2023 Revenue: ​ ​ ​ ​ ​ Over-time $ 19,902 ​ $ 21,425 Point-in-time ​ 1,897 ​ ​ 2,751 Total revenue $ 21,799 ​ $ 24,176 ​ The following table presents our revenue by geography. Revenue by geography is generally determined on the region of our contracting entity rather than the region of our customer. The relative proportion of our total revenue between each geographic region as presented in the table below was materially consistent across each of our operating regions’ revenue for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ 2024 2023 Revenue: ​ ​ ​ ​ ​ ​ North America ​ $ 16,423 ​ $ 18,989 Europe, Middle East, & Africa ​ ​ 5,376 ​ 5,187 Total revenue ​ $ 21,799 ​ $ 24,176 ​ Contract Balances Contract assets, if any, consist of unbilled receivables for completed performance obligations which have not been invoiced, and for which we do not have an unconditional right to consideration. Unbilled receivables are included in accounts receivable, less provision for credit losses on our condensed consolidated balance sheets. Contract liabilities consist of deferred revenue for which we have an obligation to transfer services to customers and have received consideration in advance or the amount is due from customers. Once the obligations are fulfilled, then deferred revenue is recognized to revenue in the respective period. 15 Table of Contents The following table presents our contract liabilities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of ​ Balance as of ​ September 30, 2024 ​ June 30, 2024 Contract liabilities: ​ ​ ​ ​ ​ ​ Deferred revenue ​ $ 41,033 ​ $ 45,989 Deferred revenue, net of current portion ​ ​ 2,875 ​ 3,280 Total deferred revenue ​ $ 43,908 ​ $ 49,269 ​ $ 12.1 million of deferred revenue as of June 30, 2024 was recognized to revenue during the three months ended September 30, 2024. ​ Remaining Performance Obligations Remaining performance obligations represent contracted revenue that had not yet been recognized, and include deferred revenue, invoices that have been issued to customers but were uncollected and have not been recognized as revenue, and amounts that will be invoiced and recognized as revenue in future periods. 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, 2024, our remaining performance obligations were $ 70.4 million of which we expect to recognize $ 54.5 million and $ 15.9 million as revenue within one year and beyond one year, respectively. ​ ​ 3. EARNINGS PER SHARE ​ Basic earnings per share is computed using the weighted-average number of shares of common stock outstanding. In periods where net income is reported, the weighted-average number of shares is increased by stock options in the money and shares issuable for RSUs subject to service-based vesting requirements to calculate diluted earnings per share. ​ The following table represents the calculation of basic and diluted net income per share (unaudited, in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ September 30, ​ ​ 2024 ​ 2023 Net income $ 652 $ 2,596 Per share information: ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.02 ​ $ 0.08 Diluted ​ $ 0.02 ​ $ 0.08 Weighted-average shares used in computation: ​ ​ ​ ​ ​ ​ Basic ​ 28,671 ​ 31,479 Diluted ​ 29,292 ​ 32,136 ​ Weighted-average shares of stock options to purchase 3,386,960 and 3,564,660 shares of common stock for the three months ended September 30, 2024 and 2023, respectively, were not included in the computation of diluted net income per share due to their anti-dilutive effect. Such securities could have a dilutive effect in future periods. ​ ​ ​ 4. INCOME TAXES ​ Income taxes are accounted for using the asset and liability method in accordance with ASC 740, Income Taxes. Under this method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to 16 Table of Contents differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. For the legacy eGain business in the United States, based upon the weight of available evidence, which includes our historical operating performance, our future investment plans, and the uncertainty in the current market and economic environment, we have provided a full valuation allowance against our net deferred tax assets. For the legacy eGain business in the United Kingdom, based on the positive evidence, the Company has determined it would be able to utilize the deferred tax assets and does not have a valuation allowance against the deferred tax assets. The remaining eGain foreign operations as well as Exony’s business have historically been profitable and we believe it is more likely than not that those assets will be realized. Our tax provision primarily relates to foreign activities as well as state income taxes. Our income tax rate differs from the statutory tax rates primarily due to the change in valuation allowance, stock-based compensation, Section 267 inclusion, research and development tax credits, and our foreign operations. We account for uncertain tax positions according to the provisions of ASC 740. ASC 740 contains a two-step approach for recognizing and measuring uncertain tax positions. Tax positions are evaluated for recognition by determining if the weight of available evidence indicates that it is probable that the position will be sustained on audit, including resolution of related appeals or litigation. Tax benefits are then measured as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. ​ As of September 30, 2024, utilization of the NOL or tax credit carryforwards to offset future taxable income and taxes, respectively, are subject to an annual limitation under the Internal Revenue Code of 1986 and similar state provisions, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments such as built in gain or built in loss, as required. Any limitation may result in expiration of all or a portion of its NOL and or tax credit carryforwards before utilization. The Company has not identified a change in ownership as of September 30, 2024 that would significantly limit the net operating loss (NOL) carryovers. ​ Under the Tax Cuts and Jobs Act, enacted on December 22, 2017 (TCJA), federal NOLs incurred in 2018 and in future years may be carried forward indefinitely, but generally may not be carried back, and the deductibility of such NOLs is limited to 80% of taxable income. ​ On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L. 116-136, was passed into law, amending portions of certain relevant US tax laws. The CARES Act included a number of federal income tax law changes, including, but not limited to: (i) permitting NOL carrybacks to offset 100% of taxable income for taxable years beginning before 2021, (ii) accelerating alternative minimum tax credit refunds, (iii) temporarily increasing the allowable business interest deduction from 30% to 50% of adjusted taxable income, and (iv) providing a technical correction for depreciation related to qualified improvement property. The CARES Act had no impact on our consolidated financial statements. Beginning in 2022, the TCJA eliminates the option to immediately deduct research and development expenditures and requires taxpayers to capitalize and amortize domestic expenditures over five years and foreign expenditures over 15 years. While the mandatory capitalization requirement increases our deferred tax assets and cash tax liabilities for 2022, the tax year in which the provision took effect, the impact will decline annually over the five-year amortization period to an immaterial amount in year six. ​ On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law and is effective for taxable years beginning after December 31, 2022. The IRA includes multiple incentives to promote clean energy with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share repurchases. These measures may affect our consolidated financial statements and we will continue to evaluate the applicability and effect of the IRA as more guidance is issued. In 2024, California enacted legislation including S.B.167, which suspends the use of NOLs by businesses and individuals for tax years 2024 through 2026, limits the use of tax credits by businesses and individuals to $5 million for tax years 2024 through 2026, and clarifies that income not included in apportionable business income is excluded from the sales factor of the apportionment formula. S.B.175, provides some relief from the $5 million credit limitation in S.B. 167 by allowing taxpayers subject to the limit to elect to later receive a refund of credits they would have otherwise used to reduce tax liabilities during the limitation period. ​ 17 Table of Contents 5. LEASES ​ We leased our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2033. We also modified three of our existing operating leases by extending the terms under such leases, which resulted in an increase in operating lease right-of-use assets and operating lease liabilities in the amount of approximately $ 2.1 million during our fiscal year ended June 30, 2024. All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term. Lease ROU assets and liabilities are recognized on the commencement date at the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments. ​ Total operating lease costs were $ 300,000 and $ 326,000 for the three months ended September 30, 2024 and 2023, respectively. ​ For the three months ended September 30, 2024 and 2023, operating cash outflows for operating leases were $ 274,000 and $ 315,000 , respectively. The following tables present information about leases on our condensed consolidated balance sheets (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ June 30, 2024 Assets: ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ $ 3,621 ​ $ 3,811 Liabilities: ​ ​ ​ ​ ​ ​ Operating lease liabilities ​ ​ 1,173 ​ ​ 1,179 Operating lease liabilities, net of current portion ​ ​ 2,455 ​ ​ 2,592 ​ The following table presents information about the weighted average lease term and discount rate as follows: ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 ​ June 30, 2024 Weighted average remaining lease term (in years) 5.33 ​ ​ 5.52 ​ Weighted average discount rate 7.77 % ​ 7.66 % ​ As of September 30, 2024, remaining maturities of lease liabilities are as follows (in thousands): ​ ​ ​ ​ ​ Fiscal Period: ​ ​ ​ Remaining nine months of fiscal year 2025 ​ $ 886 Fiscal year 2026 ​ ​ 1,068 Fiscal year 2027 ​ 822 Fiscal year 2028 ​ 295 Fiscal year 2029 ​ ​ 295 Fiscal year 2030 ​ 295 Fiscal year 2031 and thereafter ​ 1,031 Total minimum lease payments ​ ​ 4,692 Less: Imputed interest ​ ​ ( 1,064 ) Total operating lease liabilities ​ ​ 3,628 Less: Current operating lease liabilities ​ ​ ( 1,173 ) Total operating lease liabilities, net of current portion ​ $ 2,455 ​ ​ 18 Table of Contents 6. COMMITMENTS AND CONTINGENCIES ​ Litigation ​ In the ordinary course of business, we are involved in various legal proceedings and claims related to alleged infringement of intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour, and other claims that are not expected to have a material impact on our business or our condensed consolidated financial statements. We have been, and may in the future be, put on notice and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement. ​ We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to injunction if they are found to infringe the rights of a third party. In addition, our agreements require us to indemnify our customers for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling on such a claim. ​ Warranty ​ We generally warrant that the program portion of our software will perform substantially in accordance with certain specifications for a period up to one year from the date of delivery. Our liability for a breach of this warranty is either a return of the license fee or providing a fix, patch, work-around or replacement of the software. ​ We also provide standard warranties against and indemnification for the potential infringement of third party intellectual property rights to our customers relating to the use of our products, as well as indemnification agreements with certain officers and employees under which we may be required to indemnify such persons for liabilities arising out of their duties to us. The terms of such obligations vary. Generally, the maximum obligation is the amount permitted by law. Historically, cost related to these warranties have not been significant. However, we cannot guarantee that a warranty reserve will not become necessary in the future. ​ Indemnification ​ We have agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as our director or officer or that person’s services provided to any other company or enterprise at our request. ​ Transfer Pricing ​ We have received transfer-pricing assessments from tax authorities with regard to transfer pricing issues for certain fiscal years, which we have appealed with the appropriate authority. We review the status of each significant matter and assess its potential financial exposure. We believe that such assessments are without merit and would not have a significant impact on our condensed consolidated financial statements. ​ Contractual Commitments ​ Our principal contractual 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. ​ 7. FAIR VALUE MEASUREMENT ​ ASC 820, Fair Value Measurement (ASC 820), defines fair value, establishes a framework for measuring fair value of assets and liabilities, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the assets or liabilities in an orderly transaction between market participants on the measurement date. Subsequent changes in fair 19 Table of Contents value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur. ASC 820 applies whenever other statements require or permit assets or liabilities to be measured at fair value. ​ ASC 820 includes a fair value hierarchy, of which the first two are considered observable and the last unobservable, that is intended to increase the consistency and comparability in fair value measurements and related disclosures. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. ​ The fair value hierarchy consists of the following three levels: ​ Level 1 – instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. ​ Level 2 – instrument valuations are obtained from readily-available pricing sources for comparable instruments. ​ Level 3 – instrument valuations are obtained without observable market value and require a high level of judgment to determine the fair value. ​ Our money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy. As of September 30, 2024 and June 30, 2024, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $ 51.3 million and $ 73.6 million, respectively. ​ 8. SHARE REPURCHASE PROGRAM ​ On November 14, 2022, the Company’s Board of Directors authorized a stock repurchase program under which we may purchase up to $ 20.0 million of our outstanding common stock. As of September 30, 2024, approximately $ 12.4 million remained available for stock repurchases pursuant to our stock repurchase program. ​ Under the stock repurchase program, we may purchase shares of common stock on a discretionary basis from time to time through open market transactions or privately negotiated transactions at prices deemed appropriate by us. In addition, at our discretion, open market repurchase of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions. ​ The timing and number of shares repurchased will be determined based on an evaluation of market conditions and other factors, including stock price, trading volume, general business and market conditions, and the availability of capital. The stock repurchase program is effective immediately on November 14, 2022, has a term of one year from adoption unless extended, does not obligate us to acquire a specified number of shares and may be modified, suspended, or discontinued at any time at our discretion without notice. The stock repurchase program will be funded using existing cash or future cash flows. During the three months ended September 30, 2024, 670,824 shares have been repurchased for an average acquisition cost per share of $ 6.84 , totaling $ 4.6 million. We intend to reissue repurchased shares at a later date and therefore carry the shares as treasury stock at cost. ​ ​ 20 Table of Contents