What changed in this filing

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Item 1. Financial Statements

2025-02-13 compared with 2024-11-12 · 158 added, 113 removed, 415 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except par value data)

September 30,

Current assets:

1 unchanged sentence

Restricted cash

Accounts receivable, less provision for credit losses of $ 125 and $ 59 as of September 30, 2024 and June 30, 2024, respectively

Accounts receivable, less provision for credit losses of $ 67 and $ 59 as of December 31, 2024 and June 30, 2024, respectively

Costs capitalized to obtain revenue contracts, net

23 unchanged sentences

33,110 and 32,698 shares;

28,522 and 29,160 shares as of September 30, 2024 and June 30, 2024, respectively

28,481 and 29,160 shares as of December 31, 2024 and June 30, 2024, respectively

Additional paid-in capital

Treasury stock, at cost:

4,208 and 3,538 common shares as of September 30, 2024 and June 30, 2024, respectively

4,629 and 3,538 shares of common stock as of December 31, 2024 and June 30, 2024, respectively

Notes receivable from stockholders

8 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

Professional services

10 unchanged sentences

Interest income

Other (expense) income, net

Other expense, net

Income before income tax provision

8 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

Other comprehensive income, net of taxes:

5 unchanged sentences

(in thousands)

Three Months Ended September 30, 2024

Additional Paid-in

Three Months Ended December 31, 2024

Treasury Stock

Notes Receivable From

Accumulated Other Comprehensive

Total Stockholders'

Balances as of June 30, 2024

Notes Receivable

Comprehensive

Stockholders'

Balances as of September 30, 2024

Issuance of common stock upon exercise of stock options

Issuance of common stock upon vesting of restricted stock units

Issuance of common stock in connection with employee stock purchase plan

Repurchase of common stock

1 unchanged sentence

Foreign currency translation adjustments

Balances as of December 31, 2024

See accompanying notes to condensed consolidated financial statements.

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Three Months Ended December 31, 2023

Treasury Stock

Notes Receivable

Comprehensive

Stockholders'

Balances as of September 30, 2023

Three Months Ended September 30, 2023

Repayment of stockholder notes

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Repurchase of common stock

Stock-based compensation

Foreign currency translation adjustments

Balances as of December 31, 2023

See accompanying notes to condensed consolidated financial statements.

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (cont.)

(in thousands)

Six Months Ended December 31, 2024

Treasury Stock

Notes Receivable

Comprehensive

Stockholders'

Balances as of June 30, 2024

Issuance of common stock upon exercise of stock options

Issuance of common stock upon vesting of restricted stock units

Issuance of common stock in connection with employee stock purchase plan

Repurchase of common stock

Stock-based compensation

Foreign currency translation adjustments

Balances as of December 31, 2024

See accompanying notes to condensed consolidated financial statements.

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (cont.)

(in thousands)

Six Months Ended December 31, 2023

Additional Paid-in

1 unchanged sentence

Notes Receivable From

Accumulated Other Comprehensive

Accumulated Other

Comprehensive

Total Stockholders'

Balances as of June 30, 2023

Repayment of notes receivable from stockholders

Repayment of stockholder notes

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Repurchase of common stock

1 unchanged sentence

Foreign currency translation adjustments

Balances as of September 30, 2023

Balances as of December 31, 2023

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

Cash flows from operating activities:

6 unchanged sentences

Stock-based compensation

Gain on disposal of property and equipment

Changes in operating assets and liabilities:

16 unchanged sentences

Proceeds from exercise of stock options

Proceeds from employee stock purchase plan

Repurchases of common stock

2 unchanged sentences

Effect of change in exchange rates on cash and cash equivalents

Net (decrease) increase in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

2 unchanged sentences

Cash paid for taxes

Right-of-use (ROU) assets and lease liabilities recognized from lease modification

Non-cash items:

Purchases of equipment through trade accounts payable

Purchases of equipment included in accounts payable

See accompanying notes to condensed consolidated financial statements.

7 unchanged sentences

Many global brands use eGain to improve experience and reduce costs.

We are headquartered in the Sunnyvale, California, United States.

We are headquartered in Sunnyvale, California in the United States.

We also operate in the United Kingdom and India.

The Company fiscal year ends on June 30.

References to fiscal year 2025 refers to the Company’s fiscal year ending June 30, 2025.

The Company’s 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 ended 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 accompanying condensed consolidated balance sheet as of December 31, 2024 and the condensed consolidated statements of operations, comprehensive income, and stockholders’ equity for the three and six months ended December 31, 2024 and cash flows for the six months ended December 31, 2024 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.

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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.

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and included the accounts of our wholly-owned subsidiaries.

All significant intercompany balances and transactions have been eliminated.

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Actual results could differ significantly from estimates.

We make estimates

that we believe to be reasonable based on historical experience and other assumptions.

We make estimates that we believe to be reasonable based on historical experience and other assumptions.

Significant estimates and assumptions made by management include the following:

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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 effective for fiscal years beginning after December 15, 2024 (our fiscal year 2026), 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.

We are currently evaluating the impact of this update on our condensed consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60):

1 unchanged sentence

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 effective for fiscal years beginning after December 15, 2024 (our fiscal year 2026), 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.

We are currently evaluating the impact of this update on our condensed consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities.

The objective of this guidance is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in each relevant expense caption.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 (our fiscal year 2028), with early and retrospective adoption permitted.

We are currently evaluating the impact of this update on our condensed consolidated financial statements and related disclosures.

Revenue Recognition

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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.

We enter into contractual arrangements with customers that may include promises to transfer multiple services, such as subscription, support, or professional services.

With respect to our business, a performance obligation is a promise to transfer a service to a customer that is distinct.

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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 .

We typically invoice our customers in advance upon execution of the contract or subsequent renewals with payment terms generally 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.

We have a royalty revenue agreement with a customer related to our embedded intellectual property.

Under the terms of the agreement, the customer is to provide us a combination of fixed fee and 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.

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, we estimate 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.

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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.

We enter into contracts that can include various combinations of subscriptions, professional services, or maintenance and support, which are generally distinct and accounted for as separate performance obligations.

For contracts with multiple performance obligations, we allocate 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

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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.

During the three and six months ended December 31, 2024, we capitalized $ 329,000 and $ 518,000 of costs to obtain revenue contracts, respectively, and amortized $ 330,000 and $ 684,000 to sales and marketing expense, respectively.

During the three and six months ended December 31, 2023, we capitalized $ 397,000 and $ 486,000 of costs to obtain revenue contracts, respectively, and amortized $ 345,000 and $ 845,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $ 2.9 million and $ 3.1 million as of December 31, 2024 and June 30, 2024, respectively, on our condensed consolidated balance sheets.

Deferred Revenue

2 unchanged sentences

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.

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

7 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

Income from operations:

3 unchanged sentences

The following table presents our long-lived assets, corresponding to our geographic areas are as follows (in thousands):

September 30,

Long-lived assets:

8 unchanged sentences

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.

One customer, who is also one of our resell partners, accounted for more than 10% of total revenue during the three and six months ended December 31, 2024.

One customer, who is also a resell partner, accounted for more than 10% of total revenue during the three and six months ended December 31, 2023.

Two customers, one of which is our resell partner, accounted for more than 10% of our gross accounts receivable balance, less provision for credit losses as of December 31, 2024, and June 30, 2024, respectively.

Accounts Receivable and Provision for Credit Losses

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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 exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the United States (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.

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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.

Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $ 2.2 million and $ 3.6 million as of December 31, 2024 and June 30, 2024, respectively, and are included in the gross accounts receivable balance, less provision for credit losses on the accompanying condensed consolidated balance sheets.

Stock-Based Compensation

9 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

Stock-based compensation expense:

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Total stock-based compensation expense

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.

Total stock-based compensation includes expense related to non-employee awards of $ 11,000 and $ 31,000 during the three and six months ended December 31, 2024, respectively.

Total stock-based compensation includes expense related to non-employee awards of $ 25,000 and $ 51,000 during the three and six months ended December 31, 2023, respectively.

Total stock-based compensation includes expense related to the ESPP of $ 81,000 and $ 161,000 for the three and six months ended December 31, 2024, respectively.

Total stock-based compensation includes expense related to the ESPP of $ 87,000 and $ 166,000 for the three and six months ended December 31, 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.

We estimate the fair value for stock based RSU awards based on the closing market price of grant date.

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.

During the three months ended December 31, 2024 and 2023, we granted options to purchase 287,067 and 21,300 shares of common stock with a weighted-average fair value of $ 2.67 and $ 3.16 per share, respectively.

During the six months ended December 31, 2024 and 2023, we granted options to purchase 313,767 and 50,400 shares of common stock with a weighted-average fair value of $ 2.74 and $ 3.29 per share, respectively.

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,

Six Months Ended

Expected volatility

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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.

On December 1, 2024, certain employees were granted the right to purchase an aggregate of 103,618 shares under the ESPP, and compensation expense related to those purchase rights for the three and six months ended December 31, 2024 was $ 31,000 .

On December 1, 2023, certain employees were granted the right to purchase an aggregate of 87,332 shares under the ESPP, and compensation expense related to those purchase rights for the three and six months ended December 31, 2023 was $ 34,000 .

As of December 31, 2024, there were 674,749 shares of common stock available for issuance under the ESPP.

We base our estimate of expected life of a stock option on the historical exercise behavior and cancellations of all past option grants made by the Company during the time period which its equity shares have been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options.

1 unchanged sentence

Improvements to Employee Share-Based Accounting , we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense.

As of 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.

As of December 31, 2024, there was approximately $ 1.1 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 0.88 years.

There were 117,000 and 122,500 options exercised during the three months ended December 31, 2024 and 2023, respectively.

There were 149,317 and 123,500 options exercised during the six months ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, there was approximately $ 1.1 million 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 0.87 years.

There were 226,654 RSUs with a weighted average grant date fair value of $ 5.71 per share granted during the three and six months ended December 31, 2024.

There were 200,821 RSUs with a weighted average grant date fair value of $ 6.50 per share granted during the three and six months ended December 31, 2023.

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

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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

borrowing rate at lease commencement.

If the rate implicit in the lease cannot be readily determined, the Company uses its incremental 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.

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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.

We had no indicators of impairment during the three and six months ended December 31, 2024.

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):

The following table presents our SaaS and professional services revenue during the three and six months ended December 31, 2024 and 2023, respectively (in thousands):

Three Months Ended

September 30,

Six Months Ended

Professional services revenue

Total revenue

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):

The following table presents our revenue recognized over-time and at a point-in-time during the three and six months ended December 31, 2024 and 2023, respectively (in thousands):

Three Months Ended

September 30,

Six Months Ended

Point-in-time

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Three Months Ended

September 30,

Six Months Ended

North America

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The following table presents our contract liabilities (in thousands):

Balance as of

September 30, 2024

December 31, 2024

June 30, 2024

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Total deferred revenue

$ 12.1 million of deferred revenue as of June 30, 2024 was recognized to revenue during the three months ended September 30, 2024.

$ 10.7 million and $ 22.7 million of deferred revenue as of June 30, 2024 was recognized to revenue during the three and six months ended December 31, 2024.

Remaining Performance Obligations

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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.

As of December 31, 2024, our remaining performance obligations were $ 73.6 million of which we expect to recognize $ 50.9 million and $ 22.7 million as revenue within one year and beyond one year, respectively.

EARNINGS PER SHARE

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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):

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

Three Months Ended

September 30,

Six Months Ended

Per share information:

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Weighted-average shares used in computation:

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.

Effect of dilutive options and RSUs

Weighted-average shares of stock options to purchase 3,361,087 and 3,487,402 shares of common stock for the three months ended December 31, 2024 and 2023, respectively, and weighted-average shares of stock options to purchase 3,415,156 and 3,527,031 shares of common stock for the six months ended December 31, 2024 and 2023, respectively, were not included in the computation of diluted earnings per share due to their anti-dilutive effect.

Such securities could have a dilutive effect in future periods.

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

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.

Under this method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

We assess our ability to realize the deferred tax assets on a quarterly basis and we establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized.

For the legacy eGain business in the U.S., 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.

Performance improvement in the U.S.

could result in a change in the realization of the deferred tax assets in the next twelve months, which would result in a release of the valuation allowance for such jurisdiction.

The reversal of such valuation allowance would result in an income tax benefit for the quarterly and annual fiscal periods in which we release the valuation allowance.

However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the positive evidence that exists at such time.

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.

The remaining eGain foreign operations, including its wholly-owned subsidiary Exony Limited, 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.

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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.

As of December 31, 2024, utilization of the net operating loss (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.

The Company has not identified a change in ownership as of December 31, 2024 that would significantly limit the 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.

In 2024, California enacted legislation including S.B.167, which suspends the use of NOLs by businesses for tax years 2024 through 2026, limits the use of tax credits by businesses 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.

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.

We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2033.

We modified one 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 $ 599,000 during the three and six months ended December 31, 2024.

All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term.

1 unchanged sentence

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.

Total operating lease costs were $ 383,000 and $ 325,000 for the three months ended December 31, 2024 and 2023, respectively.

Total operating lease costs were $ 683,000 and $ 650,000 for the six months ended December 31, 2024 and 2023, respectively.

For the three and six months ended December 31, 2024, operating cash outflows for operating leases were $ 322,000 and $ 596,000 , respectively.

For the three and six months ended December 31, 2023, operating cash outflows for operating leases were $ 276,000 and $ 590,000 , respectively.

The following tables present information about leases on our condensed consolidated balance sheets (in thousands):

September 30, 2024

June 30, 2024

Operating lease right-of-use assets

2 unchanged sentences

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)

Weighted average discount rate

As of September 30, 2024, remaining maturities of lease liabilities are as follows (in thousands):

As of December 31, 2024, remaining maturities of lease liabilities are as follows (in thousands):

Fiscal Period:

Remaining nine months of fiscal year 2025

Remaining six months of fiscal year 2025

Fiscal year 2026

34 unchanged sentences

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

value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur.

Subsequent changes in fair 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.

7 unchanged sentences

Our money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy.

As of 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.

As of December 31, 2024 and June 30, 2024, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $ 53.8 million and $ 58.4 million, respectively.

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.

On November 14, 2022, our board of directors authorized a stock repurchase program under which we may purchase up to $ 20.0 million of our outstanding common stock.

On May 31, 2024, our board of directors authorized a $ 20.0 million increase in its stock repurchase program, bringing the aggregate amount we may purchase thereunder from $ 20.0 million to $ 40.0 million of its outstanding common stock.

As of December 31, 2024, approximately $ 10.0 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.

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 we 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 original stock repurchase program became effective on November 14, 2022, and was amended on November 14, 2024 to extend the term until the earlier of (i) the date the aggregate amount of shares that can be repurchased under the stock repurchase program have been repurchased and (ii) November 14, 2025, unless further extended.

The stock repurchase program 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.

During the three months ended December 31, 2024, 420,534 shares have been repurchased for an average acquisition cost per share of $ 5.73 , totaling $ 2.4 million.

During the six months ended December 31, 2024, 1,091,358 shares have been repurchased for an average acquisition cost per share of $ 6.41 , totaling $ 7.0 million.

We intend to reissue repurchased shares at a later date and therefore carry the shares as treasury stock, at cost.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements