10q10k10q10k.net

What changed in EGAIN Corp's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of EGAIN Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+249 added−261 removedSource: 10-K (2025-09-12) vs 10-K (2024-09-12)

Top changes in EGAIN Corp's 2025 10-K

249 paragraphs added · 261 removed · 215 edited across 3 sections

Item 1. Business

Business — how the company describes what it does

44 edited+6 added−8 removed19 unchanged
Biggest changeSolve with eGain Knowledge Hub ​ Our Knowledge Hub helps businesses to centralize knowledge, policies, procedures, situational expertise, and best-practices, while delivering guided, personalized, and trusted answers to customers, agents, and field staff. We believe our guided knowledge and virtual assistance applications ensure that all agents easily resolve customer queries, regardless of product or procedure.
Biggest changeOur AI Agent for contact center assists human agents by actively listening to customer conversations and proactively guiding them step-by-step, across intent identification, issue resolution and contact wrap up. ​ eGain AI Knowledge Hub helps businesses to centralize knowledge, policies, procedures, situational expertise, and best-practices, while delivering guided, personalized, and trusted answers to customers, agents, and field staff.
Roy holds a B.S. in Computer Science from the Indian Institute of Technology, New Delhi, a Master’s degree in Computer Science from Johns Hopkins University and a M.B.A. from Stanford University. ​ Eric N. Smit has served as Chief Financial Officer since August 2002. Prior to that, Mr.
Mr. Roy holds a B.S. in Computer Science from the Indian Institute of Technology, New Delhi, a Master’s degree in Computer Science from Johns Hopkins University and a M.B.A. from Stanford University. ​ Eric N. Smit has served as Chief Financial Officer since August 2002. Prior to that, Mr.
In addition, we occasionally compete with some of our platform partners where some of our product capabilities overlap, including Five9, Genesys, Microsoft, Salesforce, and ServiceNow. ​ Our target market is highly competitive and some of our competitors may have longer operating histories, greater economies of scale, greater financial resources, greater engineering and technical resources, greater sales and marketing resources, stronger strategic partnerships and distribution channels, larger user bases, products and services with different functions, and feature sets and greater brand recognition than we have.
In addition, we occasionally compete with some of our platform partners where some of our product capabilities overlap, including Five9, Genesys, Microsoft, Salesforce, and ServiceNow. ​ Our target market is highly competitive and some of our competitors may have longer operating histories, greater economies of scale, greater financial resources, greater engineering and technical resources, greater sales and marketing resources, stronger strategic partnerships and distribution channels, larger user bases, products and services with different 9 Table of Contents functions, and feature sets and greater brand recognition than we have.
While we believe our relations with our employees are good, our future performance depends largely upon the continued service of our key technical, sales and marketing, and senior management personnel, none of whom are bound by employment agreements requiring service for a defined period of time. ​ Available Information ​ We were incorporated in Delaware in September 1997, and our website is located at www.egain.com.
While we believe our relations with our employees are good, our future performance depends largely upon the continued service of our key technical, sales and 12 Table of Contents marketing, and senior management personnel, none of whom are bound by employment agreements requiring service for a defined period of time. ​ Available Information ​ We were incorporated in Delaware in September 1997, and our website is located at www.egain.com.
Meanwhile, businesses expect agents to remember and refresh growing knowhow that is needed to answer customer questions across complex, expanding product portfolios and compliance-heavy processes, and then recall relevant knowhow contextually in the moment of truth – when the customer is on the line.
Meanwhile, businesses expect agents to remember and refresh growing knowhow that is needed to answer customer questions across complex, expanding product portfolios and compliance-heavy processes, and then recall it contextually in the moment of truth – when the customer is on the line.
We rely on intellectual property and other laws, in addition to confidentiality procedures and licensing arrangements, to protect the proprietary aspects of our technology and business. ​ As of June 30, 2024, we had 17 issued patents in the United States.
We rely on intellectual property and other laws, in addition to confidentiality procedures and licensing arrangements, to protect the proprietary aspects of our technology and business. ​ As of June 30, 2025, we had 17 issued patents in the United States.
In addition, this is expected of an entry-level workforce that is not well-paid, routinely replaced, and globally dispersed – mainly for cost reasons. This knowledge and guidance gap for agents in the flow of their work explains Gartner Research’s top technology recommendation for customer service and support leaders since 2022: invest in knowledge management tools.
In addition, this is expected of an entry-level workforce that is not well-paid, routinely replaced, and globally dispersed – mainly for cost reasons. This knowledge and guidance gap for agents in the flow of their work explains Gartner Research’s top technology recommendation for customer service and support leaders: invest in modern knowledge management tools.
We believe we are increasing the value of investment in eGain for our clients by deeply integrating our capabilities via our enhanced APIs with enterprise assets like enterprise collaboration platforms, CRM systems, transaction and billing, and content sources. ​ Selectively Pursue Acquisitions ​ From time to time, we pursue inorganic strategies to strengthen our product portfolio.
We believe we are increasing the value of investment in eGain for our clients by deeply integrating our capabilities via our enhanced APIs with enterprise assets like enterprise collaboration platforms, CRM systems, transaction and billing, and content sources. 10 Table of Contents ​ Selectively Pursue Acquisitions ​ From time to time, we pursue inorganic strategies to strengthen our product portfolio.
We generally offer these services through a 36-month contract, with pricing based on the number of agents or self-service sessions. ​ Professional Services ​ Our worldwide professional services organization provides consulting, implementation, training, and managed services to deliver business value, drive customer success and build customer loyalty. 11 Table of Contents o Consulting and Implementation Services .
We generally offer these services through a 36-month contract, with pricing based on the number of agents or self-service sessions. ​ Professional Services ​ Our worldwide professional services organization provides consulting, implementation, training, and managed services to deliver business value, drive customer success and build customer loyalty. o Consulting and Implementation Services .
To further reduce cost and improve experience, businesses want to harness AI knowledge to automate customer service via omnichannel, conversational interfaces. According to McKinsey, the aggregate cost of customer operations in the global economy is $1.5 trillion. They anticipate that businesses could reduce this cost by 35% using AI.
To further reduce cost and improve experience, businesses want to harness AI knowledge to automate customer service via omnichannel, conversational interfaces. According to McKinsey, the aggregate cost of customer operations in the global economy is 7 Table of Contents $1.5 trillion. They anticipate that businesses could reduce this cost by 35% using AI.
According to a recent Gartner Research prediction, by 2025, 100% of all virtual customer assistant and virtual agent assistant projects that are not integrated with a modern knowledge management system will fail to meet their experience improvement and operational cost-reduction goals. ​ The eGain Approach and Benefits What Customers Want ​ We believe customer service queries fall into three categories: informational, transactional, and situational.
According to a 2024 Gartner Research prediction, 100% of all virtual customer assistant and virtual agent assistant projects that are not integrated with a modern knowledge management system will fail to meet their experience improvement and operational cost-reduction goals. ​ The eGain Approach and Benefits What Customers Want ​ We believe customer service queries fall into three categories: informational, transactional, and situational.
To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay and benefits; enhance our culture through 12 Table of Contents efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing and diverse workforce.
To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay and benefits; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing and diverse workforce.
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. ​ Information About Our Executive Officers The following table sets forth information regarding eGain’s executive officers as of September 12, 2024: ​ ​ ​ ​ ​ Name Age Position Ashutosh Roy 58 Chief Executive Officer and Chairman Eric N.
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. ​ Information About Our Executive Officers The following table sets forth information regarding eGain’s executive officers as of September 12, 2025: ​ ​ ​ ​ ​ Name Age Position Ashutosh Roy 59 Chief Executive Officer and Chairman Eric N.
We provide a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company. ​ Customer Support ​ We offer 24/7 customer support via online and phone channels worldwide under support agreements.
We provide a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company. ​ 11 Table of Contents ​ Customer Support ​ We offer 24/7 customer support via online and phone channels worldwide under support agreements.
We make available free of charge on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission.
We make available free of charge on our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission at www.sec.gov.
These subscription services allow our customers to easily consume our product innovation without dealing with infrastructure, installation and ongoing administration.
These SaaS services allow our customers to easily consume our product innovation without dealing with infrastructure, installation and ongoing administration.
From June 1994 to April 1995, Mr. Roy worked at Parsec Technologies, a call center company based in New Delhi, India, which he co-founded. From August 1988 to August 1992, Mr. Roy worked as a software engineer at Digital Equipment Corporation, a major company in the computer industry at the time . Mr.
Inc., an Internet-services company co-founded by Mr. Roy. From June 1994 to April 1995, Mr. Roy worked at Parsec Technologies, a call center company based in New Delhi, India, which he co-founded. From August 1988 to August 1992, Mr. Roy worked as a software engineer at Digital Equipment Corporation, a major company in the computer industry at the time .
Over 82% of our annual recurring cloud revenue for the fiscal year ended June 30, 2024 (which we refer to as fiscal year 2024) came from such large enterprises. ​ For fiscal year 2024, North America (NA) and combined Europe, Middle East, and Africa (EMEA) revenue accounted for 78% and 22% of total revenue. 9 Table of Contents ​ One of our largest customers, who is also our partner, accounted for 18% of total revenue in fiscal year 2024.
Over 87% of our annual recurring cloud revenue for the fiscal year ended June 30, 2025 (which we refer to as fiscal year 2025) came from such large enterprises. ​ For fiscal year 2025, North America (NA) and combined Europe, Middle East, and Africa (EMEA) revenue accounted for 78% and 22% of total revenue. ​ One of our largest customers, who is also our partner, accounted for 16% of total revenue in fiscal year 2025.
Recently, we published a revised edition of this pioneering work with generative AI updates, including relevant AI-powered product info, customer case studies, and best-practices. ​ Our partners help extend the breadth and depth of our product offerings, drive market awareness, and augment our professional service capabilities.
The revised second edition of this pioneering work incorporates generative AI updates, including relevant AI-powered product info, customer case studies, and best-practices. ​ Our partners help extend the breadth and depth of our product offerings, drive market awareness, and augment our professional service capabilities.
Not surprisingly, businesses are quickly seeking modern knowledge management solutions. AI Knowledge for Customer Engagement ​ To automate customer engagement, generative AI needs trusted content from a knowledge hub that ensures correct, compliant content is served with adequate controls. A knowledge hub can be built and maintained with much less time and cost using AI.
AI Knowledge for Customer Engagement ​ To automate customer engagement, generative AI needs trusted content from a knowledge hub that ensures correct, compliant content is served with adequate controls. A knowledge hub can be built and maintained with much less time and cost using AI.
Direct Go-to-market Strategy, Complemented by a Growing Partner Ecosystem ​ We take our solutions to market through a direct sales model, primarily in North America and Western Europe. We complement direct sales with resell partnerships. We also partner with System Integrators and boutique consultants.
Businesses can experience our product with their data, content, and process in a production setting. Direct Go-to-market Strategy, Complemented by a Growing Partner Ecosystem ​ We take our solutions to market through a direct sales model, primarily in North America and Western Europe. We complement direct sales with resell partnerships. We also partner with System Integrators and boutique consultants.
Given these potential savings, the associated market opportunity for SaaS solutions is huge.
Given these potential savings, the associated market opportunity for AI SaaS solutions for customer experience (CX) is huge.
Any given customer contact can morph across these categories as the conversation develops. Tools must orchestrate customer contact with context —accounting for machine-human hand-offs (mixed-initiative interaction), channel switching, multimodal interaction, and conversational pause-and-resume. During these interactions, customers increasingly want trusted answers and guidance.
A customer contact could span one of more of these three categories as the conversation develops. Tools must orchestrate customer contact with context — accounting for machine-human hand-offs (mixed-initiative interaction), channel switching, multimodal interaction, and conversational pause-and-resume. During these interactions, customers increasingly want guidance and trusted answers.
From April 1993 to November 1996, Mr. Smit served as Vice President of Operations and Chief Financial Officer of Velocity Incorporated, a software game developer and publishing company. Mr. Smit holds a Bachelor of Commerce in Accounting from Rhodes University, South Africa. Promod Narang has served as Chief Technology Officer since November 2022. Mr.
From April 1993 to November 1996, Mr. Smit served as Vice President of Operations and Chief Financial Officer of Velocity Incorporated, a software game developer and publishing company. Mr. Smit holds a Bachelor of Commerce in Accounting from Rhodes University, South Africa. Rao J. Chandrasekhar (also known as J.C.
At the same time, we are investing in delivery partnerships to scale our delivery capabilities. Land and Expand in the Enterprise ​ With the sustained progress we have made in customer success, we see a replicable pattern emerging: land enterprise logos with a small footprint in one business unit, demonstrate business value, and then expand in the enterprise.
Land and Expand in the Enterprise ​ With the sustained progress we have made in customer success, we see a replicable pattern emerging: land enterprise logos with a small footprint in one business unit, demonstrate business value, and then expand in the enterprise.
As of June 30, 2024, we had 544 employees, including 539 full-time employees, of which 195 were in product development, 229 in services and support, 64 in sales and marketing, and 56 in finance and administration. ​ None of our employees are covered by collective bargaining agreements.
As of June 30, 2025, we had 446 employees, including 444 full-time employees, of which 173 were in product development, 176 in services and support, 52 in sales and marketing, and 45 in finance and administration. ​ None of our employees are covered by collective bargaining agreements.
Smit 62 Chief Financial Officer Promod Narang 66 Chief Technology Officer ​ ​ Ashutosh Roy co-founded eGain and has served as Chief Executive Officer and a Director of eGain since September 1997 and as President since October 1, 2003. From May 1995 through April 1997, Mr. Roy served as Chairman of WhoWhere? Inc., an Internet-services company co-founded by Mr. Roy.
Smit 63 Chief Financial Officer Rao J. Chandrasekhar 62 Senior Vice President, Products and Services ​ ​ Ashutosh Roy co-founded eGain and has served as Chief Executive Officer and a Director of eGain since September 1997 and as President since October 1, 2003. From May 1995 through April 1997, Mr. Roy served as Chairman of WhoWhere?
Marketing and Partner Strategy ​ Our marketing strategy is to build our brand around the following pillars: thought leadership, product leadership, and customer advocacy. We have a long track record of thought leadership in this market. Our popular “Knowledge Management for Dummies” publication, for example, enjoys thousands of digital downloads and physical distribution in our target community.
We have a long track record of thought leadership in this market. Our popular “Knowledge Management for Dummies” publication, for example, enjoys thousands of digital downloads and physical distribution in our target community.
We believe these relationships are important to delivering successful integrated products and services to our customers. Our partner portal, eGain Econet™, provides comprehensive sales support and services information for partners. ​ Subscription Services ​ Our subscription services provide customers with access to our software on a cloud-based platform that we manage and offer on a subscription basis.
We believe these relationships are important to deliver successful integrated products and services to our customers. ​ SaaS Services ​ Our SaaS services provide customers with access to our software on a cloud-based platform that we manage and offer on a subscription basis.
The business impact of applying AI at scale on contact center operations can save the global economy hundreds of billions of dollars annually. 7 Table of Contents Customer Engagement Automation is a Large, Growing Market ​ Businesses continue to invest in digital transformation, especially in customer engagement.
The business impact of applying AI at scale on contact center operations could be hundreds of billions of dollars saved annually on a global basis, not to mention the positive effect of good service. Customer Experience Automation is a Large, Growing Market ​ Businesses continue to invest in digital transformation, especially in customer experience.
Invest in Direct Sales and Marketing ​ We design and execute scalable and personalized marketing programs to boost brand awareness, based on client success, product leadership and no-risk trial offers.
Invest in Direct Sales and Marketing ​ We design and execute scalable and personalized marketing programs to boost brand awareness, based on client success, product leadership and no-risk trial offers. To complement our marketing investment, we have built and trained a field sales team to maintain high-touch presence in target accounts.
As opportunities arise, we look for strategic acquisitions we believe will deliver compelling value faster than organic options. ​ Sales and Marketing Sales Strategy ​ Our sales strategy is to pursue targeted accounts, mostly B2C (Business-to-Consumer) enterprises and consumer-centric government agencies, through a combination of our direct sales force and partners.
As opportunities arise, we look for strategic acquisitions we believe will deliver compelling value faster than organic options. ​ Sales and Marketing Sales Strategy ​ Our sales strategy is to pursue North America and Europe-based enterprises with more than five thousand employees, through a combination of direct sales and partners.
Specifically, we help businesses: o Enhance customer experience with digital-first, omnichannel service, powered by AI knowledge. o Reduce operating costs with self-service automation, improved agent productivity and time-to-competence. o Ensure compliance with regulations, policies, procedures, and best practices. o Deliver insights to improve service, enhance products and design new offerings .
Specifically, we help businesses: o Enhance customer experience with digital-first, omnichannel service, powered by AI knowledge. o Reduce operating costs with self-service automation, improved agent productivity and time-to-competence. o Ensure compliance with regulations, policies, procedures, and best practices. o Deliver insights to improve service, enhance products and design new offerings . 8 Table of Contents Competitive Strengths Composable Platform with Rich APIs, Events, and UX Widgets ​ The eGain solution is a comprehensive omnichannel solution for the customer engagement market, with AI and knowledge applications at its core.
These enterprises typically have thousands of customer service agents in their contact centers. Our direct sales force is organized into teams that include field sales representatives and sales consultants. Our direct sales force is complemented by lead generation representatives and sales development representatives. We also complement our direct effort with sales alliances.
These enterprises typically have thousands of customer service agents in their contact centers. Our direct sales force is organized into teams that include sales representatives and sales consultants. Our direct sales force is complemented by sales development representatives. Marketing and Partner Strategy ​ Our brand is built around three pillars: thought leadership, product leadership, and customer advocacy.
Time-starved customers consuming complex products and grappling with extreme choices generate stubbornly high levels of customer contact. They need quick, correct, and assured help.
According to Forrester Research, there were 17 million contact center agents worldwide in 2024, with 71% of contact centers looking to hire more. Time-starved customers consuming complex products and grappling with extreme choices generate stubbornly high levels of customer contact. They need quick, correct, and assured help.
Market-leading Innovation with a Risk-free Trial Model ​ To de-risk customer decisions, we offer a unique Innovation in 30 Days ™ program—a 30-day guided production pilot in the eGain Cloud – at no cost and with no strings attached. Businesses can experience our product with their data, content, and process in a production setting.
Market-leading Innovation with Risk-free Trial Models ​ To de-risk customer decisions, we offer both self-sign ups and guided pilots at no charge: ● AI Agent self-signup with free trial. ● Innovation in 30 Days ™ program—a 30-day guided pilot in the eGain Cloud – at no cost and no strings attached.
Our customer support centers are in the United States, the United Kingdom, and India. ​ Research and Development ​ The market for our products changes rapidly and is characterized by evolving industry standards, swift changes in customer requirements, and frequent product introductions. ​ We continuously analyze market and customer requirements and evaluate external technology that we believe will enhance our competitiveness, increase our lifetime customer value, and expand our target market.
Our customer support centers are in the United States, the United Kingdom, and India. ​ Research and Development ​ The market for our products changes rapidly and is characterized by evolving industry standards, swift changes in customer requirements, and frequent product introductions. Automation of CX with AI is an exciting, global market opportunity that is being reimagined.
Pre-built integrations include connectors to Adobe, Apple Business Chat, Avaya, Amazon Connect, Cisco, Five9, Google Dialogflow, Genesys, Talkdesk, IBM Watson, Microsoft Dynamics, Microsoft SharePoint, Microsoft Teams, Salesforce, SAP, ServiceNow, and Zendesk. We offer a novel 8 Table of Contents “Bring Your Own” composable architecture to plug external bots, messaging channels, and third-party agent desktops to compose differentiated customer experiences.
Pre-built integrations include connectors to Adobe, Apple Business Chat, Atlassian Jira, Avaya, Amazon Connect, Cisco, Facebook Messenger, Five9, Google Dialogflow, Genesys, Talkdesk, IBM Watson, Microsoft Dynamics, Microsoft SharePoint, Microsoft Teams, Salesforce, SAP, ServiceNow, and Zendesk.
To complement our marketing investment, we have built and trained a field sales team to maintain high-touch presence in target accounts. 10 Table of Contents Develop New Partner Relationships ​ We are developing new partnerships with complementary platform providers (with large customer bases) to enhance their proposition with our Knowledge-powered customer engagement capabilities.
Develop New Partner Relationships ​ We are developing new partnerships with complementary platform providers (with large customer bases) to enhance their proposition with our Knowledge-powered customer engagement capabilities. At the same time, we are investing in delivery partnerships to scale our delivery capabilities.
Connect with eGain Conversation Hub ​ Our Conversation Hub offers comprehensive, scalable capabilities for digital-first, omnichannel interaction management within a modern, purpose-built desktop.
We believe our guided knowledge applications ensure that all human agents can handle their contacts regardless of tenure or expertise. ​ eGain Conversation Hub offers comprehensive, scalable capabilities for digital-first interaction management within a modern, omnichannel desktop.
ITEM 1. BUSINESS ​ Overview ​ eGain 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.
ITEM 1. BUSINESS ​ Overview ​ eGain automates customer experience with an AI knowledge hub solution. We sell our SaaS solution to enterprises who want to improve customer experience while reducing cost, by using AI to synthesize and deliver trusted, consumable answers from a knowledge hub. We are headquartered in Sunnyvale, California, USA.
In addition, embedded AI and Machine Learning (ML) helps clients generate product improvement and customer insights, while spotting opportunities to improve experience and automate processes. ​ Open, Secure APIs and Third-Party Connectors Deliver Quick Value ​ Our open, secure platform APIs enable clients and partners to extend and enhance our solutions and to integrate with enterprise assets to enable a single view of the customer.
Human agents are proactively guided by AI knowledge to efficiently serve customers via chat, short message service (SMS), email, social media, phone, video, fax, and letter. ​ Open, Secure APIs and Third-Party Connectors Deliver Quick Value ​ Our open, secure platform APIs enable clients and partners to extend and enhance our solutions and to integrate with enterprise assets to enable a single view of the customer.
AI Economy Demands Modern Knowledge Management In a world selling commoditized, yet complex products to time-strapped customers, smart tools must automate the routine and augment the interesting across agent, business and customer support tasks. This need has been amplified by the disruption of traditional work models by COVID-19.
AI Economy Demands Modern Knowledge Management In a world selling commoditized, yet complex products to time-strapped customers, smart tools must increasingly automate self-service interactions and augment agent-assisted customer experiences. In a hybrid workplace, businesses realize that they need to invest in tools that can guide agents and customers with trusted answers, ensuring compliance.
The eGain Solution is Comprehensive ​ eGain offers a comprehensive, unified solution organized into three hubs—eGain Knowledge Hub™, eGain Conversation Hub™, and eGain Analytics Hub™, to automate, augment and orchestrate digital-first customer engagement. We believe our feature-rich portfolio of applications empowers businesses to connect, solve, and optimize agent, business, and customer experience.
The eGain Solution is Comprehensive ​ eGain offers a comprehensive solution organized into three hubs — eGain AI Agent™, eGain AI Knowledge Hub™, and eGain Conversation Hub™ — to automate customer experiences. ​ eGain AI Agent helps businesses easily deploy enterprise-grade agentic solutions built on trusted knowledge and guided actions.
Removed
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.
Added
Further, AI investments are struggling to deliver value at scale because of the “Garbage In Garbage Out” problem of fragmented knowledge content across an enterprise. The answer is a centralized knowledge hub, a single source of truth that is powered by AI and orchestrated by experts in the loop.
Removed
Businesses realize that they need to invest in tools that can guide agents and customers with trusted answers, ensuring customer satisfaction and compliance. Recently we have seen the generative AI surprises pop up across businesses as businesses jumped into generative AI without solving the foundational knowledge needed to provide trusted input content to generative AI.
Added
It is a perfect technology bootstrap - AI needs trusted knowledge as input and trusted knowledge can be built much easier using AI. Contact Centers are a Brand Battleground ​ Contact centers offer a great opportunity within any business operation to automate using AI.
Removed
It is a perfect technology intersection where AI needs knowledge and knowledge can be built easier with AI. Contact Centers are a Brand Battleground ​ Contact centers offer significant opportunities to realize the transformation potential of generative AI. According to Forrester Research, there were 17 million contact center agents in 2023, with 71% of contact centers looking to hire more.
Added
We offer a novel “Bring Your Own” composable architecture to plug large language models, external bots, messaging channels, and third-party agent desktops to compose differentiated customer experiences. Compelling Benefits ​ Our solution delivers quick value, easy innovation, and big business impact.
Removed
Rich applications, powered by our Knowledge and AI capabilities (from our Knowledge Hub), proactively guide agents to efficiently interact with customers using chatbots, messaging applications, short message service (SMS), chat, email, social media, phone, video, fax, and letter. ​ Optimize with eGain Analytics Hub ​ Our Analytics Hub enables clients to measure, manage and optimize their omnichannel service operations and knowledge.
Added
We are investing heavily in product innovation to seize this opportunity in enterprises looking to drive impact at scale in CX, a critical business function. ​ We continuously analyze market and customer requirements and evaluate external technology that we believe will enhance our competitiveness, increase our lifetime customer value, and expand our target market.
Removed
Compelling Benefits ​ Our solution delivers quick value, easy innovation, and big business impact.
Added
Rao) has served as Senior Vice President, Products and Services since September 2024. J.C. Rao joined the Company in August 1999 and has served in a variety of roles, including as Senior Vice President, Services, Support, and Operations from November 2022 to September 2024, and prior to that, other leadership roles in product management and engineering. J.C.
Removed
Competitive Strengths Composable Platform with Rich APIs, Events, and UX Widgets ​ The eGain solution is a comprehensive omnichannel solution for the customer engagement market, with AI and knowledge applications at its core.
Added
Rao earned his Bachelor of Technology from Indian Institute of Technology Madras and M.S. from the University of Texas, Austin. ​ 13 Table of Contents
Removed
Narang joined eGain in October 1998 and served as Director of Engineering and from March 2000 to October 2022, he served as Senior Vice President of Products and Engineering prior to assuming his current position. Prior to joining eGain, Mr. Narang served as President of VMpro, a system software consulting company, from September 1987 to October 1998. Mr.
Removed
Narang holds a Bachelor of Science in Computer Science from Wayne State University. ​ 13 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

106 edited+21 added−22 removed142 unchanged
Biggest changeFurther, t he costs of compliance with, and other burdens imposed by, such laws, regulations and policies that are applicable to us may limit the use and adoption of our products and solutions and could have a material adverse impact on our results of operations.
Biggest changeFurther, the costs of compliance with, and other burdens imposed by, such laws, regulations and policies that are applicable to us may limit the use and adoption of our products and solutions and could have a material adverse impact on our results of operations . 25 Table of Contents Privacy concerns and laws, evolving regulation of cloud computing, AI and other domestic or foreign regulations may limit the use, functionality and adoption of our solutions and adversely affect our business. ​ We are subject to a growing number of federal, state and foreign laws, regulations and standards governing data privacy, cybersecurity and the collection, processing, storage, use and transfer of personal information.
Other factors that may cause our revenue and operating results to fluctuate include: ● timing of customer budget cycles; ● the priority our customers place on our products compared to other business investments; ● size, timing and contract terms of new customer contracts, and unpredictable and often lengthy sales cycles; ● reduced renewals; 14 Table of Contents ● competitive factors, including new product introductions, upgrades and discounted pricing or special payment terms offered by our competitors, as well as strategic actions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; ● technical difficulties, errors or service interruptions in our solutions that may cause customer dissatisfaction with our solutions; ● consolidation among our customers, which may alter their buying patterns, or business failures that may reduce demand for our solutions; ● operating expenses associated with expansion of our sales force or business, and our product development efforts; ● cost, timing and management efforts related to the introduction of new features to our solutions; ● our ability to obtain, maintain and protect our intellectual property rights and adequately safeguard the information imported to our solutions or otherwise provided to us by our customers; and ● extraordinary expenses such as impairment charges, litigation or other payments related to settlement of disputes. ​ Any of these developments may adversely affect our revenue, operating results and financial condition.
Other factors that may cause our revenue and operating results to fluctuate include: ● timing of customer budget cycles; ● the priority our customers place on our products compared to other business investments; ● size, timing and contract terms of new customer contracts, and unpredictable and often lengthy sales cycles; ● reduced renewals; ● competitive factors, including new product introductions, upgrades and discounted pricing or special payment terms offered by our competitors, as well as strategic actions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; 14 Table of Contents ● technical difficulties, errors or service interruptions in our solutions that may cause customer dissatisfaction with our solutions; ● consolidation among our customers, which may alter their buying patterns, or business failures that may reduce demand for our solutions; ● operating expenses associated with expansion of our sales force or business, and our product development efforts; ● cost, timing and management efforts related to the introduction of new features to our solutions; ● our ability to obtain, maintain and protect our intellectual property rights and adequately safeguard the information imported to our solutions or otherwise provided to us by our customers; and ● extraordinary expenses such as impairment charges, litigation or other payments related to settlement of disputes. ​ Any of these developments may adversely affect our revenue, operating results and financial condition.
We assume a certain level of credit risk with our customers in order to do business. Conditions affecting any of our customers could cause them to become unable or unwilling to pay us in a timely manner, or at all, for products or services we have already provided them.
We assume a certain level of credit risk with our customers in order to do business. Conditions affecting any of our customers could cause them to become unable or unwilling to pay us in a timely manner, or at all, for products or services we have already provided.
In addition, domestic and foreign legislation has been proposed that could prohibit or impose liability for the transmission over the Internet of certain types of information. Our 23 Table of Contents defense of any of these actions could be costly and involve significant time and attention of our management and other resources.
In addition, domestic and foreign legislation has been 23 Table of Contents proposed that could prohibit or impose liability for the transmission over the Internet of certain types of information. Our defense of any of these actions could be costly and involve significant time and attention of our management and other resources.
If our cybersecurity systems or the systems of our vendors, partners and suppliers are breached and unauthorized access is obtained to a customer’s data or our data or IT systems, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.
If our cybersecurity systems or the systems of our vendors, partners and suppliers are breached and unauthorized access is obtained to a customer’s data, our data or IT systems, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.
During engagement, third parties are regularly reviewed, at least annually, to ensure that cyber risks are evaluated and assessed on a continual basis. Cyber Incident Response Plan Our Incident Response Plan outlines the processes for detecting, identifying, prioritizing, and analyzing information security events.
During engagement, third parties are regularly reviewed, at least annually, to ensure that cyber risks are evaluated and assessed on a continual basis. Cyber Incident Response Plan Our Cyber Incident Response Plan outlines the processes for detecting, identifying, prioritizing, and analyzing information security events.
Further, our forecasted revenue, operating results and cash flows could vary materially from those we provide as guidance or from those anticipated by investors and analysts if the assumptions on which we base our financial projections are inaccurate as a result of the unpredictability of the impact that a pandemic or public health emergency will have on our businesses, our customers’ and partners’ businesses and the global markets and economy or we make changes to our licensing programs or payment terms in connection with a pandemic or public health emergency.
Our forecasted revenue, operating results and cash flows could vary materially from those we provide as guidance or from those anticipated by investors and analysts if the assumptions on which we base our financial projections are inaccurate as a result of the unpredictability of the impact that a pandemic or public health emergency will have on our businesses, our customers’ and partners’ businesses and the global markets and economy or we make changes to our licensing programs or payment terms in connection with a pandemic or public health emergency.
In the past, we have experienced collection delays from certain customers, and we cannot predict whether we will continue to experience similar or more severe delays in the future. Although we have established provision to cover losses due to delays or inability to pay, there can be no assurance that such reserves will be sufficient to cover our losses.
In the past, we have experienced collection delays from certain customers, and we cannot predict whether we will continue to experience similar or more severe delays in the future. Although we have established a provision to cover losses due to delays or inability to pay, there can be no assurance that such reserves will be sufficient to cover our losses.
The timing of the commencement and completion of these services is subject to factors that may be beyond our control, as this process may require access to the customer’s facilities and coordination with the customer’s personnel after delivery of the software obligations. In addition, customers could cancel or delay product implementations.
The timing of the commencement and completion of these services is subject to factors that may be beyond our control, as this process may require access to the customers’ facilities and coordination with the customer’s personnel after delivery of the software obligations. In addition, customers could cancel or delay product implementations.
Consequently, declines in new or renewed subscription agreements and maintenance agreements that occur in one quarter will largely be felt in future quarters, both because we may be unable to generate sufficient new revenue to offset the decline and because we may be unable to adjust our operating costs and capital expenditures to align with the changes in revenue.
Consequently, declines in new or renewed subscription agreements that occur in one quarter will largely be felt in future quarters, both because we may be unable to generate sufficient new revenue to offset the decline and because we may be unable to adjust our operating costs and capital expenditures to align with the changes in revenue.
Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit customers’ use and adoption of our services and reduce overall demand for our services.
Regulators in certain industries have adopted and may in the future adopt regulations or interpretive positions regarding the use of cloud computing, AI and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions may limit customers’ use and adoption of our services and reduce overall demand for our services.
In addition, our ability to defend against and mitigate cyberattacks depends in part on prioritization decisions that we and third parties upon whom we rely make to address vulnerabilities and security defects.
In addition, our ability to defend against and mitigate cyberattacks depends in part on prioritization decisions that we and third parties upon whom we rely on to address vulnerabilities and security defects.
Management also reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their effect. IT EM 2. PROPERTIES We lease all facilities used in our business as of June 30, 2024. Our corporate headquarters is located in Sunnyvale, California, and we also have corporate offices in Newbury, England, and Pune, India.
Management also reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their effect. IT EM 2. PROPERTIES We lease all facilities used in our business as of June 30, 2025. Our corporate headquarters is located in Sunnyvale, California, and we also have corporate offices in Newbury, England, and Pune, India.
We cannot reasonably predict the ultimate impact of any pandemic or public health emergency, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread of the pandemic or public health emergency, the impact of governmental regulations that 28 Table of Contents have been, and may continue to be, imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions.
We cannot reasonably predict the ultimate impact of any pandemic or public health emergency, including the extent of any adverse impact on our business, results of operations and financial condition, which will depend on, among other things, the duration and spread of the pandemic or public health emergency, the impact of governmental regulations that have been, and may continue to be, imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions.
Risks Related to Our Business and Strategy Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting. ​ Factors influencing our business include: ​ ● general economic and business conditions; ● currency exchange rate fluctuations; ● the overall demand for enterprise software and services; ● customer acceptance of cloud-based solutions; ● governmental budgetary constraints or shifts in government spending priorities; and ● general political developments. ​ The global economic climate continues to influence our business.
Risks Related to Our Business and Strategy Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting. ​ Factors influencing our business include: ​ ● general economic and business conditions; ● currency exchange rate fluctuations; ● the overall demand for enterprise software and services; ● customer acceptance of cloud-based and AI-enabled solutions; ● governmental budgetary constraints or shifts in government spending priorities; and ● general political and regulatory developments. ​ The global economic climate continues to influence our business.
Of our employees in India, 46% are allocated to research and development. Although the movement of certain operations internationally was principally motivated by cost cutting, the continued management of these remote operations requires significant management attention and financial resources that could adversely affect our operating performance.
Of our employees in India, 45% are allocated to research and development. Although the movement of certain operations internationally was principally motivated by cost cutting, the continued management of these remote operations requires significant management attention and financial resources that could adversely affect our operating performance.
Any of these security incidents could negatively affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions, result in reputational damage or subject us to third-party lawsuits, regulatory fines, or other action or liability, which could adversely affect our operating results.
Any security incidents could negatively affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions, result in reputational damage or subject us to third-party lawsuits, regulatory fines, or other action or liability, which could adversely affect our operating results.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index and the Nasdaq Composite Total Return Index for each of the last five fiscal years ended June 30, 2024, assuming an initial investment of $100.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor’s 500 Index and the Nasdaq Composite Total Return Index for each of the last five fiscal years ended June 30, 2025, assuming an initial investment of $100.
If a customer is not satisfied with the quality of work performed by us or a partner or with the type of professional services or functionality delivered, even if we are not contractually responsible for the partner services, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the customer’s dissatisfaction with our or our partner’s services could damage our ability to expand the scope of functionality subscribed to by that customer.
If a customer is not satisfied with the quality of work performed by us or a partner or with the type of professional services or functionality delivered, even if we are not contractually responsible for the partner services, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the customer’s dissatisfaction with our 17 Table of Contents or our partner’s services could damage our ability to expand the scope of functionality subscribed to by that customer.
This may also require increasingly sophisticated and costly sales efforts that are targeted at senior management. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of factors, including general economic conditions and our customers’ reactions to price 15 Table of Contents changes related to these additional features and services.
This may also require increasingly sophisticated and costly sales efforts that are targeted at senior management. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of factors, including general economic conditions and our customers’ reactions to price changes related to these additional features and services.
If we are unable, for technological, legal, financial or other reasons, to adapt in a timely manner to changing market conditions in the online sales, marketing, customer service and/or e-commerce industry or our customers’ or Internet users’ requirements or preferences, our business, results of operations and financial condition would be materially and adversely affected.
If we are unable, for technological, legal, financial or other reasons, to adapt in a timely manner to changing market conditions in the online sales, marketing, customer service and/or e-commerce industry or our customers’ or Internet users’ 20 Table of Contents requirements or preferences, our business, results of operations and financial condition would be materially and adversely affected.
Because we sell complex and deeply integrated solutions, it can take many months of customer education to secure sales. Since our potential customers may evaluate our products before, if ever, executing definitive agreements, we may incur substantial expenses and spend significant management and legal effort in connection with a potential customer.
Because we sell complex and deeply integrated solutions, it can take many months of customer education to secure sales. 15 Table of Contents Since our potential customers may evaluate our products before, if ever, executing definitive agreements, we may incur substantial expenses and spend significant management and legal effort in connection with a potential customer.
We are also investing in AI across the entire company and infusing generative AI capabilities into our product and service offerings. We expect AI technology and services to be a highly competitive and rapidly evolving market.
We are also investing in AI across the entire company and integrating generative AI capabilities into our product and service offerings. We expect AI technology and services to be a highly competitive and rapidly evolving market.
Any investigations, actions, or sanctions could harm our business, operating results, and financial condition. ​ Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations or interpretive positions could limit our ability to provide services and harm our business . ​ Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare and telecommunications.
Any investigations, actions, or sanctions could harm our business, operating results, and financial condition. ​ Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations or interpretive positions could limit our ability to provide services and harm our business . ​ Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare, telecommunications and other highly regulated industries.
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. 32 Table of Contents 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.
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.
Outsourcing services to offshore providers may expose us to misappropriation of our intellectual property or that of our customers, or make it more difficult to defend intellectual property rights in our technology. 21 Table of Contents If we are unable to hire and retain key personnel, our business and results of operations would be negatively affected.
Outsourcing services to offshore providers may expose us to misappropriation of our intellectual property or that of our customers, or make it more difficult to defend intellectual property rights in our technology. If we are unable to hire and retain key personnel, our business and results of operations would be negatively affected.
This includes items such as a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets.
This includes factors such as a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets.
If we fail to meet these standards, our customers could terminate their relationships with us, and we could be subject to contractual refunds, and exposure to claims for losses by, customers.
If we fail to meet these standards, our customers could terminate their relationships with us, and we could be subject to contractual refunds, and exposure to claims for losses from our customers.
Many of our agreements require us to indemnify our customers for third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim. The outcome of any litigation, regardless of its merits, is inherently uncertain.
Many of our customer agreements require us to indemnify our customers against third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim. The outcome of any litigation, regardless of its merits, is inherently uncertain.
We depend on the widespread acceptance and use of our applications as an effective solution for businesses seeking to manage high volumes of customer interactions across multiple channels, including Web, phone, email, print and in-person.
We depend on the widespread acceptance and use of our applications as an effective solution for businesses seeking to manage high volumes of customer interactions across multiple channels, including Web, phone, email, print, in-person and AI-enabled digital channels.
In addition to those discussed elsewhere in this section, our EMEA sales operations are subject to a number of specific risks, such as: ● general economic conditions in each country or region in which we do or plan to do business; ● foreign currency fluctuations and imposition of exchange controls; ● changes in data privacy laws including European Union’s General Data Protection Regulation (GDPR); ● difficulty and costs in staffing and managing our international operations; ● difficulties in collecting accounts receivable and longer collection periods; ● health or similar issues, such as a pandemic or epidemic; ● various trade restrictions and tax consequences; ● hostilities in various parts of the world, such as the conflict between Russia and Ukraine and the evolving events in Israel and Gaza; and ● reduced intellectual property protections in some countries.
In addition to those discussed elsewhere in this section, our EMEA sales operations are subject to a number of specific risks, such as: ● general economic conditions in each country or region in which we do or plan to do business; ● foreign currency fluctuations and imposition of exchange controls; ● changes in data privacy laws including European Union’s General Data Protection Regulation (GDPR) and other emerging privacy or AI-related regulations; ● difficulty and costs in staffing and managing our international operations; ● difficulties in collecting accounts receivable and longer collection periods; ● health or similar issues, such as a pandemic or epidemic; ● various international trade restrictions and tax consequences; ● hostilities or geopolitical conflicts in various parts of the world, such as the ongoing conflict between Russia and Ukraine and the evolving events in Israel and Gaza; and ● reduced intellectual property protections in some countries.
Roy individually or together with this group has the ability to exercise significant control over most matters requiring our stockholders’ approval, including the election and removal of directors and the approval of significant corporate transactions, such as a merger or sale of our company or its assets. ITEM 1B . UNRESOLVED STAFF COMMENTS None. ITEM 1C .
Roy individually or together with this group has the ability to exercise significant control over most matters requiring our stockholders’ approval, including the election and removal of directors and the approval of significant corporate transactions, such as a merger or sale of our company or its assets. 30 Table of Contents ITEM 1B . UNRESOLVED STAFF COMMENTS None.
To the extent the benefit of maintaining these operations abroad does not exceed the expense of establishing and maintaining such activities, our operating results and financial condition will suffer. 18 Table of Contents Unplanned system interruptions , delays in service or inability to increase capacity, including internationally, at our third-party data center facilities could impair the use or functionality of our cloud operations and harm our business .
To the extent the benefit of maintaining these operations abroad does not exceed the expense of establishing and maintaining such activities, our operating results and financial condition will suffer. 18 Table of Contents Unplanned system interruptions , delays in service or inability to increase capacity, including internationally, at our third-party data center facilities or third-party Platform-as-a-Service (PaaS) providers could impair the use or functionality of our cloud operations and harm our business .
Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, 27 Table of Contents damages, other civil and criminal penalties or injunctions, adverse media coverage, and other consequences.
Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage, and other consequences.
Pandemics, such as the COVID-19 pandemic, and other public health emergencies, and preventative measures taken to contain or mitigate such crises have caused, and may in the future cause, business slowdown or shutdown in affected areas and significant disruption in the financial markets, both globally and in the United States.
Pandemics, such as the COVID-19 pandemic, and other public health emergencies, and preventative measures taken to contain or mitigate such crises have caused, and may in the future cause, business slowdown or shutdown in affected areas and significant disruption in the financial markets, both globally and in the U.S.
We must ensure that our international resources and personnel are aware of and understand development specifications and customer support, as well as implementation and configuration requirements and that they can meet applicable timelines.
We must ensure that our international resources and personnel are aware of and understand development specifications and customer support, as well as 21 Table of Contents implementation and configuration requirements and that they can meet applicable timelines.
Our products may infringe on issued patents that may relate to our products because patent applications in the United States are not publicly disclosed until the patent is issued, and hence applications may have been filed which relate to our software products. Intellectual property litigation is expensive, time consuming, and could divert management’s attention away from running our business.
Our products may inadvertently infringe on issued patents that may relate to our products because patent applications in the U.S. are not publicly disclosed until the patent is issued, and hence applications may have been filed which relate to our software products. Intellectual property litigation is expensive, time consuming, and could divert management’s attention away from running our business.
The price at which our common stock trades has been and will likely continue to be highly volatile and show wide fluctuations due to factors such as the following: ● concerns related to liquidity of our stock; ● actual or anticipated fluctuations in our operating results, our ability to meet announced or anticipated profitability goals and changes in or failure to meet securities analysts’ expectations; ● announcements of technological innovations and/or the introduction of new services by us or our competitors; ● developments with respect to intellectual property rights and litigation, regulatory scrutiny and new legislation; ● conditions and trends in the Internet and other technology industries; and ● general market and economic conditions.
The price at which our common stock trades has been and will likely continue to be highly volatile and show wide fluctuations due to factors such as the following: ● concerns related to liquidity of our stock; ● actual or anticipated fluctuations in our operating results, our ability to meet announced or anticipated revenue and/or profitability goals and changes in or failure to meet securities analysts’ expectations; ● announcements of technological innovations and/or the introduction of new services by us or our competitors; ● developments with respect to intellectual property rights and litigation, regulatory scrutiny and new legislation; ● market conditions and trends in customer engagement platforms, AI solution and the broader technology industries; and ● general market and economic conditions.
As part of our business strategy, we periodically make investments in, or acquisitions of, complementary businesses, joint ventures, services and technologies and intellectual property rights, and we expect that we will continue to make such investments and acquisitions in the future.
As part of our business strategy, we may periodically make investments in, or acquisitions of, if any, complementary businesses, joint ventures, services and technologies and intellectual property rights, and we expect that we will continue to evaluate such investments and acquisitions in the future.
Our directors and executive officers, together with their affiliates and members of their immediate families, beneficially owned, in the aggregate, approximately 34% of our outstanding capital stock as of June 30, 2024, of which our Chief Executive Officer, Ashutosh Roy, beneficially owned approximately 30% as of such date. As a result of these concentrated holdings, Mr.
Our directors and executive officers, together with their affiliates and members of their immediate families, beneficially owned, in the aggregate, approximately 36% of our outstanding capital stock as of June 30, 2025, of which our Chief Executive Officer, Ashutosh Roy, beneficially owned approximately 32% as of such date. As a result of these concentrated holdings, Mr.
CYBERSECURITY RISK MANAGEMENT AND STRATEGY Protecting our business information, intellectual property, customer and employee data, and technology systems is crucial for our business continuity, regulatory compliance, and stakeholder trust. We have implemented enterprise cybersecurity risk mitigation and governance processes, detailed in our Information Security Protection Program (“Security Plan”).
ITEM 1C . CYBERSECURITY RISK MANAGEMENT AND STRATEGY Protecting our business information, intellectual property, customer and employee data, and technology systems is crucial for our business continuity, regulatory compliance, and stakeholder trust. We have implemented enterprise cybersecurity risk mitigation and governance processes, detailed in our Information Security Protection Program (Security Plan).
Any damage to, or failure of, our systems generally could interrupt service or impair the use or functionality of our cloud operations . In addition, as we continue to increase the number of customers and users on our cloud operations , we will need to increase the capacity of our data center infrastructure.
Any damage to, or failure of, our systems or those of our third-party providers generally could interrupt service or impair the use or functionality of our cloud operations. In addition, as we continue to increase the number of customers and users on our cloud operations, we will need to increase the capacity of our data center and PaaS infrastructure.
As of June 30, 2024, approximately $17.0 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.
As of June 30, 2025, approximately $1.2 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.
Depending on the incident’s scope, business impact, and potential material risk, our CISO, legal counsel, 31 Table of Contents and business stakeholders are engaged. This cross-functional team assesses the appropriate response and mitigation pathway.
Depending on the incident’s scope, business impact, and potential material risk, our CISO, legal counsel, and business stakeholders are engaged. This cross-functional team assesses the appropriate response and mitigation pathway.
The rapid evolution of these products and services will require that 20 Table of Contents we continually improve the performance, features and reliability of our services.
The rapid evolution of these products and services will require that we continually improve the performance, features and reliability of our services.
Holders ​ As of June 30, 2024, there were approximately 133 stockholders of record. ​ Dividends ​ We have never declared or paid any cash dividends on our common stock.
Holders ​ As of June 30, 2025, there were approximately 120 stockholders of record. ​ Dividends ​ We have never declared or paid any cash dividends on our common stock.
Any damage to, or failure of, our systems, or those of our third-party data centers, could result in impairment of, or interruptions in, our service.
Any damage to, or failure of, our systems, or those of our third-party providers, could result in impairment of, or interruptions in, our service.
We may, among other things, be required to implement additional contractual and technical safeguards for any personal data transferred out of the EEA, Switzerland, the United Kingdom or other regions which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual negotiations, and may adversely impact our business, financial condition and operating results. ​ We may also experience hesitancy, reluctance, or refusal by European or multi-national customers to continue to use our services due to the potential risk exposure to such customers as a result of the international legal developments.
We may, among other things, be required to implement additional contractual and technical safeguards for any personal data transferred out of the EEA, Switzerland, the United Kingdom or other regions which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual negotiations, and may adversely impact our business, financial condition and operating results. ​ We may also experience hesitancy, reluctance, or refusal by European or multi-national customers to use our services due to the potential risk exposure to such customers as a result of international legal developments, and we may need to maintain EU/UK-origin data locally, which may involve substantial expense and distraction from other aspects of our business.
Any of the above risks could adversely affect our international operations, reduce our revenue from customers outside of the United States or increase our operating costs, each of which could adversely affect our business, results of operations, financial condition, and growth prospects. As of June 30, 2024, approximately 45% of our workforce was employed in India.
Any of the above risks could adversely affect our international operations, reduce our revenue from customers outside of the U.S. or increase our operating costs, each of which could adversely affect our business, results of operations, financial condition, and growth prospects. As of June 30, 2025, approximately 43% of our workforce was employed in India.
If any of these assumptions is incorrect or if customers and companies do not adopt digital technology in a timely manner, our business will be seriously harmed and our stock price will decline.
If any of these assumptions are incorrect or if customers and companies do not adopt digital and AI-enabled technologies in a timely manner, our business will be seriously harmed and our stock price will decline.
MIN E SAFETY DISCLOSURES Not applicable. ​ ​ ​ 33 Table of Contents P ART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the Nasdaq Stock Market under the symbol “EGAN”.
MINE SAFETY DISCLOSURE S Not applicable. ​ 32 Table of Contents P ART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the Nasdaq Stock Market under the symbol “EGAN”.
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 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.
In addition, our business is subject to seasonal factors that may also cause our results to fluctuate from quarter to quarter. ​ If we are unable to properly manage our SaaS transition, our business may suffer. ​ We cannot accurately predict subscription renewal rates and the impact these rates may have on our future revenue and operating results.
In addition, our business is subject to seasonal factors that may also cause our results to fluctuate from quarter to quarter. ​ We cannot accurately predict subscription renewal rates and the impact these rates may have on our future revenue and operating results.
We cannot accurately predict renewal rates given our varied customer base of enterprise and small and medium size business customers and the number of multiyear subscription contracts.
We cannot accurately predict renewal rates given our varied customer base of enterprise and the number of multiyear subscription contracts.
Furthermore, the stock market has experienced significant price and volume fluctuations that have affected the market prices for the common stock of technology companies, regardless of the specific operating performance of the affected company.
Furthermore, the stock market has experienced significant price and volume fluctuations that have affected the market prices for the common stock of technology companies, regardless of the specific operating performance of the affected company. These broad market fluctuations may cause the market price of our common stock to decline.
In addition, our subscription model makes it more difficult for us to increase our revenue rapidly in any period, because revenue from new customers must be recognized over the applicable subscription term. It is difficult to forecast the expediency of the transition of our license customers to our cloud delivery model.
In addition, our subscription model makes it more difficult for us to increase our revenue rapidly in any period, because revenue from new customers must be recognized over the applicable subscription term.
Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers’ data or our data or IT systems.
Additionally, third-parties may attempt, through phishing, social engineering or otherwise, to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information in order to gain access to our customers’ data or our data or IT systems.
Moreover, as our customers face increased scrutiny for data privacy breaches, they may elect to transfer the risk to us through contractual provisions which may subject us to increasing levels of contractual liability for data privacy breaches. ​ Issues in the development and use of AI may result in reputational or competitive harm or liability. ​ We are integrating AI into several of our offerings, developed either by us or in collaboration with our strategic partner, OpenAI.
Moreover, as our customers face increased scrutiny for data privacy breaches, they may elect to transfer the risk to us through contractual provisions which may subject us to increasing levels of contractual liability for data privacy breaches. ​ Issues in the development and use of AI may result in reputational or competitive harm or liability. ​ We are integrating AI into several of our offerings and anticipate significant growth in this area.
Our customers have in the past experienced some interruptions with our cloud operations. We believe that these interruptions will continue to occur from time to time. These interruptions could be due to hardware and operating system failures.
Our customers have in the past experienced some interruptions with our cloud operations. We believe that these interruptions will continue to occur from time to time. These interruptions could be due to hardware and operating system failures, issues with third-party PaaS platforms, or other operational disruptions.
We might be required to spend significant resources to monitor and protect our intellectual property rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights.
Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property. We might be required to spend significant resources to monitor and protect our intellectual property rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights.
These challenges, along with other issues related to innovative technologies, could expose us to competitive harm, regulatory actions, legal liabilities (including under new AI regulations in the EU), and reputational damage. Some AI applications raise ethical concerns or have broad societal impacts.
These challenges, along with other issues related to innovative technologies, could expose us to increased compliance costs, competitive harm, regulatory actions, legal liabilities, and reputational damage. Some AI applications raise ethical concerns or have broad societal impacts.
Our success largely depends on the efficient and uninterrupted operation of our computer and communications hardware and network systems. We currently serve our customers from third-party data center facilities operated by third parties in the United States and other international locations.
Our success largely depends on the efficient and uninterrupted operation of our computer and communications hardware network systems, and third-party cloud platforms. We currently serve our customers from third-party data center facilities and third-party PaaS providers operated in the U.S. and other international locations.
For example, third parties may conduct attacks designed to temporarily deny customers access to our services. Any successful denial of service attack could result in a loss of customer confidence in the security of our platform and damage to our brand. Our platform involves the storage and transmission of our customers’ information, which may including their business and financial data.
For example, third parties may conduct attacks designed to temporarily deny customers access to our services. Any successful denial of service attack could result in a loss of customer confidence in the security of our platform and damage to our brand.
While we occasionally experience cybersecurity threats and incidents, we are not aware of any material risks from these threats, including from past incidents, that have materially affected or are likely to materially affect our business strategy, financial condition, results of operations, or cash flows. However, there is no assurance that future cybersecurity threats will not have a material impact.
While we occasionally experience cybersecurity threats and incidents, we are not aware of any material risks from these threats, including from past incidents, that have materially affected or are likely to materially affect our business strategy, 31 Table of Contents financial condition, results of operations, or cash flows.
For more information on our cybersecurity-related risks, please see “Item 1A. Risk Factors.” GOVERNANCE Protecting our customers’ data is a top priority for our board of directors and management team. Our risk management team, integrated into our CIS function, is led by our CISO.
However, there is no assurance that future cybersecurity threats will not have a material impact. For more information on our cybersecurity-related risks, please see “Item 1A. Risk Factors.” GOVERNANCE Protecting our customers’ data is a top priority for our board of directors and management team. Our risk management team, integrated into our CIS function, is led by our CISO.
Our business model assumes that both customers and companies will increasingly elect to communicate through multiple channels, as well as demand integration of the online channels into the traditional telephone-based call center.
Our business model assumes that customers will increasingly elect to communicate through multiple channels, including AI-enabled digital channels, as well as demand integration of these channels into the traditional telephone-based call center.
We currently anticipate that we will retain all available funds for use in the operation of our business and do not intend to pay any cash dividends in the foreseeable future. ​ Share Repurchases ​ 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.
We currently anticipate that we will retain all available funds for use in the operation of our business and do not intend to pay any cash dividends in the foreseeable future. ​ Share Repurchases ​ 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.
We may be unable to respond to the rapid technological change and changing customer preferences in the online sales, marketing, customer service, and/or online consumer services industries and this may cause our business to suffer.
We may be unable to respond to the rapid technological change and changing customer preferences in digital customer engagement, marketing, and service and this may cause our business to suffer.
If our efforts to upsell to our customers are not successful and negative reaction occurs, our business may suffer. Our lengthy sales cycles and the difficulty in predicting timing of sales or delays may impair our operating results.
If our efforts to upsell to our customers are not successful and negative reaction occurs, our business may suffer. Our lengthy sales cycles and the difficulty in predicting timing of sales or delays may impair our operating results. The long sales cycle for our products may cause SaaS revenue and operating results to vary significantly from period to period.
Our publication of our privacy policy and other public statements that provide promises and assurances about privacy and security can subject us to potential governmental action if they are found to be deceptive or misrepresentative of our practices.
We publicly post our privacy policies and practices concerning our processing, use and disclosure of personal information. Our publication of our privacy policy and other public statements that provide promises and assurances about privacy and security can subject us to potential governmental action or reputational harm if they are found to be deceptive or misrepresentative of our practices.
These broad market fluctuations may cause the market price of our common stock to decline. 30 Table of Contents Our insiders who are significant stockholders have the ability to exercise significant control over matters requiring stockholder approval, including the election of our board of directors, and may have interests that conflict with those of other stockholders.
Our insiders who are significant stockholders have the ability to exercise significant control over matters requiring stockholder approval, including the election of our board of directors, and may have interests that conflict with those of other stockholders.
If new or existing customers cancel or have difficulty deploying our products or require significant amounts of our professional services, support, or customized features, revenue recognition could be cancelled or further delayed and our costs could increase, causing increased variability in our operating results. 17 Table of Contents Implementation services may be performed by our own staff, by a third-party partner or by a combination of the two.
If new or existing customers cancel or have difficulty deploying our products or require significant amounts of our professional services, support, or customized features, revenue recognition could be cancelled or further delayed and our costs could increase, causing increased variability in our operating results.
Our strategy is to work with partners to increase the breadth of capability and depth of capacity for delivery of these services to our customers, and we expect the number of our partner-led implementations to continue to increase over time.
Implementation services may be performed by our own staff, by a third-party partner or by a combination of the two. Our strategy is to work with partners to increase the breadth of capability and depth of capacity for delivery of these services to our customers, and we expect the number of our partner-led implementations to continue to increase over time.
DPDP applies to personal data processed within India and personal data outside the territory of India if such processing is in connection with any activity related to offering of goods or services to data subjects.
In addition, India’s Digital Personal Data Protection Bill (DPDP), published in 2023, but with an implementation timeline that remains uncertain, applies broadly to personal data processed within India and personal data outside the territory of India if such processing is in connection with any activity related to offering of goods or services to data subjects.
We anticipate significant growth in this area. However, like many innovations, AI comes with risks and challenges that could impact its adoption and our business. Potential issues include flawed algorithms or training methods, inadequate or biased datasets, and harmful or illegal content generated by AI systems.
However, like many innovations, AI comes with risks and challenges that could impact its adoption and our business. These may include flawed algorithms or training methods, inadequate or biased datasets, concept drift, and harmful, misleading, or unlawful content that may be generated by AI systems.
Because our customers depend on our solutions for critical business functions, any service interruptions could result in lost or delayed market acceptance and lost sales, higher service-level credits and warranty costs, diversion of development resources, and product liability suits.
Because our customers depend on our solutions for critical business functions, any service interruptions could result in lost or delayed market acceptance and lost sales, higher service-level credits and warranty costs, diversion of development resources, and product liability suits. 19 Table of Contents The terms we agree to in our Service Level Agreements or other contracts may result in increased costs or liabilities, which would in turn affect our results of operations.
Changes in these or other rules, or scrutiny of our current accounting practices, or a determination that our judgments or assumptions in the application of these accounting principles were incorrect, could have a significant adverse effect on our reported operating results or the way in which we conduct our business. ​ Risks Related to Intellectual Property ​ We have been and may in the future be sued by third parties for various claims including alleged infringement of proprietary rights that can be time-consuming, incur substantial costs, and divert the attention of management, which could adversely affect our operations and cash flow.
Risks Related to Intellectual Property ​ We have been and may in the future be sued by third parties for various claims including alleged infringement of proprietary rights that can be time-consuming, incur substantial costs, and divert the attention of management, which could adversely affect our operations and cash flow.
The long sales cycle for our products may cause license and subscription revenue and operating results to vary significantly from period to period. The sales cycle for our products can be six months or more and varies substantially from customer to customer.
The sales cycle for our products can be six months or more and varies substantially from customer to customer.
In addition, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.
In addition, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers. We conduct a significant portion of our business and operations outside of the U.S., which exposes us to additional risks that may not exist in the U.S.
In addition, an inability to satisfy the standards of certain voluntary third-party certification bodies that our customers may expect, such as an attestation of compliance with the PCI Data Security Standards, may have an adverse impact on our business.
In addition, an inability to satisfy the standards of certain voluntary third-party certification bodies that our customers may expect, such as an attestation of compliance with the PCI Data Security Standards, HIPAA, FEDRAMP or similar frameworks, may adversely affect our ability to provide services 27 Table of Contents to certain customers.

… 69 more changes not shown on this page.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+7 added−16 removed34 unchanged
Biggest changeWe believe the reported carrying amounts of these financial instruments approximate fair value, based upon their short-term nature and comparable market information available at the respective balance sheet dates. ​ ​ ​ ​ ​ ​ ​ ​ ​ 41 Table of Contents Results of Operations ​ The following table sets forth certain items reflected in our consolidated statements of operations expressed as a percent of total revenue for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Revenue: ​ ​ ​ ​ ​ Subscription 92 % ​ 92 % Professional services 8 ​ ​ 8 ​ Total revenue 100 ​ ​ 100 ​ Cost of revenue: ​ ​ ​ ​ ​ ​ Cost of subscription 21 ​ ​ 19 ​ Cost of professional services 9 ​ ​ 9 ​ Total cost of revenue 30 ​ ​ 28 ​ Gross profit 70 ​ ​ 72 ​ Operating Expenses: ​ ​ ​ ​ ​ Research and development 29 ​ ​ 28 ​ Sales and marketing 24 ​ ​ 32 ​ General and administrative 11 ​ ​ 11 ​ Total operating expenses 64 ​ ​ 71 ​ Income from operations 6 % ​ 1 % ​ Revenue ​ We classify our revenue into two categories; subscription and professional services revenue.
Biggest changeWe believe the reported carrying amounts of these financial instruments approximate fair value, based upon their short-term nature and comparable market information available at the respective balance sheet dates. 39 Table of Contents Results of Operations ​ The following table sets forth certain items reflected in our consolidated statements of operations expressed as a percent of total revenue for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2024 Revenue: ​ ​ ​ ​ ​ SaaS 93 % ​ 92 % Professional services 7 ​ ​ 8 ​ Total revenue 100 ​ ​ 100 ​ Cost of revenue: ​ ​ ​ ​ ​ ​ Cost of SaaS 20 ​ ​ 21 ​ Cost of professional services 10 ​ ​ 9 ​ Total cost of revenue 30 ​ ​ 30 ​ Gross profit 70 ​ ​ 70 ​ Operating Expenses: ​ ​ ​ ​ ​ Research and development 33 ​ ​ 29 ​ Sales and marketing 22 ​ ​ 24 ​ General and administrative 10 ​ ​ 11 ​ Total operating expenses 65 ​ ​ 64 ​ Income from operations 5 % ​ 6 % ​ Revenue ​ We classify our revenue into two categories; SaaS and professional services revenue. ​ The following table presents our SaaS and professional services revenue during the fiscal years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ Change Revenue ​ (in thousands, except percentages) SaaS ​ $ 81,921 ​ ​ $ 85,082 ​ ​ $ (3,161) (4) % Professional services ​ 6,510 ​ ​ 7,721 ​ ​ ​ (1,211) (16) % Total revenue ​ $ 88,431 ​ ​ $ 92,803 ​ ​ $ (4,372) ​ ​ ​ Total Revenue Total revenue decreased $4.4 million during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024, largely due to decreased SaaS revenue of $3.2 million and decreased professional services revenue of $1.2 million in fiscal year 2025. ​ Our revenue was impacted by foreign exchange rate fluctuation between the U.S.
Included in these costs are salaries, benefits, bonuses, and stock-based compensation and allocated overhead.
Included in these costs are salaries, benefits, bonuses, and stock-based compensation and allocated overhead.
The preparation of these 37 Table of Contents financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. ​ We believe that the assumptions and estimates associated with revenue recognition, stock-based compensation, provision for credit losses, the valuation of goodwill, the valuation of deferred tax allowance, and legal contingencies have the greatest potential impact on our consolidated financial statements.
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. ​ We believe that the assumptions and estimates associated with revenue recognition, stock-based compensation, provision for credit losses, the valuation of goodwill, the valuation of deferred tax allowance, and legal contingencies have the greatest potential impact on our consolidated financial statements.
Professional services include consulting, implementation, training, and managed services. ​ Subscription Revenue ​ For our cloud delivery arrangements, our maintenance and support arrangements and our term license subscriptions that incorporate substantial cloud functionality, the combined performance obligation is recognized ratably over the contract term as the obligation is delivered.
Professional services include consulting, implementation, training, and managed services. ​ SaaS Revenue ​ For our cloud delivery arrangements, our maintenance and support arrangements and our term license subscriptions that incorporate substantial cloud functionality, the combined performance obligation is recognized ratably over the contract term as the obligation is delivered.
Training revenue that meets the criteria to be accounted for separately is recognized when training is provided. ​ Remaining Performance Obligations ​ Remaining performance obligations represent contracted revenue that have not yet been recognized, and include billed deferred revenue, consisting of amounts invoiced to customers whether collected or uncollected which have not been 38 Table of Contents recognized as revenue, as well as unbilled amounts that will be invoiced and recognized as revenue in future periods.
Training revenue that meets the criteria to be accounted for separately is recognized when training is provided. ​ Remaining Performance Obligations ​ Remaining performance obligations represent contracted revenue that have not yet been recognized, and include billed deferred revenue, consisting of amounts invoiced to customers whether collected or uncollected which have not been recognized as revenue, as well as unbilled amounts that will be invoiced and recognized as revenue in future periods.
This may result in an increase or decrease to our accounts receivable and deferred revenue. ​ Costs Capitalized to Obtain Revenue Contracts ​ We capitalize incremental costs to obtain non-cancelable subscription and maintenance and support revenue contracts with amortization periods that may extend longer than the non-cancelable subscription and maintenance and support revenue contract terms. ​ We capitalize incremental costs of obtaining a non-cancelable subscription and maintenance and support revenue contract with amortization periods of one year or more.
This may result in an increase or decrease to our accounts receivable and deferred revenue. ​ Costs Capitalized to Obtain Revenue Contracts ​ Under Topic 606, we capitalize incremental costs to obtain non-cancelable subscription and maintenance and support revenue contracts with amortization periods that may extend longer than the non-cancelable subscription and maintenance and support revenue contract terms. ​ We capitalize incremental costs of obtaining a non-cancelable subscription and maintenance and support revenue contract with amortization periods of one year or more.
Actual results may differ from these estimates under different assumptions or conditions. ​ Sources of Revenues ​ Our revenue is comprised of two categories, subscription and professional services. Subscription includes SaaS revenue and legacy revenue. SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.
Actual results may differ from these estimates under different assumptions or conditions. ​ Sources of Revenues ​ Our revenue is comprised of two categories including SaaS and professional services. SaaS revenue includes cloud delivery arrangements, term licenses, embedded OEM royalties, and associated support.
Amortization of costs capitalized related to new revenue contracts is included as a component of sales and marketing expense in our operating results. ​ Stock-Based Compensation We account for stock-based compensation in accordance with Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation .
Amortization of costs capitalized related to new revenue contracts is included as a component of sales and marketing expense in our operating results. ​ 37 Table of Contents Stock-Based Compensation We account for stock-based compensation in accordance with Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation .
We believe that, if market interest rates were to change immediately and uniformly by 10% from levels between June 30, 2024 and our next financial reporting period, the impact on the fair value of these securities or our cash flows or income would not be material. ​ 50 Table of Contents
We believe that, if market interest rates were to change immediately and uniformly by 10% from levels between June 30, 2025 and our next financial reporting period, the impact on the fair value of these securities or our cash flows or income would not be material. ​ 47 Table of Contents
The change in our effective tax rate for fiscal year 2024 as compared to fiscal year 2023 was primarily due to the change in valuation allowance, foreign rate differential, Section 267, stock-based compensation and the research and development tax credits.
The change in our effective tax rate for fiscal year 2025 as compared to fiscal year 2024 was primarily due to the decrease in valuation allowance, foreign rate differential, Section 267, stock-based compensation and the research and development tax credits.
We have not recorded a deferred tax liability related to state income taxes and foreign withholding taxes on approximately $26.2 million of undistributed earnings of foreign subsidiaries indefinitely invested outside the United States.
We have not recorded a deferred tax liability related to state income taxes and foreign withholding taxes of approximately $28.2 million of undistributed earnings of foreign subsidiaries indefinitely invested outside the United States.
Our deferred revenue was $49.3 million and $49.9 million as of June 30, 2024 and 2023, respectively. ​ Based upon our current business plan, we believe that existing capital resources will enable us to maintain current and planned operations for at least the next 12 months. From time to time, however, we may consider opportunities for raising additional capital.
Our deferred revenue was $50.5 million and $49.3 million as of June 30, 2025 and 2024, respectively. ​ Based upon our current business plan, we believe that existing capital resources will enable us to maintain current and planned operations for at least the next 12 months. From time to time, however, we may consider opportunities for raising additional capital.
We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company. We had no impairment for fiscal years ended June 30, 2024 and 2023. 39 Table of Contents Accounts Receivable and Provision for Credit Losses We extend unsecured credit to customers on a regular basis.
We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company. We had no impairment for fiscal years ended June 30, 2025 and 2024. Accounts Receivable and Provision for Credit Losses We extend unsecured credit to customers on a regular basis.
Interest income, was income of $3.8 million and $2.4 million for the fiscal years ended June 30, 2024 and 2023, respectively. ​ Other Expense, Net ​ Other expense, net primarily included foreign exchange rate fluctuations on international trade receivables.
Interest income, was income of $2.5 million and $3.8 million for the fiscal years ended June 30, 2025 and 2024, respectively. ​ Other Expense, Net ​ Other expense, net primarily included foreign exchange rate fluctuations on international trade receivables.
If we make different judgments or utilize different estimates, then material differences may result in additional reserves for trade receivables, which would be reflected by charges in general and administrative expenses for any period presented. We write-off a receivable after all collection efforts have been exhausted and the amount is deemed uncollectible.
If we make different judgments or utilize different estimates, then material differences may result in additional reserves for trade receivables, which would be reflected by charges in general and administrative expenses for any period presented. We write-off receivables after all collection efforts have been exhausted and the amounts are deemed uncollectible.
Sales and marketing expenses also include amortization of commissions paid to our sales staff, lead generation activities, advertising, trade show and other promotional costs and, to a lesser extent, occupancy costs and related overhead. ​ Sales and marketing expenses decreased by $9.6 million or 30% during the fiscal year ended June 30, 2024 from same period in fiscal year 2023.
Sales and marketing expenses also include amortization of commissions paid to our sales staff, lead generation activities, advertising, trade show and other promotional costs and, to a lesser extent, occupancy costs and related overhead. ​ Sales and marketing expenses decreased by $2.8 million or 12% during the fiscal year ended June 30, 2025 from the same period in fiscal year 2024.
Under the terms of the agreement, the customer is to provide a combined fixed fee, per agent, for each software license sold containing the embedded software to us. These embedded OEM royalties are included as subscription revenue.
Under the terms of the agreement, the customer is to provide a combined fixed fee, per agent, for each software license sold containing the 36 Table of Contents embedded software to us. These embedded OEM royalties are included as SaaS revenue.
Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases . ​ ​ The following table summarizes our contractual obligations as of June 30, 2024 and the effect such obligations are expected to have on its liquidity and cash flow in future periods (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ 1 – 3 Years ​ 3 – 5 Years ​ More than 5 Years Operating leases ​ 4,852 ​ 3,044 ​ 556 ​ 1,252 Total ​ $ 4,852 ​ $ 3,044 ​ $ 556 ​ $ 1,252 Off-Balance Sheet Arrangements As of June 30, 2024, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K. ​ ​ ​ ​ 49 Table of Contents ITEM 7A.
Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases . ​ ​ The following table summarizes our contractual obligations as of June 30, 2025 and the effect such obligations are expected to have on its liquidity and cash flow in future periods (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due by Period ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ 1 – 3 Years ​ 3 – 5 Years ​ More than 5 Years Operating leases $ 4,705 $ 2,921 $ 728 $ 1,056 Total ​ $ 4,705 ​ $ 2,921 ​ $ 728 ​ $ 1,056 Off-Balance Sheet Arrangements As of June 30, 2025, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K. ​ ​ ​ ​ 46 Table of Contents ITEM 7A.
The decrease in our stock-based compensation expense in fiscal year 2024 compared to fiscal year 2023 was primarily due to decreases in stock option vesting over their respectable periods, company-wide headcount, and option grant activity. ​ We expect to review our share-based payment awards annually, as necessary. ​ 46 Table of Contents Income from Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ 2024 2023 ​ Change ​ ​ (in thousands, except percentages) Income from operations $ 5,971 ​ $ 1,389 ​ $ 4,582 Operating margin ​ 6 % ​ 1 % ​ ​ ​ ​ Results from operations was income of $6 million in fiscal year 2024, compared to income of $1.4 million in fiscal year 2023.
The decrease in our stock-based compensation expense in fiscal year 2025 compared to fiscal year 2024 was primarily due to decreases in stock option vesting over their respectable periods, company-wide headcount, and equity grant activity. ​ We expect to review our share-based payment awards annually, as necessary. ​ Income from Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 2024 ​ Change ​ ​ (in thousands, except percentages) Income from operations $ 4,433 ​ $ 5,971 ​ $ (1,538) (26) % Operating margin ​ 5 % ​ 6 % ​ ​ ​ ​ ​ ​ 44 Table of Contents Results from operations was income of $4.4 million in fiscal year 2025, compared to income of $6.0 million in fiscal year 2024.
The following table presents a reconciliation of GAAP income from operations to non-GAAP income from operations for each of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30 ​ 2024 2023 Income from operations ​ $ 5,971 ​ $ 1,389 Add: ​ ​ ​ ​ ​ ​ Stock-based compensation ​ ​ 4,529 ​ ​ 6,246 Non-GAAP income from operations ​ $ 10,500 ​ $ 7,635 Critical Accounting Policies and Estimates ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with GAAP in the United States.
The following table presents a reconciliation of GAAP income from operations to non-GAAP income from operations for each of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30 ​ 2025 2024 Income from operations ​ $ 4,433 ​ $ 5,971 Add: ​ ​ ​ ​ ​ ​ Stock-based compensation ​ ​ 2,449 ​ ​ 4,529 Non-GAAP income from operations ​ $ 6,882 ​ $ 10,500 Critical Accounting Policies and Estimates ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with GAAP in the United States.
The changes consist primarily of proceeds from the exercise of employee stock options, our employee stock purchase plan, and funds used with repurchases of our common stock of approximately $11.5 million. ​ 48 Table of Contents Commitments Our principal commitments consist of obligations under leases for office space.
The changes consist primarily of proceeds from the exercise of employee stock options, our employee stock purchase plan, and a decrease of funds used with repurchases of our common stock of approximately $1.5 million. ​ Commitments Our principal commitments consist of obligations under leases for office space.
We can make no assurances that such opportunities will be available to us on economic terms we consider favorable, if at all. ​ Our expectations as to our future cash flows and our future cash balances are subject to a number of assumptions, including assumptions regarding anticipated increases in our revenue, our ability to retain existing customers and customer purchasing and payment patterns, many of which are beyond our control. ​ Cash Flows For the fiscal years ended June 30, 2024 and 2023, our cash flows were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ 2024 2023 Net cash provided by operating activities $ 12,454 ​ $ 4,621 Net cash used in investing activities ​ (198) ​ ​ (288) Net cash used in financing activities ​ (15,391) ​ ​ (4,079) ​ Cash provided by operating activities mainly consists of net income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including costs capitalized to obtain revenue contracts, amortization of right-of-use assets, and changes in operating assets and liabilities during the year. ​ Cash provided by operating activities increased by $7.8 million during the fiscal year ended June 30, 2024, driven primarily by the increase in net income and timing of accounts receivable collections and accrued compensation payments. ​ Net cash used in investing activities decreased by $90,000 during the fiscal year ended June 30, 2024, driven primarily by reduced activities related to the purchase of equipment for new employees and facility expenditures.
We can make no assurances that such opportunities will be available to us on economic terms we consider favorable, if at all. 45 Table of Contents ​ Our expectations as to our future cash flows and our future cash balances are subject to a number of assumptions, including assumptions regarding anticipated increases in our revenue, our ability to retain existing customers and customer purchasing and payment patterns, many of which are beyond our control. ​ Cash Flows For the fiscal years ended June 30, 2025 and 2024, our cash flows were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ 2025 2024 Net cash provided by operating activities $ 5,263 ​ $ 12,454 Net cash used in investing activities ​ (565) ​ ​ (198) Net cash used in financing activities ​ (14,393) ​ ​ (15,391) ​ Cash provided by operating activities mainly consists of net income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including costs capitalized to obtain revenue contracts, amortization of right-of-use assets, and changes in operating assets and liabilities during the year. ​ Cash provided by operating activities decreased by $7.2 million during the fiscal year ended June 30, 2025, driven primarily by the decreases in deferred income taxes related to our valuation release, stock-based compensation, and accrued liabilities mainly offset by the increase in net income. ​ Net cash used in investing activities increased by $367,000 during the fiscal year ended June 30, 2025, driven primarily by increased activities related to the purchase of equipment for employees and facility expenditures.
Historically, cash used in investing activities has been used to purchase equipment and software to support our business and growth. Net cash used in financing activities increased by $11.3 million during the fiscal year ended June 30, 2024.
Historically, cash used in investing activities has been used to purchase equipment and software to support our business and growth. Net cash used in financing activities decreased by $1.0 million during the fiscal year ended June 30, 2025.
General and administrative expenses also include fees for professional services, provision for credit losses and, to a lesser extent, occupancy costs and related overhead. ​ General and administrative expense increased by $199,000 or 2% during the fiscal year ended June 30, 2024, from the same period in fiscal year 2023.
General and administrative expenses also include fees for professional services, provision for credit losses and, to a lesser extent, occupancy costs and related overhead. ​ General and administrative expense decreased by $1.9 million or 18% during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024.
These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead. ​ Cost of subscription revenues increased by $837,000 or 4% during the fiscal year ended June 30, 2024 from the same period in fiscal year 2023.
These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead. ​ Cost of SaaS revenues decreased by $1.5 million or 8% during the fiscal year ended June 30, 2025 from the same period in fiscal year 2024.
As of June 30, 2024, our remaining performance obligations were $78.4 million, of which we expect to recognize $60.4 million and $18 million as revenue within one year and beyond one year, respectively. ​ Under Topic 606, we expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign exchange rate fluctuation.
As of June 30, 2025, our remaining performance obligations were $91.6 million, of which we expect to recognize $63.0 million and $28.6 million as revenue within one year and beyond one year, respectively. ​ We expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign exchange rate fluctuation.
Excluding a decrease from foreign exchange fluctuation of $627,000, total costs and operating expenses decreased by $10.4 million for the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. Interest Income ​ Interest income consists primarily of interest earned on money market accounts, which have increased in rates compared to prior year.
Excluding an increase from foreign exchange fluctuation of $257,000, total costs and operating expenses decreased by $3.1 million for the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. Interest Income ​ Interest income consists primarily of interest earned on money market accounts, which have decreased in rates compared to prior year.
Legacy revenue represents 0% and 1% of total revenue for the fiscal years ended June 30, 2024 and 2023, respectively. ​ Excluding an increase of $14,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $511,000 during the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ Professional Services Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change Revenue ​ (in thousands, except percentages) Professional services revenue ​ $ 7,721 ​ $ 7,687 ​ $ 34 0 % Percentage of total revenue ​ 8 % 8 % ​ ​ ​ ​ Professional services revenue includes consulting, implementation, training, and managed services.
SaaS revenue represents 93% and 92% of total revenue for the fiscal years ended June 30, 2025 and 2024, respectively. ​ Excluding an increase of $510,000 due to foreign exchange rate fluctuation, SaaS revenue decreased by $3.7 million during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ Professional Services Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 2024 Change Revenue ​ (in thousands, except percentages) Professional services revenue ​ $ 6,510 ​ $ 7,721 ​ $ (1,211) (16) % Percentage of total revenue ​ 7 % 8 % ​ ​ ​ ​ Professional services revenue includes consulting, implementation, training, and managed services.
To date, we have not experienced a loss of principal on any of our investments. Although we currently expect that our ability to access or liquidate these investments as needed to support our business activities will continue, we cannot ensure that this will not change.
Although we currently expect that our ability to access or liquidate these investments as needed to support our business activities will continue, we cannot ensure that this will not change.
The effect of recording stock-based compensation for fiscal year 2024 and 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ 2024 2023 Stock-based compensation by type of award ​ (in thousands) Stock options $ 3,348 $ 5,847 Restricted stock units ​ 819 ​ — Employee stock purchase plan ​ 362 ​ 399 Total stock-based compensation ​ $ 4,529 ​ $ 6,246 ​ Determining the fair value of the equity-based payment awards at the grant date required significant judgment and the use of estimates, particularly surrounding the Black-Scholes valuation assumptions such as stock price volatility and expected option term. ​ Below is a summary of stock-based compensation included in the cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change ​ ​ (in thousands, except percentages) Cost of revenue $ 1,237 $ 1,469 $ (232) (16) % Research and development ​ 1,424 ​ 1,970 ​ (546) (28) % Sales and marketing ​ 645 ​ 997 ​ (352) (35) % General and administrative ​ 1,223 ​ 1,810 ​ (587) (32) % Total stock-based compensation ​ $ 4,529 ​ $ 6,246 ​ $ (1,717) (27) % ​ Stock-based compensation expense includes the amortization of the fair value primarily of stock options awarded to employees, members of our board of directors and consultants.
The effect of recording stock-based compensation for fiscal year 2025 and 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ 2025 2024 Stock-based compensation by type of award ​ (in thousands) Stock options $ 1,113 $ 3,348 Restricted stock units ​ 1,033 ​ 819 Employee stock purchase plan ​ 303 ​ 362 Total stock-based compensation ​ $ 2,449 ​ $ 4,529 ​ Determining the fair value of the equity-based payment awards at the grant date required significant judgment and the use of estimates, particularly surrounding the Black-Scholes valuation assumptions such as stock price volatility and expected option term. ​ Below is a summary of stock-based compensation included in the cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 2024 Change ​ ​ (in thousands, except percentages) Cost of revenue $ 865 $ 1,237 $ (372) (30) % Research and development ​ 640 ​ 1,424 ​ (784) (55) % Sales and marketing ​ 352 ​ 645 ​ (293) (45) % General and administrative ​ 592 ​ 1,223 ​ (631) (52) % Total stock-based compensation ​ $ 2,449 ​ $ 4,529 ​ $ (2,080) (46) % ​ Stock-based compensation expense includes the amortization of the fair value primarily of stock options awarded to employees, members of our board of directors and consultants.
The decrease is primarily due to a decrease of (i) $8.4 million in personnel-related costs and (ii) $1.2 million in marketing program costs. ​ Excluding an increase of $376,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased $10.0 million for the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change ​ ​ (in thousands, except percentages) General and administrative $ 10,499 $ 10,300 $ 199 2 % Percentage of total revenue ​ 11 % 11 % ​ ​ ​ ​ 45 Table of Contents General and administrative expense primarily consists of personnel-related expenses directly associated with our finance, human resources, administrative and legal personnel.
The decrease is primarily due to a decrease of $3.4 million in personnel-related costs; partially offset by increases of (i) $273,000 in lead generation costs and (ii) $145,000 in outside consulting costs. ​ Excluding an increase of $205,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased $3.0 million for the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 2024 Change ​ ​ (in thousands, except percentages) General and administrative $ 8,615 $ 10,499 $ (1,884) (18) % Percentage of total revenue ​ 10 % 11 % ​ ​ ​ ​ General and administrative expense primarily consists of personnel-related expenses directly associated with our finance, human resources, administrative and legal personnel.
Revenues from SaaS decreased by $4.7 million during the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ SaaS revenue was $84.9 million and $89.6 million during the fiscal years ended June 30, 2024 and 2023, respectively, which represented a decrease of 5% or $4.7 million.
Revenues from SaaS decreased by $3.2 million during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ SaaS revenue was $81.9 million and $85.1 million during the fiscal years ended June 30, 2025 and 2024, respectively, which represented a decrease of 4% or $3.2 million.
Included in these costs are salaries, benefits, bonuses, stock-based compensation and allocated overhead. Research and development expense also includes outside consulting services contracted for research and development. ​ Research and development expense decreased by $674,000 or 2% during the fiscal year ended June 30, 2024, from the same period in fiscal year 2023.
Included in these costs are salaries, 42 Table of Contents benefits, bonuses, stock-based compensation and allocated overhead. Research and development expense also includes outside consulting services contracted for research and development. ​ Research and development expense increased by $3.0 million or 11% during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024.
We recorded a positive operating margin of 6% in fiscal year 2024, and a positive operating margin of 1% in fiscal year 2023. During the fiscal year ended June 30, 2024, SaaS revenue decreased by $4.7 million to $84.9 million compared to $89.6 million in fiscal year 2023.
We recorded a positive operating margin of 5% in fiscal year 2025, and a positive operating margin of 6% in fiscal year 2024. During the fiscal year ended June 30, 2025, SaaS revenue decreased by $3.2 million to $81.9 million compared to $85.1 million in fiscal year 2024.
The second, 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.
The second, 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. 38 Table of Contents On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S.
We believe SaaS clients enjoy up to 50% faster time to value from their eGain investment. ​ Key Financial Measures We monitor the key financial performance measures set forth below as well as cash and cash equivalents and available debt capacity, which are discussed in Liquidity and Capital Resources, to help us evaluate trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational effectiveness and efficiencies.
We also operate in the United Kingdom and India. ​ Key Financial Measures We monitor the key financial performance measures set forth below as well as cash and cash equivalents and available debt capacity, which are discussed in Liquidity and Capital Resources, to help us evaluate trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational effectiveness and efficiencies.
As of June 30, 2024, we had a valuation allowance of approximately $35.6 million of which approximately $13.8 million was attributable to U.S. and state net operating losses and domestic research and development credit carryforwards. We apply ASC 740, Income Taxes , in determining any uncertain tax positions.
As of June 30, 2025, we had a valuation allowance of approximately $5.5 million attributable to California net operating losses and research and development credit carryforwards. We apply ASC 740, Income Taxes , in determining any uncertain tax positions.
Legacy revenue is associated with license, maintenance and support contracts on perpetual license arrangements that we no longer sell.
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.
We recorded an income tax provision of $1.9 million and $1.2 million in the fiscal years ended June 30, 2024 and 2023, respectively. ​ New Accounting Pronouncements For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 of Notes to Consolidated Financial Statements included in Item 8 Financial Statements and Supplementary Data of this Annual Report. 47 Table of Contents Liquidity and Capital Resources ​ Overview ​ Our principal sources of liquidity were cash and cash equivalents, and accounts receivable, net.
We recorded an income tax benefit of $26.6 million and provision of $1.9 million in the fiscal years ended June 30, 2025 and 2024, respectively. ​ New Accounting Pronouncements For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 of Notes to Consolidated Financial Statements included in Item 8 Financial Statements and Supplementary Data of this Annual Report.
This decrease is due to a decrease in personnel-related costs of $560,000 from the same period in fiscal year 2023. 44 Table of Contents ​ Excluding an increase of $74,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $634,000 for the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ Operating Expenses ​ Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change ​ ​ (in thousands, except percentages) Research and development $ 26,626 $ 27,300 $ (674) (2) % Percentage of total revenue ​ 29 % 28 % ​ ​ ​ ​ Research and development expense primarily consists of personnel-related expenses directly associated with our engineering, product management and development, and quality assurance staff.
This increase is due to increases in (i) personnel-related costs of $339,000 and (ii) outside consulting cost of $13,000 from the same period in fiscal year 2024. ​ Excluding an increase of $17,000 due to foreign exchange rate fluctuation, cost of professional services revenue increased by $353,000 for the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ Operating Expenses ​ Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 2024 Change ​ ​ (in thousands, except percentages) Research and development $ 29,604 $ 26,626 $ 2,978 11 % Percentage of total revenue ​ 33 % 29 % ​ ​ ​ ​ Research and development expense primarily consists of personnel-related expenses directly associated with our engineering, product management and development, and quality assurance staff.
The income before income tax provision between the U.S. and foreign countries impacted our effective tax rate as a result of the geographic distribution and customer demand related to our products and services.
The income before income tax benefit (provision) between the U.S. and foreign countries impacted our effective tax rate as a result of the geographic distribution and customer demand related to our products and services. In fiscal year 2025, our U.S. and foreign income before our income tax benefit was an income of $3.6 million and $2.0 million, respectively.
The increase is primarily due to an increase in (i) $829,000 in legal expenses and (ii) $154,000 in accounting, audit, and administrative expenses; partially offset by decreases of (i) $526,000 in personnel-related expenses, (ii) $175,000 in bad debt expense, (iii) $150,000 in outside consulting cost and (iv) $2,000 in investor relations expense. ​ Excluding an increase of $68,000 due to foreign exchange rate fluctuation, general and administrative expense increased $131,000 for the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ Stock-Based Compensation ​ Stock-based compensation expense is accounted for in accordance with the provisions of the accounting guidance which requires the measurement and recognition of compensation expense for all equity-based payment awards made to employees, members of our board of directors and consultants, based upon the grant-date fair value of those awards.
The decrease is primarily due to decreases in (i) $992,000 in legal expenses, (ii) $608,000 in personnel-related expenses, (iii) $296,000 in accounting, audit, and administrative expenses, and (iv) $28,000 in credit loss expenses. ​ Excluding an increase of $39,000 due to foreign exchange rate fluctuation, general and administrative expense increased $1.9 million for the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ 43 Table of Contents ​ Stock-Based Compensation ​ Stock-based compensation expense is accounted for in accordance with the provisions of the accounting guidance which requires the measurement and recognition of compensation expense for all equity-based payment awards made to employees, members of our board of directors and consultants, based upon the grant-date fair value of those awards.
The decrease is primarily due to decreases in (i) $470,000 in personnel-related costs and (ii) $268,000 in outside consulting costs. ​ Excluding an increase of $64,000 due to foreign exchange rate fluctuation, research and development expense decreased by $738,000 for the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ Sales and Marketing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change ​ ​ (in thousands, except percentages) Sales and marketing $ 22,115 $ 31,707 $ (9,592) (30) % Percentage of total revenue ​ 24 % 32 % ​ ​ ​ Sales and marketing expense primarily consists of personnel-related expenses directly associated with our sales, marketing, and business development staff.
The increase is primarily due to increases in (i) $2.8 million in personnel-related costs and (ii) $197,000 in outside consulting costs. ​ Excluding a decrease of $5,000 due to foreign exchange rate fluctuation, research and development expense increased by $3.0 million for the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ Sales and Marketing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 2024 Change ​ ​ (in thousands, except percentages) Sales and marketing $ 19,356 $ 22,115 $ (2,759) (12) % Percentage of total revenue ​ 22 % 24 % ​ ​ ​ Sales and marketing expense primarily consists of personnel-related expenses directly associated with our sales, marketing, and business development staff.
Foreign exchange rate fluctuation resulted in an increase of $1.0 million and $2.4 million in total revenue during the fiscal years ended June 30, 2024 and 2023, respectively. ​ 42 Table of Contents Subscription Revenue ​ SaaS Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ Change Revenue ​ (in thousands, except percentages) SaaS revenue ​ $ 84,874 ​ ​ $ 89,619 ​ ​ $ (4,745) (5) % Percentage of total revenue ​ 91 % ​ 91 % ​ ​ ​ ​ ​ ​ SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.
Foreign exchange rate fluctuation resulted in an increase of $546,000 and $1.0 million in total revenue during the fiscal years ended June 30, 2025 and 2024, respectively. ​ 40 Table of Contents SaaS Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Change Revenue ​ (in thousands, except percentages) SaaS revenue ​ $ 81,921 ​ $ 85,082 ​ $ (3,161) (4) % Percentage of total revenue ​ 93 % 92 % ​ ​ ​ ​ ​ SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.
Professional services revenue represents 8% of total revenue for the fiscal years ended June 30, 2024 and 2023. ​ Excluding an increase of $62,000 due to foreign exchange rate fluctuation, professional services revenues decreased by $28,000 during the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. 43 Table of Contents ​ Revenue by Geography ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ 2024 2023 ​ Change Revenue ​ (in thousands, except percentages) North America ​ $ 72,611 ​ $ 76,375 ​ $ (3,764) (5) % Europe, Middle East, & Africa ​ 20,192 ​ 21,636 ​ ​ (1,444) (7) % Total revenue ​ $ 92,803 ​ $ 98,011 ​ $ (5,208) ​ ​ ​ Revenue from North America sales decreased by 5% from $76.4 million during the fiscal year ended June 30, 2023 to $72.6 million during the fiscal year ended June 30, 2024 due to decreases of (i) $3.6 million in SaaS revenue and (ii) $392,000 in legacy revenue; partially offset by the increase of $224,000 in professional service revenue. ​ Revenue from EMEA sales decreased by 7% from $21.6 million during the fiscal year ended June 30, 2023 to $20.2 million during the fiscal year ended June 30, 2024 due to decreases of (i) $1.1 million in SaaS revenue, (ii) $190,000 in professional services revenue, and (iii) $106,000 in legacy revenue. ​ Cost of Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change Cost of revenue ​ (in thousands, except percentages) Subscription ​ $ 19,514 ​ $ 18,677 ​ $ 837 4 % Professional services ​ 8,078 ​ 8,638 ​ ​ (560) (6) % Total cost of revenue ​ $ 27,592 ​ $ 27,315 ​ $ 277 ​ ​ Percentage of total revenue ​ 30 % 28 % ​ ​ ​ Gross margin ​ 70 % 72 % ​ ​ ​ ​ Subscription ​ Cost of subscription revenues consist primarily of expenses related to our cloud services and support provided to customers.
Professional services revenue represents 7% and 8% of total revenue for the fiscal years ended June 30, 2025 and 2024, respectively. ​ Excluding an increase of $36,000 due to foreign exchange rate fluctuation, professional services revenues decreased by $1.2 million during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ Revenue by Geography ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ 2025 2024 ​ Change Revenue ​ (in thousands, except percentages) North America ​ $ 68,778 ​ $ 72,611 ​ $ (3,833) (5) % Europe, Middle East, & Africa ​ 19,653 ​ 20,192 ​ ​ (539) (3) % Total revenue ​ $ 88,431 ​ $ 92,803 ​ $ (4,372) ​ ​ ​ Revenue from North America sales decreased by 5% from $72.6 million during the fiscal year ended June 30, 2024 to $68.8 million during the fiscal year ended June 30, 2025 due to decreases of (i) $2.6 million in SaaS revenue and (ii) $1.2 million in professional service revenue. ​ 41 Table of Contents Revenue from EMEA sales decreased by 3% from $20.2 million during the fiscal year ended June 30, 2024 to $19.7 million during the fiscal year ended June 30, 2025 due to a decrease of $570,000 in SaaS revenue; partially offset by an increase of $32,000 in professional services revenue. ​ Cost of Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ ​ ​ ​ ​ 2025 2024 Change Cost of revenue ​ (in thousands, except percentages) SaaS ​ $ 17,975 ​ $ 19,514 ​ $ (1,539) (8) % Professional services ​ 8,448 ​ 8,078 ​ ​ 370 5 % Total cost of revenue ​ $ 26,423 ​ $ 27,592 ​ $ (1,169) ​ ​ Percentage of total revenue ​ 30 % 30 % ​ ​ ​ Gross margin ​ 70 % 70 % ​ ​ ​ ​ SaaS ​ Cost of SaaS revenues consist primarily of expenses related to our cloud services and support provided to customers.
The transaction price is allocated to various performance obligations based on their standalone selling prices (SSP). Revenue allocated to each performance obligation is recognized as work is performed. Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of our solutions in a company.
Revenue allocated to each performance obligation is recognized as work is performed. Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of our 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.
These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements. Overview ​ eGain 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.
These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements. Overview ​ eGain automates customer experience with an AI knowledge hub solution. We sell our SaaS solution to enterprises who want to improve customer experience while reducing cost, by using AI to synthesize and deliver trusted, consumable answers from a knowledge hub.
Deferred Tax Valuation Allowance When we prepare our consolidated financial statements, we estimate our income tax liability for each of the various jurisdictions where we conduct business. This requires us to estimate our actual current tax exposure and to assess temporary differences that result from differing treatment of certain items for tax and accounting purposes.
This requires us to estimate our actual current tax exposure and to assess temporary differences that result from differing treatment of certain items for tax and accounting purposes.
Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to interest earned on our cash and cash equivalents. The primary objective of our investment activities is to preserve our capital to fund operations. We also seek to maximize income from our investments without assuming significant risk.
The primary objective of our investment activities is to preserve our capital to fund operations. We also seek to maximize income from our investments without assuming significant risk. Our investment policy provides for investments in short-term and low-risk investment-grade debt instruments. These investments are subject to interest rate risk and will decrease in value if market interest rates increase.
The increase is primarily due to an increase in personnel related costs of $1.3 million; partially offset by a decrease in (i) outside consulting cost of $390,000 and (ii) cloud computing cost of $158,000 during the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ Excluding an increase of $45,000 due to foreign exchange rate fluctuation, cost of subscription revenues increased by $793,000 during the fiscal year ended June 30, 2024, from the same period in fiscal year 2023. ​ ​ Professional Services ​ Cost of professional services consists primarily of personnel-related costs directly associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation and allocated overhead. ​ Cost of professional services decreased by $560,000 or 6% during the fiscal year ended June 30, 2024 from the same period in fiscal year 2023.
Foreign exchange rate fluctuation had an immaterial impact on cost of SaaS revenues when comparing fiscal year ended June 30, 2025 and 2024. ​ ​ Professional Services ​ Cost of professional services consists primarily of personnel-related costs directly associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation and allocated overhead. ​ Cost of professional services increased by $370,000 or 5% during the fiscal year ended June 30, 2025 from the same period in fiscal year 2024.
Other expense, net was $51,000 and $434,000 for the fiscal years ended June 30, 2024 and 2023, respectively. ​ Income Tax Provision ​ Provision for income taxes consists of federal, state and foreign income taxes.
Other expense, net was $1.3 million and $51,000 for the fiscal years ended June 30, 2025 and 2024, respectively. ​ Income Tax Benefit (Provision) ​ Provision for income taxes consists of federal, state and foreign income taxes and the release of a substantial portion of our valuation allowance against U.S. deferred tax assets as of June 30, 2025.
A 10% increase in the value of the dollar relative to other currencies would decrease the value of these assets by $2.5 million between June 30, 2024 and our next financial reporting period. We do not currently use derivative instruments to hedge against foreign exchange risk.
As of June 30, 2025 and 2024, identifiable assets denominated in foreign currency totaled approximately $25.9 million and $24.9 million, respectively. A 10% increase in the value of the dollar relative to other currencies would decrease the value of these assets by $2.6 million between June 30, 2025 and our next financial reporting period.
Fiscal Year 2024 Compared with Fiscal Year 2023 Our effective tax rate for both fiscal years 2024 and 2023 was a tax provision of $1.9 million and $1.2 million, respectively.
We are currently assessing the impact of OBBBA on our consolidated financial statements. Fiscal Year 2025 Compared with Fiscal Year 2024 Our effective tax rate for both fiscal years 2025 and 2024 was a tax benefit of $26.6 million and a tax provision of $1.9 million, respectively.
As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Identifiable assets denominated in foreign currency as of June 30, 2024 and 2023 totaled approximately $24.9 million and $20.8 million, respectively.
As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Identifiable assets denominated in foreign currency consist primarily of cash and cash equivalents, accounts receivable, net, and operating lease ROU asset.
As such we are exposed to market risk from fluctuations in foreign currency exchange rates, principally from the exchange rate between the U.S. Dollar and the Euro, the British Pound and the Indian Rupee. An unfavorable change in the foreign currency exchange rates may cause an adverse effect on our financial position or results of operations.
We do not currently use derivative instruments to hedge against foreign exchange risk. As such we are exposed to market risk from fluctuations in foreign currency exchange rates, principally from the exchange rate between the U.S. Dollar and the Euro, the British Pound and the Indian Rupee.
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.
Managed services contracts are bid on a time-and-material basis. Fixed fees are generally paid on milestone billing 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.
Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations; and (ii) such expenses can vary significantly between periods as a result of the timing of new stock-based awards.
The following table presents total revenue for each of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30 ​ ​ ​ ​ ​ 2025 2024 Change Revenue ​ (in thousands, except percentages) SaaS revenue ​ $ 81,921 ​ $ 85,082 ​ $ (3,161) (4) % Professional services ​ 6,510 ​ 7,721 ​ (1,211) (16) % Total revenue ​ $ 88,431 ​ $ 92,803 ​ $ (4,372) ​ ​ ​ ​ Non-GAAP Operating Income ​ Non-GAAP operating income is defined as income from operations, adjusted for the impact of stock-based compensation expense. 35 Table of Contents Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations; and (ii) such expenses can vary significantly between periods as a result of the timing of new stock-based awards.
The decrease in total costs and operating expenses in fiscal year ended June 30, 2024 was $10.1 million primarily due to decreases of (i) $8.6 million in personnel-related expenses, (ii) $1.2 million in outside consulting costs, (iii) $1.2 million in marketing costs, (iv) $175,000 in bad debt expenses, (v) $158,000 in cloud computing costs , and (vi) $2,000 in investor relations cost; partially offset with increases in (i) $829,000 in legal expense and (ii) $154,000 in accounting and administrative services expenses.
The decrease in total costs and operating expenses in fiscal year ended June 30, 2025 was $2.8 million primarily due to decreases of (i) $2.4 million in personnel-related expenses, (ii) $992,000 in legal expenses, (iii) $199,000 in outside consulting costs, and (iv) $28,000 in credit loss expenses; partially offset by increases in (i) $279,000 in cloud computing costs and (ii) $273,000 in lead generation costs.
Our liquidity sources were $101.7 million compared to $104.8 million as of June 30, 2024 and 2023, respectively. Our cash, cash equivalents, and restricted cash were $70.0 million and $73.2 million as of June 30, 2024 and 2023, respectively. ​ Our working capital was $44.5 million and $46.1 million as of June 30, 2024 and 2023, respectively.
Our cash, cash equivalents, and restricted cash were $62.9 million and $70.0 million as of June 30, 2025 and 2024, respectively. ​ Our working capital was $38.4 million and $44.5 million as of June 30, 2025 and 2024, respectively.
Unbilled accounts receivables are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable at contractually specified dates.
Unbilled accounts receivables are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable at contractually specified dates. Tax Legislation 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.
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.
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 fiscal year 2024, our U.S. and 40 Table of Contents foreign income before our income tax provision was an income of $6.2 million and $3.5 million, respectively. In fiscal year 2023, our U.S. and foreign income before our income tax was loss of $460,000 and income of $3.8 million, respectively.
In fiscal year 2024, our U.S. and foreign income before our income tax was an income of $6.2 million and $3.5 million, respectively. Deferred Tax Valuation Allowance When we prepare our consolidated financial statements, we estimate our income tax liability for each of the various jurisdictions where we conduct business.
Our investment policy provides for investments in short-term, low-risk, investment-grade debt instruments. These investments are subject to interest rate risk and will decrease in value if market interest rates increase. We currently do not hedge interest rate exposure, and we do not have any foreign currency or other derivative financial instruments.
We currently do not hedge interest rate exposure, and we do not have any foreign currency or other derivative financial instruments. To date, we have not experienced a loss of principal on any of our investments.
Revenues from professional services increased by $34,000 and remained flat at $7.7 million during the fiscal year ended June 30, 2024.
Revenues from professional services decreased by $1.2 million during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024. ​ Professional services revenue was $6.5 million and $7.7 million during the fiscal years ended June 30, 2025 and 2024, respectively, which represented a decrease of 16% or $1.2 million.
Due to the current economic state of the U.S. economy, expiring tax attributes and uncertainty of future profitability, we maintain a valuation allowance against U.S. deferred tax assets as of June 30, 2024.
In the year ended June 30, 2025, we concluded that the valuation allowance related to the U.S. federal and state (excluding certain California tax attributes) deferred tax assets was no longer required due to the assessment of our recent income/loss and forecast future taxable income.
Removed
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.
Added
Revenue We believe total revenue is a useful measure to value our business. SaaS revenue is defined as revenue from cloud delivery arrangements, term licenses, embedded OEM royalties and associated support. Professional services revenue includes system implementation, consulting, training, and managed services.
Removed
We also operate in the United Kingdom and India. ​ We have transitioned from a hybrid model, where we sold both SaaS and perpetual license solutions, to a SaaS only business model.
Added
Under revenue guidance, since these arrangements are for sales-based licenses of intellectual property, we recognize revenue only as the subsequent sale occurs. However, since such sales are reported by the customer with a quarter in arrears, such revenue is recognized at the time it is reported and paid by the customer.
Removed
As we migrated our legacy perpetual license clients to SaaS, we expect our legacy revenue, primarily comprising annual maintenance and support fees for legacy perpetual license clients to continue to decline to a non-significant amount in our SaaS business. ​ We believe our go-forward SaaS business model affords us recurring revenue visibility and more predictability.
Added
Any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimates and the risk of significant revenue reversals. ​ Professional Services Revenue ​ Professional services revenue includes system implementation, consulting, training, and managed services. The transaction price is allocated to various performance obligations based on their SSP.
Removed
Historical fiscal years affirmed our view that SaaS clients adopt our product innovation much faster than the perpetual license model and get better service levels.
Added
The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. This new legislation has multiple effective dates, with certain provisions becoming effective in 2025 and others implemented through 2027.
Removed
SaaS Revenue With our transition to a SaaS only business model, we believe SaaS revenue better reflects our business momentum and to analyze progress and thus, we disaggregate our subscription revenue growth between: ● SaaS revenue, which is defined as revenue from cloud delivery arrangements, term licenses and embedded original equipment manufacturer (OEM) royalties and associated support; and ● Legacy revenue, which is defined as revenue, maintenance and support contracts on perpetual license arrangements that we no longer sell. ​ ​ ​ ​ ​ ​ 36 Table of Contents The following table presents a break out of subscription revenue between SaaS and legacy revenues for each of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30 ​ ​ ​ ​ ​ ​ 2024 2023 ​ Change Revenue ​ (in thousands, except percentages) SaaS revenue ​ $ 84,874 ​ $ 89,619 ​ $ (4,745) (5) % Legacy revenue ​ 208 ​ 705 ​ ​ (497) (70) % Total subscription revenue ​ $ 85,082 ​ $ 90,324 ​ $ (5,242) ​ ​ ​ ​ SaaS and Professional Services Revenue ​ As we have shifted to a SaaS only business model, substantially all of professional services revenue is now generated from our SaaS customer base.
Added
The decrease is primarily due to decreases in (i) personnel related costs of $1.5 million and (ii) outside consulting cost of $258,000; partially offset by an increase in cloud computing cost of $279,000 during the fiscal year ended June 30, 2025, from the same period in fiscal year 2024.
Removed
We believe the combination of SaaS and professional services revenue is a useful measure to value our business on a forward-looking basis. ​ The following table presents total SaaS and professional services revenue for each of the following periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30 ​ ​ ​ ​ ​ 2024 2023 Change Revenue ​ (in thousands, except percentages) SaaS revenue ​ $ 84,874 ​ $ 89,619 ​ $ (4,745) (5) % Professional services ​ 7,721 ​ 7,687 ​ 34 0 % Total SaaS and professional services revenue ​ $ 92,595 ​ $ 97,306 ​ $ (4,711) ​ ​ ​ ​ Non-GAAP Operating Income ​ Non-GAAP operating income is defined as income from operations, adjusted for the impact of stock-based compensation expense.
Added
Liquidity and Capital Resources ​ Overview ​ Our principal sources of liquidity were cash and cash equivalents, and accounts receivable, net. Our liquidity sources were $95.7 million compared to $101.7 million as of June 30, 2025 and 2024, respectively.
Removed
Under revenue guidance, since these arrangements are for usage-based licenses of intellectual property, we estimate revenue recognized only as the performance obligation of the OEM royalties has been satisfied or partially satisfied. ​ Professional Services Revenue ​ Professional services revenue includes system implementation, consulting, training, and managed services.
Added
An unfavorable change in the foreign currency exchange rates may cause an adverse effect on our financial position or results of operations. Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to interest earned on our cash and cash equivalents.
Removed
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 on milestone billing at pre-determined points in the contract.

… 8 more changes not shown on this page.

Other EGAN 10-K year-over-year comparisons