eGain Corporation

Good day and welcome to the eGain Fiscal 2021 Third Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead, sir.

Thank you, Operator, and good afternoon, everyone. Welcome to eGain's Third Quarter Fiscal 2021 Financial Results Conference Call. On the call today are Regain's Chief Executive Officer, Ashutosh Roy, and Chief Financial Officer, Eric Smit. Before we begin, I would like to remind everyone that during this conference call, management will make certain forward-looking statements which convey management's expectations, beliefs, plans, and objectives regarding future financial and operational performance. Forward-looking statements are generally preceded by words such as believe, plan, intend, expect, anticipate, or similar expressions. Forward-looking statements are protected by safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a wide range of risks and uncertainties that could cause actual results to differ in material respects. Information on various factors that could affect eGain's results are detailed in the company's reports filed with the Securities and Exchange Commission. eGain is making these statements as of today, May 11, 2021, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call. In addition to GAAP results, we will discuss certain non-GAAP financial measures, such as non-GAAP operating income. The tables included with the earnings press release include a reconciliation of the historical non-GAAP financial measures to most directly comparable GAAP financial measures. Our earnings press release can be found on the news release link on the investor relations page at eGain's website at eGain.com. And a phone replay of this conference call will be available for one week. Now with that said, I'd like to turn the call over to eGain's CEO, Ashutosh Roy.

Thank you, Jim. And good afternoon, everyone. We are pleased with our performance in the third quarter. Both our top and bottom line results exceeded our guidance and were ahead of street consensus. Our SAS revenues grew 14% year-over-year and 19% year-to-date. Gross margins improved by 5 percentage points over the prior year quarter. We were GAAP profitable with net income of $1.3 million, and our cash flow year-to-date is ahead of our expectations. Turning to business progress in the quarter, we continued to build on our sales and marketing investment. Let me share some metrics. Our brand awareness is up significantly. Website traffic for the period Jan 1st through April 30th this year was up 144% over the same year-ago period. This awareness increase is driving more interest and opportunities. Our marketing generated leads in fiscal third quarter were up 49% year over year. And as a result, at the end of Q3, our total number of opportunities were also up 70% compared to a year ago. As I noted before, our number one focus this year from a sales perspective is adding new SaaS logos. And we are doing well on that front. New SaaS wins continue to be up more than 100% year over year, both in the third quarter and year to date. Specifically, in the first nine months of fiscal 2021, that is the first three quarters of fiscal 2021, we have added 37 new SaaS customers compared to 11 during the same period last year. Both the total value of our new logo pipeline and the total number of new logo opportunities in the pipeline are up over 90%. During the quarter, we won some nice new SAS logos. Let me share some examples. First is a Fortune 500 provider of cybersecurity software. Another one is a big utility out on the West Coast. The third one is a large healthcare provider on the East Coast. And the last one I'll mention here is a telco based in EMEA. We also saw healthy expansion bookings with clients during the quarter. Some notable expansions include a large telco where we continue to roll out our solution across multiple business units. Another financial services client where we're expanding our platform to proactively engage members across all touchpoints. The third one is a large business service provider where our solution is being deployed across their global client base. And finally, a federal government entity in the US where they're expanding the use of eGain for digital service automation. In terms of renewals, our net retention rate in the third quarter continued to be north of 100% and up sequentially. Our continued investment in customer success has resulted in better value delivery and sustained account expansion. But now we are at a point where our million dollar ARR plus customers that count of million-dollar ARR customers and more has grown by 63% year-over-year. This is a nice trend. We want to build on it. On the sales front, as you know, we've been ramping our investment in the past three quarters. Our non-GAAP sales and marketing expense in Q3 as a percentage of total revenue was at 34%, up from 27% from the same quarter a year ago. The sales rep cohort we hired in the first half of fiscal 21 continues to ramp up in the third quarter. This cohort, as I have mentioned before, is focused on new logo acquisition. Once fully ramped, this team will increase our sales capacity by 50%. On the partner front, we are building nice momentum as well. Responding to demand from clients, we recently published our platform connector to the Adobe Experience Manager Marketplace. This connector helps businesses leverage our capabilities in concert with Adobe's website publishing tools. Our open architecture allows us to easily plug into other complementary solutions, increasing market reach and awareness. As I had mentioned last quarter, we are seeing good interest from the SI community. One of them, a global SI, is looking to now include our platform within their reference architecture for enterprise knowledge management. They're keen to provide clients with a unified AI-powered knowledge solution overlaid on multiple CRM systems and content repositories in any large client environment. We are jointly pursuing a handful of opportunities with this proposition. Our Cisco partnership continues to deliver good results across the board with a combination of new expansion and renewal bookings in the quarter. And finally, our Avaya partnership is now generating new logos with bookings across enterprise and public cloud offerings. On the product front, in March, we launched our Virtual Financial Coach, an AI-powered proactive customer engagement solution targeting financial services. We developed the solution in partnership with Greenpath, a leading provider of financial wellness solutions. This automated coach is powered by AI and machine learning from eGain and comes prepackaged with best practice and compliant know-how from Greenpath. With this solution, our clients get incredible value, time to value, as well as Thank you very much. Our coach is a compelling option for banks of all sizes to accelerate their financial wellness programs. We are very excited about this new solution we have come up with. In conclusion, our new SaaS logo wins in the first nine months of this fiscal year are trending nicely. Our clients are actively expanding the use of the eGain platform. Our sales and marketing investments are showing early results with Avaya now beginning to perform. alongside Cisco in our Contact Center Channel program. And our new go-to-market investments in Partner Buildout and the Virtual Financial Coach are both progressing well. We do expect to see their top-line impact in the coming fiscal year. With that, I'll ask Eric Smit, our Chief Financial Officer, to add more color around our financial operations. Eric?