eGain Corporation

Hello and welcome to the eGain 2022 fourth quarter and full year financial results conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to eGain's fiscal 2022 fourth quarter and full year financial results conference call. On the call today are eGain's Chief Executive Officer, Ashu Roy, and Chief Financial Officer, Eric Smith. 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, excuse me, 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, September 8, 2022, 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 reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. Our earnings press release can be found by clicking the press releases link on the investor relations page of eGain's website at eGain.com. Along with the earnings release, we have also posted an updated investor presentation to the investor relations page of eGain's site. And lastly, a phone replay of this conference call will be available for one week. And now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.

Thank you, Jim. And good afternoon, everyone. We finished the year strong. And overall, we are very pleased with our progress this year. Both our top and bottom line results were ahead of our guidance and street consensus. So our total revenue for the year grew 17% year over year to 92 million. And we generated good cash flow from operations for the year of over $8 million. That was a good way to end the fiscal year for us. Looking at the last quarter, let me share some notable new wins. The first one is a top 10 airline in the world. and they selected eGain Knowledge as their centralized platform to empower agents across their global contact centers. This is phase one. In the second phase, they'll use the same knowledge assets to drive better customer self-service. Interestingly, we are partnering with Deloitte to deliver this solution to the airline client. The next one is a leading U.S.-based provider of health and benefit plans. Their challenge was similar. They were struggling with knowledge silos, and it was showing up in long customer calls and repeat contacts. So, again, our Knowledge Hub solution is what they went with. The third one is the Department of Taxation, for a state government in the US. They selected eGain for knowledge as well as the omni-channel advisor desktop capabilities. And in this case, our FedRAMP authorization was a significant factor in their selection. The last one I want to bring out is one of the clients we won, which is a European-based leading vehicle leasing companies, one of the biggest vehicle leasing companies in the world. They plan to deploy the eGain Knowledge Hub as a central platform across 29 countries in 19 different languages. So the power of centralization where there is a need for multilingual and appropriate regulatory personalization, that's something which was very important to them. Those were really good wins. Excited about those new plans and more. In terms of customer expansion in the quarter, one of the notable ones was, again, a federal agency who's an existing customer. They have upgraded to the FedRAMP version of the eGain Knowledge Solution. Looking back at the fiscal year, I just want to observe that at the start of the year, we mentioned we were making a bet to scale our sales capacity. And that's something we continue to do through the year. And by the end of the year, so over the year, we ended up increasing our sales capacity by over 50%. And that steady investment increase also then ramped up improvement in our bookings and our pipeline build. So just a few metrics to share to show our progress over the whole year. These metrics are tricky for quarterly... because they tend to vary. But over the year, you can see the difference is something I'm sharing at this time. Our new logo-based ARR, new logo-based ARR for fiscal 22 was up 45% year-over-year. In terms of pipeline, the RFP volume from prospects went up by over 50% year-over-year in fiscal 2022 compared to fiscal 2021. And then we ended the year with our RTO, our remaining performance obligation, at over $100 million, which is, again, up over 50% year-over-year. These are some relevant metrics. Of course, we look at these and they tend to be a little volatile, but over the year, the progress is evident. Looking at the market, we continue to see the big opportunity in knowledge management and overall customer engagement powered by knowledge. Even with the economic slowdown, leaning into this market with the current level of sales investment we have built up to is a good bet. We believe in a tough market, customers will continue to invest in agent experience and also in self-service automation. Further, our top two verticals, that is financial services and insurance being one, and government now being the second biggest. Together, these two comprise over half of our business now. These two verticals, we believe, should not get too negatively impacted in the market slowdown. Of course, there will be some impact. So we do anticipate decision-making slowdown. That's natural. So we feel it's prudent for us to plan conservatively while maintaining current levels of sales investment. In fiscal 23, we intend to focus on driving sales productivity, as we take a balanced view of growth and profits in the current climate. On the product front, a couple of interesting things in the quarter. We recently announced our eGain Knowledge Connector for Microsoft SharePoint. As you all know, probably, SharePoint is the leading content management tool out there now. And what we are seeing is increasingly our clients want to modernize their knowledge management, but at the same time, they also want to federate all their legacy content from multiple SharePoint repositories. Just to give you an example, one of the clients we recently won, not in the last quarter, but a couple of quarters before that, and we are deploying and going live with a solution, They have over 60 SharePoint repositories in their enterprise that they want to federate into. Yes, they'll have a small bit of curated knowledge and intelligence in the e-game knowledge platform, but still the vast majority of legacy content continues to sit in these SharePoint repositories. So we believe this is a a good opportunity for us to layer on our modern knowledge hub alongside the SharePoint install base in the enterprise. And then just yesterday, we announced our connector to IBM Watson. This leverages our bring your own bot or BYOB architecture. We are seeing that businesses have built many bots and continue to build their specialized bots using technologies like IBM Watson. And now they want to leverage that specialized bot investment in combination with a modern knowledge platform like ours to deliver better service. So these connectors make it easy for them to do so. Looking ahead, We see businesses continuing to invest in digital transformation. So demand for our solutions, I believe, is still strong and will get stronger while accommodating for the economic slowdown, which is a cycle. So a couple of things I want to highlight. One was beginning of the year, I think we had mentioned this, published an annual research paper early 2022, calendar 2022, which brought out the technologies that are important for enterprises looking to improve customer service. And then number one technology recommendation at that time to these customer service leaders for the year was to invest in knowledge management tools. So now you fast-forward that, and in July, so a couple of months ago, they published another Gartner estimate where it talked about the hype cycle of different technologies, which they publish every year and refresh every year. And in that, the penetration of knowledge management technology for customer service, they rated that still under 20%. It was anywhere between 5% and 20%, so definitely under 20%. The fact that there's a big market ahead of us. At the same time, they assess that the value of this technology is high for enterprises. Their assessment in that document, which we completely agree with, is that the three reasons knowledge is seeing a resurgence of interest in the enterprise. The first two are more demand-oriented. The third one is more capabilities of technology and solutions. The first thing is just the proliferation of number of customer contact points. That's driving a lot of inconsistency and customer frustration in service. The second is the world of hybrid work and high levels of employee attrition. That's highlighting the need for better knowledge and guidance tools for these frontline agents. And then the third bit, which is the supply side, Their assessment, and we are part of that solution, is that new knowledge and AI technologies are making it possible to deliver these better solutions and show the value of knowledge and guidance using AI and knowledge technologies. These solution stories and client successes at scale, that's creating a virtuous dynamic in the markets. With our leading solutions in the space and our client successes, we believe we are well positioned to capture market share with our scale sales capacity. Before I hand over to Eric a couple of comments, first a plug for our annual customer conference. After a two-year gap, we are very excited to announce eGames Solve 22. This is our annual customer conference. We will be holding it on October 11th and 12th, the MGM grant in Las Vegas. This time around, we have a record number of customer speakers, so we're very excited about it. We've been missing it for two years. And we'll also be announcing some exciting capabilities of the conference. In addition, several legal partners, including Deloitte, will be showcasing value-added solutions alongside our proposition. In conclusion, I just want to wrap up with a couple of summary thoughts. The first thing is the market need for our solutions continues to be strong and relevant, and we are more excited than ever. Second, given the economic environment, we are adopting a prudent stance, and so we're focusing on productivity of our sales team in fiscal 23. and not necessarily further increasing our investment on the sales capacity side until we see the productivity showing up, which we expect. And then lastly, our product strategy overall remains unchanged as we continue to build out our platform and grow our partner ecosystem with connectors, APIs, and developer support. With that, I'll ask Eric Smith, our Chief Financial Officer, to add more color around our financial operations. Eric.