Company Quick10K Filing
eGain
Price7.91 EPS0
Shares32 P/E53
MCap252 P/FCF46
Net Debt-34 EBIT5
TEV218 TEV/EBIT43
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-Q 2019-12-31 Filed 2020-02-10
10-Q 2019-09-30 Filed 2019-11-12
10-K 2019-06-30 Filed 2019-09-12
10-Q 2019-03-31 Filed 2019-05-09
10-Q 2018-12-31 Filed 2019-02-11
10-Q 2018-09-30 Filed 2018-11-09
10-K 2018-06-30 Filed 2018-09-13
10-Q 2018-03-31 Filed 2018-05-10
10-Q 2017-12-31 Filed 2018-02-13
10-Q 2017-09-30 Filed 2017-11-13
10-K 2017-06-30 Filed 2017-09-26
10-Q 2017-03-31 Filed 2017-05-10
10-Q 2016-12-31 Filed 2017-02-09
10-Q 2016-09-30 Filed 2016-11-09
10-K 2016-06-30 Filed 2016-09-13
10-Q 2016-03-31 Filed 2016-05-06
10-Q 2015-12-31 Filed 2016-02-05
10-Q 2015-09-30 Filed 2015-11-06
10-K 2015-06-30 Filed 2015-09-14
10-Q 2015-03-31 Filed 2015-05-08
10-Q 2014-12-31 Filed 2015-02-09
10-Q 2014-09-30 Filed 2014-11-10
10-K 2014-06-30 Filed 2014-09-12
10-Q 2014-03-31 Filed 2014-05-09
10-Q 2013-12-31 Filed 2014-02-12
10-Q 2013-09-30 Filed 2013-11-08
10-K 2013-06-30 Filed 2013-09-23
10-Q 2013-03-31 Filed 2013-05-15
10-Q 2012-12-31 Filed 2013-02-11
10-Q 2012-09-30 Filed 2012-11-14
10-K 2012-06-30 Filed 2012-09-25
10-Q 2012-03-31 Filed 2012-05-14
10-Q 2011-12-31 Filed 2012-02-14
10-Q 2011-09-30 Filed 2011-11-14
10-K 2011-06-30 Filed 2011-09-27
10-Q 2011-03-31 Filed 2011-05-16
10-Q 2010-12-31 Filed 2011-02-14
10-Q 2010-09-30 Filed 2010-11-12
10-K 2010-06-30 Filed 2010-09-23
10-Q 2010-03-31 Filed 2010-05-17
10-Q 2009-12-31 Filed 2010-02-16
8-K 2020-05-07
8-K 2020-02-06
8-K 2019-12-13
8-K 2019-11-21
8-K 2019-11-06
8-K 2019-09-03
8-K 2019-05-08
8-K 2019-03-14
8-K 2019-03-13
8-K 2019-02-07
8-K 2018-11-27
8-K 2018-11-08
8-K 2018-09-06
8-K 2018-05-07
8-K 2018-02-08

EGAN 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 egan-20200331ex311abff86.htm
EX-31.2 egan-20200331ex312d69d15.htm
EX-32.1 egan-20200331ex321ea28aa.htm
EX-32.2 egan-20200331ex322d637b1.htm

eGain Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
806244268-102012201420172020
Assets, Equity
2518114-3-102012201420172020
Rev, G Profit, Net Income
201482-4-102012201420172020
Ops, Inv, Fin

10-Q 1 egan-20200331x10q.htm 10-Q egan_Current Folio_10Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q


(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 001-35314


 

eGain Corporation

(Exact name of registrant as specified in its charter)


 

 

 

 

Delaware

 

77-0466366

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

1252 Borregas Avenue, Sunnyvale, CA

 

94089

(Address of principal executive offices)

 

(Zip Code)

 

(408) 636-4500

(Registrant’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year, if changed since last report)


 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes  ☒    No  ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒    No  ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

Large Accelerated Filer

 

  

Accelerated Filer

 

 

 

 

 

Non-accelerated Filer

 

  

Smaller Reporting Company

 

 

 

 

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes  ◻    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

 

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, par value $0.001 par value

EGAN

The Nasdaq Stock Market LLC

 

The number of outstanding shares of the registrant’s common stock, $0.001 par value per share, was 30,688,643 as of May 8, 2020.

 

 

 

 

 

EGAIN CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

    

 

PART I. 

FINANCIAL INFORMATION

 

 

Item 1. 

Financial Statements (Unaudited)

 

2

 

Condensed Consolidated Balance Sheets as of March 31, 2020 and June 30, 2019

 

2

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March  31,  2020 and 2019

 

3

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended March 31, 2020 and 2019

 

4

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2020 and 2019

 

5

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2020 and 2019 

 

7

 

Notes to Condensed Consolidated Financial Statements

 

8

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

 

36

Item 4. 

Controls and Procedures

 

36

PART II. 

OTHER INFORMATION

 

38

Item 1. 

Legal Proceedings

 

38

Item 1A. 

Risk Factors

 

38

Item 6. 

Exhibits

 

55

 

Signatures

 

56

 

 

 

 

i

PART I.  FINANCIAL INFORMATION

 

Item 1. Financial Statements

EGAIN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

March 31, 

 

June 30, 

 

    

2020

    

2019

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

40,658

 

$

31,860

Restricted cash

 

 

 6

 

 

 7

Accounts receivable, less allowance for doubtful accounts of $429 and $320 as of March 31, 2020 and June 30, 2019, respectively

 

 

13,369

 

 

20,411

Costs capitalized to obtain revenue contracts, net

 

 

919

 

 

740

Prepaid expenses

 

 

1,822

 

 

2,517

Other current assets

 

 

585

 

 

1,054

Total current assets

 

 

57,359

 

 

56,589

Property and equipment, net

 

 

629

 

 

525

Operating lease right-of-use assets (Note 6)

 

 

3,363

 

 

 —

Costs capitalized to obtain revenue contracts, net of current portion

 

 

1,976

 

 

1,777

Intangible assets, net

 

 

93

 

 

294

Goodwill

 

 

13,186

 

 

13,186

Other assets

 

 

1,369

 

 

1,383

Total assets

 

$

77,975

 

$

73,754

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,797

 

$

4,173

Accrued compensation

 

 

6,191

 

 

5,480

Accrued liabilities

 

 

3,067

 

 

2,353

Operating lease liabilities (Note 6)

 

 

1,726

 

 

 —

Deferred revenue

 

 

25,960

 

 

30,688

Total current liabilities

 

 

38,741

 

 

42,694

Deferred revenue, net of current portion

 

 

5,261

 

 

5,801

Operating lease liabilities, net of current portion (Note 6)

 

 

1,837

 

 

 —

Other long-term liabilities

 

 

668

 

 

952

Total liabilities

 

 

46,507

 

 

49,447

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.001 par value - authorized: 50,000 shares; outstanding: 30,689 shares as of March 31, 2020 and 30,478 shares as of June 30, 2019

 

 

31

 

 

31

Additional paid-in capital

 

 

373,303

 

 

371,099

Notes receivable from stockholders

 

 

(89)

 

 

(88)

Accumulated other comprehensive loss

 

 

(1,558)

 

 

(1,459)

Accumulated deficit

 

 

(340,219)

 

 

(345,276)

Total stockholders' equity

 

 

31,468

 

 

24,307

Total liabilities and stockholders' equity

 

$

77,975

 

$

73,754

 

See accompanying notes to condensed consolidated financial statements

2

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

    

2020

    

2019

 

2020

    

2019

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription

 

$

16,919

 

$

15,318

 

$

48,834

 

$

44,868

Professional services

 

 

1,435

 

 

1,686

 

 

4,865

 

 

5,540

Total revenue

 

 

18,354

 

 

17,004

 

 

53,699

 

 

50,408

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of subscription

 

 

3,739

 

 

3,625

 

 

11,046

 

 

10,711

Cost of professional services

 

 

1,761

 

 

1,672

 

 

5,012

 

 

5,362

        Total cost of revenue

 

 

5,500

 

 

5,297

 

 

16,058

 

 

16,073

Gross profit

 

 

12,854

 

 

11,707

 

 

37,641

 

 

34,335

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,205

 

 

3,622

 

 

12,255

 

 

10,777

Sales and marketing

 

 

5,064

 

 

4,320

 

 

14,622

 

 

12,706

General and administrative

 

 

1,828

 

 

1,976

 

 

5,911

 

 

6,180

Total operating expenses

 

 

11,097

 

 

9,918

 

 

32,788

 

 

29,663

Income from operations

 

 

1,757

 

 

1,789

 

 

4,853

 

 

4,672

Interest income (expense), net

 

 

113

 

 

(120)

 

 

384

 

 

(449)

Other income (expense), net

 

 

65

 

 

(199)

 

 

44

 

 

(189)

Income before income tax provision

 

 

1,935

 

 

1,470

 

 

5,281

 

 

4,034

Income tax provision

 

 

(68)

 

 

(72)

 

 

(224)

 

 

(32)

Net income

 

$

1,867

 

$

1,398

 

$

5,057

 

$

4,002

Per share information:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

$

0.05

 

$

0.17

 

$

0.14

Diluted

 

$

0.06

 

$

0.05

 

$

0.16

 

$

0.13

Weighted-average shares used in computation:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,662

 

 

28,426

 

 

30,580

 

 

27,993

Diluted

 

 

31,987

 

 

30,229

 

 

31,935

 

 

29,909

 

See accompanying notes to condensed consolidated financial statements 

3

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

    

2020

    

2019

 

2020

    

2019

Net income

 

$

1,867

 

$

1,398

 

$

5,057

 

$

4,002

Other comprehensive income, net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

92

 

 

36

 

 

(99)

 

 

34

Comprehensive income

 

$

1,959

 

$

1,434

 

$

4,958

 

$

4,036

 

See accompanying notes to condensed consolidated financial statements

4

 

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2020

 

Common Stock

 

Additional Paid-in

 

Notes Receivable From

 

Accumulated Other Comprehensive

 

Accumulated

 

Total Stockholders'

 

Shares

    

Amount

    

Capital

    

Stockholders

    

Income (Loss)

    

Deficit

    

Equity

Balances as of December 31, 2019

30,637

 

$

31

 

$

372,676

 

$

(89)

 

$

(1,650)

 

$

(342,086)

 

$

28,882

Issuance of common stock upon exercise of stock options

52

 

 

 —

 

 

167

 

 

 —

 

 

 —

 

 

 —

 

 

167

Stock-based compensation

 —

 

 

 —

 

 

460

 

 

 —

 

 

 —

 

 

 —

 

 

460

Foreign currency translation adjustments

 —

 

 

 —

 

 

 —

 

 

 —

 

 

92

 

 

 —

 

 

92

Net income

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

1,867

 

 

1,867

Balances as of March 31, 2020

30,689

 

$

31

 

$

373,303

 

$

(89)

 

$

(1,558)

 

$

(340,219)

 

$

31,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2019

 

 

Common Stock

 

Additional Paid-in

 

Notes Receivable From

 

Accumulated Other Comprehensive

 

Accumulated

 

Total Stockholders'

 

 

Shares

    

Amount

    

Capital

    

Stockholders

    

Income (Loss)

    

Deficit

    

Equity

 

Balances as of December 31, 2018

27,883

 

$

28

 

$

347,182

 

$

(87)

 

$

(1,620)

 

$

(346,840)

 

$

(1,337)

 

Issuance of common stock upon exercise of stock options

276

 

 

 —

 

 

713

 

 

 —

 

 

 —

 

 

 —

 

 

713

 

Issuance of common stock from public offering, net of issuance costs

2,000

 

 

 2

 

 

20,205

 

 

 —

 

 

 —

 

 

 —

 

 

20,207

*

Stock-based compensation

 —

 

 

 —

 

 

499

 

 

 —

 

 

 —

 

 

 —

 

 

499

 

Foreign currency translation adjustments

 —

 

 

 —

 

 

 —

 

 

 —

 

 

36

 

 

 —

 

 

36

 

Net income

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

1,398

 

 

1,398

 

Balances as of March 31, 2019

30,159

 

$

30

 

$

368,599

 

$

(87)

 

$

(1,584)

 

$

(345,442)

 

$

21,516

 

 

*Accrued liabilities of $185,000 included for stock issuance costs

 

 

See accompanying notes to condensed consolidated financial statements

5

 EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (cont.)

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended March 31, 2020

 

Common Stock

 

Additional Paid-in

 

Notes Receivable From

 

Accumulated Other Comprehensive

 

Accumulated

 

Total Stockholders'

 

Shares

    

Amount

    

Capital

    

Stockholders

    

Income (Loss)

    

Deficit

    

Equity

Balances as of June 30, 2019

30,478

 

$

31

 

$

371,099

 

$

(88)

 

$

(1,459)

 

$

(345,276)

 

$

24,307

Interest on stockholder notes

 —

 

 

 —

 

 

 —

 

 

(1)

 

 

 —

 

 

 —

 

 

(1)

Issuance of common stock upon exercise of stock options

142

 

 

 —

 

 

334

 

 

 —

 

 

 —

 

 

 —

 

 

334

Issuance of common stock in connection with employee stock purchase plan

69

 

 

 —

 

 

448

 

 

 —

 

 

 —

 

 

 —

 

 

448

True up of issuance costs related to public offering

 —

 

 

 —

 

 

29

 

 

 —

 

 

 —

 

 

 —

 

 

29

Stock-based compensation

 —

 

 

 —

 

 

1,393

 

 

 —

 

 

 —

 

 

 —

 

 

1,393

Foreign currency translation adjustments

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(99)

 

 

 —

 

 

(99)

Net income

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

5,057

 

 

5,057

Balances as of March 31, 2020

30,689

 

$

31

 

$

373,303

 

$

(89)

 

$

(1,558)

 

$

(340,219)

 

$

31,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended March 31, 2019

 

 

Common Stock

 

Additional Paid-in

 

Notes Receivable From

 

Accumulated Other Comprehensive

 

Accumulated

 

Total Stockholders'

 

 

Shares

    

Amount

    

Capital

    

Stockholders

    

Income (Loss)

    

Deficit

    

Equity

 

Balances as of June 30, 2018

27,667

 

$

28

 

$

346,222

 

$

(85)

 

$

(1,618)

 

$

(353,260)

 

$

(8,713)

 

Cumulative-effect adjustment upon the modified retrospective
adoption of ASU No. 2016-16

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3,816

 

 

3,816

 

Interest on stockholder notes

 —

 

 

 —

 

 

 —

 

 

(2)

 

 

 —

 

 

 —

 

 

(2)

 

Issuance of common stock upon exercise of stock options

492

 

 

 —

 

 

975

 

 

 —

 

 

 —

 

 

 —

 

 

975

 

Issuance of common stock from public offering, net of issuance costs

2,000

 

 

 2

 

 

20,205

 

 

 —

 

 

 —

 

 

 —

 

 

20,207

*

Stock-based compensation

 —

 

 

 —

 

 

1,197

 

 

 —

 

 

 —

 

 

 —

 

 

1,197

 

Foreign currency translation adjustments

 —

 

 

 —

 

 

 —

 

 

 —

 

 

34

 

 

 —

 

 

34

 

Net income

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

4,002

 

 

4,002

 

Balances as of March 31, 2019

30,159

 

$

30

 

$

368,599

 

$

(87)

 

$

(1,584)

 

$

(345,442)

 

$

21,516

 

 

*Accrued liabilities of $185,000 included for stock issuance costs

 

See accompanying notes to condensed consolidated financial statements

6

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

March 31, 

 

    

2020

    

2019

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

5,057

 

$

4,002

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Amortization of intangible assets

 

 

201

 

 

371

Amortization of costs capitalized to obtain revenue contracts

 

 

607

 

 

481

Amortization of deferred financing costs

 

 

 —

 

 

242

Amortization of right-of-use assets

 

 

1,145

 

 

 —

Depreciation

 

 

220

 

 

293

Provision of doubtful accounts

 

 

127

 

 

263

Deferred income taxes

 

 

(197)

 

 

(380)

Stock-based compensation

 

 

1,393

 

 

1,197

Loss (gain) on disposal of property and equipment

 

 

(2)

 

 

69

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

6,715

 

 

(7,818)

Costs capitalized to obtain revenue contracts

 

 

(1,018)

 

 

(742)

Prepaid expenses

 

 

572

 

 

151

Other current assets

 

 

435

 

 

(219)

Other non-current assets

 

 

149

 

 

(85)

Accounts payable

 

 

(2,369)

 

 

(217)

Accrued compensation

 

 

780

 

 

337

Accrued liabilities

 

 

745

 

 

(218)

Deferred revenue

 

 

(5,043)

 

 

10,266

Operating lease liabilities

 

 

(1,217)

 

 

 —

Other long-term liabilities

 

 

152

 

 

(23)

Net cash provided by operating activities

 

 

8,452

 

 

7,970

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(339)

 

 

(272)

Net cash used in investing activities

 

 

(339)

 

 

(272)

Cash flows from financing activities:

 

 

 

 

 

 

Payments on bank borrowings

 

 

(31)

 

 

(16,869)

Proceeds from bank borrowings

 

 

31

 

 

7,435

Payments on capital lease obligations

 

 

 —

 

 

(41)

Proceeds from exercise of employee stock options

 

 

334

 

 

975

Proceeds from employee stock purchase plan

 

 

448

 

 

 —

Proceeds from follow-on public offering, net of issuance costs

 

 

 —

 

 

20,392

Net cash provided by financing activities

 

 

782

 

 

11,892

Effect of change in exchange rates on cash and cash equivalents

 

 

(98)

 

 

(10)

Net increase in cash, cash equivalents and restricted cash

 

 

8,797

 

 

19,580

Cash, cash equivalents and restricted cash at beginning of period

 

 

31,867

 

 

11,504

Cash, cash equivalents and restricted cash at end of period

 

$

40,664

 

$

31,084

 

 

 

 

 

 

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

Cash paid for interest

 

$

 2

 

$

211

Cash paid for taxes, net of tax refunds

 

$

188

 

$

189

 

 

See accompanying notes to condensed consolidated financial statements

7

EGAIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization and Nature of Business

 

eGain Corporation (eGain, the Company, our, we or us) is a leading provider of cloud-based customer engagement software with operations in the United States, United Kingdom and India. We help B2C brands operationalize digital customer engagement strategy. Our suite includes rich applications for digital interaction, knowledge management, and AI-based process guidance. We also provide advanced, integrated analytics for contact centers and digital properties to holistically measure, manage, and optimize resources. We believe the benefits of our products include reduced customer effort, customer satisfaction, connected service processes, converted upsell opportunities, and improved compliance—across mobile, social, web, and phone. Hundreds of global enterprises rely on eGain to transform fragmented customer service systems into unified customer engagement hubs.

 

Fiscal Year

 

Our fiscal year ends on June 30. References to fiscal year 2020 refer to fiscal year ending June 30, 2020.

 

Basis of Presentation

 

The accompanying condensed consolidated balance sheet as of March 31, 2020 and the condensed consolidated statements of operations, comprehensive income, stockholders’ equity,  and cash flows for the three and nine months ended March 31, 2020 and 2019, are unaudited. The consolidated balance sheet as of June 30, 2019 included herein was derived from the audited financial statements as of that date.

 

Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), have been condensed or omitted pursuant to such rules and regulations although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations and cash flows for the periods presented.

 

These condensed consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and accompanying notes for the fiscal year ended June 30, 2019, included in our Annual Report on Form 10-K. The condensed consolidated balance sheet as of June 30, 2019 was derived from audited consolidated financial statements as of that date but does not include all the information and footnotes required by GAAP for complete financial statements. The results of our operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending June 30, 2020.

 

The Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), on a modified retrospective basis, as discussed below. As a result, the condensed consolidated balance sheet as of March 31, 2020 is not comparable with that as of June 30, 2019.

 

Principles of Consolidation

 

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and included the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

 

8

Use of Estimates

 

The preparation of financial statements requires us to make estimates and assumptions in the condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from estimates. We make estimates that we believe to be reasonable based on historical experience and other assumptions. Significant estimates and assumptions made by management include the following:

 

·

Standalone selling price (SSP) of performance obligations for contracts with multiple performance obligations;

·

Estimate of variable consideration for performance obligations in connection with Topic 606;

·

Period of benefit associated with capitalized costs to obtain revenue contracts;

·

Valuation, measurement and recognition of current and deferred income taxes;

·

Fair value of stock-based awards,

·

Useful lives of intangible assets; and

·

Lease term and incremental borrowing rate for lease liabilities.

 

Follow-On Public Offering

 

In March 2019, we completed a follow-on public offering, in which we issued 2.0 million shares of our common stock at a public offering price of $11.00 per share. In April 2019, the underwriters exercised an over-allotment option to purchase 149,000 additional shares of our common stock. We received net proceeds of $21.7 million after deducting underwriting discounts and commissions of $1.6 million and other offering expenses of $282,000.

 

Recent Accounting Pronouncements

 

Pronouncements Not Yet Adopted

 

In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). This update requires a customer in a cloud computing service arrangement to follow the internal-use software guidance to determine which implementation costs to recognize and defer as an asset. This update is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021). We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures. 

 

In December 2019, FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update simplifies the accounting for income taxes. This update is effective for fiscal years beginning after December 15, 2020 (our fiscal year 2022). We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures.

 

Pronouncements Recently Adopted

 

In February 2016, the FASB issued ASU 2016-02, Topic 842, which requires that we recognize lease assets and liabilities on the balance sheet, but recognize the expenses on our statement of operations in a manner similar to previous accounting guidance. Topic 842 generally requires that lessees recognize operating and financing liabilities for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. We adopted this guidance as of our first fiscal quarter of fiscal year 2020.

 

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update provides the option to reclassify tax effects to retained earnings relating to items in accumulated other comprehensive income that the FASB refers to as having been stranded in accumulated other comprehensive income as a result of the U.S. Tax Act. We adopted this guidance as of our first quarter of fiscal year 2020 without a significant impact on our consolidated financial statements.

 

9

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718)—Improvements to Nonemployee Share-Based Payment Accounting. This update expands the scope of Topic 718, Compensation—Stock Compensation, to include share-based awards granted to non-employees in exchange for goods or services. The accounting for employees and non-employees will be substantially aligned. We adopted this guidance as of our first quarter of fiscal year 2020 without a significant impact on our consolidated financial statements. 

 

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an alternative transition method by allowing companies to initially apply the new leases guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted this guidance as of our first quarter of fiscal year 2020.

 

In February 2019, the FASB issued ASU No. 2019-01 Leases (Topic 842) Codification Improvements, which aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost. We adopted this guidance as of our first quarter of fiscal year 2020.

 

Leases

 

Effective July 1, 2019, the Company adopted the provisions and expanded disclosure requirements described in Topic 842. The Company adopted the standard under a modified retrospective approach, using the provision of ASU 2018-11,  Leases (Topic 842) Targeted Improvements, which allows for the adoption of Topic 842 to be applied at the beginning of the fiscal year of adoption. As a result, the condensed consolidated balance sheet and statement of operations for prior periods are not comparable to fiscal year 2020. In addition, the Company elected the package of practical expedients permitted under the transition guidance, which among other things, allowed the Company to not reassess prior conclusions on lease classifications or initial direct costs, or on whether contracts are or contain a lease. The Company did not use hindsight when determining the lease term.

 

Upon adoption, operating leases are now reported on the condensed consolidated balance sheet, which has materially increased total assets and liabilities. As a result, the Company recorded operating lease right-of-use assets of approximately $4.5 million and corresponding operating lease liabilities of $4.8 million on its opening condensed consolidated balance sheet.

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

Adjustments due to ASC 842

 

Balance at July 1, 2019

Balance sheet captions:

 

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

2,517

 

 

(114)

 1

 

2,403

Total current assets

 

 

56,589

 

 

(114)

 1

 

56,475

Operating lease right-of-use assets (Note 6)

 

 

 —

 

 

4,494

1,2,3

 

4,494

Total assets

 

 

73,754

 

 

4,380