Executive Summary
eGain reported Q3 2025 revenue of $21.0 million, a 6% YoY decline driven by the loss of two large customers in the prior year; however, the quarter showcased profitability upside versus guidance and robust operating cash flow. Non-GAAP net income was $0.765 million ($0.03 per share) on $21 million revenue, while GAAP results remained modest but positive with net income of $0.574 million. The company reaffirmed and expanded its AI knowledge strategy, highlighted by the March launch of the eGain AI Agent for Contact Center and strong customer interest in AI-enabled workflows. ARR in the knowledge segment rose 11% YoY, while overall SaaS ARR declined 6% YoY, underscoring a differentiating growth dynamic within the SaaS mix. A major post-quarter win with a US mega bank’s Consumer Banking Group, expanding usage to >100,000 users across more than half the bank, signals meaningful scale and validates the platform’s enterprise AI vision. Management continues to emphasize a multi-quarter path to growth through AI-driven knowledge infrastructure and expanded deployments across industries, while acknowledging extended sales cycles and macro uncertainty as headwinds.
Key Performance Indicators
QoQ: -95.85% | YoY:-97.12%
QoQ: -14.46% | YoY:-61.55%
QoQ: -12.77% | YoY:-57.47%
Key Insights
Revenue: $21.0m in Q3 2025, down 6% YoY; SaaS revenue 93% of total; SaaS gross margin 77%, total gross margin 69%; Non-GAAP operating costs $13.8m; R&D up 15% YoY; Non-GAAP net income $0.765m ($0.03 per share); Adjusted EBITDA 6%. Operating cash flow $2.21m; Free cash flow $2.11m; Share repurchases: 895k shares for $5.0m; Ending cash $68.74m; ARR knowledge: +11% YoY; Net retention: knowledge 97%, total 88%; Net expansion: knowledge 103%, all customers 104%; Remaining performance obligations ...
Financial Highlights
Revenue: $21.0m in Q3 2025, down 6% YoY; SaaS revenue 93% of total; SaaS gross margin 77%, total gross margin 69%; Non-GAAP operating costs $13.8m; R&D up 15% YoY; Non-GAAP net income $0.765m ($0.03 per share); Adjusted EBITDA 6%. Operating cash flow $2.21m; Free cash flow $2.11m; Share repurchases: 895k shares for $5.0m; Ending cash $68.74m; ARR knowledge: +11% YoY; Net retention: knowledge 97%, total 88%; Net expansion: knowledge 103%, all customers 104%; Remaining performance obligations (RPO): down 2% YoY; Q4 revenue guidance: $22.8m–$23.3m; Fiscal 2025 revenue guidance revised to $88.0m–$88.5m; GAAP net income guidance $2.5m–$3.0m; Non-GAAP net income guidance $5.1m–$5.6m.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
21.01M |
-6.00% |
-6.16% |
| Gross Profit |
14.29M |
-5.81% |
-9.06% |
| Operating Income |
27.00K |
-97.12% |
-95.85% |
| Net Income |
574.00K |
-61.55% |
-14.46% |
| EPS |
0.02 |
-57.47% |
-12.77% |
Key Financial Ratios
operatingProfitMargin
0.13%
Management Commentary
Strategic AI momentum and Gartner validation: 'Gartner published their first emerging market quadrant for generative AI knowledge management apps... rated eGain a leader' (transcript). Execution and near-term impact: 'In our third quarter, we exceeded our profitability projections and delivered solid operating cash flow' and 'we secured one of our largest deals ever soon after the quarter closed' (Ashu Roy). Knowledge-management focus driving expansion: 'knowledge is becoming a solution that people are looking to deploy across the business so that they can then have that single source of truth across all functions' (Ashu Roy). AI Agent launches and integration: 'In March, we launched the eGain AI Agent for Contact Center' with connections to Amazon Connect, Genesis Cloud and Salesforce. Operational discipline: 'Revenue was $21 million, within guidance, but down 6% YoY' and 'SaaS gross margin 77%, total gross margin 69%' (Eric Smit). Market backdrop and guideposts: 'macro uncertainty impacted the timing of closing new deals' and 'sales cycles extended to roughly nine to twelve months' (Ashu Roy; Eric Smit). Mega bank deal ramp and visibility: 'the ramp will be pretty much from the beginning' and 'deployment is at pace... fully deployed by late fall; expansion is ~10x larger than prior deals' (Ashu Roy; CFO commentary).
In our third quarter, we exceeded our profitability projections and delivered solid operating cash flow.
— Ashutosh Roy
Revenue for the third quarter was $21 million, which was within our guidance, but down 6% year-over-year.
— Eric Smit
Forward Guidance
Near-term outlook remains constructive but hinges on large deal execution and continued AI-driven demand. Q4 2025 revenue guidance of $22.8–$23.3 million implies modest sequential growth from Q3, supported by the mega bank deployment that is running through fall. Management guided for fiscal 2025 revenue of $88.0–$88.5 million (down from $88.5–$90.0 million previously) due to longer-than-expected closing cycles, while increasing bottom-line expectations: GAAP net income $2.5–$3.0 million and non-GAAP net income $5.1–$5.6 million. The company expects knowledge-ARR to reach the high-teens YoY growth in fiscal 2026, supported by continued expansion within the mega bank account and other enterprise customers. Key factors for investors to monitor include: (1) time-to-closure and cadence of new enterprise deployments, (2) ARR progression in the knowledge segment and overall SaaS ARR, (3) margin progression as PS attachments continue to decline with faster time-to-value, and (4) ongoing cash generation and capital allocation (share repurchases, potential acquisitions or investments in R&D). Given the current trajectory, a potential reacceleration in top-line growth could materialize in fiscal 2026 as AI knowledge investments translate into realized ARR expansion and cross-sell opportunities.