Executive Summary
eGain reported QQ4 2024 revenue of $22.5 million, bringing full-year revenue to $92.8 million, down 5% year over year. The quarter reflected ongoing churn stemming from two large clients lost in Q2, which weighing on top-line performance, but management emphasized material progress in the AI Knowledge market. Management highlighted that roughly half of revenue now derives from AI Knowledge offerings and signaled intent to accelerate R&D and brand investment to capitalize on this core growth driver. The company also underscored strong gross margins (71% in Q4) and improving operating discipline, with non-GAAP operating costs down 8% YoY and full-year non-GAAP costs down 13%. The strategic narrative centers on leveraging AI Knowledge to convert pilot activity into durable, multi-year relationships with large, multinational customers.
Looking ahead, eGain provided cautious near-term guidance reflecting a Cisco OEM revenue deferral of about $1.3 million into fiscal 2025, with most impact anticipated in Q1 2025. For Q1 2025, the company guided revenue of $21.4–$21.8 million and a non-GAAP loss per share of $0.01–$0.02, framing the period as a ramp into a more durable AI Knowledge growth trajectory. For fiscal year 2025, management targeted revenue of $92–$93 million and non-GAAP net income of $5–$6 million ($0.17–$0.20 per share), with GAAP net income breakeven to $1 million. The outlook reflects a shift toward more ratable recognition from Cisco OEM arrangements and continued investment in AI Knowledge capabilities as a core differentiator in a competitive CX software landscape.
Key Performance Indicators
QoQ: 27.08% | YoY:-49.45%
Key Insights
Revenue: Q4 2024 $22.462M, YoY -8.82%, QoQ +0.56% (Q3 2024 was $22.350M); Full-year 2024 revenue $92.8M, YoY -5%
Gross profit: Q4 2024 $15.556M, gross margin 69.25%; FY2024 gross profit $66.4M, margin 72%
Operating performance: Q4 non-GAAP operating costs $13.7M, down 8% YoY; full-year non-GAAP operating costs $56.0M, down 13% YoY
Net income and margins: Q4 non-GAAP net income $2.5M ($0.08 per share); Q4 GAAP net income not explicitly stated, but implied positive; FY2024 non-GAAP net income $12....
Financial Highlights
Revenue: Q4 2024 $22.462M, YoY -8.82%, QoQ +0.56% (Q3 2024 was $22.350M); Full-year 2024 revenue $92.8M, YoY -5%
Gross profit: Q4 2024 $15.556M, gross margin 69.25%; FY2024 gross profit $66.4M, margin 72%
Operating performance: Q4 non-GAAP operating costs $13.7M, down 8% YoY; full-year non-GAAP operating costs $56.0M, down 13% YoY
Net income and margins: Q4 non-GAAP net income $2.5M ($0.08 per share); Q4 GAAP net income not explicitly stated, but implied positive; FY2024 non-GAAP net income $12.3M ($0.40 basic, $0.39 diluted), up 47% YoY; Adjusted EBITDA margin Q4 11%, FY2024 12%
Cash flow and liquidity: CFO FY2024 $12.4M (13% OCF margin); buybacks ~2.8M shares for $17.3M; cash and equivalents $70.0M; net change in cash for year -$12.98M; free cash flow (FCF) -$5.17M
Balance sheet: total assets $127.9M; total liabilities $69.4M; cash/cash equivalents $70.0M; RPO short-term $60.4M (down 9% YoY, up 26% sequentially); knowledge SaaS ARR up 8% YoY; total SaaS ARR down 10% YoY; LTM dollar-based SaaS NRR knowledge = 97%, total = 85%; knowledge expansion rate = 106%
Outlook and risk: Cisco OEM revenue deferral of about $1.3M into FY2025; Q1 2025 revenue guide $21.4–$21.8M; non-GAAP net loss $0.00 to $0.05 per share; full-year 2025 non-GAAP net income guidance $5–$6M; key risk factors include client churn sensitivity, OEM recognition timing, and execution of AI Knowledge sales cycle.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
22.46M |
-8.82% |
0.50% |
| Gross Profit |
15.56M |
-13.33% |
2.56% |
| Operating Income |
1.19M |
-49.45% |
27.08% |
| Net Income |
1.51M |
-42.10% |
0.87% |
| EPS |
0.05 |
-40.42% |
1.24% |
Key Financial Ratios
operatingProfitMargin
5.31%
operatingCashFlowPerShare
$-0.17
freeCashFlowPerShare
$-0.17
Management Commentary
Theme: AI Knowledge market opportunity and strategy
- Quote 1 (Ashu Roy): “We are doubling down on this AI Knowledge market opportunity. Currently, half of our revenue comes from AI Knowledge offerings.” Significance: Establishes AI Knowledge as the growth engine and a differentiator in a crowded CX software market.
Theme: Market validation and demand
- Quote 2 (Ashu Roy citing Gartner): “By 2025, 100% of generative AI, virtual customer assistant, and virtual agent-assistant projects that lacks integration to modern knowledge management systems will fail to meet their customer experience and operational cost reduction goals.” Significance: Provides external validation for eGain’s focus on knowledge management as a foundation for successful AI deployments, supporting the company’s strategic emphasis.
Theme: Financials and guidance
- Quote 3 (Eric Smit on Cisco OEM deferral): “We estimate this change will result in deferral of approximately $1.3 million of revenue that would have otherwise been recognized in fiscal 2025.” Significance: Highlights near-term revenue timing risk from OEM tiered arrangements and the need to monitor the impact on Q1 2025 results.
Theme: Operational execution and pipeline
- Ashu Roy on pipeline activity: “The last few quarters have seen stronger inbound interest and faster progression from pilots to decisions, with ARR north of $200k on new logos.” Significance: Underpins management’s view that the AI Knowledge opportunity is translating into tangible pipeline progress and scalable deal sizes.
Theme: Capital allocation and balance sheet
- Ashu Roy on investment: “We are increasing investment in R&D and brand marketing to capitalize on this opportunity.” Significance: Signals a deliberate tilt toward growth investments, potentially impacting near-term profitability but supporting longer-term differentiation.
We are doubling down on this AI Knowledge market opportunity. Currently, half of our revenue comes from AI Knowledge offerings.
— Ashutosh (Ashu) Roy
We estimate this change will result in deferral of approximately $1.3 million of revenue that would have otherwise been recognized in fiscal 2025.
— Eric Smit
Forward Guidance
Near-term view: Revenue visibility is supported by an improving inbound pipeline and an expanding AI Knowledge product footprint, but a near-term headwind remains from Cisco OEM revenue deferral (~$1.3M) that is expected to affect FY2025 early quarters, particularly Q1 2025. The company expects Q1 2025 revenue of $21.4–$21.8M and a non-GAAP net loss of $0.01 to $0.05 per share, with stock-based compensation (~$0.9M) and D&A (~$0.12M) included.
Full-year FY2025 outlook: Revenue of $92–$93M; non-GAAP net income of $5–$6M (~$0.17–$0.20 per share); GAAP net income breakeven to $1M (~$0.00–$0.03 per share). The company also expects SB-C expense of ~$5M and D&A of ~$0.4M. Weighted average shares ~29.3M (Q1) and ~29.7M (FY).
Assessment: The guidance implies modest top-line growth from a depressed Q1 baseline, offset by margin improvement and a higher investment cadence in AI Knowledge. Achievability hinges on sustaining strong AI Knowledge demand, converting pilots into durable contracts, and mitigating OEM revenue timing through product/market expansion. Investors should monitor: (1) progression of AI Knowledge deals and renewal rates (NRR/ARR); (2) Cisco OEM revenue recognition timing; (3) customer concentration risk given the prior churn incidents; (4) cadence of R&D/brand investments and their impact on near-term profitability; (5) new customer wins and expansion in existing accounts.